DCIT, CIRCLE- 11(1), NEW DELHI V. HOTLINE CPT LTD., NEW DELHI

ITA 5507/DEL/2019

AI Insights

The case involves the Revenue's appeal against the order of the Ld. CIT(Appeals)-4, New Delhi, which had allowed the assessee's appeal against the levy of penalty under section 271(1)(c) of the Income Tax Act. The assessee, HOTLINE CPT LTD, underwent a corporate insolvency resolution process, culminating in liquidation proceedings. The Supreme Court's judgment in Ghanashyam Mishra and Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. was pivotal, establishing that once a resolution plan is approved, all claims not included in the plan stand extinguished. Consequently, the Revenue's claims for the assessment year 2015-16 were also extinguished.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 113356 (ITAT-DELHI)
• Duration Of Justice: 10 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 30-11-2022
• Assessment Year: misc
• Appeal Filed On: 20-01-2012
• Other Referred Cases: Ghanashyam Mishra and Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd.
• Laws Referred To: Income Tax Act, Insolvency and Bankruptcy Code, 2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Liquidation
• Section: 271(1)(c)

Judgement Text

I.T.A.No.5507/Del/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H” NEW DELHI BEFORE ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER आ .अ.स ं /.I.T.A No.5507/Del/2019 /Assessment Year: 2015-16 DCIT Circle 11(1), New Delhi. ब म Vs. HOTLINE CPT LTD. 52, Okhla Industrial Estate, Phase-III, New Delhi. PAN No. AABCH0583M अ Appellant /Respondent िनधा रतीक ओरसे /Assessee by None राज वक ओरसे /Revenue by Ms. Yamini, Sr. DR स ु नवाईक तारीख/ Date of hearing: 01.12.2022 उ ोषणाक तारीख/Pronouncement on 05.12.2022 आदेश /O R D E R PER ANUBHAV SHARMA, J.M. 1. Heard and perused the record. 2. The Revenue has preferred this appeal against the order dated 12.04.2019 of Ld. CIT(Appeals)-4, New Delhi who had allowed the appeal of assessee against the levy of penalty u/s 271(1)(c) of the Act. I.T.A.No.5507/Del/2019 2 3. As the case was called for hearing. None appeared for the assessee, however, the records show that written submissions on behalf of the assessee dated 02.06.2022 are on record and on last date of hearing the bench had directed the DR shall call report from Assessing Officer in respect of the orders of NCLT. 4. Ld. Sr. DR has sought further opportunity for the same submitting that the report is awaited. The bench is of considered opinion that no further opportunity is justified as there is a copy of order dated 31.07.2020 of NCLT bench-3, New Delhi on record, wherein the corporate insolvency resolution process initiated against the assessee company has culminated with an order for initiation of liquidation proceedings against the assessee. 5. The Hon’ble Supreme Court of India, vide its judgment dated 13-4-2021 in Ghanashyam Mishra and Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd.[ 2021 SCC OnLine SC 313] has settled whether statutory creditors, including the Central Government, State Government and any local authority, are bound by a resolution plan, once it is approved by an adjudicating authority under sub­-section (1) of Section 31 of the Insolvency and Bankruptcy Code, 2016[2] (IBC/the Code) [as amended vide IBC (Amendment) Act, 2019[3] dated 5-8-2019 (the 2019 Amendment)]. I.T.A.No.5507/Del/2019 3 The relevant extracts from the said order containing the ratio of the judgment, are reproduced below, for ease of understanding: “95. ... (i) Once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of the 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; (ii) 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 the Code has come into effect; (iii) consequently, 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 I.T.A.No.5507/Del/2019 4 period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued.”In the light of aforesaid all claims of individuals and including Government stand culminated.” 6. Accordingly, any claim of the Revenue in regard to the present assessment year also stands culminated in accordance with the insolvency proceedings. 6. The appeal is dismissed, however, with a caveat that in case there is any change in circumstances leading to revival of the claim of the Revenue, the application for restoration of the present appeal may be filed by the Revenue. Order pronounced in the open court on 05/12/2022 Sd/- Sd/- (ANILCHATURVEDI) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 05.12.2022 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi