The Insolvency and Bankruptcy Code has an overriding effect on the Income Tax Act, and the assessing officer must consider the moratorium under Section 14(1)(a) of the Code. Judicial proceedings should demonstrate restraint and sobriety, and adverse remarks against advocates should be expunged if made without opportunity for defense.

JUDGMENT :

T.S. SIVAGNANAM, J.

1. We have heard Mr. J.P. Khaitan, learned senior counsel appearing with Mr. Somak Basu, learned Advocate for the appellant/assessee and Mr. Tilak Mitra, learned standing counsel for the respondent.

2. The order impugned is dated 13th April, 2022 passed in WPO/1839/2022. The appellant had filed the writ petition challenging the notice dated 23rd March, 2022 which is an opportunity granted to the assessee to show cause as to why the proposal made in the notice by way of giving effect to the order passed by the PCIT, Kolkata-II under Section 263 of the Income Tax Act, 1961 should not be made against the appellant/assessee. The assessee had submitted their reply dated 26th March, 2022 in which the first contention raised by the assessee was that the proceedings are liable to be stayed since the assessee has been admitted for Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC) and presently the assessee is under moratorium by orders of the National Company Law Tribunal (NCLT). In this regard, the assessee referred to Section 14 of the Code and also extracted the relevant portion of the order passed by the NCLT. In support of such contention, reliance was placed on the decision of the Hon’ble Supreme Court in Alchemist Asset Reconstruction Company vs. Hotel Gaudavan (P) Ltd. and Others, (2017) 88 Taxmann.com 202 (SC) and the decision in the case of Mr. Rajendra K. Bhutta vs. Maharashtra Housing and Area Development Authority and Another (Civil Appeal No. 12248 of 2018 dated 19.02.2020) and the other decisions of the Income Tax Appellate Tribunal, Delhi Bench and also the Securities Appellate Tribunal. Further, the assessee contended that in terms of Section 238 of the Code, the provisions of the Code shall override the provisions of the Income Tax Act and reference was also made to Section 178 of the Income Tax Act, which also provides that the Section shall override all other laws for the time being in force except the Insolvency and Bankruptcy Code (IBC). In support of such contention, reliance was placed on the decision of the Hon’ble Supreme Court in PCIT vs. Monnet Ispat and Energy Ltd. (2018) SCC Online SC 984. Therefore, the assessee requested the assessing officer to keep the proceedings in abeyance till the completion of the CIRP. Without prejudice to such submission, the assessee also dealt with the merits of the proposed assessment. In the penultimate paragraph of the explanation, the assessee requested for grant of opportunity of personal hearing in view of Clause (VI) to (IX) of Section 144B(7) of the Income Tax Act, 1961.

3. Thereafter, the assessee filed the writ petition being WPO/1839/2022 challenging the show cause notice dated 23rd March, 2022. After filing the writ petition the assessee sent a letter to the Authority on 29th March, 2022 pointing out that similar proceedings, under Section 263 of the Act for the assessment year 2016-17, have been initiated against the assessee by the PCIT-II which is also time barring on 31st March, 2022 and notice dated 8th March, 2022 was received by the assessee for initiating assessment proceedings under Section 143(3) read with Section 263 of the Act for the said assessment year 2016-17 and in response to such notice a similar request was made by the assessee to the PCIT-II to keep the impugned proceedings in abeyance till the completion of CIRP. PCIT-II, vide order dated 23rd March, 2022 had kept the proceedings in abeyance.

4. Though the assessee had requested for an opportunity of personal hearing in their reply dated 26th March, 2022, it appears that the same was not afforded but “so called hearing” is stated to have been conducted by way of exchanging of messages in the chat box. The assessee vide letter dated 29th March, 2022 pointed out that due to technical issues the personal hearing could not be conducted through video conferencing and requested for an opportunity of effective hearing be affo