Authority: National Company Law Tribunal, Hyderabad Bench-I

Order Date: 09/10/2026

Case Overview

The application was filed by M. Karunakar Reddy, the successful bidder and former director of M/s Smaat India Private Limited, against the erstwhile liquidator (Mr. N. Prabhakar) and the Principal Commissioner of Income Tax. The Corporate Debtor, Smaat India, entered CIRP on 03.08.2018 and liquidation was ordered on 06.06.2019. The applicant was declared the successful bidder in a going-concern sale approved by the tribunal on 25.02.2020. Liquidation proceedings were closed on 13.08.2020 with directions to hand over all records to the successful purchaser.

The applicant sought to claim benefits under Section 79 of the Income-tax Act, 1961 for carry-forward losses and unabsorbed depreciation. The Income Tax Department rejected the application under Section 119(2) on 23.04.2024 due to non-production of required documents including financial statements, audit reports, and valuation reports for verification. The applicant contended that the liquidator failed to provide these documents despite tribunal orders and departmental communications, thereby prejudicing the value of the going-concern sale.

The tribunal heard arguments from all parties. The applicant relied on precedents including Madala Srinivasu v. Sri Rajesh Chillale and Sysco Industries Ltd. v. Chairman, Central Board of Direct Taxes. The liquidator denied withholding any documents and stated he became functus officio after dissolution. The Income Tax Department argued the tribunal lacked jurisdiction over tax matters and that the applicant had alternative statutory remedies.

Final Outcome

The tribunal dismissed the application, finding that: (1) The applicant failed to establish any default by the liquidator in document handover; (2) The tribunal lacks jurisdiction to direct tax authorities to grant benefits or set aside tax orders; (3) The application was filed after significant delay without contemporaneous grievance; (4) The applicant, being a former promoter-director, should have knowledge of the required documents; (5) The applicant should pursue statutory remedies under the Income-tax Act, particularly revision under Section 264 as indicated in the rejection order dated 23.04.2024. No costs were awarded.

Topics: Insolvency Proceedings, Tax Benefits, Document Handover