Income Tax Dept Seized Amount Adjusted Towards Demand Prior to Initiation Of CIRP Not an Asset of CD: NCLAT
The amount seized has already been adjusted much prior to the initiation of CIRP much less the liquidation which took place much later therefore the argument raised by the appellant has no legs to stand.
The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that an amount seized by the Income Department adjusted against demand prior to initiation of the CIRP cannot be considered as assets of the corporate debtor. Harish Chander Arora Liquidator of Rathi Super Steel Ltd, the applicant challenged an order passed by the National Company Law Tribunal (NCLT) by...
The New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that an amount seized by the Income Department adjusted against demand prior to initiation of the CIRP cannot be considered as assets of the corporate debtor.
Harish Chander Arora Liquidator of Rathi Super Steel Ltd, the applicant challenged an order passed by the National Company Law Tribunal (NCLT) by which an IA filed by the liquidator was dismissed. The liquidator in the application sought direction for the respondent to refund Rs. 20,50,000 belonging to the corporate debtor. It is the case of the liquidator that the said amount could not have been adjusted towards an outstanding demand for Assessment Year 2011–12.
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The Tribunal had dismissed the application on the ground that the amount was seized in the year 2012 by the Department. The Assessee i.e. Corporate Debtor filed an appeal before CIT(A) against the outstanding demand but as per the instructions of the Board, the Assessee was liable to pay 20% of the outstanding amount i.e. 7501208/-. The said amount stated to have been adjusted by the Respondent on 31.03.2019.
An online tax accounting system of the department of income tax was produced which indicated that the amount in question pertaining to the year 2011-12 has been adjusted vide challan serial no. 86 on 31.03.2019 whereas CIRP in this case was initiated on 12.06.2019.
It was argued by the Appellant that the amount could not have been adjusted by the Department even if it has been seized for the year 2011-12 after the initiation of the CIRP because Respondent has to file a claim in terms of the Code either to the IRP or to the Liquidator as the case may be.
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While dismissing the appeal, the bench of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member) observed that since the amount seized has already been adjusted on 31.03.2019 , much prior to the initiation of CIRP much less the liquidation which took place much later thereof, therefore, the argument raised by the Appellant has no legs to stand.
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