Amount Seized By Income Tax Department And Adjusted Against Demand Prior To Initiation Of CIRP Is Not Asset Of CD: NCLAT

The NCLAT New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member) Has held that an amount seized by the Income Department and adjusted against demand prior to initiation of the CIRP cannot be considered as assets of the corporate debtor. Brief Facts This appeal has been filed against an order passed by the 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. The Tribunal had dismissed the application, inter alia, 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. In this regard, he has produced an online tax accounting system of the department of income tax 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. The only argument raised by the Appellant is 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. Observations: The tribunal while rejecting the submissions of the appellant observed that since the amount in question having been seized in the year 2011-12 and has already been adjusted on 31.03.2019 as per the evidence produced, indicated herein above, 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. Accordingly, the present appeal was dismissed. Case Title: Harish Chander Arora Liquidator of Rathi Super Steel Ltd. Versus The Principal Commissioner of Income Tax, Ghaziabad, & Anr. Case Number: Comp. App. (AT) (Ins) No. 306 of 2024 & I.A. No. 898, 8327 of 2024 Judgment Date: 2/12/2024 Click Here To Read/Download The Order

Amount Seized By Income Tax Department And Adjusted Against Demand Prior To Initiation Of CIRP Is Not Asset Of CD: NCLAT

Mohd Malik Chauhan

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