Loading judgment…
Facts
The Revenue preferred two appeals against an order by the CIT(A) concerning assessment years 2011-12 and 2012-13. The appeals primarily concerned the deletion of additions made by the Assessing Officer for bogus expenses and undisclosed income. The National Company Law Tribunal (NCLT) had approved a Resolution Plan for the assessee under the Insolvency and Bankruptcy Code, 2016.
Held
The Tribunal held that the NCLT's approval of the Resolution Plan under the Insolvency and Bankruptcy Code, 2016, has an overriding effect over the Income Tax Act. Consequently, no parallel proceedings under the Income Tax Act can be undertaken once proceedings under the IBC have been initiated and a resolution plan approved.
Key Issues
Whether proceedings under the Income Tax Act can continue after a Resolution Plan has been approved for the assessee under the Insolvency and Bankruptcy Code, 2016.
Sections Cited
Section 31 of the Insolvency and Bankruptcy Code, 2016, Income Tax Act
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,
Before: SHRI YOGESH KUMAR US, & SHRI NAVEEN CHANDRA
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- The above captioned two separate appeals by the Revenue are preferred against the order of the ld. CIT(A)-23, New Delhi dated 25.11.2016 pertaining to A.Ys. 2011-12 and 2012-13 respectively.
ITA Nos. 520 & 521/DEL/2017 [A.Y 2011-12 & 2012-13] ACIT Vs. Tecpro Systems 2. None appeared on behalf of the assessee. We decided to proceed ex-parte with the assistance of the ld. DR who was heard at length. Case records carefully perused.
The solitary grievance raised by the Revenue in both the appeals is the deletion of addition made by the Assessing Officer on account of bogus expenses claimed by the assessee company. In A.Y 2012-13, the Revenue has raised another ground pertaining to deletion of addition on account of undisclosed income.
At the very outset, the ld. DR pointed out to the order of the National Company Law Tribunal [NCLT] delivered on 15.05.2019 wherein the NCLT has approved the Resolution Plan u/s 31 of the Insolvency and Bankruptcy Code, 2016 against the assessee.
We have heard the submissions and have perused the relevant material on record. We find that the NCLT u/s 31 of the provisions of the Insolvency and Bankruptcy Code, 2016 (I & B Code], has approved the Resolution Plan. In such a situation, we are of the considered view that by virtue of the order of NCLT which accepted the application filed against the assessee for initiating proceedings under IBC, no parallel proceedings under Income Tax Act can be undertaken and therefore the appeal of the Revenue cannot survive.
Page 2 of 4 & 521/DEL/2017 [A.Y 2011-12 & 2012-13] ACIT Vs. Tecpro Systems 6. We are fortified in our observation by the decision of the Mumbai Bench of the Tribunal in the case of Pratibha Industries Ltd. Vs. DCIT (142 taxmann.com 295) taking note of the decision of the Hon’ble Apex Court in the case of Pr.CIT Vs. Monnet Ispat & Energy Ltd. (107 taxmann.com 481) wherein the Hon’ble Apex Court held that IBC has an overriding effect over the provisions of IT Act and dismissed the appeals of the Revenue as well as the Assessee as the proceedings under Insolvency and Bankruptcy Code 2016 were initiated on the assessee.
Therefore, the proceedings under I.T. Act in the case of assessee can no longer continue. Accordingly, the grounds of the Revenue in both the A.Ys are dismissed.
The appeals filed by the Revenue however, are hereby dismissed with the liberty to the Revenue to file miscellaneous application for recall of this order once the assessee is declared that it is out of the purview of IBC proceedings under Insolvency and Bankruptcy Code 2016, as and when situation arises.
In the result, appeals of the Revenue in and 521/DEL/2017 are dismissed.