Bombay High Court

Pr. Commissioner Of Income Tax-13, ... vs Shirpur Gold Refinery Ltd. on 23 July, 2025

Author: B. P. Colabawalla

Bench: B. P. Colabawalla

2025:BHC-OS:11909-DB


                                                                             102.itxa.729.18.doc



                       IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                              ORDINARY ORIGINAL CIVIL JURISDICTION
                                 INCOME TAX APPEAL NO. 729 OF 2018
                                               WITH
                                  INCOME TAX APPEAL NO.798 OF 2018
                                               WITH
                                  INCOME TAX APPEAL NO.773 OF 2018

           Pr. Commissioner of Income Tax-13
           Mumbai                                                              .. Appellant

                     Versus

           Shirpur Gold Refinery Ltd                                           .. Respondent

                Mr. Akhileshwar Sharma, Advocates for the Appellant.

                Mr. Somesh Chhangani i/b Bhupendra Dave, Advocates for the
                Respondent (Resolution Professional).



                              CORAM: B. P. COLABAWALLA &
                                                   FIRDOSH P. POONIWALLA, JJ.

                              DATE:                JULY 23, 2025

           P. C.

1. The above Appeals are filed by the Revenue challenging the two

different orders of the Income Tax Appellate Tribunal ("ITAT") giving rise,

according to the Revenue, to substantial questions of law as more particularly

set out in each of the Appeals.

2. The learned counsel appearing on behalf of the Resolution

Professional of the Respondent (Shirpur Gold Refinery Ltd) submitted that

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the Respondent is undergoing a Corporate Insolvency Resolution Process

("CIRP") under the provisions of the Insolvency and Bankruptcy Code, 2016

(for short "IBC, 2016"). He submitted that since the company is undergoing

a CIRP, and there is a moratorium in effect/in force under Section 14 of the

IBC, 2016, the above Appeals cannot proceed. In this regard, he relied upon

a decision of the Hon'ble Delhi High Court in the case of Principal

Commissioner of Income Tax-6, New Delhi v/s Monnet Ispat and

Energy Ltd [(2017) SCC Online DEL 12759]. He submitted that in this

decision, the Delhi High Court had clearly held that during the period of

moratorium, the Appeals filed by the Revenue before the High Court [against

the orders of the ITAT], cannot proceed. He submitted that the aforesaid

decision of the Delhi High Court was subjected to an Appeal before the

Hon'ble Supreme Court. The Hon'ble Supreme Court also, relying upon

Ssection 238 of the IBC, 2016, came to the conclusion that the Delhi High

Court correctly decided the law and proceeded to dismiss the Special Leave

Petition. The decision of the Hon'ble Supreme Court is reported in (2018)

18 SCC 786. He, therefore, submitted that the above Appeals cannot

proceed.

3. On the other hand, the learned counsel appearing on behalf of

the Revenue submitted that though it is correct that recovery proceedings

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could not be proceeded with against the Assessee because of the moratorium,

the same would not preclude the completon of the assessment proceedings.

Since the above Appeals are in relation to assessment proceedings and

penalty proceedings, the Appeals can continue. In this regard, the learned

counsel for the Revenue relied upon the decision of the Hon'ble Supreme

Court in the case of Sundaresh Bhatt (Liquidator) of ABG Shipyard

v/s Central Board of Indirect Tax and Customs [(2023) 1 SCC

472].

4. Having heard the learned counsel for the parties, we find that the

present case is squarely covered by the decision of the Hon'ble Delhi High

Court in Monnet Ispat and Energy Limited (supra). Since the order

of the Delhi High Court is a short order, the same is reproduced as under:-

"1. The Court has heard the learned counsel for both parties. The provisions of the Insolvency and Bankruptcy Code, 2016 ('Code') and, in particular, Section 14 thereof has been perused.

2. It appears to the Court that Section 238 of the Code is categorical that the Code will apply, notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Section 14 (1) (a) of the Code states, inter alia, that on the 'insolvency commencement date' the Adjudicating Authority (AA) shall by order declare moratorium for prohibiting "the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority." That the Code will prevail over

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all other statutes inconsistent therewith has been explained in the recent decision dated 31 st August, 2017 of the Supreme Court in Civil Appeal No. 8337-8338/2017 (Innovative Industries Ltd. v. ICICI Bank).

3. In the instant case, the National Company Law Tribunal (NCLT) [which by virtue of Section 5(1) of the Code is the AA] has by its order dated 18 th July 2017 admitted the petition under Section 7 of the Code filed by the State Bank of India against the Respondent Assessee and prohibited, inter alia, "the institution of suits or continuation of pending suits or proceedings" against the Respondent. This would include the present appeal by the Income Tax Department ('Department') against the order of the Income Tax Appellate Tribunal ('ITAT') in respect of the tax liability of the Respondent-Assessee.

4. Mr. Asheesh Jain, learned Senior Standing counsel for the Revenue, points out that unlike some of the earlier insolvency statutes the code does not envisaged permission being sought from the NCLT for continuation of the continuation of pending proceedings against the respondent in other fora. In the order dated 18 th July 2017 is clear that the moratorium continues "till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-Section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33, as the case may be."

5. Consequently, these appeals are disposed of with liberty to the Appellant-Department to revive them subject to the further orders of the NCLT.

6. Copy of the order be given dasti under the signature of the Court Master."

(emphasis supplied)

5. This decision of the Delhi High Court was subjected to challenge

by the Revenue before the Hon'ble Supreme Court. The Hon'ble Supreme

Court proceeded to dismiss the SLP by making the following observations:-

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"1. Heard. Delay, if any, is condoned.

2. Given Section 238 of the Insolvency and Bankruptcy Code, 2016, it is obvious that the code will override anything inconsistent contained in any other enactment, including the Income Tax Act. We may also refer in this connection to Dena bank v. Bhikhabhai Prabhudas Parekh and Co.

and its progeny, making it clear that income tax dues, being in the nature of crown debts, do not take precedence even over secured creditors, who are private persons.

3. We are of the view that the High Court of Delhi, is, therefore, correct in law. Accordingly, the special leave petitions are dismissed. Pending applications, if any, stand disposed of."

(emphasis supplied)

6. From these decisions, and which are directly under the

provisions of the Income Tax Act, 1961, we find that the above Appeals

cannot proceed while the moratorium under Section 14 of the IBC, 2016, is

in operation.

7. As far as the judgment relied upon by the learned advocate for

the Revenue in the case of Sundaresh Bhatt (Liquidator) of ABG

Shipyard (supra) is concerned, we find that the same is wholly

inapplicable to the facts of the present case. That decision was rendered

under the provisions of the Customs Act, 1962 and was in relation to

completing assessment or reassessment of duties and other levies and not in

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