Company becomes Non-Existent on completion of Liquidation Process: ITAT upholds Overriding effect of IBC over Income Tax Proceedings [Read Order]
![Company becomes Non-Existent on completion of Liquidation Process: ITAT upholds Overriding effect of IBC over Income Tax Proceedings [Read Order]](https://www.taxscan.in/wp-content/uploads/2022/03/Company-completion-Liquidation-ITAT-IBC-Income-Tax-taxscan-2.jpeg "Company becomes Non-Existent on completion of Liquidation Process: ITAT upholds Overriding effect of IBC over Income Tax Proceedings [Read Order]")
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) while quashing the income tax proceedings, held that since the Insolvency and Bankruptcy Code has overriding effect over the income tax proceedings, the department cannot have any claim since the company becomes non-existent once the liquidation process is completing. The assessment against the Company, M/s Oasis Textiles...
The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) while quashing the income tax proceedings, held that since the Insolvency and Bankruptcy Code has overriding effect over the income tax proceedings, the department cannot have any claim since the company becomes non-existent once the liquidation process is completing.
The assessment against the Company, M/s Oasis Textiles Ltd, was completed in the year 2017, and the appellate order thereupon was passed on 27.12.2018. Parallelly, NCLT has passed Resolution plan on 22.11.2017, and in the absence of any Resolution Plan, it was ordered to be liquidated vide order dated 22.11.2017. On completion of liquidation process, assesseecompany was dissolved by the NCLT vide order dated 30.6.2020.
The Tribunal bench comprising Shri Pramod M. Jagtap, Vice President and Ms. Suchitra M. Kamble, Judicial Member observed that “the claim of the Department was prior to the date of Resolution Plan approved by the NCLT, and therefore, the present income tax proceedings is hit by section 31(1) of Insolvency and Bankruptcy Code, 2016, which has overriding effect vis-à-vis the Income Tax Act, 1961. All these events are within the knowledge of the Income Tax Department, as the OL of assessee-company has intimated the Department from time to time in writing, but no action has been taken by the Department. Once a company is dissolved it becomes a non-existent party and therefore no action can be brought in its name. Therefore, in view of overriding effect of IBC code to the Income Tax proceeding, we hold that Revenue is not entitled to recover the claim, if any arising from the present proceedings for Asst.year 2015-16, as the same is not part of the resolution plan.” Shri Umesh Ved appeared for the assessee.
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