IBC has overriding affect on all the acts including Income Tax Act as specifically provided u/s 178(6)
ABCAUS Case Law Citation:
ABCAUS 3669 (2023) (02) ITAT
In the instant case, both the Revenue and the assessee had challenged the order passed by the CIT(A) for two Assessment Years.
The Revenue was aggrieved by the order of the CIT(A) in holding that the assumption of jurisdiction by the Assessing Officer (AO) u/s 147 of the Income Tax Act, 1961 is illegal, bad and void ab initio. On the other hand the assessee was aggrieved by the order of the CIT(A) in substantially confirming the order of assessment u/s 143(3) without granting sufficient proper opportunity.
The Revenue brought to the notice of the Tribunal that a financial creditor had filed an Application u/s 7 of the Insolvency and Bankruptcy Code 2016 against the assessee before the National Company Law Tribunal (NCLT) and judgment had been passed by the NCLT allowing the application.
The Revenue prayed that in view of the above, consequential appropriate order may be passed in the present appeal(s).
The Tribunal observed that the NCLT had admitted the Application filed u/s 7 of IBC Code, in terms of Section 14 of the IBC Code and consequent to the same the moratorium in terms of Section 14(a),(b), (c) & (d), the following prohibition are imposed:
(a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
(c) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate debtor.
The Tribunal opined that in view of the above, no proceedings can be initiated against the corporate debtor, i.e., assessee company including the present proceedings before the Tribunal, or the income tax proceedings and recovery of demand or giving effect of any order.
The Tribunal stated that it is well settled now that, IBC has overriding affect on all the acts including Income Tax Act which has been specifically provided u/s 178(6) of the I.T. Act as amended w.e.f. 01.11.2016.
The Tribunal stated that 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.
Accordingly, the Tribunal dismissed both the appeals filed by the assessee and the Revenue as not maintainable. However, liberty was granted to the assessee/Revenue to seek remedial measures in accordance with law as and when the moratorium period is over or order of the NCLT is modified.
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