Recently, Patna High Court has ruled that the Liquidator should be noticed and participate in the income tax reassessment proceedings.
The court has quashed the order which were all issued to the e-mail of the assessee after the Liquidator was appointed which makes it clear that the Liquidator was never informed of the reassessment proceedings.
Facts
The assessee/writ petitioner is under liquidation by orders of the National Company Law Tribunal (NCLT) Chandigarh Bench. The Liquidator who represents the assessee has been appointed order dated 06.02.2020 passed by the NCLT. The Liquidator representing the assessee has challenged the re-assessment for the year 2012-2013.
Arguments
The petitioner contended that the Liquidator was never issued with notice of re-assessment and could not participate in the re-assessment. There are also claims of refund which are being prosecuted for the years 2013- 2014 to 2015-2016 before the appropriate authority. There should be a proper assessment proceeding taken with the participation of the petitioner. Section 33 (5) of the Insolvency and Bankruptcy Code, 2016 (IBC) that when a liquidation order has been passed, no suit or other legal proceeding shall be initiated instituted by or against a corporate debtor.
On the other hand the department argued that the order itself indicates that notices were sent on e-mail and even the Advocate who was prosecuting the refund application before the Tax Authorities was given notice, who had informed the respondents that the company is in liquidation.
Conclusion
The court concluded that the moratorium spoken of under the IBC is either as per the terms of Section 14 or Section 33(5) and there can be no recovery made though the authorities would be entitled to assess or determine the quantum of duties or taxes.
The court set aside the order for the violation of principle of natural justice and held that the Liquidator shall appear before the Assessing Officer on 21.08.2024 after filing proper objections. The assessment order at Annexure-C itself shall be considered as a notice for re-assessment. After filing the objection, the Assessing Officer shall hear the matter on the same day or any other date with intimation to the Liquidator, who is representing the assessee. The matter shall be considered on merits and an assessment order passed, which again has to be enforced only by filing a proper claim before the Liquidator.
Case Details
Case name: M/s Isolux Corsan India Engineering and Construction Private Limited v/s The State of Bihar
Citation: Civil Writ Jurisdiction Case No.13042 of 2022
Judges: Chief Justice K. Vinod Chandran and Justice Partha Sarthy
Date of Decision: 01/08/2024
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