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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: DR. MANISH BORAD, HON’BLE & SHRI SONJOY SARMA, HON’BLE
O R D E R
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
These appeals are preferred by the assessee against the order of the National Faceless Appeal Centre (hereinafter referred to as the Ld. CIT(A)”], passed u/s 250 of the Income-tax Act, 1961 (hereinafter the ‘Act’), for Assessment Years 2012-13, 2014-15 & 2017-18. The Registry has pointed out that there is a delay of 311 (three 2. hundred eleven) days in filing the present appeals before the Tribunal. The assessee has filed a petition for condonation of delay supported by an affidavit stating the reasons for delay in filing of the appeals. It is noted that the period of delay falls during the time of Pandemic of Assessment Year: 2012-13 I.T.A. No. 748/Kol/2022 Assessment Year: 2014-15 & I.T.A. No. 749/Kol/2022 Assessment Year: 2017-18 Stesalit Limited 2 Covid-19 which has been excluded by the Hon’ble Supreme Court in the case of suo moto Writ Petition (C) No. 3 of 2020 dated 10.01.2022 by which the period from 15.03.2020 to 28.02.2022 has been directed to be excluded for the purpose of limitation. Accordingly, we condone the delay and proceed to admit the appeals for hearing.
3. At the outset, the ld. Counsel for the assessee submitted that in view of the order of the Learned National Company Law Tribunal, Kolkata (hereinafter “the ld. NCLT”) dt. 20/07/2018, all the tax liabilities raised against the assessee for the impugned Assessment Years have ceased to exist and, therefore, the order of the Assessing Officer deserves to be set aside. Written submission has been filed and the same reads as follows:- “This is with reference to our Appeal No. 747/748/ 749/Kol/2022 against Order u/s 250 of Income Tax Act, passed by National Faceless Appeal Centre (NFAC) Delhi. We submit as under:
1.
In the year 2017, Corporate Insolvency Resolution Proceedings (CIRP) were initiated against the Assessee Company vide order dated 20.11.2017, and the Resolution Plan of the successful Resolution Applicant i.e., River Rail JV was approved by the Hon'ble NCLT, Kolkata in CP(IB) No. 512/KB/2017 on 20.07.2018. Section V of the Approved Resolution Plan of the Assessee deals with: "Financial Reliefs, Concessions and Extinguishment of Claims/ Entitlements". Clause 3 of Section V deals with "Unconditional Extinguishment of financial and other claims in perpetuity" and states that "All Claims {whether contingent or crystallized and whether or not filed) of Governmental Authorities in relation to all Taxes which the Corporate Debtor was or may be liable to pay (including with respect to financial years under assessment), all deductions and all withholding Taxes on any payment, as required under Applicable Law and pertaining to the period prior to the Effective Date shall stand extinguished on and with effect from the Effective Date."
2. The Appeal against the Order dated 20.07.2018, approving the Resolution Plan, was also dismissed by the Hon'ble NCLT on 26.02.2020 in Company Appeal (AT) (Insolvency) No. 685 of 2019. Therefore, the Resolution Plan has attained I.T.A. No. 747/Kol/2022 Assessment Year: 2012-13 Assessment Year: 2014-15 & I.T.A. No. 749/Kol/2022 Assessment Year: 2017-18 Stesalit Limited 3 finality and is binding on all stakeholders including the Income Tax Department, which was also one of the creditors, which participated in the CIRP.
Pertinently, the alleged transaction which is a subject matter of the present proceedings relate to the AY 2017 - 18, AY 2014-15 and AY 2012-13, when the affairs of the answering Respondent were looked after by its erstwhile management, which has now been changed with the current management of the answering Respondent, as a result of the aforesaid CIRP. As such, the Appeal is liable to be allowed by this Hon'ble Tribunal in view of Section 32A of the Insolvency and Bankruptcy Code, 2016 ("Code").
The Hon'ble Supreme Court in the case of Manish Kumar v. Union of India, (2021) 5 SCC 1 has put forth "The Clean Slate" principle with' respect to the prior liabilities of the Corporate Debtor/Assessee after approval of the Resolution Plan by the Adjudicating Authority. Furthermore, the Hon'ble Delhi High Court in Tata Steel BSL Ltd. vs Union of India (W.P.(CRL) 3037/2019 and CRL.M.A. 39126/2019) has held that it is clear from the express language of the aforementioned provision that a Corporate Debtor would not be liable for any offence committed prior to commencement of the CIRP and the corporate debtor would not be prosecuted if a resolution plan has been approved by the Adjudicating Authority." Hence, the subject proceedings are liable to be quashed by the Ld. Appellate Authority in view of Sections 31,32A and 238 of the Code.
Further, the Hon'ble Supreme Court in a landmark judgment in the matter of Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17, has held that: "It is clear that once the Code gets triggered by admission of a creditor's petition under Sections 7 to 9, the proceeding that is before the adjudicating authority, being a collective proceeding, is a proceeding in rem." The aforesaid principle of law, laid down by the Hon'ble Supreme Court, clarifies that the Corporate Insolvency Resolution Proceedings, being in rem. Hence, the Order passed by an Adjudicating Authority/NCLT/NCLAT in such proceedings shall be binding on all categories of stakeholders mentioned under Section 31(1) of the Code read with Regulation 2(j) of the IBBI (Grievance and Complaint Handling Procedure) Regulations, 2017.
In addition to the above the time limit to Appeal to National Company Law Appellate Tribunal u/s 61A of the IBC has also lapsed, thereby Order passed by NCLAT is binding on all categories of stakeholders, including the Income Tax Department.
In the instant case the honorable ITAT had passed an order dated 09.05.2023 (page no. 154-157 of the page book) whereby the tax liabilities of the appellant were ceased, but due to some drafting errors brought in the notice of Honorable IT AT through a misc. application filed on 03.07.2023, the said order was recalled vide order dated 21.09.2023 (page no. 158-161 of the page book) and a fresh date of hearing was assigned via fresh notice. The order cited as: "A perusal of the above reveals that, the Assessee has ceased °its tax liabilities making these appeals before us infructuous and the same are dismissed as such/' I.T.A. No. 747/Kol/2022 Assessment Year: 2012-13 Assessment Year: 2014-15 & I.T.A. No. 749/Kol/2022 Assessment Year: 2017-18 Stesalit Limited 4 Therefore, in the light of aforesaid position of law and a consideration of facts, the Income Tax department being a stakeholder, is unequivocally bound by the Resolution Plan Approved vide Final Order dated 20.07.2018 passed by the Hon'ble NCLT in Company Petition (IB) No.512/KB/2017. Hence, the Impugned Order of the Ld. A.O. is liable to be set aside at the threshold. Your Honors, the Assessee will have no objection to furnish any other information or documents if further required by Your Goodself to enable you to frame and complete the instant assessment. It is needless to state here that a fair and proper opportunity be granted to the Assessee before drawing any adverse inference.”