M/s. Ambassador Building Solutions Pvt. Ltd. vs Income Tax Officer Ward – 14(2)

“A. BECAUSE the impugned order dated 22.08.2025 has been passed in complete violation of the principles of natural justice and the materials available on record.

B. BECAUSE the Appellant is not liable to pay either the alleged demand nor the interest & penalties levied on the Alleged demand as the alleged demand pertains to the A.Y. 2012-13 and the same was raised upon the previous Company i.e., M/s Kansal Building Solutions Pvt. Ltd. and the appeal was preferred on 21.04.2018 against the demand/order dated 31.03.2018 passed by the Ld. ITO. That, thereafter, Dena Bank preferred an insolvency petition before the Hon'ble NCLT, Delhi being C.P. (IB) -816/2018 and vide order dated 25.03.2019 IRP was appointed & the statutory moratorium had commenced and accordingly publication was also made in terms of Section 13(2) of the IBC, 2016 and creditors were called for filing their respective claims, including the Govt. Departments. However, the IT department did not made any claim before the IRP. That, thereafter proceeding under the IBC the Hon'ble NCLT, Delhi has passed a scheme of Arrangement & Compromise dated 24.12.2021 and vide the said scheme all the creditors who had filed their claims before the Ld. IRP were settled and the company was made free from all the liabilities. That, thereafter, the present promoters have purchased the Company from the previous promoters and have subsequently changed the name of the company to "M/s Ambassador Building Solutions Pvt. Ltd." As such, the impugned order is bad in Law and deserves to be set aside.

C. BECAUSE the alleged demand was raised upon the previous Company M/s Kansal Building Solutions Pvt. Ltd. and the said company had preferred two Appeals before the Respondent Authority the first one against the alleged Demand raised by the Respondent Authority and the second on was against the demand of interest and penalties levied against the alleged Demand. It would be pertinent to mention here that the said Appeal against the Alleged Demand is still pending before Respondent Authority and before deciding the main appeal against the alleged Demand the Respondent Authority has gone ahead to decide the Appeal against the interest & penalties. As such, the impugned order is bad in Law and deserves to be set aside.

D. BECAUSE the impugned order is bad in law for the reasons that they were never served upon with the notice of hearing and the alleged notices for hearing were served upon the email address of the previous company i.e., at [email protected] & [email protected], as has been stated in the impugned order. It would be pertinent to mention here that all the proceeding have been conducted by the Respondent Department subsequent to declaration of the moratorium period by the Hon'ble NCLT. Delhi as such the same are not tenable in Law. Therefore, the impugned order is bad in Law and deserves to be set aside.

E. BECAUSE while passing the scheme of M/s Kansal Building Solutions Pvt. Ltd., the Hon'ble NCLT, Delhi vide its order dated 24.12.2021 has held that "(iii) From the date of approval of the scheme, all inquiries, investigation and proceedings, whether civil or criminal, suits, claims, disputes, interests and damages in connection with the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future in relation to any period prior to the scheme approval date, or arising on account of implementation of this scheme shall stand withdrawn, satisfied and discharged from the date of approval of the 'scheme'. The Applicant shall be legally authorized to seek appropriate orders from respective authorities/ courts/ tribunals for renewal of licences/withdrawal/ dismissal or abatement of the proceedings, as the case may be." As such, by the effect of the said order dated 24.12.2024 passed by the Hon'ble NCLT, Delhi the Company has been discharged from all the liabilities towards the department and the said proceedings stands abated and the department should not have proceeded against the company. Further, by effect of the said order the impugned order is a nullity, bad in law & deserves to be set aside.”

1.

That the Appellant company "M/s Ambassador Building Solutions Pvt. Ltd." (for short "ABSPL") was previously known as "M/s Kansal Building Solutions Pvt. Ltd." (for short "KBSPL").

2.

That KBSPL had availed certain Financial Assistance from DENA Bank and had failed to repay the same, as such, DENA Bank had preferred an insolvency petition before the Hon'ble NCLT, Delhi being C.P. (IB) 816/2018 and vide order dated 25.03.2019 the Hon'ble NCLT Delhi had declared the statutory moratorium for commencement of the insolvency proceeding against the KBSPL and had appointed the Interim Resolution Professional (for short "IRP") and accordingly publication was also made in terms of Section 13(2) of the IBC, 2016 calling the creditors to file their respective claims, including the Statutory dues.

3.

That pursuant to the said publication various creditors filed their claims before the Ld. IRP. However, the Respondent IT department did not made any claim before the Ld. IRP.

4.

That during the pendency of the said Insolvency Proceedings the company could not be revived, therefore, the same was recommended for Liquidation.

5.

That, thereafter, the KBSPL preferred an Application u/s 230 of the Companies Act, 2013 seeking approval of the Scheme of Compromise & Arrangement for revival of the Company.

6.

Accordingly, the Hon'ble NCLT, Delhi vide its order dated 24.12.2021 passed the said Scheme of Compromise & Arrangement for revival of the Company as the same was approved by 97.33% of the Creditors in terms of section 23(9) of the Act.

7.

That while passing the said order dated 24.12.2021 the Hon'ble NCLT, Delhi has held that "(iii) From the date of approval of the scheme, all inquiries, investigation and proceedings, whether civil or criminal, suits, claims, disputes, interests and damages in connection with the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future in relation to any period prior to the scheme approval date, or arising on account of implementation of this scheme shall stand withdrawn, satisfied and discharged from the date of approval of the 'scheme'. The Applicant shall be legally authorized to seek appropriate orders from respective authorities/ courts/ tribunals for renewal of licences/withdrawal/ dismissal or abatement of the proceedings, as the case may be." As such, from the date of passing of the said order all the proceeding against KBSPL has abated and cannot be proceeded against it.

8.

That after passing of the said scheme for compromise & arrangement, the Appellants have purchased the business of the said company and thereafter the name of the company has been changed to "M/s Ambassador Building Solutions Pvt. Ltd." from "M/s Kansal Building Solutions Pvt. Ltd."

9.

That on 05.01.2026 the Appellant company through its Charted Accountant that there was certain outstanding demand against the company from the IT Department. Accordingly, the Charted Accountant of the company was directed to enquire about the issues, who later informed the Appellant Company that there is certain Demand against the Company prior to the period of passing of the order dated 24.12.2021 by the Hon'ble NCLT, Delhi.

10.

That it would be pertinent to mention here that the department had raised certain demand on KBSPL in the year 2018 against the AY 2012-13. Against the said illegal demand KBSPL preferred an Appeal before the Respondent Authority being Appeal No. 5/10150/2019-20, which is still pending adjudication.

11.

That in the meantime the Department raised demand dated 31.03.2018 for interest & penalty over the alleged assessed amount, against which KBSPL preferred another Appeal before the Respondent Authority being Appeal No. CIT(A), Delhi-5/10021/2018-19 on 21.04.2018.

12.

That, thereafter, the said Appeal was transferred to National Faceless Appeals Centre in terms of Notification dated 25.09.2020 issued by CBDT, New Delhi. And the first notice of hearing was alleged to have been issued to KBSPL on 21.01.2020.

13.

That it would be pertinent to mention here that, as stated hereinabove, after filing the Appeal in 2018, the DENA Bank had filed an insolvency proceeding against KBSPL and after admission of the said Insolvency petition, the all the powers of the company got vested in the IRP and the Director's power to act was ceased, therefore, no one could respond to the notices sent by the Respondent Authority on the said appeal no. CIT(A). Delhi-5/10021/2018-19 on 21.04.2018. In fact all the dates of hearing are subsequent to the filing of the insolvency proceeding and further the same were being sent on the email addresses i.e., [email protected] & [email protected], which had become non-functional subsequent to the appointment of IRP. As such, no notice was received by the KBSPL.

14.

That it would be pertinent to mention here that the Respondent Authority has failed to appreciate that the impugned order could not have been passed in the light of the fact that the main Appeal i.e., the Appeal No. 5/10150/2019-20 against the Demand is still pending before the Respondent Authority. Therefore, he could not have passed the order for demand of interest & penalty before deciding the Appeal preferred before him against the alleged demand against the Assessment for FY 2012-13.

15.

That in any event the impugned order is bad in Law for the reasons that vide the order dated 24.12.2021 the Hon'ble NCLT, Delhi has held that "(iii) From the date of approval of the scheme, all inquiries, investigation and proceedings, whether civil or criminal, suits, claims, disputes, interests and damages in connection with the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future in relation to any period prior to the scheme approval date, or arising on account of implementation of this scheme shall stand withdrawn, satisfied and discharged from the date of approval of the 'scheme'. The Applicant shall be legally authorized to seek appropriate orders from respective authorities/ courts/tribunals for renewal of licences/withdrawal/ dismissal or abatement of the proceedings, as the case may be."

16.

That in view of the submissions made hereinabove it becomes abundantly clear that the in view of the order / judgment dated 24.12.2021 passed by NCLT, Delhi in C.P. (IB)-816/2018, the impugned order dated 22.08.2025 is bad in Law & deserves to be dismissed/set aside.”

"(iii)

From the date of approval of the scheme, all inquiries, investigation and proceedings, whether civil or criminal, suits, claims, disputes, interests and damages in connection with the Corporate Debtor or the affairs of the Corporate Debtor, pending or threatened, present or future in relation to any period prior to the scheme approval date, or arising on account of implementation of this scheme shall stand withdrawn, satisfied and discharged from the date of approval of the 'scheme'. The Applicant shall be legally authorized to seek appropriate orders from respective authorities/ courts/ tribunals for renewal of licences/withdrawal/ dismissal or abatement of the proceedings, as the case may be."

“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 vs. Bhikhabhai Prabhudas Parekh and Co. & Ors. (2000) 5 SCC 694 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.”