GAYATRI PROJECTS LIMITED,HYDERABAD vs. DCIT, CIRCLE 2(1), HYDERABAD

The learned Authorised Representative of the Assessee has submitted that the learned CIT(A) has not adjudicated the appeal of the assessee on merits but the same was dismissed in limine on the ground that the assessee is facing Insolvency and Bankruptcy Proceedings before the 3 ITA.No.1752/Hyd./2025 National Company Law Tribunal [in short “NCLT”]. Thus, he has submitted that the matter may be remanded to the record of the learned CIT(A) for adjudication of the appeal of the assessee on merits. He has pointed out that this Tribunal in assessee’s own case for the assessment year 2016-2017 has considered an identical issue and remanded the matter to the record of the learned CIT(A) for adjudication of the same on merits.

“6.3. The appellant has filed written submissions, where it has been stated that the Corporate Insolvency Resolution Process (CIRP) was initiated in the case of the appellant w.e.f. 15.11.2022 vide the order of Hon'ble National Company Law Tribunal, Hyderabad Bench in CP(IB) No. 308/07/HDB/2022. The appellant also annexed and mention para 11 of NCLT order as per which the 4 ITA.No.1752/Hyd./2025 moratorium has been declared from the date of the order till the completion of CIRP.

6.4. Hon'ble Income Tax Appellate Tribunal, D Bench, Mumbai vide order dated 08.06.2022 has held that no proceedings can be initiated against the appellant company before the tribunal or any Income Tax Authority in any proceedings because Insolvency and Bankruptcy Code, 2016 (IBC) has overriding effect on all the acts including Income Tax Act which has been specially provided u/s 178(6) of the Income Tax Act, 1961 as amended w.e.f. 01.11.2016. Hon'ble ITAT has held that till the completion of moratorium period or upon the revival of corporate debtor as per the resolution plan approved by the adjudicating authority, the appeals filed by the appellant are treated as dismissed in limini. Hence, following the judgement of Hon'ble Income Tax Appellate Tribunal, D Bench, Mumbai, this appeal is treated as dismissed in limini.”

5.1. Thus, the appeal of the assessee was dismissed in limine because of the proceedings under Insolvency and Bankruptcy Code are pending before the NCLT. This Tribunal in assessee’s own case for the assessment year 2016-2017 in ITA.No.1110/Hyd./2025 vide Order dated 24.09.2025 has considered this issue in Para-10 as under:

“10. We have heard both the parties, perused the material on record and had gone through the orders of the authorities below. We find that, Corporate Insolvency Resolution Process [in short “CIRP”] has been initiated in the case of the assessee company with effect from 15.11.2022 vide order of NCLT,, Hyderabad and the NCLT, Hyderabad in CP(IB) No.308/2007/HDB./2022 and the 5 ITA.No.1752/Hyd./2025 NCLT, Hyderabad Bench, Hyderabad has granted moratorium to proceedings including Income Tax proceedings from the date of the Order i.e., from 15.11.2022. Therefore, as per the Order of the NCLT, Hyderabad Bench, Hyderabad, dated 15.11.2022, the moratorium granted to the assessee company is in operation and during the moratorium period, no proceedings can be initiated or continued against the assessee company, except, continuing the pending proceedings for determination of the tax liability. Once moratorium is in place, the Department cannot recover any tax liability from the corporate debtor, since, the provisions of IBC Code, 2016 has over-riding effect on other laws including Income Tax which is very clear from section 178(6) of the Income Tax Act, 1961. In the present case, the assessee company has filed appeal before the learned CIT(A) on 27.04.2022 when the moratorium granted by the NCLT, Hyderabad was in operation. Therefore, in our considered view, the learned CIT(A) shall have two options i.e., (i) to keep the proceedings before him in abeyance or (ii) to continue the proceedings for determination of tax liability without any recovery of tax. In the present case, the learned CIT(A) without considering the relevant facts, has simply dismissed the appeal filed by the assessee company ‘in limine’ by following decision of ITAT, Mumbai Bench, Mumbai Order dated 08.06.2022, however, not referred the case. On the other hand, the assessee company has relied upon the decision of ITAT, Mumbai F-Bench, Mumbai in the case of M/s. Varun Resources Limited, Mumbai vs., ITO-5(3)(1), Mumbai, Order dated 27.05.2024 (supra), where the law has been considered and after considering the relevant facts, it has been held that, the presence of IBC Code, 2016 would prevail over Income Tax Act, 1961. However, Income Tax Authorities have limited jurisdiction to assess/determine the quantum of income tax dues, but, have no authority to initiate recovery of such dues 6 ITA.No.1752/Hyd./2025 on it’s own during the period of moratorium in violation of section 14 or 33(5) of IBC Code, 2016. In our considered view, the law is very clear, in as much as, once the moratorium is granted to the corporate debtor, then, the Income Tax Department cannot proceed to recover any dues, but, there is no bar under the IBC Code, 2016 or under the Income Tax Act, 1961, to continue the proceedings to determine the tax liability. In the present case, the learned CIT(A) without appreciating the relevant facts, has simply dismissed the appeal filed by the assessee company ‘in limine’. Thus, we set aside the Order of the learned CIT(A) and restore the issue back to the file of learned CIT(A) and also direct the learned CIT(A) to reconsider the issue in light of our discussion given hereinabove in the preceding paragraphs. Accordingly, the grounds of appeal of the assessee are allowed for statistical purposes.”

6. Accordingly, following the earlier Order of this Tribunal in assessee’s own case, we set aside the impugned order of the learned CIT(A) and remand the matter to the record of the learned CIT(A) for adjudication of the appeal of the assessee on merits.

7 ITA.No.1752/Hyd./2025 Order pronounced in the open Court on 11.02.2026.

Sd/- Sd/- [MADHUSUDAN SAWDIA] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 11th February, 2026 VBP Copy to: Gayatri Projects Limited, 6-3-1090, TSR Towers, 1. Rajbhavan Road, I.M. Colony, Khairatabad, Hyderabad. PIN – 500 082. Telangana. The DCIT, Circle-2(1), 5th Floor, Signature Towers, 2. Hyderabad. PIN - 500 084. Telangana.

VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO Date: 2026.02.11 RAO 15:12:17 +05'30'