Case Number: ITA 609/DEL/2019
Appellant: Shakti Bhog Foods Pvt. Ltd, New Delhi
Respondent: ACIT, Central Circle-27, New Delhi
Assessment Year: 2012-13
Result: 2012-13
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) highlights the intricate intersection of insolvency proceedings and tax appeals. This case, along with others involving Shakti Bhog Foods Limited and Shakti Bhog Snacks Limited, revolves around the assessment years from 2009-10 to 2015-16, with significant implications for the company’s tax liabilities amidst insolvency proceedings.
M/s. Shakti Bhog Foods Limited and its associated entity, Shakti Bhog Snacks Limited, faced scrutiny from the Income Tax Department for multiple assessment years. The assessments were conducted under Section 143(3) read with Section 153A of the Income Tax Act, 1961. The assessments culminated in orders dated 30.12.2017 and 29.12.2017 respectively, which were subsequently appealed before the Commissioner of Income Tax (Appeals)-XXIX, New Delhi (CIT(A)).
While the tax appeals were pending, Shakti Bhog Foods Limited was subjected to proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The State Bank of India initiated the Corporate Insolvency Resolution Process (CIRP) against the company 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 declaring a moratorium on legal proceedings against the company.
During the ITAT hearing, the CIT-DR for the Revenue informed the Tribunal about the insolvency proceedings and the order from NCLT. Despite the ongoing insolvency proceedings, the Tribunal decided to proceed with the hearing ex-parte due to the multiple opportunities already provided to the assessee.
The ITAT, considering the insolvency proceedings, deemed it appropriate to remit the appeals back to the CIT(A) for re-evaluation. The CIT(A) was directed to take into account all orders passed by NCLT and other superior forums while adjudicating the appeals. This decision ensures that the implications of the IBC Code, 2016, are fully considered in the tax appeal process.
The Tribunal’s order underscores the importance of synchronizing insolvency proceedings with ongoing tax disputes to ensure a comprehensive resolution. The remittance to the CIT(A) aligns the tax adjudication process with the broader framework of insolvency resolution, providing a holistic approach to resolving the financial distress of the corporate debtor.
In conclusion, the case of Shakti Bhog Foods Pvt. Ltd. vs ACIT is a landmark instance illustrating the complexities involved when insolvency proceedings intersect with tax appeals. The ITAT’s decision to remit the appeals to the CIT(A) for reconsideration, in light of the insolvency proceedings, sets a precedent for similar cases in the future. It highlights the need for a coordinated approach between tax authorities and insolvency tribunals to ensure that the resolution process is fair, comprehensive, and aligned with the legal frameworks governing both tax and insolvency matters.
This case also emphasizes the need for companies facing financial distress to proactively manage their tax disputes, keeping in mind the potential implications of insolvency proceedings on their ongoing legal battles. As more companies navigate the complexities of insolvency and tax regulations, the lessons from this case will serve as a critical reference point for both legal practitioners and corporate entities.
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: Implications of Insolvency Proceedings on Tax Appeals
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