Karuturi Global Ltd Vs Deputy/Assistant Commissioner of Income Tax (ITAT Bangalore)
The Income Tax Appellate Tribunal (Bangalore Bench) dismissed the cross-appeals filed by Karuturi Global Ltd. and the DCIT/ACIT, Bangalore on the ground that the appeals were not maintainable, as they were signed by the company’s directors post-liquidation. The Tribunal also held that, to sustain the Revenue’s appeal, the Assessing Officer must demonstrate that a claim was filed before the NCLT during the liquidation proceedings.
Facts: In the present case, the assessee company, Karuturi Global Ltd., was undergoing Corporate Insolvency Resolution Process (CIRP) and had entered liquidation. Despite this, an appeal was filed and signed by the directors of the company. A cross-appeal was also filed by the Assessing Officer (AO).
Issues:
1.Whether, after the initiation of CIRP and commencement of liquidation, the directors of the company have any locus standi to file an appeal?
2. Whether the cross-appeal filed by the AO is legally sustainable?
Observations:
- The Tribunal noted that the company was under liquidation and a liquidator had already been appointed. The assets of the company were being auctioned. In such circumstances, the directors of the company ceased to have any authority to act on behalf of the company, including filing appeals.
- Although a letter of authority had been issued by the liquidator, it was essential to file a fresh Form 36 signed and verified by the liquidator, in accordance with the prescribed procedure. However, the appellant failed to do so. Consequently, the appeal was held to be not duly verified and was dismissed on that ground.
- The Tribunal granted liberty to the liquidator to revive the proceedings by filing a fresh Form 36, along with a petition for condonation of delay explaining the cause of delay, particularly because nearly five years had elapsed since the commencement of liquidation.
- As for the cross-appeal by the AO, the Tribunal observed that, even if the appeal were to be allowed in favour of the Revenue, no effective recovery could be made from the company, which was already in liquidation. The Tribunal clarified that the AO must demonstrate that a claim had been filed before the NCLT as part of the liquidation process to pursue recovery. Since no such claim was shown to have been made, the Revenue’s appeal was also dismissed.
Conclusion: The Tribunal dismissed both appeals, holding that post-liquidation, only the liquidator, not the directors, has locus standi to file appeals, and the Revenue’s claim was unsustainable absent proof of having filed a claim before the NCLT.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
