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Facts
The Revenue filed appeals for AY 2008-09 and 2013-14 against the First Appellate Authority's order deleting certain additions. The assessee company informed the Tribunal that it is undergoing insolvency/liquidation proceedings before the NCLT.
Held
The Tribunal noted that Section 156A of the Income Tax Act, introduced by the Finance Bill 2022, mandates the Assessing Officer to modify demand orders in conformity with orders passed by an Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. Given the assessee's insolvency status, the Revenue's appeals were deemed non-maintainable.
Key Issues
Whether assessment demands are maintainable against an assessee undergoing insolvency/liquidation proceedings, in light of the provisions of Section 156A of the Income Tax Act.
Sections Cited
156, 156A
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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI ABY T VARKEY & SHRI AMITABH SHUKLA
आदेश / O R D E R
PER AMITABH SHUKLA, A.M : The below mentioned appeals have been filed by the Revenue for AY-2008-09 and AY-2013-14 contesting the order of Ld. First Appellate Authority indicated Column-E, herein below:- S. Appeal AYs Appellant CIT(A) Order Details Respondent No. Nos. A B C D E F dated Assistant M/s.Surana ITA 20.12.2017 No. Commissioner Corporation Ltd., 1 2008-09 1104 / Chny No.29, Whites Road, of Income Tax, / 2018 Royapettah, Central Circle- Chennai-600 014. 2(3), Nadu-636005. ITA Nos. 151/16-17 dated Chennai. [PAN: AAACS3122L] 20.12.2017 2 2013-14 1105 / Chny / 2018
Page - 1 - of 5 2.0 The twin appeals are centering around a common issue and hence for the purposes of convenience, adjudicated together. For the purposes of this adjudication the facts and figures for AY-2008-09 have been taken. The decision for AY-2008-09 shall apply mutatis mutandis for appeal AY-2013-14. The Revenue is contesting the order of the Ld. First Appellate Authority for AY-2008-09 and AY-2013-14 in deleting the addition made by the Ld. AO on identical grounds.
3.0 At the outset the Ld. Council for the assessee informed that the assessee company has undergone insolvency / liquidation proceedings before the NCLT and hence the demand raised through impugned assessment orders can now only be subjected to law prescribed under the IBC code. In support of its submission the Ld. Counsel has filed a detailed paper book containing orders of NCLT details of liquidation proceedings, inter-alia, including CIRP order dated 05.10.2018, liquidation order dated 25.09.2019 etc. The assessee has also filed letter dated 06.07.2020 of ACIT Central Circle-2(3) Chennai addressed to the liquidator in the case qua Revenue’s claims. The Ld. Counsel argued that as the Revenue’s case is now non-maintainable, its appeal therefore requires to be dismissed. The Ld.AR also invited our attention to section 156A which authorizes the AO to modify the demand order issued under Page - 2 - of 5 Section 156 in conformity with the order of the adjudicating authority, reducing the demand of tax, interest, penalty, fine, or any other sum.
4.0 The Ld. DR did not contest the arguments of the Ld. AR and agreed for action to be taken by the AO as prescribed in the section 156A.
5.0 We have heard the rival submission and examined the matter in the light of facts of the case and evidence placed on record. It is noted that the finance bill-2022 introduced section 156A which provides as under:
Modification and revision of notice in certain cases. “..156A.(1) Where any tax, interest, penalty, fine or any other sum in respect of which a notice of demand has been issued under section 156, is reduced as a result of an order of the Adjudicating Authority as defined in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Assessing Officer shall modify the demand payable in conformity with such order and shall thereafter serve on the assesse a notice of demand specifying the sum payable, if any, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall accordingly, apply in relation to such notice. (2) Where the order referred to in sub-section (1) is modified by the National Company Law Appellate Tribunal or the Supreme Court, as the case may be, the modified notice of demand as referred to in sub-section (1), issued by the Assessing Officer shall be revised accordingly.”.
Page - 3 - of 5 6.0 The statutory provision of section 156A effective from 1st April, 2022.thus provides that where any tax, interest, penalty, fine or any other sum in respect of which a notice of demand has been issued under section 156, is reduced as a result of an order of an Adjudicating Authority as defined in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016, the Assessing Officer shall modify the demand payable in conformity with such order and shall thereafter serve on the assesse a notice of demand specifying the sum payable, if any, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly. The amended law further provides that where the order referred to in sub-section (1) is modified by the National Company Law Appellate Tribunal or the Supreme Court, as the case may be, the modified notice of demand as referred to in sub-section (1), issued by the Assessing Officer shall be revised accordingly. Accordingly, we direct the assessing officer to take necessary action under section 156A of the Act. The grounds of appeal raised by the Revenue are therefore dismissed.
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