Case Law Details
Redhu Farms Pvt Ltd Vs ITO (ITAT Delhi)
In a recent decision, the Income Tax Appellate Tribunal (ITAT) in Delhi ruled that an appeal filed by a suspended director after the appointment of an Interim Resolution Professional (IRP) is not maintainable. The case involved an assessment order against a company for the assessment year 2015-16.
Background:
The company’s assessment order had been passed on September 29, 2021, and the company’s income was computed at Rs. 15,03,92,501. Dissatisfied with the assessment order, the company filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]/NFAC, and the CIT(A) partially allowed the appeal by upholding some of the additions made by the Assessing Officer (AO).
Aggrieved by the CIT(A)’s order, the company, represented by its former director, filed the present appeal before the ITAT, raising various grounds of appeal.
IRP Appointment and ITAT’s Decision:
During the hearing of the appeal, the company’s representative informed the ITAT about the appointment of an Interim Resolution Professional (IRP) by the National Company Law Tribunal (NCLT), Chandigarh Bench, Chandigarh. The NCLT had appointed Mr. Prashant Gupta as the IRP and declared a moratorium in accordance with Section 14(1) of the Insolvency and Bankruptcy Code, 2016 (IBC).
The ITAT noted that, as per the NCLT order, from the date of the IRP’s appointment, the powers of the company’s Board of Directors were suspended, and the management of the company’s affairs was vested with the IRP. In light of this, the ITAT ruled that the appeal filed by the suspended/ex-director was not maintainable.
Conclusion:
The ITAT’s decision underscores the legal implications of the appointment of an Interim Resolution Professional (IRP) under the Insolvency and Bankruptcy Code, 2016. When an IRP is appointed, the powers of the company’s directors are suspended, and the IRP assumes control over the company’s affairs. In such cases, individuals or parties affected by the company’s financial proceedings should be aware that certain legal actions, such as appeals, may not be maintainable until the IRP’s role is concluded.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by Assessee is filed against the order of Learned Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short], dated 08/07/2022 for Assessment Year 2015-16.
2. The grounds of Appeal are as under:-
“1. The ld. CIT(A) has erred in law and facts while rejecting the grounds of jurisdiction of the Ld. A.O. to frame the assessment.
2. The Ld. CIT(A) has erred in law and on facts rejecting the ground of non compliance of CBDT directions dated 6-9-2021 by the AO while framing the assessment.
3. The Id. CIT(A) has erred in law and on facts while upholding the assessment even without providing proper opportunity of being heard.
4. The Id. CIT(A) has erred in law and facts while upholding the additions of share capital by promoters and not considering the additional documents/evidences
5. The Id. CIT(A) has erred in law and facts while upholding the trading/business additions of Rs. 12,27,37,359/- made even without rejecting the books of accounts or without pointing out any infirmity in the books of accounts of the previous year
6. The Assessee may please be allowed to add, alter, amend its ground of appeal at any time before or during the course of hearing of the appeal.”
3. An assessment order came to be passed against the assessee company on 29/09/2021 by computing the income of the assessee at Rs. 15,03,92,501/-. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A)/NFAC and the CIT(A) vide order dated 08/07/2022 partly allowed the Appeal by confirming some of the additions made by the A.O. Aggrieved by the order of the CIT(A), the assessee company represented by its ‘ex-Director’ filed the present Appeal on the grounds mentioned above. When the matter is taken up for hearing, the Assessee’s Representative brought to our notice regarding passing of order dated 30/03/2023 by National Company Law Tribunal, Chandigarh Bench, Chandigarh (NCLT) and submitted that Interim Resolution Professional has been appointed by the NCLT and moratorium in terms of Section 14(1) of the Insolvency and Bankruptcy Code 2016 has been declared.
4. The Ld. Departmental Representative submitted that the appeal has been filed by ex-Director and in view of appointment of Interim Resolution Professional by the NCLT, Chandigarh Bench, Chandigarh the present Appeal is deserves to be dismissed.
5. We have heard both the parties and perused the material available on record. We have gone through the order of NCLT made in CP(1B) No. 129/Chd/Hry/2021 dated 30/03/2023 wherein one Mr. Prashant Gupta has been appointed as Interim Resolution Professional. From the date of appointment of the Interim Resolution Professional, the powers of the Board of Directors shall stand suspended and the management of the affairs shall vest with the Interim Resolution Professional and the officers and the managers of the Corporate Debtor shall report to the Interim Resolution Professional, who shall be enjoined to exercise all the powers as are vested with Interim Resolution Professional and strictly perform all the duties as are enjoined on the Interim Resolution Professional under Section 18 and other relevant provisions of the Code, including taking control and custody of the assets over which the Corporate Debtor has ownership rights recorded in the balance sheet of the Corporate Debtor etc. as provided in Section 18 (1) (f) of the Code. The Interim Resolution Professional is directed to prepare a complete list of the inventory of assets of the Corporate Debtor.
6. In view of appointing of Interim Resolution Professional and also in terms of Section 17 of the IBC Code, the present Appeal filed by the suspended/Ex-Director is not maintainable. Accordingly, we dismiss the present Appeal with a liberty to the Interim Resolution Professional to file necessary Application or Appeal in accordance with law if he deems fit to do so. The assessee is also at the liberty to approach the Tribunal after conclusion of proceedings initiated under IBC Code in case of any necessity or on any cause of action.
7. In the result, Appeal filed by the assessee is dismissed.
Order pronounced in open Court on 25th August, 2023.
