Income Tax Refund Received By Bank During CIRP In Corporate Debtor's Account Cannot Be Withheld: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that Income Tax Refund received by the bank in the corporate debtor's account during Corporate Insolvency Resolution Process (CIRP) cannot be withheld on ground and such amount must be remitted to the liquidation bank account of the corporate debtor. Corporate Insolvency Resolution Process (CIRP) of the corporate debtor, Topsgroup Services and Solutions Limited commenced on 19.02.2021, on an application filed by the Punjab National Bank (International) Limited. During CIRP of the corporate debtor, the appellant received an amount of ₹4,65,58,425.87/- on 08.06.2021 in current account maintained by the appellant Bank as Income Tax Refund. Appellant detained the amount in the said account. The Resolution Professional (RP) filed an I.A. No.2967/2021 on 16.12.2021, seeking a direction to the Indian Bank to transfer the amount of ₹4,65,58,425/- from account maintained in the Indian Bank to CIRP bank account being maintained in the Yes Bank. The Application was allowed and the Appellant was directed to transfer the amount. The Appellant submitted that the adjudicating authority committed an error in holding that Income Tax Refund is not receivable. Corporate debtor having already put into liquidation and bank vide its Form dated 03.08.2022, communicated the decision not to relinquish its security interest, appellant was not obliged to transfer the amount. It was further submitted that the appellant never refused to transfer the amount rather has communicated that account be transferred to any other member of the Committee of Creditors (CoC) and not to private bank. Per contra, the Respondent submitted that CIRP against the corporate debtor having been commenced on 19.02.2021 moratorium was imposed and all amount received by corporate debtor during moratorium including the Income Tax Refund was part of the kitty of the corporate debtor It was further submitted that therefore the amount of ₹4,65,58,425/- was received by the corporate debtor in its account maintained in the Indian Bank as Income Tax Refund. The Income Tax Refund which was received by the corporate debtor during CIRP has to be transferred in the account of the corporate debtor. The tribunal noted that It has further been noticed that the bank received the amount of ₹4 crore on 08.06.2021 in the current account of corporate debtor and RP sent several emails to transfer the amount which facts have been pleaded. The Tribunal observed that the Adjudicating authority while rejecting the application did not hold that the recall order was passed ex parte. It was held that the tax refund amount received by the Appellant could not be treated as the receivables of the bank therefore it was right in rejecting the plea of the bank that it was not obligated to transfer the amount to the corporate debtor's account. It further held that the Tax Refund Amount was credited to the corporate debtor's account in the Indian Bank that too during the currency of the CIRP. Since the fund belonged to the Corporate Debtor, the RP was mandated to control it. Despite repeated requests sent by the RP, the Appellant failed to transfer the amount thereby leading to filing an application before the Adjudicating Authority. Accordingly, the present appeals were dismissed. Case Title:Indian Bank Versus Anshul Gupta, Liquidator Topsgroup Services & Solutions Ltd. Case Number:Company Appeal (AT) (Insolvency) No. 85 of 2025 Judgment Date: 08/07/2025 For Respondent : Mr. Milan Singh Negi, Mr. Nikhil Kumar Jha and Ms. Aakriti Gupta, Advocates. Click Here To Read/Download The Order

Income Tax Refund Received By Bank During CIRP In Corporate Debtor's Account Cannot Be Withheld: NCLAT

Mohd Malik Chauhan

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Income Tax Refund Received By Bank During CIRP In Corporate Debtor's Account Cannot Be Withheld: NCLAT

Mohd Malik Chauhan

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INR 1099+GST

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