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2026 Supreme(Online)(NCLT) 1119
NATIONAL COMPANY LAW TRIBUNAL
Brajendra Mani Tripathi, J, Man Mohan Gupta, T
Nishant Agrawal – Appellant
Versus
Income Tax Department (ITD) – Respondent
I.A. No. 366 of 2025 | C.P. (IB) No. 48 (MP) of 2023
For the Petitioner: Ms. Darshana Baghel, Adv.
For the Income Tax Department: Ms. Yashika Bondwal, Adv., Mr. Harsh Prashar, Adv.
The adjustment of income tax refunds against pre-CIRP dues during the moratorium violates the Insolvency and Bankruptcy Code, highlighting the absolute nature of the moratorium.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 14 and 238 - Adjustment of income tax refund of Rs. 4,95,720/- for Assessment Year 2024-25 against pre-CIRP outstanding demand during moratorium - Such adjustment constitutes recovery of a pre-CIRP debt and violates statutory moratorium under Section 14 of the Code, which is absolute and applies irrespective of knowledge of the statutory authority - Resultantly, the adjustment is declared null and void, and the Respondent is directed to refund the amount to the CIRP account along with interest. (Paras 1, 28, 36)
(B) The legal effect of actions is not dependent on the execution process or knowledge of the authorities; the automatic nature of adjustment cannot override statutory prohibitions. (Paras 15, 31)
Facts of the case:
The Resolution Professional filed an application against the Income Tax Department for the unilateral appropriation of a tax refund during an active moratorium period, asserting that it violated the provisions of the Insolvency and Bankruptcy Code.
Findings of Court:
The adjustment of the refund against pre-CIRP dues is in direct contravention of Section 14 and is unenforceable.
Issues: Whether the adjustment of tax refund during the moratorium period constitutes a violation of the moratorium?
Ratio Decidendi: The Tribunal held that the moratorium applies from the date of commencement of insolvency regardless of whether the authorities were aware of it, and any adjustments made during this period are illegal.
Result: I.A. No. 366 of 2025 is allowed, directing reversal of the refund adjustment.
| Table of Content |
|---|
| 1. unilateral adjustment of tax refund under moratorium is prohibited. (Para 1 , 5 , 19) |
| 2. moratorium under section 14 prohibits actions against corporate debtor. (Para 2 , 3 , 4 , 29) |
| 3. court affirms legal character of actions during moratorium period. (Para 27 , 30 , 31) |
ORDER
1. The present Interlocutory Application, being I.A. No. 366/MP/2025, has been filed by the Nishant Agrawal, filed on 04.08.2025 (hereinafter referred to as “Applicant/Resolution Professional”) Resolution Professional (IBBI Registration No. IBBI/IPA-001/IP-P- 02100/2020-21/13283) of M/s Shree Geeta Textile Mills Private Limited (hereinafter referred to as the “Corporate Debtor”), under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Sections 14 and 238 of the Code and Rule 11 of the National Company Law Tribunal Rules, 2016, seeking appropriate directions against the Income Tax Department, Burhanpur, (hereinafter referred to as “Respondent”) for the illegal and unilateral adjustment of the income tax refund of Rs. 4,95,720/- (Rupees Four Lakhs Ninety-Five Thousand Seven Hundred and Twenty Only) due and payable to the Corporate Debtor for Assessment Year 2024–25, which was appropriated against an alleged pre-CIRP outstanding demand during the subsistence of moratorium declared under Section 14 of the Code, and praying for a declaration that the said adjustment is null, void and unenforceable in law.
2. It is an admitted position on record that this Hon'ble Adjudicating Authority, vide order dated 13.11.2024, admitted the petition filed by Bank of India under Section 7 of the Code and initiated Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP” against the Corporate Debtor. Consequent upon the said admission, moratorium under Section 14 of the Code came into force with effect from the insolvency commencement date, i.e., 13.11.2024, thereby imposing a statutory prohibition on all actions for recovery, appropriation or enforcement of any claim against the Corporate Debtor or its assets. The Admission Order dated 13.11.2024 has been placed on record and is marked as Annexure A/1 (Pages 10–20).
3. It is further noted that initially, Ms. Chaya Gupta (Registration No.IBBI/IPA-002/N-00984/2020-2021/13133) was appointed as the Interim Resolution Professional vide the order dated 13.11.2024. Subsequently, this Adjudicating Authority vide order dated 05.02.2025, in pursuance of the decision of the Committee of Creditors taken with 86.13% voting share, confirmed the appointment of the Applicant, Shri Nishant Agrawal, as the Resolution Professional of the Corporate Debtor. The order dated 05.02.2025 appointing the Resolution Professional has been placed on record and is marked as Annexure A/2
4. It is brought on record that the Centralised Processing Centre (hereinafter referred to as “CPC”), Bengaluru, processed the income tax return of the Corporate Debtor, M/s Shree Geeta Textile Mills Private Limited (PAN: AAMCS3217L), filed for Assessment Year 2024–25, and determined a tax refund of Rs. 4,95,720/- (Rupees Four Lakhs Ninety- Five Thousand Seven Hundred and Twenty Only) as payable to the Corporate Debtor, vide Intimation under Section 143 (1) of the Income Tax Act, 1961 dated 01.11.2024. The said Intimation has been placed on record and is marked as Annexure A/3 (Pages 22–29).
5. It is the specific and categorical grievance of the Applicant that, despite the moratorium having come into force with effect from 13.11.2024, the Respondent unilaterally and without intimation to or consent of the Resolution Professional, adjusted the aforesaid refund of Rs. 4,95,720/- for Assessment Year 2024–25 on 22.11.2024 against an alleged outstanding tax demand pertaining to Assessment Year 2022– 23, which is admittedly a pre-CIRP period. This adjustment was after the commencement of CIRP and during the full subsistence of the moratorium under Section 14 of the Code. The CPC Ad
