What did the Tribunal hold?

The Tribunal held that the moratorium granted by the NCLT prohibits the continuation of pending suits or proceedings. Therefore, both appeals filed before the ITAT are no longer maintainable.

The assessee and revenue filed cross-appeals against an ITAT order. The National Company Law Tribunal (NCLT) later granted a moratorium under the Insolvency and Bankruptcy Code, 2016, to the assessee company.

What were the issues?

Whether pending appeals before the Income Tax Appellate Tribunal can be continued after a moratorium is imposed on the assessee company by the NCLT.

ITO vs M/S Twenty First Century Wire… | ITAT Delhi 2022

Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI

Before: SHRI ANIL CHATURVEDI & SHRI AMIT SHUKLA

For Appellant: Shri Savan Saxena, Advocate

For Respondent: Shri H.K. Choudhary, CIT DR

Hearing: 02.02.2022

PER AMIT SHUKLA, JM : Aforesaid cross appeals have been filed by the assessee as well as Revenue against the impugned order dated 28.05.2012, passed by the ld. CIT (Appeals)-XIX, New Delhi for the quantum of assessment

It has been brought on record that in the case of the assessee company, National Company Law Tribunal (NCLT) vide judgment dated 12.09.2018 have granted moratorium in terms of section 14 of Insolvency and Bankruptcy Code 2016 (for short ‘the Code’). Ld. DR also admitted that now, in view of the judgment of NCLT, no suit or appeal can be pursued including the pending disputes.

We have perused the judgment (supra) of NCLT in the case of the assessee company wherein petition was filed under section 10 of the Code to initiate insolvency resolution process and directions have been issued for activating the moratorium u/s 14 of the Code. Para 27 of the said judgment reads as under :-

“27. We also declare moratorium in terms of section 14 of the Code. A necessary consequence of the moratorium flows from the provisions of section 14(1)(a),(b), (c) & (d) and thus the following prohibitions are imposed which must be followed by all and sundry :-

“(a) 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 panel or other authority;

(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

3 (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial assets and Enforcement of Security Interest Act, 2002;

(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession f the corporate debtor.”

In view of the above, both the appeals are dismissed with a liberty to both the assessee as well as Revenue to revive the said appeals subject to the further order of the NCLT.

Order was pronounced in open court on 2nd day of February, 2022 after the conclusion of the hearing.

ITO, NEW DELHI vs. M/S TWENTY FIRST CENTURY WIRE RODS LTD., MUMBAI

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