ITAT Delhi Dismisses Appeals Against Sahara Airlines After Claims Extinguished In CIRP
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has recently dismissed a batch of appeals involving Sahara Airlines Ltd., now known as Jet Lite (India) Ltd., after finding no material to show that the Income Tax Department's claims for the assessment years involved were admitted in the resolution or liquidation proceedings.
The CIRP of Jet Airways (India) Ltd. was admitted by the NCLT on June 20, 2019, on an application filed by the State Bank of India under the Insolvency and Bankruptcy Code (IBC).
A bench comprising Judicial Member Anubhav Sharma and Accountant Member S Rifaur Rahman was hearing 10 appeals and a cross-objection concerning assessment years 1998-99, 1999-2000, 2001-02, 2004-05, 2005-06, 2006-07 and 2007-08.
Sahara Airlines became known as Jet Lite (India) Ltd. from May 15, 2007, after Jet Airways acquired 100% of its shares and took over its management.
The resolution plan submitted by the Jalan Fritsch consortium was approved by the NCLT on June 22, 2021. The plan referred to operational-creditor claims, including those of the Government and Income Tax Department, and provided for an allocation of ₹15,000 to each operational creditor irrespective of its claim amount. The liquidation value due to operational creditors, including government dues and taxes, was stated to be nil.
The plan was not implemented. On November 7, 2024, the Supreme Court directed that the corporate debtor be taken into liquidation. The NCLT Mumbai appointed a liquidator on November 26, 2024, and the liquidation proceedings were pending when the ITAT heard the appeals.
The appeals arose from assessments under provisions including Sections 143(3), 144 and 271D of the Income-tax Act. Section 143(3) provides for a detailed assessment after examination of the return and material on record, while Section 144 allows a best-judgment assessment in specified circumstances. Section 271D provides for a penalty for accepting certain loans or deposits in breach of the Act.
The department had primarily challenged additions on merits. The ITAT, however, noted that there was no material showing that its claims for the assessment years before the bench had been admitted in either insolvency process.
“There is nothing before us to conclude that in regard to the claim of department for the AYs involved there is any admitted claim in resolution proceedings or the liquidation proceedings,” the tribunal observed.
The tribunal relied on its earlier decision in ACIT (OSD) v. GAIL Mangalore Petrochemicals Ltd., besides Supreme Court rulings on tax claims following approval of resolution plans.
The ITAT ultimately dismissed the department's appeals as well as the assessee's appeals.
Counsel for the Revenue: K. Hauthang, CIT (DR)