GAYATRI PROJECTS LIMITED,HYDERABAD V. DCIT, CIRCLE 2(1), HYDERABAD

ITA 1752/HYD/2025

AI Insights

The case involves Gayatri Projects Limited, which appealed against the order of the CIT(A)-National Faceless Appeal Centre, Delhi, for the assessment year 2022-2023. The CIT(A) had dismissed the appeal in limine due to an ongoing moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, which was in force following a Corporate Insolvency Resolution Process (CIRP) initiated by the National Company Law Tribunal (NCLT). The Tribunal noted that the determination of tax liability is not barred under the IBC, and recovery proceedings, while stayed, do not prevent the adjudication of tax liabilities.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 835540 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2022-2023
• Appeal Filed On: 27-10-2025
• Other Referred Cases: Varun Resources Limited vs. ITO-5(3)(1), Mumbai
• Laws Referred To: Insolvency and Bankruptcy Code, 2016, Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L V BHASKARA REDDY
• Assessee Lawyers: CH SATYA DINAKAR
• Keywords: Set aside; Principle of natural justice; Recovery proceedings

Judgement Text

" 1 ITA.No.1752/Hyd./2025 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं /ITA.No.1752/Hyd/2025 Assessment Year 2022-2023 Gayatri Projects Limited, Hyderabad. PIN - 500 082. Telangana. PAN AAACG8040K vs. The DCIT, Circle-2(1), Hyderabad. Telangana. (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by : CA Ch Satya Dinakar राज̾ व Ȫारा/Revenue by : Sri LV Bhaskara Reddy, CIT-DR सुनवाई की तारीख/Date of hearing: 05.02.2026 घोषणा की तारीख/Pronouncement: 11.02.2026 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT : This appeal by the Assessee is directed against the Order dated 07.08.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2022-2023. Printed from counselvise.com 2 ITA.No.1752/Hyd./2025 2. The assessee has raised the following grounds of appeal: 1. “The order of the Ld. CIT(A) in dismissing the appellant's appeal in limini is erroneous in law, contrary to the facts of the case and against principles of equity and natural justice. 2. Ld. CIT(A) erred in law and on facts in dismissing the appellant's appeal in limini on the ground that a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) was in force, without adjudicating the appeal on merits, despite the fact that determination of tax liability per se is not barred under the IBC. It is a settled position that while recovery proceedings are stayed under Sections 14 and 33(5) of the IBC, adjudicatory proceedings such as appeals involving determination of tax liability must be decided on merits as held by Hon'ble ITAT, Hyderabad Bench in appellant's own case for the AY 2016-17 in ITA No 1110/Hyd/ 2025 dated 24/09/2025. 3. For these and other reasons that may be urged at the time of hearing, the appellant prays the Honorable Tribunal to kindly restore the appeal back to file of Ld. CIT(A) for adjudication on merits.” 3. The learned Authorised Representative of the Assessee has submitted that the learned CIT(A) has not adjudicated the appeal of the assessee on merits but the same was dismissed in limine on the ground that the assessee is facing Insolvency and Bankruptcy Proceedings before the Printed from counselvise.com 3 ITA.No.1752/Hyd./2025 National Company Law Tribunal [in short “NCLT”]. Thus, he has submitted that the matter may be remanded to the record of the learned CIT(A) for adjudication of the appeal of the assessee on merits. He has pointed out that this Tribunal in assessee’s own case for the assessment year 2016-2017 has considered an identical issue and remanded the matter to the record of the learned CIT(A) for adjudication of the same on merits. 4. The learned DR has raised no objection if the matter is remanded to the record of the learned CIT(A) for adjudication on merits. 5. We have considered the rival submissions as well as carefully perused the relevant material on record. We note that the learned CIT(A) has dismissed the appeal of the assessee by giving the reasons in Paras-6.3 and 6.4 as under: “6.3. The appellant has filed written submissions, where it has been stated that the Corporate Insolvency Resolution Process (CIRP) was initiated in the case of the appellant w.e.f. 15.11.2022 vide the order of Hon'ble National Company Law Tribunal, Hyderabad Bench in CP(IB) No. 308/07/HDB/2022. The appellant also annexed and mention para 11 of NCLT order as per which the Printed from counselvise.com 4 ITA.No.1752/Hyd./2025 moratorium has been declared from the date of the order till the completion of CIRP. 6.4. Hon'ble Income Tax Appellate Tribunal, D Bench, Mumbai vide order dated 08.06.2022 has held that no proceedings can be initiated against the appellant company before the tribunal or any Income Tax Authority in any proceedings because Insolvency and Bankruptcy Code, 2016 (IBC) has overriding effect on all the acts including Income Tax Act which has been specially provided u/s 178(6) of the Income Tax Act, 1961 as amended w.e.f. 01.11.2016. Hon'ble ITAT has held that till the completion of moratorium period or upon the revival of corporate debtor as per the resolution plan approved by the adjudicating authority, the appeals filed by the appellant are treated as dismissed in limini. Hence, following the judgement of Hon'ble Income Tax Appellate Tribunal, D Bench, Mumbai, this appeal is treated as dismissed in limini.” 5.1. Thus, the appeal of the assessee was dismissed in limine because of the proceedings under Insolvency and Bankruptcy Code are pending before the NCLT. This Tribunal in assessee’s own case for the assessment year 2016-2017 in ITA.No.1110/Hyd./2025 vide Order dated 24.09.2025 has considered this issue in Para-10 as under: “10. We have heard both the parties, perused the material on record and had gone through the orders of the authorities below. We find that, Corporate Insolvency Resolution Process [in short “CIRP”] has been initiated in the case of the assessee company with effect from 15.11.2022 vide order of NCLT,, Hyderabad and the NCLT, Hyderabad in CP(IB) No.308/2007/HDB./2022 and the Printed from counselvise.com 5 ITA.No.1752/Hyd./2025 NCLT, Hyderabad Bench, Hyderabad has granted moratorium to proceedings including Income Tax proceedings from the date of the Order i.e., from 15.11.2022. Therefore, as per the Order of the NCLT, Hyderabad Bench, Hyderabad, dated 15.11.2022, the moratorium granted to the assessee company is in operation and during the moratorium period, no proceedings can be initiated or continued against the assessee company, except, continuing the pending proceedings for determination of the tax liability. Once moratorium is in place, the Department cannot recover any tax liability from the corporate debtor, since, the provisions of IBC Code, 2016 has over-riding effect on other laws including Income Tax which is very clear from section 178(6) of the Income Tax Act, 1961. In the present case, the assessee company has filed appeal before the learned CIT(A) on 27.04.2022 when the moratorium granted by the NCLT, Hyderabad was in operation. Therefore, in our considered view, the learned CIT(A) shall have two options i.e., (i) to keep the proceedings before him in abeyance or (ii) to continue the proceedings for determination of tax liability without any recovery of tax. In the present case, the learned CIT(A) without considering the relevant facts, has simply dismissed the appeal filed by the assessee company ‘in limine’ by following decision of ITAT, Mumbai Bench, Mumbai Order dated 08.06.2022, however, not referred the case. On the other hand, the assessee company has relied upon the decision of ITAT, Mumbai F-Bench, Mumbai in the case of M/s. Varun Resources Limited, Mumbai vs., ITO-5(3)(1), Mumbai, Order dated 27.05.2024 (supra), where the law has been considered and after considering the relevant facts, it has been held that, the presence of IBC Code, 2016 would prevail over Income Tax Act, 1961. However, Income Tax Authorities have limited jurisdiction to assess/determine the quantum of income tax dues, but, have no authority to initiate recovery of such dues Printed from counselvise.com 6 ITA.No.1752/Hyd./2025 on it’s own during the period of moratorium in violation of section 14 or 33(5) of IBC Code, 2016. In our considered view, the law is very clear, in as much as, once the moratorium is granted to the corporate debtor, then, the Income Tax Department cannot proceed to recover any dues, but, there is no bar under the IBC Code, 2016 or under the Income Tax Act, 1961, to continue the proceedings to determine the tax liability. In the present case, the learned CIT(A) without appreciating the relevant facts, has simply dismissed the appeal filed by the assessee company ‘in limine’. Thus, we set aside the Order of the learned CIT(A) and restore the issue back to the file of learned CIT(A) and also direct the learned CIT(A) to reconsider the issue in light of our discussion given hereinabove in the preceding paragraphs. Accordingly, the grounds of appeal of the assessee are allowed for statistical purposes.” 6. Accordingly, following the earlier Order of this Tribunal in assessee’s own case, we set aside the impugned order of the learned CIT(A) and remand the matter to the record of the learned CIT(A) for adjudication of the appeal of the assessee on merits. 7. In the result, appeal of the Assessee is allowed for statistical purposes. Printed from counselvise.com 7 ITA.No.1752/Hyd./2025 Order pronounced in the open Court on 11.02.2026. Sd/- Sd/- [MADHUSUDAN SAWDIA] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 11th February, 2026 VBP Copy to: 1. Gayatri Projects Limited, 6-3-1090, TSR Towers, Rajbhavan Road, I.M. Colony, Khairatabad, Hyderabad. PIN – 500 082. Telangana. 2. The DCIT, Circle-2(1), 5th Floor, Signature Towers, Hyderabad. PIN - 500 084. Telangana. 3. The Pr. CIT, Hyderabad. 4. The DR, ITAT, “B” Bench, Hyderabad. 5. Guard file. BY ORDER Printed from counselvise.com VADREVU PRASADA RAO Digitally signed by VADREVU PRASADA RAO Date: 2026.02.11 15:12:17 +05'30' "