# In the matter of Kitply Industries Ltd. IA No. 54-2018 in CP (IB)-02-GB-2018

> NCLT judgment dated 2018-09-05. Citation: TCN-2018-NCLT-00818. The case involves an application filed under Section 7 of the Insolvency & Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 5 Sept 2018
- **Citation:** TCN-2018-NCLT-00818
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/kitply-industries-ltd-ia-no-54-2018-in-cp-ib-02-gb-2018-8f1488b1

## Summary

### Background

The case involves an application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking directions to the Assistant Commissioner of Income Tax (TDS) to defreeze the accounts of the corporate debtor, Kitply Industries Ltd. The Income Tax Department had frozen the accounts due to outstanding dues demanded by a letter dated 2017-04-26. The applicant argues that operating the bank account is necessary for the Corporate Insolvency Resolution Process (CIRP) and that the Income Tax Department cannot appropriate the funds without filing its claims.

## Facts

Kitply Industries Ltd. is undergoing Corporate Insolvency Resolution Process (CIRP). The Income Tax Department froze Kitply Industries Ltd.'s bank accounts between January 2018 and April 2018 due to outstanding dues demanded in a letter dated 2017-04-26. The Resolution Professional (RP) filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking directions to defreeze the accounts, arguing that operating the bank account is necessary for CIRP and that the Income Tax Department cannot appropriate funds without filing claims. The RP approached the NCLT Guwahati Bench for relief.

## Issues and analysis

### Issue 1: Whether the Assistant Commissioner of Income Tax (TDS) should be directed to defreeze the accounts …

**Ratio:** The principle is that the CIRP needs to be conducted effectively, and hindering the

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**Reasoning:** The court found it necessary to require the applicant to issue notice to the respondent

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**Interpretation:** This issue concerns the balance between the Income Tax Department's right to

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**Application:** The court is considering whether the Income Tax Department's action of freezing

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## Parties

- **Judges:** P. K. S…
- **Respondents:** Kitply Industries…; IDBI Bank…
- **Advocates:** M. Haza…; Kewi…

## Timeline

- **2017-04-26 — Demand L…**: The Income Tax Department issued a letter demanding outstanding dues from Kitply…
- **2018-01-01 — Account F…**: The Income Tax Department directed the freezing of Kitply Industries Ltd.'s bank accounts…

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