Moratorium Bars Revenue Appeal Without Established Insolvency Claim: ITAT Delhi

ACIT Vs IL & FS Energy Development Company Limited (ITAT Delhi)

Summary: ITAT Delhi dismissed the Revenue’s appeals concerning IL & FS Energy Development Company Limited for AYs 2017-18 and 2018-19 in view of the moratorium-like protection granted by the National Company Law Appellate Tribunal. The assessee relied upon the NCLAT order dated 15.10.2018 in Company Appeal (AT) Nos. 346 & 347/2018, whereby the institution or continuation of suits or proceedings by any party against the assessee company or its group companies in any court of law, including a Tribunal, had been stayed.

The Assessing Officer, through the Departmental Representative, submitted that the appeals should consequently be kept in abeyance or adjourned sine die until the final outcome of proceedings before the NCLT. The Tribunal, however, considered that once moratorium had been granted, the Department could not succeed without first establishing its claim in the insolvency or liquidation proceedings. It observed that nothing had been placed before it to demonstrate that the Department had made any claim concerning the present assessee and the issues involved in the appeals.

The Tribunal therefore found no justification for keeping the appeals pending. Accordingly, the appeals were dismissed, while liberty was granted to seek restoration if any favourable order concerning the Department’s claim relating to the impugned assessment orders subsequently became available as a remedy enabling the Department to prosecute the appeals.