VIJAYGROUP HOUSING PRIVATE LIMITED,MUMBAI V. NFAC CIT(A), MUMBAI

ITA 5281/MUM/2024

AI Insights

The case involves Vijaygroup Housing Pvt Ltd, which is under Corporate Insolvency Resolution Process (CIRP), appealing against the additions made to their income for AY 2016-17 and AY 2019-20 by the National Faceless Appeal Centre (NFAC), Delhi. The additions were based on allegations of unexplained credits, expenditures, and investments linked to accommodation entries provided by intermediaries involved in illegal activities. The tribunal examined the submissions and evidence (or lack thereof) presented by both parties, including the Resolution Professional managing the CIRP, and found no merit in the appeals, leading to their dismissal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312760 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2016-2017
• Other Referred Cases: CIT vs. Monnet Ispat & Energy Ltd., PLATINO CLASSIC MOTORS INDIA PVT. LTD. vs. WP(C) NO. 7997 OF 2023, Sundaresh Bhatt, Liquidator of ABC Shipyard V. Central Board of Indirect Taxes and Customs
• Laws Referred To: Income Tax Act, 1961, Insolvency & Bankruptcy Code, 2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside; Business income; Unexplained cash credit; Unexplained expenditure; Depreciation; Unexplained investment; Bogus purchase; Period of limitation; Principle of natural justice; Search and seizure; Accommodation entries; Unabsorbed depreciation; Time period of passing order; Recovery proceedings; Liquidation; Bogus
• Section: 147; 148; 142(1); 154; 68; 69; 133(6); 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F”, MUMBAI BEFORE RAJ KUMAR CHAUHAN, JUDICIAL MEMBER AND SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER ITA No. 5280/MUM/2024 AY: 2019-20 & ITA No. 5281/MUM/2024 AY: 2016-17 Vijaygroup Housing Pvt Ltd. 708 Raheja Centre, 7th Floor, Free Press Marg, Nariman Point, Mumbai 400021 PAN: AADCN1474D Vs. National Faceless Appeal Centre CIT(A), Mumbai Aayakar Bhavan, R. NO. 528, 5th Floor, Mumbai 400020 (Appellant) (Respondent) Assessee Represented by : Shri. RAjnish Vohra a/w. Mr. Parth Gupta Department Represented by : Shri. Pravin Salunkhe, Sr. DR Date of conclusion of Hearing : 04.04.2025 Date of Pronouncement : 29.04.2025 O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. By this common order we propose to dispose of ITA No. 5281/Mum/2024 for AY 2016-17 and ITA No. 5280/Mum/2024 for AY 2019-20 because both the appeals pertains to the same appellant/assessee and the impugned orders challenged are also of the same date, therefore, in order to avoid multiplicity of decision, both the appeals are being disposed of simultaneously vide this ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 2 common order. Both this appeals are directed against separate order of the even date 09.08.2024 u/s. 250 of the income tax Act, 1961 [hereinafter refereed as the act] passed by National Faceless Appeal centre (NFAC), Delhi hereinafter refereed as the CIT(A). ITA 5281/Mum/2024 for AY 2016-17 is taken as lead case. 2. Brief facts as culled out from the proceeding of the lower authorities are that the assessee is having business of construction and development of real estate projects and has filed its return of income for AY 2016-17 on 16/10/2016 declaring total taxable income at Rs. Nil. The return was proceed u/s. 143(1) of the Act. However an information was received regarding this case on the inside portal having been uploaded by ADIT (investigation), unit 1 (3 Mumbai) regarding search and seizure action and survey action in case of Ramesh Chaurshiya, Shri Achal Chaurshiya and ARC group. As per information, the group was involved in illegal online batting and gambling activities and was generating huge amount of unaccounted cash from these activities; that the cash was being routed in the books of accounts of more than 35 group concerns through various types of accommodation entries which were being sourced against cash with the help of various intermediaries including Chartered Accountants, Company Secretary and Entry Operators. It was noted that CA Sanjay Shah was one of the ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 3 intermediaries who had sourced and provided accommodation entries of different types like bogus purchases, bogus trading income, bogus long term capital gain, etc. 3. It is further noticed that, CA Sanjay Shah has arranged accommodation entries for his clients from the entities being run and operated by Shri. Rajesh Mehta viz. Anericap limited and VRB Capital Services Limited. On perusal of list of beneficiaries and fund trader, it is seen that the assessee i.e. M/s. Vijaygroup Housing Limited is one of the beneficiaries during the year under consideration with the transaction of Rs.1,53,06,493/-. Accordingly, as per above information received, the case of assessee was reopened by issue of notice u/s. 148 dated 31.03.2023 after taking the approval of principle CCIT, Mumbai. The case was assigned to NFAC for completion of assessment, however, the case was reassigned to the jurisdictional assessing officer u/s. 144B(8) of the Act for completion of assessment. In response to the notice issued u/s. 148 of the Act, the assessee vide Email dated 24.11.2023 has stated certain facts, the relevant part of which is as below: “i. As you are aware, Vijaygroup Housing Private Limited (Corporate Debtor) is presently undergoing a Corporate Insolvency Resolution Process (CIRP), with my appointment as the Resolution Professional (RP) having been established by the Hon'ble National Company Law Tribunal (NCLT) via an order dated March 15, 2023 These particulars have been previously communicated to you vide letter July 10, 2017 ii. Regarding tax claims and proceedings by tax authorities for the enforcement or recovery of tax claims during the CIRP, it has been legally established that the moratorium under Section 14 of the IBC applies to such ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 4 tax claims (please refer to CIT vs. Monnet Ispat & Energy Ltd., 2018) (18 SCC 786) Therefore, in compliance with the IBC framework, for dues pertaining to periods before the insolvency commencement date, creditors, including tax departments, cannot seek repayment during the CIRP due to the imposed moratorium The Income Tax Department has the option to file their claim with the RP, which will be processed under the IBC under an approved resolution plan or during liquidation\" 4. Considering the reply of the assessee company, a letter vide DIN No. ITBA/COM/F/17/2023-24/1059452492(1) has been issued to rebut the stand of the assessee company. The relevant part of the same is as under: \"In this regard it is submitted that as per Hon ble Kerala High Court Order in the case of PLATINO CLASSIC MOTORS INDIA PVT. LTD. in WP(C) NO. 7997 OF 2023 dated 26.10.2023 has made the following observations/directions which is as under \"From perusal of Section 14 of the IBC and several Judgments of the other High Courts as well as the Supreme Court, it is well settled that Section 14 of the IBC does not create a bar for finalisation of the assessment and adjudication proceedings in respect of the taxes.\" In view of the above your contentions filed in this office on 24.11.2023 is not acceptable. Therefore it is requested to submit the details as per the requirement of this office for completion of Assessment proceedings in the case of M/s VijayGroup Housing Pvt Ltd PAN AADCN1474D for A Y 2019- 20.\" 5. Notice u/s. 142(1) of the Act was sent on 12.02.2024 requesting the assessee to file details in regard to the transaction of Rs. 1,53,06,493/- as mentioned above on or before 25.01.24. In response, it was submitted on behalf of assessee that Corporate Insolvency Resolution Process, (CIRP) in respect of assessee was initiated by Hon’ble NCLT, Mumbai vide order dated 30.12.2022 and vide replacement order dated 15.03.2023, IRP was replaced and Mr. Prakash V. Kukreja was appointed as Resolution Professional for the assessee (corporate Debtor). In respect of ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 5 transaction entered into of Rs.1,53,06,493/-, the Resolution Professional of the assessee had submitted that due to limited information available with the Resolution Professional as he has not been able to get from the ex-promoter any information because the ex-promoters have not responded to him, therefore the Resolution Professional (RP) could submit nothing. 6. A notice u/s. 133(6) was also sent to M/s. VRB Capital Services Limited on 12.03.2024 requesting to furnish details of the above said transaction of Rs.1,53,06,493/- along with supporting documents/evidence. The said notice has been duly delivered through email but no response has been filed. Even the assessee has failed to submit any documentary evidence and supporting documents about the transaction and accordingly show cause notice dated 28.02.2024 was issued to the assessee for explaining about the transaction. In response vide letter dated 04.03.2024, the Resolution Professional on behalf of assessee simply stated that, neither the Resolution Professional is privy to the alleged transaction under taken out of books of accounts nor he is aware of the alleged transaction because the information pertains to unexplained credit u/s. 68 of the Income Tax Act, to which Resolution Professional has no knowledge as about there has been no response from the ex-promoters of the assessee. Further the ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 6 financial for AY 2015-16 were prepared by the ex-management and audited by auditor’s appointed by ex-management. The assessee in response vide letter dated 04.03.2024 has submitted its response as under: “i. As you are aware, the Corporate Insolvency Resolution Process (CIRP) in respect of Vijaygroup Housing Private Limited (Corporate Debtor) was initiated by Hon'ble NCLT Mumbai Bench vide its Order dated 30th September 2022 and thereafter vide its replacement order dated 15th March, 2023 (uploaded on 24th Mar 23) erstwhile (RP was replaced and Mr. Prakash V. Kukreja was appointed as the Resolution Professional (RP) for the Corporate Debtor. ii Upon commencement of CIRP, the RP takes charge of the affairs of the Company since the powers of the Board of Directors of the Corporate Debtor stand suspended on commencement of the CIRP by virtue of Section 17(1)(b) of the Code; and such powers are exercised by the RP iii. Your good office has proposed to make addition to income of Rs. 20,34,000/- in respect of transaction stated to have undertakeri during FY 2018-19 le pre-cirp period. In this regard, RP would like to point out that during the concerned period, the Company affairs were looked after by Board of Directors/Ex-Promoters and RP was appointed by the Hon'ble NCLT, wef. 15th March 2023. Thus, neither RP is privy to the alleged transaction undertaken out of books of accounts nor he is aware about the alleged transaction. iv. Please note that the RP, upon receiving this SCN, also reached out to the ex-promoter to assist in sharing any relevant and available information to appropriately share with the ITO, Since the information pertains to unexplained cash credits u/s 68 of the Income Tax Act, to which RP has no knowledge about. There has been no response from the ex-promoter v. Further, the financials for FY 2018-19 were prepared by the RP based on very limited available information and data provided by the erstwhile management. Hence suitable assumptions and best judgement, alongwith applicable assumptions were taken to complete the financials and the audit. All the relevant documents available with the RP have already been shared in the response to your notice u/s 142(1) issued dated 10th Jan 2024. vi. As an additional information, it may also be noted that the RP is duty bound to form an opinion and accordingly file an application for the avoidance transactions with the Hon'ble NCLT. Hence, RP based on a Transaction Audit conducted for the Corporate Debtor, has filed an avoidance application against the transactions categorised as Fraudulent Transactions u/s 66 of the IBC and the with the Hon'ble NCLT”. ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 7 7. The above submission of the assessee were considered. However, it was noticed that the assessee had failed to submit any supporting document or evidence in support of unsecured loan of Rs. 1,53,06,493/- including interest @12% i.e. Rs.2,71,233/- and brokerage of Rs. 35,260/- from VRB Capital Services Limited. The assessee has failed to produce any documents/evidence to prove the identity, credit worthiness of the parties alongwith genuineness of transaction concerned as stated above. Accordingly, the receiving of the loan amount by the assessee of Rs.1,50,00,000/- was added back to the total income of the assessee as unexplained credits u/s. 68 of the Income Tax Act. The interest of amount of Rs. 2,71,233/- and brokerages of Rs. 35,260/- paid to Mr. Sanjay Shah is also added to the total income of the assessee as unexplained expenditure u/s. 69(C) of the Act. The proceeding u/s. 271(C) were also initiated. 8. Further notice u/s. 142(1) of the Act was issued on 21.02.2024 requesting assessee to file details in respect of the third party transactions of the assessee. However, the assessee failed to response to the same. Accordingly, show cause notice was issued to the assessee company on 19.03.2024 for explaining the transaction mentioned in third party information available on insight portal with respect to the property having been purchased for ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 8 consideration of Rs. 2,08,06,040/- during the year under consideration. The response dated 21.03.2024 was submitted on behalf of the assessee stating that audited financial for the given period were done by the erstwhile auditors who were appointed by the Board of directors of the ex-promoters. Since the information pertains to pre CIRP period and the ex-promoter did not assist the Resolution Professional in sharing any relevant and available information with respect to the above transaction. 9. Since the assessee has failed to submit any details or any documentary evidence in support of the transaction of purchase of property of Rs.2,08,06,040/-, the same was treated as unexplained investments and added back u/s. 69 of the Act. Further a sum of Rs. 12 lacs were also added to the total income of the assessee in respect of difference of rental income received from M/s. Vijaya Surksha Reality LLP. Accordingly, total income of the assessee was shown Rs. 3,73,12,533/- as under: Particulars Amount Returned Income Rs. NIL/- Add: 1. Disallowance made -u/s. 68 of the IT Act (as per para 5.2) Rs. 1,50,00,000/- 2. Disallowance-u/s. 69C of the IT Act (as per para 5.3) Rs. 3,06,493/- 3. Disallowance-u/s. 69 of the IT Act (as per para 5.6) Rs. 2,08,06,040/- 3. Income from other sources (Rental Income) (as per para 5.7) Rs. 12,00,000/- Total Income Rs. 3,73,12,533/- ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 9 10. Aggrieved, by the assessment order, the assessee filed an appeal u/s. 250 of the Income Tax Act against the addition of Rs. 3,73,12,533/- stating that the said addition by the Ld. AO was unjustified in law. It is stated that during the course of search action and assessment proceeding, the Ld. AO has recoded statement of CA Sanjay Shah and his statement was also recorded u/s. 132(4) of the Act wherein he has stated that he was operating VRB Capital Services Limited for providing accommodation entries in respect of unsecured loans. The Ld. AO has not provided statement of CA Sanjay Shah and has also not provided evidence which is stated to containing name of the appellant company; the Ld. AO has made addition by using the above evidence against appellant company and the addition made by the Ld. AO without confronting the above evidence with the appellant before completion of assessment proceeding was totally unjustified and addition was made in violation of principle of natural justice. It is noticed by the Ld. CIT(A) that this objection against the addition regarding non providing documents and non-providing statement of Mr. Sanjay Shah has not been raised before the Ld. AO who was the right person or forum where this objection could have been raised by the appellant. It is further observed that the appellant/assessee has not provided any documents/evidence ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 10 regarding the merit of the case. It is apparent form the finding of the Ld. AO that no documentary evidence or details/submissions had been made before the Ld. AO or the first appellant authorities, thus all the grounds related to the various additions made by the Ld. AO were dismissed on the ground that due to negligent behavior of the appellant/assessee and in the absence of any document or material having not been submitted, the addition made by the Ld. AO were upheld and confirmed and grounds no.1 to 5 of appellants were rejected. Regarding the setoff of the current year business loss of Rs. 44,12,000/- and brought forward unabsorbed depreciation of Rs. 70,12,991/- pertaining to AY 2013- 14 and AY 2015-16 against the addition made of Rs. 3,73,12,533/- was directed to the verified by the Ld. AO with the directions to setoff the current year business loss, if any brought forward as unabsorbed depreciation, if any as per law. Thus, the appeal was partly allowed and partly dismissed by the Ld.CIT(A). 11. Aggrieved by the impugned order of the Ld. CIT(A) the assessee is in appeal before us and has raised the following grounds: “1. The Learned CIT(A) erred in confirming the addition of Rs 15000000 on account of receipt of loan as unexplained credit u/s 68 of the Income Tax Act. Reasons assigned by him for confirming the same are wrong and insufficient. Therefore, Appellant prays for the deletion of additions confirmed by the Learned CIT(A). 2. The Learned CIT(A) erred in confirming the addition of Rs 306493 on account of interest paid of Rs. 271233 and brokerage paid of Rs. 35260 by Appellant as unexplained expenditure u/s 69C of the Income Tax Act. Reasons assigned by him for confirming the same are wrong and ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 11 insufficient. Therefore, Appellant prays for the deletion of additions confirmed by the Learned CIT(A). 3. The Learned CIT(A) erred in confirming the addition of Rs 20806040 on account of purchase of immovable property u/s 69 of the Income Tax Act. Reasons assigned by him for confirming the same are wrong and insufficient. Therefore, Appellant prays for the deletion of additions confirmed by the Learned CIT(A).3. The Learned CIT(A) erred in confirming the addition of Rs 20806040 on account of purchase of immovable property u/s 69 of the Income Tax Act. Reasons assigned by him for confirming the same are wrong and insufficient. Therefore, Appellant prays for the deletion of additions confirmed by the Learned CIT(A). 4. The Learned CIT(A) erred in confirming the addition of Rs 1200000 on account of difference of rental income is added back under the head Income from other sources. Reasons assigned by him for confirming the same are wrong and insufficient. Therefore, Appellant prays for the deletion of additions confirmed by the Learned CIT(A). 5. Order passed is bad in law and contrary to the provisions of the Act. The Company is under Corporate Insolvency Process under the Insolvency & Bankruptcy Code, 2016, as the Supreme court has clearly ruled that initiation and continuation of proceedings relating to the period prior to the approval of the resolution plan cannot be indulged in. Therefore, Appellant prays for the cancel the impugned Assessment Order. 6. The appellant carves leave to add alter/modify the grounds of appeal.” 12. On perusal of the grounds raised, we have noticed that the ground no.1 to 4 pertains to the various addition made by Ld. AO and confirmed by the Ld. CIT(A). The ground no.5 in ITA NO. 5281/Mum/2024 (lead case) is the legal ground. The ground no. 6 is general ground and does not need adjudication 13. We have heard the Ld. AR as well as Ld. DR. At the very outset it has been submitted on behalf of the assessee that no material/documents were available with Resolution Professional/Liquidator who has filed the present appeal on behalf of the assessee because the ex-promoter has not cooperated and failed to provide any information and documents with respect to ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 12 the alleged transaction on the basis of which alleged additions have been made against the assessee. With respect to the legal ground it has been argued by the Ld. AR that the order passed is bad in law because the assessee Company is undergoing Cooperate Insolvency Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 and continuation of proceeding relating to the period prior to the approval of the resolution plan was not legal and accordingly, it was submitted that the impugned assessment order was required to be set aside. 14. The Ld. AR on behalf of the assessee has submitted in writing that no factual details could be filed before the Ld. AO and the Ld. CIT(A) by the Resolution Professional, owing to the fact that the appellant company was undergoing CIRP and ex-promoters did not provide any factual details to the Resolution Professional of the appellant company. It is further, stated that the appellant also confirms that factual details are not available even now. 15. The Ld. DR on the other hand submitted that it is an admitted fact that no document/material/submission has been made by the assessee, or on behalf of the assessee against the additions made by the Ld. AO. The assessee has totally failed to establish identity, credit worthiness of the parties and genuineness of the transaction which resulted into the addition by the Ld. AO as unexplained ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 13 credits u/s. 68 of the Act, unexplained expenditure u/s. 69(C) of the Act, unexplained investment u/s. 69 of the Act and addition as income from other sources respectively. 16. With regard to the legal ground raised against the right of the revenue/income tax department for initiating proceeding despite the insolvency proceedings against the assessee, the Ld. DR has relied upon the order of the Ld. coordinate bench in ITA No. 4517/Mum/2023 AY 2017-18 order dated 27.05.2025 where similar ground was raised with respect to income tax assessment proceeding during CIRP under IBC, 2016. It is argued by the Ld. DR that there is no bar for completing the assessment by the income tax department with respect to assessee/corporate debtor under the CIRP, as only recovery of the due tax is restrained against the corporate debtor undergoing insolvency proceeding under the IBC 2016. It is therefore, submitted that there is no merit in the appeal and the same be dismissed. 17. We have considered the rival submissions and examined the material available on record. Ground No.1 to 4 (Lead Case) 18. These grounds pertains the addition of Rs.1,50,000/- as unexplained credit u/s. 68 of the Act, an addition of Rs.3,06,493/- as unexplained expenditure u/s. 69(C) of the Act which included ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 14 on account interest paid and brokerage paid by the appellant; addition as unexplained investment of Rs.2,08,06,040/- is on account of purchase of immovable property u/s. 69 of the Income Tax Act and addition of Rs.12,00,000/- is made as income from other sources because assessee had failed to submit details in respect of difference of rental income received from Vijay Surksha Reality LLP. Admittedly no document or material had been submitted by the assessee or on behalf of the assessee by the Resolution Professional before the Ld. AO as well as Ld. CIT(A) which has resulted into the addition of the relevant amount mentioned by the Ld. AO and confirmation by the first appellant authority Ld. CIT(A). With respect to the addition made u/s 68 of the Act it was incumbent upon the assessee to satisfy the revenue authority by proving the identity, credit worthiness of the partes and the genuineness of the transaction. With respect to the addition made u/s. 69(C) of the Act, the assessee has failed to offer any explanation about the sources of the funds to the satisfaction of the Ld. AO. With respect to the addition u/s. 69 of unexplained investment, admittedly the assessee has failed to offer explanation about the nature and source of investment to the satisfaction of the revenue authorities. The assessee has failed to furnish any document or material before the Ld. AO as well as before the Ld. ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 15 CIT(A) and it has been submitted before us in writing that no such material is available with the Resolution Professional for submitting on behalf of the assessee even before this Tribunal. 19. We have noticed that the Ld. CIT(A) has examined the submissions with respect to the various additions made and has dismissed the appeal of assessee and based his decision on sound legal principles and settled legal precedents. It is to be noticed that the resolution professional on behalf of the assessee has also submitted in writing before us that he has no material/evidence/submissions to be made on behalf of the assessee with respect to the additions to the total income challenged in this appeal. Thus, the assessee has totally failed to bring any material against the additions made by Ld. Assessing Officer and confirmed by the Ld. CIT(A). For the above reasons, we find no legal infirmity in the impugned order which may warrant interference by this Tribunal. The ground no. 1 to 4 are accordingly rejected. 20. With respect to legal ground no. 5 we are of the considered opinion that the issue is covered by the order of the Ld. Coordinate bench in ITA No.4517/Mum/2023 order dated 27.05.2024 (supra) and we proceed to quote the following extracts relevant to the issue involved before us as under: ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 16 “4. In response to the notice issued by the tribunal, Learned Representative for the department appeared and participated in the hearing of the case. 5. We have gone through the materials available on record and Heard learned representatives for both the parties. 6. The following points are to be determined under appeal. “I. Whether, the provisions of the IBC code 2016 would prevail over the Income Tax Act 1961, and if so to what extent? II. Whether learned CIT(A) erred in not adjudicating the issue on merit, merely because of the pendency of the liquidation process against the assessee corporate debtor? III. Whether assessee is entitled to any relief? 7. At the very outset, it is pertinent to mention that all the Income Tax Authorities had knowledge of the fact that the appellant assessee/corporate debtor was admitted into corporate insolvency resolution process (CIRP) vide order dated 14.06.2017 passed by the National Company Law Tribunal (NCLT) Mumbai bench (NCLT is an adjudicating authority under IBC) Mr. Sanjeev maheshwari was appointed as Interim Resolution professional. Due to non approval of Resolution Plan by the committee of creditors within the statutory period, adjudicating authority passed liquidation order dated 04.12.2018 under section 33(1) of the IBC in respect of the assessee/Corporate debtor. 8. Learned representative for the assessee has submitted that since liquidator was appointed on 4th December, 2018 by NCLT, no legal proceedings could be initiated subsequent there to. He has referred Deutsche Bank vs S.P.Kala Official Liquidator of Sea, [1990]67COMPCAS474(BOM). The relevant para 6 reads as under: \"..........Section 446 of the Companies Act provides that, when a winding up order is made or the official liquidator is appointed as provisional liquidator, no suit or legal proceedings should be commenced or if pending on the date of the winding, winding-up order, shall be proceeded with, against the company, Except with the leave of the court and subject to such terms as may be imposed. Sub- section (2) further lays down that the court which is winding-up the company shall, notwithstanding anything contained in any other law in force, have jurisdiction to entertain or dispose of, inter alia, any suit or proceeding by or against the company, whether such suit or proceeding has been instituted or is instituted. A careful examination of these provisions of law makes it clear that once a winding-up order is made or the official liquidator is appointed as provisional liquidator, no proceedings can continue or be instituted against the company without the permission of the court...... 9. Learned Representative for the revenue department has submitted that no leave of the adjudicating authority is necessary to be obtained by the Revenue Department in respect of assessment proceedings. He has referred Official Liquidator, High Court,...Vs Commissioner of Income Tax, West Bengal, AIR 1970 CAL349, in support of his arguments. The relevant para 49a read as under: ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 17 “49a. Assessment proceedings and recovery proceedings, although both are proceedings under the Income-tax Act, do not, to my mind, stand on the same footing in so far as leave nder Section 446(1) of the Companies Act, 1956 is concerned. So long as the duty of assessment is not performed, the right to recover does not arise at all. Assessment validly done in accordance with the provisions of the Income-tax Act is the only way of creating a debt in favour of the Department and does not affect the assets and properties of the company or the scheme of administration thereof or the winding up of the company in any way. When any debt for payment of taxes arises on an assessment, it is open to the Department to prove the debt in liquidation, claim payment thereof and the debt of the Department will be paid in the same manner as the debt of other creditors of the same class) It may also be open to the Department to seek to enforce its right of recovery of the debt in accordance with the provisions of the Income-tax Act. But the right to enforce recovery by taking recourse to recovery proceeding against the assere of the company in liquidation is and cannot be an unfettered right. This right to recover in enforcement of the recovery proceedings under the Income-tax Act is controlled by Section 446(1) of the Companies Act, 1956 and is subject to necessary leave of Court,.........\" 10. It is true that the IBC is more recent statute. Section 238 of IBC reads as under: \"238. Provision of this Code to override other laws.- The Provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.\" 11. The non-obstante clause in the above referred Section 238 clarifies that the IBC Code shall have the effect of overriding the provisions of other laws. Section 178 of the Act makes provision in respect of the 'company in liquidation'. The relevant Section 178(6) of the Income Tax Act reads as under: \"(1) ……….. (2) ……….. (3) ……….. (4) ……….. (5) ……….. (6) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force [except the provisions of the Insolvency and Bankruptcy Code, 2016].\" 12. Above referred Sub Section 6 of Section 178 of the Act was amended by Section 247 r/w 3rd schedule of IBC with effect from 01.11.2016. This provision makes it clear that IBC code will override the provisions of Income Tax Act 1961. The three judges bench of Hon'ble Supreme Court in Civil Appeal No. 7667 of 2021, Sundaresh Bhatt, Liquidator of ABC Shipyard V. Central Board of Indirect Taxes and Customs, vide order dated 26.08.2022, has held that the respondent could only initiate assessment or re-assessment of the duties and other levies, once a moratorium is imposed in terms of Section 14 or 33(5) of the IBC as the case may be, the respondent authority, only has limited jurisdiction to assess/determine the quantum of the customs ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 18 duty and other levies. The respondent authority does not have the power to initiate recovery of dues. Liquidator has an obligation to ensure that assessment is legal and he has been provided with sufficient power to question any assessment if he finds the same to be excessive. 13.We accordingly, on the basis of aforesaid binding precedent, hold that the provisions of IBC 2016 would prevail over the Income Tax Act. 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 at its own during the period of moratorium in violation of Section 14 or 33(5) of the IBC. The Income Tax Authorities are like any other creditor, may stake their claim before liquidator in the statutory limitation period provided under the IBC. The first point is accordingly determined in positive in favour of the assessee. 14. Secondly, in view of the findings given at point no.1, it is easily concluded that Learned CIT(A) has erred is not adjudicating the matter which was with respect to the determination of tax dues only, more so, when the liquidator, himself, was pursuing the matter. The second point is accordingly determined in positive in favour of the assessee and against the revenue department.” 21. We respectfully, follow the judgment of the, Ld. Coordinate bench extracted above and also find ourselves in agreement with the finding of the ld. Coordinate bench to the effect that the income tax authorities have limited jurisdiction to assess/determine the income tax due but have no authority for immediate recovery of such due at its own during the period of moratorium in violation of Section 14 or 33(5) of IBC, 2016. We respectfully, agree with the coordinate bench that the income tax authorities are like any other creditor, may stake their claim before the liquidator in the statutory limitation period provided under the IBC 2016. The Revenue authorities are within their powers against the assessee who is undergoing CIRP under the IBC, 2016, for adjudicating the matter with respect to determination of tax only. For these ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 19 reasons, the ground no. 5, which is the legal ground is also rejected. 22. In view of the above, findings on the grounds, the appeal of the assessee is accordingly dismissed. IAT No. 5280/Mum/2024 Ay 2019-20 23. The assessee has filed its return of income for AY 2019-20 on 29.09.20 declaring total taxable income as Rs. NIL. The return was proceed u/s. 143(1) of the Act. However on the basis of information from DDIT/ADIT investigation, the assessment was reopened u/s. 148 of the Act after completing all formalities. 24. Brief facts shows that CA Sanjay Shah had arranged the accommodation entries of unsecured loan for the assessee from VRB Capital Services Limited for which the assessee has allegedly made payment of interest of Rs.20,34,000/-. The assessee has failed to submit any documents in support of its claims of payment/cash and to establish unsecured loan from M/s. VRB Capital Services Limited. Even the M/s. VRB Capital Services Limited has not responded to the notice u/s. 133(6) dated 12.03.2024 issued by the Ld. AO and has not filed any reply. Hence, the sum of Rs. 20,34,000/- was added to the total income of the assessee as unexplained cash expenditure u/s. 69(C) of the ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 20 Act because the assessee failed to produce any documents/evidence to prove the identity, credit worthiness and genuineness of the transaction as mentioned above. 25. Aggrieved by the assessment order, the assessee filed appeal before the Ld.CIT(A) who dismissed the same and confirmed the additions on the ground that assessee/appellant had failed to substantiate the transaction as no document/material was produced before the Ld. AO or before the Ld. CIT(A). 26. The ground no. 4 before the Ld.CIT(A) was raised and disposed of as under: “APPELLATE DEICSION W.R.T GROUND NO.-4: The appellant states that, the \".... On the facts and in law the AO has erred in considering income of Rs.6.64,40,138/- as per intimation u/s. 143(1) as against Nil Income as per Return of income fled without appreciating the fact that there is mistake in the Intimation issued u/s. 143(1) while processing the return of income wherein Business income is considered at Rs.5.29,71,920/- against Nill Business Income declared in the IT Return fled and set off of Current year business loss against Income from other sources Rs 1,34,68,218/- is not allowed in the Intimation. The appellant is seeking to challenge the AO's order passed u/s. 143(1) of the Act and whereas this appeal filed by the appellant vide no. NFAC/2018- 19/10363805, dated 22/04/2024, against the assessment order dated 26.03.2024 passed u/s 147 of the Income Tax Act, 1961, for this AY 2019-20. Thus, it is evident that, the grounds of appeal are incorrect and or not relevant to the assessment order dated 26.03.2024. Thus, the same are rejected as not entertainable. However, the appellant is free to file a rectification petition U/s. 154 of the Income-tax Act, 1961 before the AO concerned seeking such corrections of errors in the AO's order passed u/s, 143(1) of the Act, if any as per law. Thus, this ground no.-4 is also rejected.” 27. Aggrieved by the order of the Ld. CIT(A) the assessee has filed present appeal and has raised the following grounds. “1. The Learned CIT(A) erred in confirming the addition of Rs 2034000 on account of interest paid by Appellant as unexplained cash expenditure u/s 69C of the Income Tax Act. Reasons assigned by him for confirming the ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 21 same are wrong and insufficient. Therefore, Appellant prays for the deletion of additions confirmed by the Learned CIT(A). 2. On the facts and in law the AO has erred in considering income of Rs.66440138/- as per intimation u/s. 143(1) as against Nil Income as per Return of income filed. Business income is considered at Rs.5,29,71,920/- against Nill Business Income declared in the IT Return filed and set off of Current year business loss against Income from other sources Rs. 1,34,68,218/- is not allowed in the Intimation. 3. Order passed is bad in law and contrary to the provisions of the Act. The Company is under Corporate Insolvency Process under the Insolvency & Bankruptcy Code, 2016, as the Supreme court has clearly ruled that initiation and continuation of proceedings relating to the period prior to the approval of the resolution plan cannot be indulged in. Therefore, Appellant prays for the cancel the impugned Assessment Order”. 28. On perusal of the grounds, it is noticed that the ground no. 1 pertains to the addition of Rs. 20,34,000/- u/s. 69(C) of the Act and ground no. 2 pertains to the addition of Rs.1,34,68,218/- as income from other sources and also with respect to the mistake in the intimation u/s. 143(1) of the Act. Ground no. 3 is a legal ground which is same and similar to the ground no. 5 in ITA No. 5281/Mum/2024 (The lead Case). 29. We have heard the Ld. AR and Ld. DR with respect to the grounds raised in the present appeal. Admittedly no document has been produced before the revenue authority or before the Tribunal with respect to the unexplained expenditure of Rs.20,34,000/- added u/s. 69(C) of the Act, therefore, the finding recorded in ITA No. 5281/Mum/2024 with respect to ground no. 1 to 4 therein shall mutatis mutandis apply to the ground no.1 of the present appeal. Accordingly, the ground no, 1 stands dismissed. ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 22 30. With the respect to the ground no.2, we have examined the finding of the Ld. CIT(A) on ground no.4 before him as extracted in the preceding para no. 28 by us and we find no illegality in the findings of the Ld. CIT(A) on the ground no.4 before him and which is ground no.2 before us. Nothing contrary to the finding returned by the Ld. CIT(A) with respect to the ground no. 4 before the Ld. CIT(A) has been submitted before us. Accordingly, the ground no.2 in the present appeal also stands rejected. 31. The ground no.3 is legal ground and the finding returned by us in ITA No. 5281/Mum/2024 (Lead Case) with respect to ground no.5 therein shall mutatis mutandis apply to the ground no.3 herein and the same is accordingly rejected. 32. In the result, appeal of the assessee is dismissed. 33. For the above reasons both the appeals in ITA No. 5280/Mum/2024 for AY 2019-20 and ITA No. 5281/Mum/2024 Ay 2016-17 are dismissed. Order pronounced on 29.04.2025 Sd/-Sd/- Sd/- (OM PRAKASH KANT) (RAJ KUMAR CHAUHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai / Dated 29.04.2025 Divya R. Nandgaonkar, (Stenographer) ITA No. 5280 & 5281/Mum/ 2024 Vijaygroup Housing Pvt. Ltd. 23 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mumbai "