2022 (6) TMI 1465 - HC - Income Tax

Assessment against company dissolved/insolvent - Income tax dues - priority to debts to be discharged - Scope of section 238 of the Insolvency and Bankruptcy Code 2016 - HELD THAT - As against the respondent company an application for liquidation has been filed before the National Company Law Tribunal Kolkata Bench and by order the application filed by Chaitanya Alloys Private Limited the operational creditor under Section 9 of the Insolvency Bankruptcy Code 2016 has been admitted and a moratorium as provided under Section 14 of the Code has been ordered. There are other directions issued by the NCLT as well. Thus in the light of the statutory provision and in the light of the decision of the Hon ble Supreme Court in PCIT- Vs. -Monnet Ispat and Energy Limited 2018 (8) TMI 1775 - SC ORDER and also in the light of the overriding provisions of the Code in terms of Section 238 of the Act the revenue cannot pursue the appeal.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal due to NCLT order and Section 14 of the Insolvency & Bankruptcy Code, 2016.
2. Appeal under Section 260A of the Income Tax Act, 1961 against ITAT order for assessment year 2013-14.
3. Justification of quashing the order under Section 263 by ITAT.
4. Application for liquidation filed before NCLT leading to a moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016.
5. Impact of NCLT order and statutory provisions on the revenue's ability to pursue the appeal.

Analysis:
1. The High Court considered a delay of 474 days in filing the appeal and noted that due to an order by NCLT and Section 14 of the Insolvency & Bankruptcy Code, 2016, the appeal cannot be pursued by the revenue. Despite the delay, the Court exercised discretion and decided to condone the delay in filing the appeal.

2. The appeal under Section 260A of the Income Tax Act, 1961 was directed against an order passed by the Income Tax Appellate Tribunal for the assessment year 2013-14. The revenue raised a substantial question of law regarding the justification of quashing the order under Section 263, highlighting the assessing officer's failure to compute the business income of the assessee after rejecting the books of accounts.

3. An application for liquidation was filed before the National Company Law Tribunal, Kolkata Bench, leading to the admission of the application and the imposition of a moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016. Citing the decision of the Hon'ble Supreme Court and the overriding provisions of the Code, the High Court concluded that the revenue cannot pursue the appeal due to the NCLT order and statutory provisions.

4. In light of the statutory provisions and the NCLT order, the High Court dismissed the appeal and left the substantial question of law open for future consideration. Additionally, the stay application was also dismissed as a consequence of the appeal being rejected based on the NCLT order and statutory provisions impacting the revenue's ability to pursue the case effectively.