Ajnara India Ltd., Delhi vs. ACIT - (Income Tax Appellate Tribunal) (16 Feb 2023)

IBC has overriding effect on all the acts including Income Tax Act

MANU/ID/0242/2023

Direct Taxation

The assessment proceedings have been initiated against the Assessee and an assessment order came to be passed by disallowing the expenditure of Rs. 44,00,886. Aggrieved by the Assessment order, the Assessee preferred an appeal before the Learned CIT(A). The Learned CIT (A) dismissed Appeal filed by the Assessee by confirming the Assessment Order, which is under challenge before present Tribunal.

The Learned Counsel for the assessee brought to notice that, a financial creditor had filed an Application under Section 7 of Insolvency and Bankruptcy Code 2016 (IBC) against the assessee before the National Company Law Tribunal Principal Bench at New Delhi ('NCLT') and judgment has been passed by the NCLT by allowing the application.

It is found that, a financial creditor had filed an Application under Section 7 of IBC against the assessee before the National Company Law Tribunal Principal Bench at New Delhi ('NCLT') and judgment has been passed by the NCLT by allowing the said application. The NCLT has admitted the Application filed under Section 7 of IBC, in terms of Section 14 of the IBC.

In view of the above, no proceedings can be initiated against the corporate debtor, i.e., assessee company including the present proceedings before this Tribunal, or the income tax proceedings and recovery of demand or giving effect of any order. It is well settled now that, IBC has overriding affect on all the acts including Income Tax Act which has been specifically provided under Section 178(6) of the I.T. Act as amended w.e.f. 01.11.2016.

Thus, in view of moratorium declared by NCLT, all the proceedings in the Court of Law, Tribunal etc. cannot continue in view of Amendment to Section 178(6) of the Act, therefore, no useful purpose is going to be served in continuing the present proceedings.

Liberty is granted to the assessee to seek remedial measures in accordance with law as and when the moratorium period is over or order of the NCLT is modified revival of assessee company takes place or where it is necessary to do so in the interest of justice. The appeal of the assessee is dismissed.

Tags : ASSESSMENT EXPENDITURE DISALLOWANCE