The Dy. CIT, Central Circle-3, Vadodara V. M/s. Diamond Power Infrastructure Ltd., Vadodara

ITSSA 54/AHD/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6055 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-06-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 28-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 132; 153A; 115JB; 143(1)

Judgement Text

IT(SS)A Nos.54 to 59/Ahd/2023 & C.O. Nos.9 to 14/Ahd/2023 Assessment Year2: 2013-14 to 2018-19 Page 1 of 7 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER IT(SS)A Nos.54 to 59/Ahd/2023 Assessment Years: 2013-14 to 2018-19 The Deputy Commissioner of Income Tax, Central Circle – 3, 603, 6 th Floor, Aykar Bhavan, Race Course Circle, Vadodara – 390 007. Vs. M/s. Diamond Power Infrastructure Limited, 5/9-10, Essen House, BIDC Gorwa, Vadodara – 390 016, Gujarat. [PAN – AAACD 8043 K] C.O. Nos.9 to 14/Ahd/2023 (In IT(SS)A Nos.54 to 59/Ahd/2023) Assessment Years: 2013-14 to 2018-19 M/s. Diamond Power Infrastructure Limited, 5/9-10, Essen House, BIDC Gorwa, Vadodara – 390 016, Gujarat. [PAN – AAACD 8043 K] Vs. The Deputy Commissioner of Income Tax, Central Circle – 3, 603, 6 th Floor, Aykar Bhavan, Race Course Circle, Vadodara – 390 007. (Appellants) (Respondents) Assessee by Shri Bandish Soparkar & Parin Shah, ARs. Revenue by Dr. Darsi Suman Ratnam, CIT-DR D a t e o f H e a ri n g 19.06.2024 D a t e o f P ro n o u n c e m e n t 04.07.2024 O R D E R PER BENCH: These are appeals filed by the Revenue and Cross Objections filed by the assessee against consolidated order dated 13.03.2023 passed by the CIT(A)-12, Ahmedabad for the Assessment Years 2013-14 to 2018-19. 2. Since all the matters are identical as mentioned by both the parties, we are taking up Assessment Year 2014-15 first as the same was argued by the parties. IT(SS)A Nos.54 to 59/Ahd/2023 & C.O. Nos.9 to 14/Ahd/2023 Assessment Year2: 2013-14 to 2018-19 Page 2 of 7 3. As regards A.Y. 2014-15, the assessee furnished return of income on 29.11.2014 declaring total income (loss) at Rs.11,63,41,984/- and book profit at Rs.11,40,02,065./- as per provisions of Section 115JB of the Income Tax Act, 1961. Subsequently, on 15.04.2015, the assessee revised its original return of income by increasing its loss to Rs.15,43,51,611/- and book profit under Section 115JB remains as it is. The same was processed under Section 143(1) of the Act. Subsequently, search and seizure operation were conducted under Section 132 of the Act by the Officials of the Directorate of Investigation of Income Tax on 10.04.2018 in the case of Diamond Power Group of Vadodara. The assessee company was also covered under search and seizure action carried out under Section 132(1) of the Act on 10.04.2018. During the course of search and survey operation at the office and residential premises, certain books/papers/documents/digital records were seized and impounded. Subsequent to search proceedings, notice under Section 153A of the Act was issued. The assessee M/s. Diamond Power Infrastructure Limited (DPIL) is the main company of group company of DPIL. DPIL group is a family-held group that is owned, operated and manged by Bhatnagar Family. The assessee company is engaged in manufacturing of flexible wires and cables, power and control cables, conductors, power and distribution transformers and Transmission Towers. The Assessing Officer for A.Y. 2014-15 assessed the total income of the assessee at Rs.433,49,31,931/- thereby making the various additions. After challenging the Assessment Order during the course of assessment proceedings itself, the assessee submitted that Resolution Professional of the assessee has filed an application before the NCLT under Section 30(6) of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as “IBC 2016”) for approval of the Resolution Plan submitted by M/s. GSEC Limited in consortium with Mr. Rakesh Shah. The assessee was in receipt of the order passed by the NCLT vide IA No.160 of 2022 in CP (IB) 137 of 2018 dated 20.06.2022 in which the application is allowed by the Hon’ble NCLT and approved the Resolution Plan of M/s. GSEC Limited. The said order categorically states out as under :- “18. With these directions, we approve the resolution plan submitted by M/s. GSEC in consortium with one Mr Rakesh Shah and proceed to pass the following orders : ORDER (i) Application is allowed IT(SS)A Nos.54 to 59/Ahd/2023 & C.O. Nos.9 to 14/Ahd/2023 Assessment Year2: 2013-14 to 2018-19 Page 3 of 7 (ii) The resolution plan of M/s. GSEC Limited for Corporate Debtors i.e. M/s. Diamond Power Infrastructure Limited stands allowed as per Section 30(6) of the IBC, 2016. (iii) The approved ‘Resolution Plan’ shall become effective from the date of passing of this order. (iv) The order of moratorium dated 24.08.2018 passed by this Adjudicating Authority under Section 14 of I&B Code, 2016 shall cease to have effect from the date of passing of this order. (v) ..................” 4. The CIT(A) observed that the NCLT has approved the application made by GSEC Limited for assessee company and passed order stating that all past claims stand extinguished. 5. The Ld. AR submitted the list of dates and events in respect of present assessee’s case, more specifically setting out the events and orders passed by the NCLT related to IBC, 2016 proceedings. Date Event Page Nos. 10.04.2018 Search u/s.132 of the IT Act 24.08.2018 Assessee admitted to Corporate Insolvency Resolution Process and Interim Resolution professional appointed by NCLT 178 25.10.2018 Notices issued u/s.153A by the AO for all the years 27.05.2020 On an application by AO, the Revenue permitted to frame assessments for all the years but prohibited from proceeding against the assessee without prior permission from the NCLT and Dept. permitted to file their claim with the Resolution Professional. pp.1-6 of judgement compilation 6.1.2022 Resolution plan submitted by the Resolution Applicant approved by the Committee of Creditors. Under the plan the total dues of all operational Creditors which would include income Tax Department proposed to be settled at Rs.5 crores. 182 39-41 22.2.2022 NCLT issued notice to Income Tax Department before sanction of the plan. After considering their reply dated 2.3.2022, NCLT held that 185 IT(SS)A Nos.54 to 59/Ahd/2023 & C.O. Nos.9 to 14/Ahd/2023 Assessment Year2: 2013-14 to 2018-19 Page 4 of 7 provision is made in the Resolution Plan to pay them as Operational Creditor 20.6.2022 NCLT approved the Plan and made it effective. This is therefore “NCLT Approval Date”. 189 29.6.2022 30.6.2022 1.7.2022 The Assessing Officer framed assessment orders for different years 189 6. The Ld. DR has taken the following grounds in Assessment Year 2014-15, which are identical in all the appeals, and the submissions are in consonance with the grounds of appeal taken by the Revenue as per Form No.36 filed before us:- “1) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in quashing the assessment order passed u/s.153A r/w 144 or u/s.143(3) of the Act dated 01/07/2022 without appreciating the facts that the Hon'ble National Company Law Tribunal (NCLT), Ahmedabad vide its order no. IA No. 672 of 2019 in C.P. (I.B.) No.137/NCLT/AHM/2018 dated 27.05.2020 allowed permission to the Department to continue the assessment proceedings for Α.Υ. 2013-14 to 2019-20 in the case of the assessee company and also directed the Resolution Professional to extend his full cooperation to the Department in their assessment of tax of the Respondent assessee Company. 2) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in quashing the assessment order passed u/s.153A r.w.s 144 of the I.T. Act in view of the order of the NCLT approving the "Resolution Plan" submitted by GSEC Ltd in consortium with Shri Rakesh Shah under the IBC, 2016 without appreciating the facts that even after its own permission to carry the assessment proceedings, the Hon. NCLT passed the order before finalizing the assessment proceedings u/s.153A of the I.T. Act, for А.У. 2013-14 to 2019-20 and therefore, without considering the claim of the Department. 3) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in quashing the assessment order passed u/s.153A r.w.s 144 of the I.T. Act in view of the order of the NCLT approving the "Resolution Plan" submitted by GSEC Ltd. in consortium with Shri Rakesh Shah under the IBC, 2016 without appreciating the fact that the Hon'ble NCLT grossly erred in not allowing an opportunity of being heard to the Department if the Hon'ble Tribunal was to pass the order prior to the finalization of the assessments in the case of the assessee. 4) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in quashing the assessment order passed u/s.153A r.w.s 144 of the I.T. Act without appreciating the facts that the assessment order so passed could not be termed as bad in law especially when they were passed in accordance with low and with IT(SS)A Nos.54 to 59/Ahd/2023 & C.O. Nos.9 to 14/Ahd/2023 Assessment Year2: 2013-14 to 2018-19 Page 5 of 7 express permission of the NCLT, wherein department was allowed to continue the assessment proceedings for A.Y. 2013-14 to 2019-20 in the case of the assessee company and the Resolution Professional was directed to extend his full cooperation to the Department in the assessment of tax of the Respondent assessee Company. 5) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in quashing the assessment order passed u/s.153A r.w.s 144 of the I.T. Act in view of the order of the NCLT dated 20.06.2022 which was passed without considering the fact that the assessment proceedings for different Assessment Years were underway as allowed by the Hon'ble NCLT and subsequently Assessment Orders have been passed on 29.06.2022 to 01.07.2022 raising a demand of Rs.11,53,81,28,876/- for the AY's 2013-14 to AY 2019-2020, and thereby without considering such huge liability on the assessee. 6) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in quashing the assessment order passed u/s.153A r.w.s 144 of the I.T. Act in view of the order of the NCLT approving the "Resolution Plan" submitted by GSEC Ltd. in consortium with Shri Rakesh Shah under the IBC, 2016 without appreciating the fact that the impugned order of Hon'ble NCLT has not been accepted by the Department and appeal is pending before Hon'ble NCLAT. 7) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in quashing the assessment order passed u/s.153A r.w.s 144 of the I.T. Act in view of the order of the NCLT approving the "Resolution Plan" submitted by GSEC Ltd in consortium with Shri Rakesh Shah under the IBC, 2016 without appreciating the facts enumerated in judgment of the Hon'ble Supreme Court in the case of State Tax Officer Vs. Rainbow Papers Limited in its order dated 06.09.2022, wherein the Hon'ble Supreme Court held that if the Resolution Plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the Adjudicating Authority is bound to reject the Resolution Plan. 8) On the facts and in the circumstance of the case and in law, the Id. CIT(A) has erred in quashing the assessment order passed u/s.153A r.w.s 144 of the I.T. Act in view of the order of the NCLT and holding that order passed by Hon'ble NCLT under Section 31 of IBC, 2016 has overriding effect over anything inconsistent contained in the Income Tax Act and it shall be binding on all the respective entities including other stakeholders, which include Central Government, State Government and other Local Bodies without appreciating the judgment of the Hon'ble Supreme Court in the case of State Tax Officer Vs. Rainbow Papers Limited in its order dated 06.09.2022, wherein the Hon'ble Supreme Court held any plan which does not meet the requirements of Section (2) of Section 30 of the IBC, would be invalid and not binding on the Central Government, any State Government, any statutory or other authority, any financial creditor, or other creditor to whom a debt in respect of dues IT(SS)A Nos.54 to 59/Ahd/2023 & C.O. Nos.9 to 14/Ahd/2023 Assessment Year2: 2013-14 to 2018-19 Page 6 of 7 arising under any law for the time being in force is owed. Such a resolution plan would not bind the State when there are outstanding statutory dues of a Corporate Debtor. 9) On the facts and in the circumstances of the case and in law, the Ld. CIT (A)- 12, Ahmedabad ought to have upheld the order of the Assessing Officer. 10) It is, therefore, prayed that the order of the Ld. CIT (A) may be set aside and that the AO may be restored to the above extent. 11) The appellant craves leave to add, delete, amend, raise any new ground of appeal either before or during the course of the hearing of the appeal as may be necessary.” 7. The Ld. AR relied upon the order of the CIT(A) and further submitted that the same to be taken into account as IBC, 2016 must have specific provision/Section 31 of the said Act clearly set out that there is overriding effect over all the other Acts to that of IBC, 2016. The decision of Hon’ble Supreme Court in the case of Ghanshyam Mishra & Sons vs. Edelweiss Asset Reconstruction (2021) 126 taxmann.com 132 (SC) was also relied upon by the Ld. AR. The Ld. AR further relied upon the Hon’ble Telangana High Court’s decision in the case of Sirpur Paper Mills Limited vs. Union of India (Writ Petition No.25827 of 2019, order dated 18.01.2022). 8 We have heard both the parties and perused all the relevant material available on record. Since the Resolution plan has been accepted by the Revenue after approval of the same in 20.06.2022 as the Department represented their stand on 22.02.2022 before the NCLT it becomes categorically clear that overriding effect of Insolvency and Bankruptcy, 2016 will prevail over other Statutory Acts and, therefore, the decision taken by the CIT(A) is just and proper as per law of the land. In fact, the Revenue as well as the assessee are at this juncture bound by the Resolution Plan accepted by the NCLT after hearing and giving opportunity to all the parties including Income Tax Department cannot contest the statutory liabilities before the Income Tax Appellate Tribunal at this juncture. Thus, all the appeals filed by the Revenue are dismissed. 9. As relates to Cross Objections filed by the assessee, the same do not survive in the light of the findings given by us hereinabove. Hence, all the Cross Objections filed by the assessee are also dismissed. IT(SS)A Nos.54 to 59/Ahd/2023 & C.O. Nos.9 to 14/Ahd/2023 Assessment Year2: 2013-14 to 2018-19 Page 7 of 7 10. In the result, all the appeals filed by the Revenue and all the Cross Objections filed by the assessee are dismissed. Order pronounced in the open Court on this 4 th July, 2024. Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 4 th July, 2024 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad