Moratorium Declared by NCLT in View of Insolvency & Bankruptcy Code has Overriding Effect on Tribunal: ITAT [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the moratorium declared by National Company Law Tribunal, (NCLT) has an overriding effect on the tribunal in view of insolvency and bankruptcy code.

The assessee, UM Green Lighting P. Ltd had been subjected to proceedings under Insolvency and Bankruptcy Code, 2016 (IBC) and Corporate Insolvency Resolution Process (CIRP) had been initiated against the assessee by the operational creditors.

It was pointed out that in terms of order delivered by Delhi Bench of National Company Law Tribunal, (NCLT) a moratorium had been declared in the case of the assessee with reference to provisions of Section 14 of the Insolvency Code.

As a necessary consequence of the declaration of moratorium in terms of Section 14 of the Code, several prohibitions had been imposed which inter alia included continuation of pending suits or proceedings against the assessee including execution of any judgement, decree or order by any Court of Law, Tribunal, Arbitration Penal or Authority.

Ajiv Bhatnagar, on behalf of the appellant submitted that in view of prohibitions imposed by the NCLT order which had the overriding effect on the Tribunal, the present proceedings by the revenue against the assessee could not continue during the moratorium period.

Rajarajeswari on behalf of the revenue submitted that the present appeal in narrated circumstances could not be pursued in view of the overriding provisions of insolvency code. However, he prayed for liberty to revive the captioned appeal as and when the moratorium period had over or when the revival of the company took place.

The two member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) dismissed the appeal filed by the revenue and the assessee was estopped to pursue the captioned appeal in the light of decision of the Supreme Court CIT Vs. Monnet Ispat and Energy Limited  and also in the light of the overriding provision of the code.

The Bench further observed that, “In view of the moratorium declared by NCLT, all proceedings in the court of law, Tribunal etc. cannot continue in view of the overriding provisions of Insolvency & Bankruptcy Code as recognized in Section 178(6) of the Act.”

To Read the full text of the Order CLICK HERE

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