Manpreet Estates LLP Vs ACIT (ITAT Mumbai Bench)
Revenue Slept Through the Resolution Plan & Woke Up With a Reassessment Order: Unclaimed Tax Dues Stand Extinguished Under IBC – ITAT Mumbai
Summary: The assessee, Manpreet Estates LLP, challenged the reassessment framed u/s 143(3) r.w.s. 147, principally contending that the proceedings were initiated and completed despite the subsistence of the Corporate Insolvency Resolution Process [CIRP] under the Insolvency and Bankruptcy Code, 2016.
The reassessment had resulted in an addition of ₹4.50 crore u/s 68 r.w.s. 115BBE. According to the AO, the assessee had failed to establish the nature and source of the amount credited in its books. The assessee explained that the amount represented consideration received on sale of property, which had been wrongly reflected in the books as advances received. It also expressed its willingness during the reassessment proceedings to offer the amount as business income after deducting the corresponding cost incurred.
However, the assessee raised a more fundamental jurisdictional objection. The contention was that the reassessment proceedings themselves could not survive in view of the provisions of the IBC and the resolution plan approved by the NCLT.
The CIRP against the assessee had commenced on 24.11.2023 pursuant to an order of the NCLT, Mumbai Bench. Once the CIRP commenced, the statutory moratorium contemplated u/s 14 of the IBC came into operation. Despite this, the AO issued notice u/s 148A on 02.05.2024 seeking to reopen the assessment for AY 2020-21.
