Harish Chander Arora Liquidator of Rathi Super Steel Ltd Vs PCIT (NCLAT Delhi)
The National Company Law Appellate Tribunal (NCLAT) Delhi dismissed the appeal by Harish Chander Arora, Liquidator of Rathi Super Steel Ltd, against the Principal Commissioner of Income Tax (PCIT). The appeal contested an NCLT order rejecting the liquidator’s claim for the return of ₹20,50,000 adjusted by the Income Tax Department against outstanding tax demand for AY 2011-12. The liquidator argued that the amount, seized in 2012 and adjusted on March 31, 2019, constituted an asset of the Corporate Debtor (CD) and should have been claimed through the insolvency resolution process post-CIRP initiation on June 12, 2019.
NCLAT held that since the amount was seized and adjusted by the department prior to the initiation of the Corporate Insolvency Resolution Process (CIRP), it did not form part of the CD’s assets under the Insolvency and Bankruptcy Code (IBC). The Tribunal ruled that the Department’s action complied with existing rules and evidence, including the tax accounting records, and the appeal lacked merit. The decision reinforces the principle that adjustments made before CIRP initiation are outside the scope of insolvency proceedings.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
This appeal is directed against the order dated 13.09.2023 passed by the National Company Law Tribunal, New Delhi, Special Bench by which an application filed by the Liquidator bearing I.A No. 4457 of 2021 under Section 60(5)(c) of the Code for a direction to the Respondent herein to return the amount of Rs. 20,50,000/- in the account of the Corporate Debtor viz. Rathi Super Steel Limited (in Liquidation) on the ground that the said amount belongs to the CD and could not have been adjusted by the Respondent against the outstanding demand raised against the CD for the AY 2011 – 12 has been dismissed.
