Garden Silk Mills Ltd., Surat V. The Dy.CIT.,Cent.Circle-1, Surat

CO 82/AHD/2012

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2061 (ITAT-SURAT)
• Duration Of Justice: 10 year(s) 1 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-05-2022
• Assessment Year: 2003-2004
• Appeal Filed On: 09-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER IT(SS)A No. 79/AHD/2012 (AY: 2003-04) D.C.IT., Central Circle-1, Surat. Vs Garden Silk Mills Ltd., Garden Mills Complex, Sahara Gate, Surat. PAN: AAACG 8932 C Assessee/ appellant Revenue/ respondent C.O. No. 82/AHD/2012 (in IT(SS)A No. 79/ADH/2012)(AY: 2003-04) Garden Silk Mills Ltd., Garden Mills Complex, Sahara Gate, Surat. PAN: AAACG 8932 C Vs. D.C.IT., Central Circle-1, Surat. APPELLANT RESPONDEDNT IT(SS)A No. 80, 81, 82 & 135/AHD/2012 (A Y: 2003-04, 2004-05 to 2006-07 & 2009-10) D.C.IT., Central Circle-1, Surat. Vs Garden Silk Mills Ltd., Garden Mills Complex, Sahara Gate, Surat. PAN: AAACG 8932 C Assessee/ appellant Revenue/ respondent IT(SS)A No. 2762/AHD/2015 (Assessment Year: 2011-12) A.C.IT., Circle-1(1)(2), Surat. Vs Garden Silk Mills Ltd., Garden Mills Complex, Sahara Gate, Surat. PAN: AAACG 8932 C Assessee/ appellant Revenue/ respondent IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 2 C.O. No. 194/AHD/2015 (Arising out of IT(SS)A No. 2762/AHD/2015) (Assessment Year: 2011-12) Garden Silk Mills Ltd., Garden Mills Complex, Sahara Gate, Surat. PAN: AAACG 8932 C Vs. A.C.IT., Circle-1(1)(2), Surat. APPELLANT RESPONDEDNT C.O. No. 83/AHD/2012 (Arising out of IT(SS)A No. 83/AHD/2012) (Assessment Year: 2004-05) Garden Silk Mills Ltd., Garden Mills Complex, Sahara Gate, Surat. PAN: AAACG 8932 C Vs. D.C.IT., Central Circle-1, Surat. APPELLANT RESPONDEDNT IT(SS)A No. 91, 92, 93, 94 & 125/AHD/2012) (Assessment Years: 2005-06 to 2009-10) Garden Silk Mills Ltd., Garden Mills Complex, Sahara Gate, Surat. PAN: AAACG 8932 C Vs. D.C.IT., Central Circle-1, Surat. APPELLANT RESPONDEDNT IT(SS)A No. 936/AHD/2017) (A Y: 2012-13) Garden Silk Mills Ltd., Garden Mills Complex, Sahara Gate, Surat. PAN: AAACG 8932 C Vs. D.C.IT., Central Circle-1, Surat. APPELLANT RESPONDEDNT Department by Shri H.P. Meena, CIT-DR Assessee by Shri Nitin Gheewala, CA & Ms. Nancy Vankawala, CA, Date of hearing (Physical) 13/05/2022 Date of pronouncement 18/05/2022 Order under section 254(1) of Income-tax Act IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 3 PER: BENCH 1. This batch of 15 appeals/Cross Objections by the Revenue as well as the assessee are directed against different orders of learned Commissioner of Income Tax (Appeals)-II, Surat (in short, the ld. CIT(A)] starting from Assessment Year (AY) 2003- 04 to 2012-13 against sustaining/deleting various additions or disallowances in all the assessment years. The nature of additions/disallowances made by the Assessing Officer and allowed/partly allowed or deleted or sustained against which the parties have approached this Tribunal, are not narrated here as the appeals are not adjudicated on merit. 2. The assessee by way of application filed on 12/05/2022, has brought to our notice that there are certain new developments had taken place after filing all these appeals/ cross appeals/ Cross Objection in all assessment years. In the application, the applicant/assessee has contended that the learned National Company Law Tribunal, Ahmedabad (in short, NCLT) vide its order dated 01/01/2021 passed in IA No. 661 of 2020 with IA No. 759 of 2020 in CP(IB) No. 453 of 2018 approved the resolution plan (second revised resolution plan) dated 19/09/2020 with addendums dated 19/09/2020 of MCPI Pvt. Ltd. (Successful resolution applicant) in exercise of its powers IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 4 under Section (U/s) 31(1) of Insolvency and Bankruptcy Code, 2016 (in short, “I&B Code”) for the insolvency resolution of the corporate debtor i.e. applicant/assessee (Garden Silk Mills Pvt. Ltd.), copy of which is placed on record. On the basis of aforesaid order, the applicant/assessee submitted and prayed that all the appeals filed by assessee are liable to be allowed and appeals filed by the revenue are liable to be dismissed and also prayed for direction to the Assessing officer to modify/revise/ reduce/cancel the demand according to provision of Section 156A of the Income Tax Act, 1961 (in short, the Act). The assessee in para 5 of its application has stated that the Hon’ble Gujarat High Court in Civil Application No. 1 of 2021 in Tax Appeal No. 875 of 2013 (revenue’s appeals), has passed an order that appeal filed by Revenue does not survive and dismissed the same without expressing any opinion on merit and granted liberty to the revenue to file an appeal under Section 61 of I&B Code before NCLT. 3. The ld. AR of the assessee submits that the Hon’ble Supreme Court in the case of Ghanashyam Mishra & Sons Pvt. Ltd. Vs Edelweiss Asset Reconstruction Company Ltd. (2021) 126 taxmann.com 132 (SC) has held that once a resolution plan is approved by adjudicating authority under sub-Section (1) of Section 31, the claim as provided in the resolution plan stand IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 5 frozen and will be binding on the corporate debtor and its employees, members, creditors, Central Government, any State Government or any local authority, guarantors and other stake holders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not part of resolution plan shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not a part of resolution plan. The ld AR for the assessee further submits that Hon’ble Supreme Court further held that amendment in Section 31 of I & B Code is clarificatory in nature and therefore will be effective from the date on which I&B Code has come in effect. It was also held that all dues including statutory dues owed by the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceeding in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued. The ld. AR further submits that recently Section 156A is inserted in Income Tax Act by the Finance Act, 2022, by virtue of a new Section 156A is inserted for modification and revision of notice in certain cases wherein sub-Section (1) specified that “Where any tax, interest, penalty, fine or any other sum in respect of which a IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 6 notice of demand has been issued under Section 156, is reduced as a result of an order of the Adjudicating Authority as defined in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Assessing Officer shall modify the demand payable in conformity with such order and shall thereafter serve on the assessee a notice of demand specifying the sum payable, if any, and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall accordingly, apply in relation to such notice.” Further sub-Section (2) of Section 156A of the Act specified that “Where the order referred to in sub-section (1) is modified by the National Company Law Appellate Tribunal or the Supreme Court, as the case may be, the modified notice of demand as referred to in sub-section (1), issued by the Assessing Officer shall be revised accordingly.” 4. The ld. AR submits that he has already placed on record the order passed by the ld. NCLT in IA No. 661 and 759 of 2020 in CP(IB) No. 453 of 2018 dated 01/01/2021 for approving the resolution plan, order of Hon’ble Supreme Court in Ghanashyam Mishra & Sons P Ltd. Vs Edelweiss Asset Reconstruction Co. Ltd. (supra) and the order passed by the Hon’ble Jurisdictional High Court in Tax Appeal No. 875 of 2013 dated 24/01/2022. IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 7 5. On the other hand, the ld. CIT-DR for the Revenue after going through the contents of application, order passed by ld. NCLT dated 01/01/2021 approving the resolution plan and the order of Hon’ble Supreme Court in Ghanashyam Mishra & Sons P Ltd. Vs Edelweiss Asset Reconstruction Co. Ltd. (supra) and the order passed by the Hon’ble Jurisdictional High Court in Tax Appeal No. 875 of 2013 dated 24/01/2022 would submit that the interest of revenue may be protected and revenue may be given liberty to move appropriate application/ appeals either before this Tribunal or before NCLT. 6. We have considered the rival submissions of parties and have gone through the orders passed by the NCLT in IA No. 661 and 759 of 2020 in CP(IB) No. 453 of 2018 dated 01/01/2021 and order passed by the Hon’ble Jurisdictional High Court in assessee’s own case in Tax Appeal No. 875 of 2013. There is no dispute that the ld. NCLT has approved the resolution plan under Section 31(1) of I&B Code vide order dated 01/01/2021. In these circumstances, the question arises whether the appeal filed by the Revenue would survive or the claims which are not part of resolution plan shall stand extinguished and the proceedings relating thereto shall stand terminated. The Hon’ble Supreme Court in the case of Ghanashyam Mishra & Sons P Ltd. Vs Edelweiss Asset Reconstruction Co. Ltd. (supra) IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 8 held that once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of Section 31, the claims as provided in resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, Central Government, any State Government or any local authority, guarantors and other stake holders. It was also held by the Hon’ble Supreme Court that on the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. The Hon’ble Supreme Court has further held that 2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore, will be effective from the date on which I&B Code has come into effect. It was further held by the Hon’ble Supreme Court that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 9 7. The Hon’ble Gujarat High Court in assessee’s own case in Tax Appeal No. 875 of 2013 by following the decision of Hon’ble Supreme Court in the case of Ghanashyam Mishra & Sons P Ltd. Vs Edelweiss Asset Reconstruction Co. Ltd. (supra) has held that “the Supreme Court took the view that the 2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will have a retrospective operation. Considering the decision of Hon’ble Supreme Court in the case of Ghanashyam Mishra & Sons P Ltd. Vs Edelweiss Asset Reconstruction Co. Ltd. (supra), we are of the view that all the appeals filed by the Revenue have become infructuous and would not survive and are dismissed without expressing any opinion on merit. Similarly, the claims including statutory dues owed to Central Government, any State Government if not part of resolution plan is also extinguished and no proceeding in respect of such dues prior to the date which the Adjudicating Authority grants its approval under Section 31 could be continued. Therefore, all the appeals of the assessee are allowed as all the dues owed to the Central Government, which is not part of resolution plan stand extinguished. Accordingly, all the appeals of the assessee are allowed and the Assessing Officer is directed to modify/reduce/cancel the demand according to provisions of Section 156A of the Act. IT(SS)A Nos.79/AHD/2012 DCIT Vs Garden Silk Mills Ltd. with 15 Ors. Appeals 10 8. We find that on similar set of facts, the appeal of revenue was also dismissed by the Hon’ble Jurisdictional High Court in Tax Appeal No. 875 of 2013 (supra). However, the Revenue is given liberty to file appeal under Section 61 of I&B Code. The assessee (successor in interest) is also given liberty to file appropriate application before the Tribunal in case, further demand under Section 156A is created. With the aforesaid observation, all the appeals of the assessee as well as the revenue are dismissed as the same are not survive and all the appeals are disposed of accordingly without expressing any opinion on merit. 9. In the result, all the appeals of the assessee as well as the revenue are dismissed Order announced in Court on 18/05/2022 in open Court and the result was also placed on the notice board. Sd/- Sd/- (Dr. A. L. SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 18/05/2022 *Ranjan Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Assistant Registrar/Sr. PS/PS ITAT, Surat