DCIT 5(3)(1), MUMBAI vs. SCORODITE STAINLESS INDIA P LTD, MUMBAI

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ITA 802/MUM/2018Status: DisposedITAT Mumbai31 October 2022AY 2009-105 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the appeals were not maintainable in their current format. This was due to an order of moratorium passed by the National Company Law Tribunal (NCLT) initiating insolvency proceedings against the assessee company.

What were the facts?

The Revenue appealed against the deletion of additions made on account of bogus purchases for AY 2009-10 and 2011-12. The additions were made on the grounds that the assessee had not produced documentary evidence for goods movement and that parties from whom bills were obtained were not produced.

What were the issues?

The primary issue was the maintainability of the Revenue's appeals in light of the moratorium declared under the Insolvency and Bankruptcy Code, 2016, which prohibited continuation of proceedings against the corporate debtor.

Which sections of the Income-tax Act were involved?

Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI

Before: SHRI KULDIP SINGH & SHRI GAGAN GOYAL

For Appellant: Shri Piyush Chhajed, A.R, Shri Sumit Mantri, A.R
For Respondent: Shri Satyapal Kumar, D.R

Present for: Assessee by : Shri Piyush Chhajed, A.R. Shri Sumit Mantri, A.R. Revenue by : Shri Satyapal Kumar, D.R. Date of Hearing : 21 . 09 . 2022 Date of Pronouncement : 31 . 10 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: Since common questions of law and facts have been raised in both these inter-connected appeals, the same are being disposed of by way of composite order to avoid repetition of discussion.

2.

The appellant, DCIT 5(3)(1), Mumbai (hereinafter referred to as ‘the Revenue) by filing the present appeals, sought to set aside the impugned order dated 28.11.2017 & 29.11.2017 for A.Y. & 803/M/2018 2 M/s. Scordite Stainless India Pvt. Ltd.

2009-10 & 2011-12 respectively passed by Commissioner of Income Tax (Appeals), Jodhpur [hereinafter referred to as the CIT(A)] on the grounds inter-alia that :- for A.Y. 2009-10 “1. Whether the CIT (A) was right in deleting addition on account of bogus purchase by ignoring the decision of the Supreme Court in the case of M/s. NK Proteins Ltd., Vs. Dy.CIT and No.769 of 2017 dtd. 16.01.2017 (SC)? 2. Whether the CIT{A) was right in deleting addition by ignoring the fact that the assesssee has not produced any documentary evidences in respect of movement of goods purchased? 3. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in not appreciating the fact that the notices under section 133(6) issued t the parties from whom alleged bills obtained were returned undelivered and the assessee has also failed to produce the parties before the AO and hence the assessee failed to establish the genuineness of the said purchases leading to conclusion that the assessee company was beneficiary in respect of bogus purchases? 4. Whether the CIT(A) was right in deleting the addition by ignoring the fact that one of the alleged bogus party i.e. M/s.Alliance Steels Inds. has admitted to have provided bogus bills at the commission and also accepted to have not made any sale/purchase of goods?”

ITA No.803/M/2018 for A.Y. 2011-12

1.

Whether the CIT (A) was right in deleting addition on account of bogus purchase by ignoring the decision of the Supreme Court in the case of M/s. NK Proteins Ltd., Vs. Dy.CIT and No.769 of 2017 dtd. 16.01.2017 (SC)?

2. Whether the CIT(A) was right in deleting addition by ignoring the fact that the assesssee has not produced any documentary evidences in respect of movement of goods purchased?

3. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in not appreciating the fact that the notices under section 133(6) issued the parties from whom alleged bills obtained were returned undelivered and the assessee has also failed & 803/M/2018 3 M/s. Scordite Stainless India Pvt. Ltd.

to produce the parties before the AO and hence the assessee failed to establish the genuineness of the said purchases leading to conclusion that the assessee company was beneficiary in respect of bogus purchases?

3.

Briefly stated facts necessary for adjudication of the issues at hand are: Revenue has come up before the Tribunal challenging the deletion of addition made by the Assessing Officer (AO) on account of bogus purchases to the tune of Rs.5,99,89,178/- and Rs.3,31,78,068/- for A.Y. 2009-10 and 2011-12 respectively qua the goods purchased from 7 hawala dealers.

4.

We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.

5.

At the very outset, it is brought to the notice of the Bench that the National Company Law Tribunal (NCLT), Mumbai Bench in CP No.3290/IBC/NCLT/MB/MAH/2018 passed the order dated 16.07.2019 which is available on the appeal file to the following effect: “This petition Hied under Section 7 of I&B Code. 2016, against the Corporate Debtor for initiating corporate insolvency resolution process is at this moment admitted. We further declare moratorium u/s 14 of I&B Code with consequential directions as mentioned below:

I. That this Bench as a result of this prohibits: 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; & 803/M/2018 4 M/s. Scordite Stainless India Pvt. Ltd. b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; 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 Kinancii.il Assets and Enforcement of Security Interest Act. 2002; d) the recovers of any property by an owner or lessor where such property is occupied b\ or in possession of the corporate debtor. II. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period.

III. Thai the provisions of sub-section (1) of Section 14 of I&B Code shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

IV. That the order of moratorium shall have effect from the date of this Order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub- section (1) of section 31 of I&B Code or passes an order for the liquidation of the corporate debtor under section 33 of I&B Code, as the case may be. V. That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of I&B Code. VI. That this Bench at this moment appoints Mr. Chandra Prakash Jain, a registered insolvency resolution professional having Registration Number [IBBI/IPA-001/IP-P00147/2017-18/10311] as Interim Resolution Professional to carry out the functions as mentioned under I&B Code, fee payable to IRP/RP shall comply with the IBBI Regulations/Circulars/Directions issued in this regard.”

6.

In view of the order passed by the Hon’ble NCLT, we are of the considered view that since proceedings under insolvency and bankruptcy code have already been initiated and moratorium has been declared for prohibiting all the proceedings against the corporate debtors, present appeals in the present format are not maintainable, being not filed by IRP who can file appeal with & 803/M/2018 5 M/s. Scordite Stainless India Pvt. Ltd.

approval of committee of creditors, hence both the appeals are liable to be dismissed being not maintainable at this stage.

7.

Resultantly, the aforesaid appeals filed by the Revenue are dismissed with liberty to file fresh appeal in proper format, duly verified by person authorized to file the return of income or to get the present appeals restored by moving an application.

Order pronounced in the open court on 31.10.2022.

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