M/S ORCHID PHARMA LTD. (FORMERLY M.S ORCHID CHEMICALS & PHARMACEUTICALS LTD.),CHENNAI vs. ACIT, CENTRAL CIRCLE-1(1), CHENNAI

ITA 276/CHNY/2022Status: DisposedITAT Chennai25 September 2024AY 2013-14Bench: Shri S.S. Viswanethra Ravi (Judicial Member), Shri S.R. Raghunatha (Accountant Member)1 pages
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What did the Tribunal hold?

The Tribunal held that the Supreme Court's decision in the case of State Bank of India against M/s. Accord Life Spec Private Limited confirmed the NCLT order approving the Resolution Plan, which settled income-tax liabilities at NIL value. Consequently, the penalty imposed under section 271(1)(c) of the Act was deemed to not survive and was deleted.

What were the facts?

The assessee filed its return of income declaring a total income and later a revised return declaring a loss. The scrutiny assessment involved additions on account of disallowances under various sections, leading to a penalty under section 271(1)(c) of the Income Tax Act. The assessee argued that the penalty should be NIL due to a Resolution Plan approved under the Insolvency and Bankruptcy Code, which settled operational creditors, including income tax, at NIL.

What were the issues?

Whether the penalty levied under section 271(1)(c) of the Income Tax Act, 1961, is sustainable in light of the NCLT-approved Resolution Plan settling the income-tax liability at NIL.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 37,Section 35(2AB),Section 36(va),Section 238,Section 31(1),Section 30(2),Section 156A

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Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha

Hearing: 29.08.2024Pronounced: 25.09.2024

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

Both the appeals filed by the assessee are directed against separate common order both dated 28.02.2022 passed by the ld. Commissioner of Income Tax (Appeals)-18, Chennai for the assessment years 2013-14 and 2014-15 under section 271(1)(c) of the Income T

The order continues below.

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