Facts of the Case

The present batch of appeals was filed by the Revenue challenging various orders passed by the Income Tax Appellate Tribunal (ITAT) concerning multiple assessment years ranging from AY 2010–11 to AY 2014–15.

The Tribunal had dismissed the appeals of both the assessee and the Revenue primarily on the ground that the respondent companies, belonging to the Amrapali Group, were undergoing Corporate Insolvency Resolution Process (CIRP). The Tribunal relied on its earlier order dated 17.03.2021 while passing subsequent orders.

During the proceedings before the High Court, it was repeatedly brought to notice that the Amrapali Group entities were under insolvency proceedings and matters concerning them were also under consideration before the Supreme Court.

Issues Involved

  1. Whether appeals filed by the Revenue can be adjudicated when the respondent companies are undergoing CIRP.
  2. Whether continuation of tax proceedings is appropriate in absence of clarity regarding representation during insolvency proceedings.
  3. Whether the High Court should keep such appeals pending indefinitely or dispose them with liberty for revival.

Petitioner’s Arguments (Revenue)

  • The Revenue sought adjudication of appeals challenging ITAT orders.
  • It was submitted that tax issues required determination despite insolvency proceedings.
  • However, the Revenue was unable to clearly specify the appropriate person/entity upon whom notice should be served due to ongoing CIRP 

Respondent’s Arguments

  • No representation appeared on behalf of the respondents.
  • The context indicates reliance on the fact that the companies were undergoing insolvency proceedings under IBC.

Court’s Findings / Order

    • The respondent companies were undergoing CIRP.
    • Proceedings concerning the Amrapali Group were under consideration before the Supreme Court.
    • Despite repeated opportunities, the Revenue failed to provide clarity regarding proper service or representation.
  • Given that more than one year had passed without clarity, the Court held that keeping the appeals pending was not appropriate.

Final Order

  • All appeals were closed.
  • Liberty was granted to the Revenue to seek revival of the appeals in accordance with law once clarity is obtained.
  • Pending applications, including delay condonation applications, were also disposed of.

Important Clarifications

  • The dismissal/closure of appeals is not on merits.
  • The Revenue retains the right to revive the appeals once procedural clarity emerges.
  • The judgment underscores procedural challenges when tax litigation intersects with insolvency proceedings.
  • Proper identification of authorized representatives during insolvency is critical for continuation of litigation.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/60821122023ITA3292022_004004.pdf

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