M/S. ANKIT METAL & POWER LTD.,KOLKATA V. D.C.I.T., CC - 3(3), KOLKATA, KOLKATA

ITA 693/KOL/2022

AI Insights

Ankit Metal & Power Ltd. filed two appeals against the Deputy Commissioner of Income Tax concerning disallowances and additions made during the assessment years 2008-09 and 2012-13. The appeals were delayed and the company sought condonation for the delay citing mismanagement and lack of awareness due to the irregular services of their accountant. The tribunal admitted the appeals for adjudication but found that the matters were infructuous due to the ongoing CIRP, which imposes a moratorium on legal proceedings against the corporate debtor. The tribunal referenced several precedents which established that once a moratorium under section 14 of the IBC is in effect, no proceedings can continue against the corporate debtor, including tax assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37622 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Other Referred Cases: Kohinoor Steel (P.) Ltd. vs. Income-tax, Srei Equipment Finance Ltd. vs. Income-tax, Sumeet Industries Ltd. vs. Income-tax
• Laws Referred To: Income-tax Act, Insolvency and Bankruptcy Code, 2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ANY OTHER
• Keywords: Set aside; Opportunity of being heard; Depreciation; Liquidation; Application of stay
• Section: 250; 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA SHRI GEORGE MATHAN, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER ITA No. 512/Kol/2022 Assessment Year 2008-09 & ITA No. 693/Kol/2022 Assessment Year 2012-13 Ankit Metal & Power Ltd., 35, Chittaranjan Avenue, 4th Floor, Kolkata - 700012 [PAN: AAECA5230B] ….................................. Appellant vs. Deputy Commissioner of Income tax, Central Circle – 3(3), Kolkata 110, Shanti Pally, EM Bypass, Kolkata – 700107 ................................... Respondent Appearances by: Assessee represented by : None Department represented by : Loviesh Shelly, Addl. CIT, Sr. DR Date of concluding the hearing : 19.03.2025 Date of pronouncing the order : 19.03.2025 O R D E R PER BENCH 1. This is a batch of two appeals having similar set of facts and hence they are being disposed of through a single order. It is seen that ITA No. 512/Kol/2022 for AY 2008-09 is delayed by 172 days for which the assessee has filed a petition for condoning the said delay as under: “I, Subham Bhagat, Director of M/s. Ankit Metal & Power Ltd. of 35, Chittaranjan Avenue, Kolkata-700 012, do hereby solemnly affirm and declare as follows: 1. That M/s. Ankit Metal & Power Ltd. is assessed to income-tax by the D.C.I.T., Central Circle-3(3), Kolkata, under PAN No. AAECA5230B. 2 ITA No. 512 & 693/Kol/2022 Ankit Metal & Power Ltd. 2. That the assessment for A.Y. 2008-09 in the case of the company was completed u/s. 251/143(3) of the IT. Act vide order dated 22.11.2018 assessing the total income at Rs.27,64,99,570/- as against income of Rs.23, 18,85,114/- declared in the ROI and thereby disallowing depreciation of Rs.4,36,60,503/- on new plant & machinery and addition of the same to the total income. 3. That an appeal was e-filed before the Ld. C.I.T.(A) agitating the said disallowance/addition made in the assessment order. The appellate order u/s. 250 of the Act was passed on 20.01.2022 in Appeal No. CIT(A), Kolkata-21/10349/2018- 19, sustaining the disallowance/addition made in the assessment order and thus dismissing the appeal. 4. That the said appellate order dated 20.01.2022 was only uploaded in the e-mail portal of the assessee and the same was not served upon the assessee by any other mode. 5. That the income-tax matter of the company was being independently looked after by the Accountant of the company, who used to regularly look through/check the e- mail portal and inform accordingly to the management. The Accountant was irregular in his services and ultimately stopped coming to the office of the company without even intimating the cause to the management. Therefore, the management was not practically aware of passing of the said appellate order and posting the same immediately thereafter in company's 1.T. portal on 20th January, 2022. 6. That thereafter sometime in the last week of August, 2022 when the company was going through the matter of assessment year 2013-14 and discussing the same with the Chartered Accountant, the reference of appellate order for A.Y. 2008-09 having already been passed in January, 2022 by the Ld. C.I.T.(A) came to our notice. We had immediately searched out the past portal and found out the order of the Ld. C.I.T.(A), Kolkata-21 dated 20/01/2022, which was totally unknown to the management of the co. 7. That we had thereafter contacted our Lawyer, who advised for filing appeal before the Hon'ble Tribunal against the said appellate order dated 20.01.2022. After providing the necessary papers etc. in relation to the appeal, the Memorandum of Appeal was prepared and the same was filed before the Hon'ble Tribunal on 09/09/2022. 8. That considering the date 20/01/2022 put on the impugned appellate order passed u/s 250 of the I.T. Act as order receipt date and the appeal having been filed before this Hon'ble Tribunal on 07/09/2022, in the process an unintended delay of 172 days beyond the prescribed due date has been occurred. 9. That the appellant-company was not negligent in filing of the appeal but due to some unavoidable reasons and circumstances as stated above, no step was possible to be taken for filing the appeal within the prescribed time. On the above facts, the unintended delay of 172 days in filing the appeal before the Hon'ble Tribunal is for good and sufficient reason. There was no deliberateness or negligence of mala fides on the part of the appellant-company behind not filing appeal within the prescribed time, because that will invite serious risk which no litigant-assessee will desire to invite. 10. That the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. [167 LT.R. 471 (SC)] held that the Courts should have a pragmatic and liberal approach while considering the petition for condonation of delay. Their Lordships have also held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice should be preferred. 3 ITA No. 512 & 693/Kol/2022 Ankit Metal & Power Ltd. 11. That to meet the cause of substantial justice, it is humbly prayed before the Hon'ble Tribunal to condone the said delay of 172 days in filing this appeal and admission of the appeal for adjudication on merits. 12. That the above statement is true to the best of my knowledge and belief.” 1.1 Considering the reasons given by the assessee, the delay is condoned and the appeal is admitted for adjudication. 2. In both these appeals a common factor is that the matters have been pending for adjudication for a long time due to pendency of proceedings before National Company Law Tribunal (NCLT). On the last date of hearing, the Ld. DR brought to our notice an email received from the Ld. AO and for the sake of record the email deserves to be extracted as under: “In this connection, intimation of Corporate Insolvency Revolution Process (CIRP) and appointment of Interim Revolution Professional (IRP) in the matter of M's Ankit Metal & Power Limited (Corporate Debtor/the Company) has been received from Shri Rajesh Kumar Agarwal Insolvency Professional on 08.01.2014, Copy of the same is enclosed herewith for your information. Further, an e-mail was received from Shir Rajesh Kumar Agarwal on 15.03.2024 wherein he has informed that the Corporate Insolvency Resolution Process has been withdrawn under IBC, 2016 vide order passed by the Hon'ble National Company Law Appellate Tribunal, New Delhi Bench dated 12th March, 2024 in respect of Mis Ankit Metal & Power Ltd. Copy of the same is enclosed herewith for your information.” 2.1 Along with this email, the Ld. DR placed on record an order of National Company Law Appellate Tribunal (NCLAT) and also a communication from Mr. Rajesh Kumar Agrawal, Insolvency Professional, informing about the status of proceedings as in January, 2024. While the Ld. AO has mentioned that Corporate Insolvency Resolution Process has been withdrawn, it is clear from a reading of NCLAT’s order supplied to us that the said proceedings have merely been remanded back to the NCLT for adjudication, after providing an opportunity of being heard. Thus, it is clear that the proceedings have not been withdrawn by any of the petitioners or respondents, as claimed by the Ld. AO. Furthermore, examination from the website of NCLT reveals that the proceedings are very much ongoing and as recently as on 17.03.2025, some hearing took place. In light of these facts the present appeal has to be disposed of. 4 ITA No. 512 & 693/Kol/2022 Ankit Metal & Power Ltd. 3. None appeared on behalf of the assessee but with the help of Ld. DR, it has been brought to our notice that there are several cases of coordinate Benches of ITAT and even of the Hon’ble jurisdictional High Court, which would help in deciding these two appeals. 3.1 In the case of Kohinoor Steel (P.) Ltd. reported in 159 taxmann.com 571 (Kolkata) some portions from the head notes of this case deserves to be extracted: “Section 178, read with section 68, of the Income-tax Act, 1961 and sections 31 and 238 of the Insolvency and Bankruptcy Code, 2016 Company in liquidation (Stay) - Assessment year 2012-13 - Whether IBC is a complete Code in itself and in view of provisions of section 238 of IBC, provisions of IBC would prevail notwithstanding anything inconsistent therewith contained in any other law for time being in force including Income-tax Act which has been specifically provided under section 178(6) of the Income-tax Act as amended with effect from 1-11-2016-Held, yes -Whether once resolution plan is approved by Adjudicating Authority, dues including statutory dues of Government or local authority, if not part of resolution plan, gets extinguished and no proceedings in respect thereof for a period prior to date of approval under section 31 can be initiated against corporate debtor, that is, assessee company including income tax proceedings Held, yes Whether, therefore, where assessee- company was under Corporate Insolvency Resolution Process (CIRP), no proceedings could be initiated against assessee-company including income tax proceedings and recovery of demand or giving effect of any order; appeal filed by assessee against addition made by Assessing Officer under section 68 in respect of share application money was to be dismissed as infructuous - Held, yes [Paras 9.8 and 9.10] [Partly in favour of assessee]” 3.2 Similarly, in the case of Srei Equipment Finance Ltd. reported in 141 taxmann.com 307 (Kolkata), the Hon’ble High Court has clearly directed that no proceedings can be ongoing once moratorium u/s 14 of IBC 2016 is in operation head note deserves to be extracted: “Section 178 of the Income-tax Act, 1961, read with sections 14 and 238. of the Insolvency and Bankruptcy Code, 2016 Company in liquidation (Sub-section (6)) Whether moment an insolvency petition is admitted, moratorium that comes into effect under section 14(1)(a) expressly interdicts institution or continuation of pending suits or proceedings against corporate debtors Held, yes Whether where in response to show cause notice issued to assessee, it had pointed out that proceedings were liable to be stayed since it had been admitted for Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016 (IBC) and presently was under moratorium by orders of National Company Law Tribunal (NCLT), Assessing Officer committed grave error in proceeding to complete assessment without hearing assessee on issue relating to effect of IBC and refusing to stay proceedings till completion of CIRP-Held, yes Whether therefore, assessment order was to be set aside and matter was to be restored to file of Assessing Officer and matter shall be kept in abeyance till completion of CIRP-Held, yes (Paras 5, 7 and 14] [In favour of assessee]” 5 ITA No. 512 & 693/Kol/2022 Ankit Metal & Power Ltd. 3.3 Similarly, in the case of Sumeet Industries Ltd. reported in 150 taxmann.com 464 (Surat-Trib) it has been held that once section 14 of the IBC, 2016 comes into operation there could be no continuation of any pending proceedings before ITAT. The proceedings before ITAT would need to be dismissed. 4. A combined reading of the cases cited above clearly shows that during the pendency of proceedings before NCLT, where a moratorium u/s 14 of the IBC is operational, there cannot be any live proceedings pending before the ITAT. We accordingly, dismiss the two appeals as infructuous. 5. In the result, appeals filed by the assessee are dismissed. Order pronounced in the court on 19.03.2025 Sd/- Sd/- (George Mathan) (Sanjay Awasthi) Judicial Member Accountant Member Dated: 19.03.2025 AK, P.S. Copy of the order forwarded to: 1. Ankit Metal & Power Ltd 2. Deputy Commissioner of Income tax, Central Circle – 3(3), Kolkata 3. CIT(A)- 4. CIT- 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches "