Shamken Multifab Ltd., New Delhi V. DCIT, New Delhi

ITSSA 29/DEL/2012

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6931 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 25-05-2017
• Assessment Year: misc
• Appeal Filed On: 10-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Assessee Lawyers: RAJIV SAXENA ADV SHRI R P MAL
• Keywords: Recovery proceedings; Competent authority; Tax effect; Liquidation
• Section: 201; 268A

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER IT(SS)A NO. 29/DEL/2012 (ASSESSMENT YEAR: 01.04.1995 TO 30.01.2002 ) SHAMKEN MULTIFAB LTD, SHAMKEN HOUSE, A - 20/B - 1, MOHAN CO - OP, INDUSTRIAL AREA, MATHURA ROAD, NEW DELHI PAN: AAACS0356C VS. DCIT, CENTRAL CIRCLE - 20, NEW DELHI (APPELLANT) (RESPONDENT) IT ( SS)A NO. 149/DEL/2007 (ASSESSMENT YEAR: 01.04.1995 TO 30.01.2002) DCIT, CENTRAL CIRCLE - 11 , NEW DELHI VS. SHAMKEN MULTIFAB LTD, SHAMKEN HOUSE, A - 20/B - 1, MOHAN CO - OP, INDUSTRIAL AREA, MATHURA ROAD, NEW DELHI PAN: AAACS0356C (APPELLANT) (RESPONDENT) ITA NO. 3551/DEL/2007 (ASSESSMENT YEAR: 01.04.1995 TO 30.01.2002) DCIT, CENTRAL CIRCLE - 11, NEW DELHI VS. M/S. SHAMKEN MULTIFAB LTD, SHAMKEN HOUSE, A - 20/B - 1, MOHAN CO - OP, INDUSTRIAL AREA, MATHURA ROAD, NEW DELHI PAN: AAACS0356C (APPELLANT) (RESPONDENT) ITA NO. 3550/DEL/2007 (ASSESSMENT YEAR: 2002 - 03) DCIT, CENTRAL CIRCLE - 11, NEW DELHI VS. M/S. SHAMKEN SPINNER LTD, SHAMKEN HOUSE, A - 20/B - 1, MOHAN CO - OP, INDUSTRIAL AREA, MATHURA ROAD, NEW DELHI PAN: AABCS6791G (APPELLANT) (RESPONDENT) ITA NO. 3549/DEL/2007 PAGE | 2 (ASSESSMENT YEAR: 2002 - 03) DCIT, CENTRAL CIRCLE - 11, NEW DELHI VS. M/S. SHAMKEN COTSYN LTD, SHAMKEN HOUSE, A - 20/B - 1, MOHAN CO - OP, INDUSTRIAL AREA, MATHURA ROAD, NEW DELHI PAN: AABCS1098K (APPELLANT) (RESPONDENT) IT( SS)A NO. 150/DEL/2007 (ASSESSMENT YEAR: 01.04.1995 TO 30.01.2002) DCIT, CENTRAL CIRCLE - 11, NEW DELHI VS. M/S. ARHUM SYNTEX PVT. LTD SHAMKEN HOUSE, A - 20/B - 1, MOHAN CO - OP, INDUSTRIAL AREA, MATHURA ROAD, NEW DELHI PAN: AAACA1274H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJIV SAXENA, ADV SHRI R. P. MAL, ADV REVENUE BY: MS. SULEKHA VERMA, CIT DR DATE OF HEARING 27/09 / 201 9 DATE OF PRONOUNCEMENT 22 / 10 / 2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . AT THE BEGINNING OF THE HEARING IT WAS FOUND THAT IN CASE OF A . SHAMKEN COTSYN LTD (ITA NO. 3549/DEL/2007 ) , B . SHAMKEN SPINNERS LTD (ITA NO; 3550/DEL/2007) AND C . SHAMKEN MULTIFAB LTD (ITA NO. 3551/DEL/2007 APPEAL OF THE REVENUE AND ITA NO. 39/DEL/2012 APPEAL OF ASSESSEE ) CASES THE MATTER IS PENDING BEFORE THE INSOLVENCY RESOLUTION PROFESSIONAL IN TERMS OF INSOLV ENCY AND BANKRUPTCY CODE, 2016 AND MORARORIUM PERIOD IS DECLARED AS PER SECTION 14 OF THE INSO LVENCY AND BANKRUPTCY CODE,2016. 2 . IT WAS FOUND THAT I N TERMS OF APPLICATION FILED BY M/S. ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED IN ITS CAPACITY AS THE FINANCIAL CREDITORS OF M/S. SHAMKEN COTSYN LIMITED (HEREINAFTER REFERRED TO AS CORPORATE DEBTOR) AND OTHER TWO COMPANIES , UNDER SECTION 7 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC) READ WITH RULE 4 OF INSOLVENCY AND BANKRUPTCY PAGE | 3 (APPLICATION TO ADJUCATING AUTHORITY) RULES, 2016 BEFORE THE HONBLE ADJUDICATING AUTHORITY (A.A) I.E. NATIONAL COMPA NY LAW TRIBUNAL AT ALLHABAD BENCH (NCLT) FOR INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP) OF THE CORPORATE DEBTOR. 3 . THE SAID APPLICATION OF CIRP HAS SINCE BEEN ADMITTED BY THE HONBLE NCLT, ALLAHABAD VIDE ITS ORDER DATED 29.05.2018 (REVISED O 31.05.2018) AND CONSEQUENT UPON SUCH ADMISSION THE CIRP HAS COMMENCED W.E.F. 29.05.2018 (COPY OF ORDER DATED 31.05.2018 ISSUED BY THE HONBLE NCLT, ALLAHABAD IS PLACED AS ANNEXURE - 1). 4 . THAT PURSUANT TO THE ADMISSION OF APPLICATION OF CIRP, THE HONBLE NC LT ALLAHABD VIDE ITS SAID ORDER DATED 31.05.2018 HAS INTERALIA APPOINTED THE MR. ANSHUL GUPTA (REGISTRATION NUMBER: IBBI/IPA/ - 002/IP - N00310/2017 - 18/10899), AS THE INTERIM RESOLUTION (IRP) FOR CONDUCTING THE CIRP AND EXERCISE ALL POWERS AND SUBJECT TO ALL DUTIES AS CONTEMPLATED UNDER THE PROVISIONS OF THE IBC. IT WAS ALSO PUBLIC ANNOUNCEMENT MADE BY IRP IN TWO NEWS PAPERS. FURTHER, TO THE SAID APPOINTMENT, THE COMMITTEE OF CREDIT ORS HAS CONFIRMED IRP AS THE RESOLUTION PROFESSIONAL OF THE CORPORATE DEBTO R VIDE ITS RESOLUTION THROUGH E - VOTING DATED 02.07.2018 TO 03.07.2018. MORATORIUM PERIOD IS ALSO DECLARED. 5 . THEREFORE, IN VIEW OF THE PROVISIONS OF SECTION 14 OF THE INSOLVENCY AND BANKRUPTCY CODE 2016, IT WAS MADE CLEAR THAT THE APPEALS FILED BY THE INCOME TAX DEPARTMENT AGAINST THE COMPANY CANNOT CONTINUE IN VIEW OF THE PROVISIONS OF SECTION 14 OF THE CODE. 6 . THE LEARNED CIT SUBMITTED THAT APPEALS OF THE REVENUE CANNOT BE DISMISSED IN VIEW OF THE PROVISIONS OF SECTION 14 OF IBC 2016 WITH RESPECT TO THE MORATORIUM PERIOD. SHE SUBMITTED THAT THE PROVISIONS OF SECTION 14 (1) (A) SUGGEST THAT THE WORD PROCEEDINGS DOES NOT INCLUDE INCOME TAX PROCEEDINGS AND CAN CONTINUE DURING THE PERIOD OF MORATORIUM. SHE FURTHER REFERRED TO THE PROVISIONS OF RULE 26 OF ITAT RULES, 1963 AND STATED THAT IF INCOME TAX PROCEEDINGS FALL WITHIN THE AMBIT OF SECTION 14 IT WILL CREATE AN ANO MALOUS AND PARADOXICAL SITUATION. THEREFORE, SHE STATED THAT THE MEANING, WHICH IS ATTACHED TO THE WORD PROCEEDINGS , IS THE PROCEEDINGS RELATED TO SUITS AND NOT ALL KINDS OF PROCEEDINGS. THEREFORE, ACCORDING TO HER THE INCOME TAX PROCEEDINGS CAN CONT INUE DURING THE MORATORIUM PERIOD PAGE | 4 ALSO. SHE STATED THAT THE COORDINATE BENCH IS PROHIBITED U/S 14 OF THE CODE TO GIVE ANY DIRECTION REGARDING TAX RECOVERY PROCEEDINGS IN RELATION TO THE COMPANY HOWEVER, THE APPEAL SHALL CONTINUE. SHE FURTHER REFERRED TO RULE 26 OF THE APPELLATE TRIBUNAL RULES 1963 TO PROVIDE THAT PROCEEDINGS BEFORE ITAT CAN CONTINUE EVEN AFTER INSOLVENCY. 7 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. APPARENTLY, THE PROVISIONS OF SECTION 14 OF THE INSOLVENCY AND BANKRUPTCY CO DE , 2 016 PROVIDES THAT ALL THESE SUITS OR CONTINUATION OF PENDING SUITS OR PROCEEDINGS AGAINST THE CORPORATE DEBTOR INCLUDING ANY JUDGEMENT OR DECREE OR ORDER IN ANY COURT OF LAW, TRIBUNAL, ARBITRATION PANEL OR OTHER AUTHORITY CANNOT BE PASSED DURING THE MORAT ORIUM PERIOD. THE PERIOD OF MORATORIUM SHALL HAVE THE EFFECT FROM THE DATE OF SUCH ORDER TILL THE COMPLETION OF THE CORPORATE INSOLVENCY RESOLUTION PROCESS. IN THE PRESENT CASE, THE APPEAL FILED BY THE REVENUE IS AN INSTITUTION OF SUIT AGAINST THE CORPOR ATE DEBTOR , WHICH IS PROHIBITED UNDER SECTION 14 OF THE ACT. NO EXCEPTS U/S 14 (2) OF THE IBC 2016 WAS SHOWN TO US . AS HELD BY THE HONOURABLE SUPREME COURT IN CASE OF ALCHEMIST ASSET RECONSTRUCTION CO. LTD VS HOTEL GODAVAN PVT LTD [ 88 TAXMANN.COM 20 2 ] IT HAS BEEN HELD THAT EVEN ARBITRATION PROCEEDINGS CANNOT BE INITIATED AFTER IMPOSITION OF THE MORATORIUM U/S 14 (1) (A ) HAS COME INTO EFFECT AND IT IS NOT NICE IN LAW AND COULD NOT HAVE BEEN ALLOWED TO CONTINUE. FURTHER HONOURABLE APEX COURT IN THE CASE OF PCIT V MONNET ISPAT AND ENERGY LTD. [SLP (C) NO: 6487 OF 2018, DATED 10 - 8 - 2018] HAS UPHEL OVERRIDING NATURE AND SUPREMACY OF THE PROVISIONS OF THE IBC CODE OVER ANY OTHER ENACTMENT IN CASE OF CONFLICTING PROVISIONS, BY VIRTUE OF A NON - OBSTANTE CLAUSE CONTAINED IN SECTION 238 OF THE IBC CODE. IN VIEW OF THIS THE APPEAL S FILED BY THE REVENUE CAN NOT BE CONTINUED TO BE ALLOWED DURING THE COURSE OF MORATORIUM PERIOD. 8 . FURTHER, THE RECENT AMENDMENT TO IBC 2016 A NY RESOLUTION PLAN OR LIQUIDATION ORDER AS DECIDED BY THE COMPETENT AUTHORITY WOULD BE BINDING ON ALL THE STAKEHOLDERS INCLUDING THE CENTRAL GOVT., ANY STATE GOVT. OR LOCAL AUTHORITY TO WHOM A DEBT IN RESPECT OF THE PAYMENT OF THE DUES MAY BE OWED. THIS WILL PREVENT STATE AUTHORITIES, REGULATORY BODIES INCLUDING DIRECT & INDIRECT TAX DEPARTMENTS FROM QUESTIONING THE RESOLUTION PLAN OR LIQUIDAT ION ORDER AS WELL AS JURISDICTION OF TRIBUNALS WITH REGARD TO IBC. PAGE | 5 THUS THEREFORE AFTER RECENT AMENDMENT ALSO THERE IS NO REASON TO CONTINUE WITH THESE APPEALS. 9 . IN VIEW OF THIS , WE DISMISS THE APPEAL S FILED BY THE REVENUE IN CASE OF ABO VE 3 COMPANIE S WITH THE LIBERTY TO AO TO FILE THESE APPEALS AFTER MORATORIUM PERIOD , IF AO WANTS TO CONTINUE WITH THIS PROCEEDINGS, MAKING THE RESPECTIVE REPRESENTATIVE OF COMMITTEE OF CREDITORS, IRP . THUS, ALL THE APPEALS OF REVENUE WITH RESPECT TO THESE 3 COMPA NIES ARE DISMISSED. 10 . FURTHER WITH RESPECT TO THE APPEALS FILED BY THE ASSESSEE ALSO CANNOT BE SUSTAINED AS ASSESSEE DID NOT FURNISH ANY PERMISSION OBTAINED FROM NATIONAL COMPANY LAW TRIBUNAL AS HELD BY THE HONOURABLE MADRAS HIGH COURT IN MR JAY RAJKUMAR VS STANDIC BANK GHANNA LTD IN 101 TAXMANN.COM 329 . FURTHER BEFORE US, NO PROPER LETTER OF AUTHORITY SIGNED BY IRP IN FAVOUR OF THE COUNSEL HAVE BEEN FILED BY THE RESOLUTION PROFESSIONAL. THIS IS ALSO NOT DONE DESPITE OUR REPEATED REQUEST AND GIVI NG A SPECIFIC TIME OF ALMOST ONE MONTH TO ASSESSEE TO COMPLY WITH IT. THE ASSESSEE NEITHER COMPLIED BY FILING PROPER LETTER OF AUTHORITY NOR SOUGHT FURTHER TIME. CONTRARY TO THAT, LD COUNSEL KEPT ON INSISTING TO ACCEPT THE LETTER OF AUTHORITY SIGN ED BY THE DIRECTORS OF THE COMPANY WHERE IN DIRECTORS OF THE COMPANY WERE AUTHORISED BY IRP TO REPRESENT THE CASE. NONE OF THE DIRECTORS REMAINED PRESENT BEFORE US. THEREFORE, THE APPEAL FILED BY THE COMPANY IN ITA NUMBER 29/DEL/2012 ALSO CANNOT BE SUST AINED IN ABSENCE OF ANY PERMISSION FROM THE NATIONAL COMPANY LAW TRIBUNAL OR FILING OF THE PROPER LETTER OF AUTHORITY BY THE INSOLVENCY RESOLUTION PROFESSIONAL. ACCORDINGLY ALL THE APPEAL S WITH RESPECT TO ABO VE 3 COMPANIES FILED BY THE REVENUE AS WELL AS BY THE ASSESSEE ARE DISMISSED WITH THE LIBERTY TO FILE THEM A FRESH ON COMPLETION OF MORATORIUM PERIOD OR WHEN CORPORATE INSOLVENCY IS RESOLVED, AS THE SITUATION MAY BE. 11 . AT THE OUTSET OF THE HEARING, THE LD. DR BROUGHT TO OUR ATTENTION THAT CBDT VIDE CIRCULAR NO. 17/2019 DATED 08TH AUGUST 2019 HAS DECIDED THAT THE REVENUE WOULD NOT PREFER ANY APPEAL BEFORE THE TRIBUNAL IF THE TAX EFFECT IS LESS THAN RS. 50 LAKHS. THEREFORE, HE PLEADED THAT THAT ITA NO. 149 DEL/2007 IN CASE OF M/S. STYLE SYNTEX PVT. LTD, ITA NO. 150/DEL/2007 IN CASE OF M/S. PAGE | 6 ARHUM SYNTEX PVT. LTD ARE THE APPEAL OF THE REVENUE BE DECIDED AS PER THE INSTRUCTION OF THE CBDT. 12 . WE HAVE HEARD THE CONTENTION OF THE LD DR AND PERUSED THE MATERIAL ON R ECORD. WE FIND THAT THE CBDT VIDE CIRCULAR NO. 17/2019 DATED 08 TH AUGUST 2019 HAS ENHANCED THE MONETARY LIMIT FOR FILING THE APPEAL BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL, HONBLE HIGH COURTS AND HONBLE SUPREME COURT. THE RELEVANT PAR A OF THE AFORESAID CIRCULAR IS REPRODUCED AS UNDER : - 2. AS A STEP TOWARDS FURTHER MANAGEMENT OF LITIGATION, IT HAS BEEN DECIDED BY THE BOARD THAT MONETARY LIMITS FOR FILING OF APPEALS IN INCOME - TAX CASES BE ENHANCED FURTHER THROUGH AMENDMENT IN PARA 3 OF THE CIRCULAR MENTIONED ABOVE AND ACCORDINGLY, THE TABLE FOR MONETARY LIMITS SPECIFIED IN PARA 3 OF THE CIRCULAR SHALL READ AS FOLLOWS: S.NO. APPEALS/SLPS IN INCOME - TAX MATTERS MONETARY LIMIT (RS.) 1 . BEFORE APPELLATE TRIBUNAL 50.00,000 2. BEFORE HIGH COURT 1 . 00 . 00.000 3. BEFORE SUPREME COURT 2.00,00.000 3. FURTHER, WITH A VIEW TO PROVIDE PARITY IN FILING OF APPEALS IN SCENARIOS WHERE SEPARATE ORDER IS PASSED BY HIGHER APPELLATE AUTHORITIES FOR EACH ASSESSMENT YEAR VIS - A - VIS WHERE COMPOSITE ORDER FOR MORE THAN ONE ASSESSMENT YEARS IS PASSED, PARA 5 OF THE CIRCULAR IS SUBSTITUTED BY THE FOLLOWING PARA: '5. THE ASSESSING OFFICER SHALL CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUE S IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE. THE DISPUTED ISSUES ARISE IN MORE THAN ONE ASSESSMENT YEAR, APPEAL CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IN RESPECT OF THE DISPUTED ISSUES EXCEEDS T HE MONETARY' LIMIT SPECIFIED IN PARA 3. NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR Y EARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. FURTHER, EVEN IN THE CASE OF COMPOSITE ORDER OF ANY HIGH COURT OR APPEL LATE AUTHORITY WHICH INVOLVES MORE THAN ONE ASSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, NO APPEAL SHALL BE FILED IN RESPECT OF AN ASSESSMENT YEAR OR YEARS IN WHICH THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT SPECIFIED IN PARA 3. IN CASE WHERE A COMPOSITE ORDER/ JUDGEMENT INVOLVES MORE THAN ONE ASSESSEE. EACH ASSESSEE SHALL BE DEALT WITH SEPARATELY. 4. THE SAID MODIFICATIONS SHALL COME INTO EFFECT FROM THE DATE OF ISSUE OF THIS CIRCULAR. 5. THE SAME MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. 6. THIS ISSUES UNDER SECTION 268A OF THE INCOME - TAX ACT, 1961. PAGE | 7 13 . WE FIND THAT THE TAX EFFECT INVOLVES IN THE APPEAL OF THE REVENUE IS BELOW RS. 50 LAKHS. THERE IS NO DISPUTE THAT THE BOARDS INSTRUCTIONS OR DIRECTIONS ISSUED TO THE INCOME - TAX AUTHORITIES ARE BINDING ON THOSE AUTHORITIES, THEREFORE, THE DEPARTMENT SHOULD HAVE WITHDRAWN/NOT PRESSED THE PRESENT APPEAL IN VIEW OF THE AFORESAID INSTRUCTION SINCE THE TAX EFFECT IN THE INSTANT APPEAL IS LESS THAN THE AMOUNT OF RS. 50 LAKHS. 14 . IN VIEW OF THE ABOVE, CIRCULAR NO. 17/2019 DATED 08/08/2019 WILL APPLY TO ALL PENDING APPEALS. THEREFORE THE PRECEDENT, IT IS HELD THAT THE APPEAL IS NOT MAINTAINABLE IN THE INSTANT CASE AS THE TAX EFFECT IS LESS THAN RS. 50 LAKHS. ACCORDINGLY, IT IS HELD THAT APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. WE ALSO HASTENED TO ADD THAT CERTAIN TIMES INSTANCES STATED IN PARA NO. 10 OF THE CBDT CIRCULAR NO. 3/2018 DATED 11.07.2018 IS NOT DISCERNABLE FROM THE ASSESSMENT AND APPELLATE ORDERS, THEREFOR E, IN SUCH CASES, WE ALSO GIVE LIBERTY TO REVENUE THAT IF SUCH INSTANCES COMES TO THEIR NOTICE THAN HE MAY FILE MISCELLANEOUS APPLICATION WITH SUCH EVIDENCES. 15 . IN THE RESULT ALL THESE SIX APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 / 10 / 2019 . - SD/ - - SD/ - ( AMIT SHUKLA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 / 10 / 2019 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI