The Delhi Bench of the Income Tax Appellate Tribunal in the case ACIT Versus ABW Infrastructure Ltd. observed and has held that the Insolvency and Bankruptcy Code, 2016 has an overriding effect on all the acts, which includes the Income Tax Act, 1961 as per Section 178(6) of the Income Tax Act which is effective from 01.11.2016.
The bench comprising of Judicial Member, Yogesh Kumar U.S. and the Accountant Member, Pradip Kumar Khedia in the case observed that no proceedings can be initiated against the corporate debtor which includes the proceedings before the Tribunal, the income tax proceedings, the recovery of demand, or giving effect to any order in the said case.
However, it has been challenged by the department or appellant the order of CIT(A)’s, wherein it is deleted the addition made by the A.O.
It has also been contended by the department that an application has been filed by financial creditor under Section 7 of the Insolvency and Bankruptcy Code 2016 against the assessee before the National Company Law Tribunal, and the judgement had also been by the NCLT while allowing the application.
Therefore, an application is admitted by the NCLT under the IBC Code in terms of Section 14, the IBC Code, and subsequently, the moratorium terms were imposed.
It has been noted by the tribunal that in view of the moratorium declared by NCLT, all the proceedings initiated by the court of law, tribunal, etc. cannot continue in view of the amendment to Section 178(6) of the Act and thus, no useful purpose is going to be served by the court in continuing the proceedings.
Accordingly, the ITAT observed and has granted the Revenue and the assessee the right for seeking remedial measures in accordance with the law when the moratorium period expires, thus, the court revived the assessee company or where it being necessary for the interest of justice. The court modified the order of NCLT.