THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-2(2),, AHMEDABAD vs. ORIENT SPA (P) LTD.,, GANDHINAGAR

ITSSA 141/AHD/2016Status: DisposedITAT Ahmedabad12 November 2024AY 2010-117 pages
AI SummaryDismissed

What were the facts?

The Revenue filed an appeal against the order of the CIT(A) for Assessment Year 2010-11, which had substantially allowed the assessee's appeal against an assessment order passed under section 143(3) read with section 153A of the Income Tax Act, 1961. The assessee, engaged in Spa and Wellness services, was covered in a search action on September 8, 2010. The assessment was completed at a total income of Rs. 2,80,34,310/-. During the appeal proceedings before the ITAT, it was brought to the Tribunal's notice that the assessee company was under liquidation proceedings as per an order of the National Company Law Tribunal (NCLT) dated June 29, 2020. The Official Liquidator was appointed, and the company was declared liquidated.

What did the Tribunal hold?

The Tribunal held that the present appeal proceedings are not sustainable due to the liquidation order passed by the NCLT against the assessee company. The Tribunal relied on Section 33(5) of the IBC, 2016, which clearly states that once a liquidation order is passed, no suit or other legal proceeding shall be instituted by or against the corporate debtor. This provision was interpreted to mean that pending proceedings also cannot be processed or pursued parallel to the IBC proceedings. The Tribunal further emphasized that the IBC has an overriding effect over other laws, including the Income Tax Act, 1961, as per Section 238 of the IBC and acknowledged by Section 178(6) of the Income Tax Act. The Tribunal cited decisions from its coordinate benches in M/s PKS Limited and Pratibha Industries Ltd. v. DCIT, which held similar views. Consequently, the appeal filed by the Revenue was dismissed. Liberty was granted to the Revenue/Official Liquidator to request for recall of the order if the occasion arises.

What were the issues?

1. Whether the present appeal proceedings before the Income Tax Appellate Tribunal (ITAT) are sustainable in light of the liquidation order passed by the National Company Law Tribunal (NCLT) against the assessee company, considering the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC)? Assessee's Contention: The assessee argued that the IBC, 2016 has an overriding effect on the Income Tax Act, 1961. Once a liquidation order is passed, no fresh legal proceedings can be initiated, and pending proceedings cannot be continued against the corporate debtor. Reliance was placed on the ITAT, Kolkata decision in DCIT vs. PKS Limited. Revenue's Contention: The Revenue brought to the Tribunal's notice the AO's report confirming the liquidation proceedings under the IBC, 2016, and the NCLT order declaring the assessee company liquidated. The Revenue did not explicitly argue on the merits of the grounds of appeal but acknowledged the liquidation status.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153A,Section 132,Section 33(5),Section 238,Section 178(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD

Before: SHRI T.R. SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Vikas Jain, Official Liquidator assisted by Shri Chetan
For Respondent: Shri A P Singh, CIT-DR
Hearing: 07.11.2024Pronounced: 12.11.2024

PER SHRI NARENDRA PRASAD SINHA, AM: The present appeal is filed by the Revenue against the order dated 28.01.2016 passed by the Commissioner of Income Tax (Appeal)-12, Ahmedabad, (in short ‘the CIT(A)’), for the assessment year (A.Y.) 2010-11 in respect of order u/s 143(3) read with section 153A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

IT(SS)A 141/Ahd/2016 Assessment Year: 2010-11 2. The brief facts of the case are

The order continues below.

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