ACIT Vs Tecpro System Ltd. (ITAT Delhi)
IBC Overrides Income-tax Proceedings: ITAT Dismisses Revenue Appeals After NCLT Approves Resolution Plan
The Delhi ITAT dismissed the Revenue’s appeals for AYs 2011-12 and 2012-13 in the case of Tecpro System Ltd., holding that once insolvency proceedings are admitted and a resolution plan is approved by the NCLT under Section 31 of the Insolvency and Bankruptcy Code, parallel income-tax proceedings cannot continue. The Revenue had challenged the CIT(A)’s deletion of additions relating to alleged bogus expenses and undisclosed income.
The Tribunal noted that the NCLT had approved the resolution plan on 15.05.2019 and, in view of the overriding effect of the IBC, all pending proceedings under the Income-tax Act stood eclipsed. Relying on the Supreme Court decision in Pr. CIT v. Monnet Ispat & Energy Ltd. and the Mumbai ITAT ruling in Pratibha Industries Ltd., the Tribunal held that IBC has overriding supremacy over the Income-tax Act and no further tax proceedings can survive during the subsistence of insolvency resolution.
Accordingly, both Revenue appeals were dismissed as not maintainable, with liberty granted to the Department to seek recall of the order if the assessee later comes out of the IBC framework.
FULL TEXT OF THE ORDER OF ITAT DELHI
The above captioned two separate appeals by the Revenue are preferred against the order of the ld. CIT(A)-23, New Delhi dated 25.11.2016 pertaining to A.Ys. 2011-12 and 2012-13 respectively.
