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Facts
The Revenue preferred two appeals against orders passed by the National Faceless Appeal Centre, pertaining to assessments framed under section 143(3) for assessment years 2006-07 and 2007-08. The respondent-company was admitted into the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.
Held
The Tribunal held that due to the moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016, proceedings against the corporate debtor are stayed. Therefore, the appeals cannot be heard on merits at this stage and are dismissed in limine.
Key Issues
Whether the appeals can be heard on merits when the respondent-company is undergoing Corporate Insolvency Resolution Process and a moratorium is in effect under the Insolvency and Bankruptcy Code, 2016?
Sections Cited
143(3), 7, 14(1), 14
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Income Tax Appellate Tribunal, ‘B’ BENCH
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
आदेश / O R D E R PER AMIT SHUKLA (J.M):
These two appeals have been preferred by the Revenue against separate impugned orders, both dated 10 December 2024, passed by the National Faceless Appeal Centre (NFAC), Delhi, pertaining to the assessments framed under section 143(3) of the Income-tax Act, 1961 for the assessment years 2006-07 and 2007-08.
At the threshold of hearing, the learned Departmental Representative drew our attention to the significant & 1558/Mum/2025 Nirjala Teleholdings Limited development that the respondent-company, Nirjala Teleholdings Limited, has been admitted into the Corporate Insolvency Resolution Process (CIRP) under section 7 of the Insolvency and Bankruptcy Code, 2016, by an order of the Hon’ble National Company Law Tribunal (NCLT), Special Bench, Chennai, dated 13 April 2023. It was pointed out that, upon such admission, the moratorium contemplated under section 14(1) of the Code came into immediate effect, thereby suspending all proceedings against the corporate debtor, including those before judicial, quasi-judicial, or arbitral authorities.
We have carefully perused the said order of the NCLT. Paragraph 40 thereof makes it abundantly clear that the application of the financial creditor under section 7(5) of the Code has been admitted, and that the moratorium stipulated under section 14(1) has commenced from the very date of that order. The relevant portion of the NCLT’s direction reads as under:
Based on the above terms, the application stands admitted in terms of section 7(5) of the IBC, 2016 and the moratorium shall come into effect as of this date. A copy of the order shall be communicated to the Financial Creditor as well as to the Corporate Debtor by the Registry. In addition, a copy shall be forwarded to the Insolvency and Bankruptcy Board of India (IBBI) for its records and to the Interim Resolution Professional, who shall forthwith communicate the initiation of the CIRP in relation to the Corporate Debtor to the Registrar of Companies concerned.
& 1558/Mum/2025 Nirjala Teleholdings Limited 4. The legal consequence of the above direction leaves no room for ambiguity. Section 14(1) of the Insolvency and Bankruptcy Code, 2016 imposes a statutory embargo on the institution or continuation of all suits and proceedings against the corporate debtor. The moratorium expressly covers proceedings before any Court of law, Tribunal, arbitral panel, or other authority. It further restrains the execution of any judgment, decree, or order already passed, and bars any action to foreclose, recover, or enforce any security interest created by the corporate debtor. In view of the legislative command, the hands of this Tribunal are tied: it cannot, during the currency of the moratorium, entertain or proceed with any appeal in which the corporate debtor stands arrayed as a respondent.
It is further noted that, pursuant to the same order, an Interim Resolution Professional (IRP) has been appointed to take over the management of the corporate debtor and conduct the CIRP in accordance with law. Until the moratorium is lifted or appropriate permission is granted by the Committee of Creditors through the IRP recognising the claim of the Income-tax Department as an operational or financial creditor, no adjudicatory step can be validly undertaken in these proceedings.
In this backdrop, the present appeals of the Revenue cannot, at this stage, be heard or decided on merits. Respecting the statutory injunction contained in section 14 of the Code, we are constrained to keep the proceedings in abeyance. However, to safeguard the interests of the Revenue, & 1558/Mum/2025 Nirjala Teleholdings Limited we clarify that this dismissal shall be in limine and without prejudice to the right of the Department to seek restoration of the appeals as and when the moratorium ceases to operate or specific leave is obtained from the competent authority under the IBC framework. Upon such restoration being sought, these appeals shall revive and be heard in accordance with law.
In the result, both the appeals filed by the Revenue stand dismissed in limine, with the liberty as aforesaid.
Order pronounced on 12th November, 2025.