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Facts
The assessee's appeal was dismissed by the CIT(A) as non-maintainable due to a moratorium issued by the NCLT. The NCLT order prohibited the continuation of proceedings against the corporate debtor.
Held
The Tribunal held that while the moratorium bars proceedings against the corporate debtor, it does not prevent the company itself from initiating actions. The Tribunal modified the CIT(A)'s finding, allowing for the revival of the appeal after the moratorium period expires.
Key Issues
Whether a moratorium under the IBC prevents the continuation of tax appeals against a corporate debtor, and if the appeal can be revived after the moratorium period.
Sections Cited
14, 68
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Before: SHRI SAKTIJIT DEY & SHRI NARENDRA KUMAR BILLAIYA
स िवाई की िारीख / Date of Hearing 05.06.2025 घोर्णा की िारीख/Date of Pronouncement 05.06.2025 आदेश / O R D E R PER NARENDRA KUMAR BILLAIYA [A.M.]:- This appeal by the assessee is preferred against the order dated 12.12.2024 by NFAC, Delhi [hereinafter referred to as “CIT(A)”] pertaining to Assessment Year [AY] 2018-19.
The grievance of the assessee reads as under: “1. The Ld. CIT Appeals has erred in dismissing as non-maintainable as the assessee was out of CIRP a year before passing the order and same was communicated to the Ld CIT Appeals.
2. The Ld. CIT Appeals has erred by not appreciating that the section 14 of IBC puts temporary bar on continuation of proceedings and it does not put permanent embargo by abating the proceedings. 3.The Ld. CIT Appeals has erred by not appreciating that the section 14 of IBC bars. the continuation of proceedings against the corporate debtor but does not put any bar when proceedings, suit etc. is instituted by company itself. 4. The Ld CIT Appeals has erred by not deleting the addition of Rs 344,17,27,462/-made u/s 68 in respect of share capital issued. 5. The LD CIT Appeals has erred by not granting the opportunity through video conferencing before disposal of the matter & thereby principles of natural justice was violated.”
None appeared on behalf of the assessee in spite of notice. Therefore, we decided to proceed exparte.
The entire quarrel revolves around the dismissal of the appeal for the reasons that the National Company Law Tribunal [NCLT] has issued a moratorium vide its order dated 03.03.2023, by which the NCLT has appointed Shri Sushil Kumar Agarwal as an insolvency professional. The NCLT inter alia held that “it prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor, including execution of any judgment, decree or order in any court of law, tribunal, arbitration, penal or other authority.” 5. In light of the above, the CIT(A) held the appeal as non-maintainable. We are of the considered view that a liberty should be given to the assessee for revival of the appeal once the moratorium period expires. Therefore, modifying A.Y. 2018-19 KIFS Finstock Ltd. the findings of the CIT(A), we give liberty to the assessee for revival of the appeal once the final order/outcome of the NCLT comes. 6. With this modification, the appeal of the assessee is dismissed. Order pronounced in the open court on .2025.