Case Number: ITA 610/DEL/2019
Appellant: Shakti Bhog Foods Pvt. Ltd, New Delhi
Respondent: ACIT, Central Circle-27, New Delhi
Assessment Year: 2013-14
Result: 2013-14
Case Filed On: 2019-01-29
Order Type: Final Tribunal Order
Date of Order: 2023-01-18
Pronounced On: 2023-01-18
The case of Shakti Bhog Foods Pvt. Ltd. vs ACIT in the Income Tax Appellate Tribunal (ITAT) for the assessment year 2013-14 illustrates the complex dynamics between insolvency proceedings and tax appeals. This article delves into the background, proceedings, and implications of this case, which is part of a larger set of appeals involving Shakti Bhog Foods Limited and its associated entities.
Shakti Bhog Foods Pvt. Ltd., a prominent entity in the food industry, faced tax assessments for multiple years, including 2013-14. The assessments were conducted under Section 143(3) read with Section 153A of the Income Tax Act, 1961. The initial assessment orders were issued on 30.12.2017, leading to appeals before the Commissioner of Income Tax (Appeals)-XXIX, New Delhi (CIT(A)). The CIT(A) issued orders on 27.11.2018, which were subsequently contested by both the assessee and the Revenue in the ITAT.
Parallel to the tax appeals, Shakti Bhog Foods Pvt. Ltd. encountered financial distress, leading to insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The State Bank of India, a major creditor, initiated the Corporate Insolvency Resolution Process (CIRP) due to defaults on loan accounts. The National Company Law Tribunal (NCLT) Principal Bench in New Delhi passed an order on 22.09.2022, initiating CIRP and imposing a moratorium on all legal proceedings against the company.
During the ITAT hearings, the CIT-DR for the Revenue informed the Tribunal about the ongoing insolvency proceedings. Despite multiple opportunities for the assessee to appear, they failed to do so, prompting the Tribunal to proceed ex-parte.
Considering the insolvency proceedings, the ITAT deemed it appropriate to remit the appeals back to the CIT(A) for re-evaluation. The CIT(A) was instructed to take into account all relevant orders from the NCLT and other superior forums while adjudicating the appeals. This decision ensures that the tax adjudication process aligns with the provisions of the IBC Code, 2016, and comprehensively addresses the financial distress of the corporate debtor.
The ITAT’s order underscores the importance of integrating insolvency proceedings with ongoing tax disputes to achieve a holistic resolution. By remitting the appeals to the CIT(A), the Tribunal ensures that all aspects of the insolvency proceedings are considered, providing a coordinated approach to resolving the company’s financial and tax issues.
This case highlights the complexities and challenges faced by companies undergoing insolvency while also dealing with tax disputes. The integration of insolvency and tax proceedings is crucial for a fair and comprehensive resolution. The decision sets a precedent for similar cases, emphasizing the need for a coordinated approach between tax authorities and insolvency tribunals.
For companies facing financial distress, this case serves as a critical reminder of the importance of managing tax disputes proactively, considering the potential implications of insolvency proceedings. It also highlights the need for legal practitioners to navigate the intricacies of both tax and insolvency regulations to achieve favorable outcomes for their clients.
In conclusion, the case of Shakti Bhog Foods Pvt. Ltd. vs ACIT for the assessment year 2013-14 is a significant example of the intersection between insolvency proceedings and tax appeals. The ITAT’s decision to remit the appeals to the CIT(A) for reconsideration, in light of the ongoing insolvency proceedings, ensures a comprehensive and coordinated approach to resolving the company’s financial issues. This case will undoubtedly serve as a reference point for future cases involving similar circumstances, highlighting the need for a synchronized approach to insolvency and tax disputes.
Order was pronounced in the open Court on 18/01/2023 by the Judicial Member Shri Kul Bharat and the Accountant Member Shri Pradip Kumar Kedia.
Source: Income Tax Appellate Tribunal Delhi Bench “G” Delhi
Disclaimer: This article provides a general overview of the case and is not a substitute for professional legal advice. For detailed information, readers are encouraged to refer to the official case documents and consult with a qualified legal professional.
Shakti Bhog Foods Pvt. Ltd. vs ACIT: Insolvency Proceedings and Tax Appeal for AY 2013-14
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