# In the matter of RRC International Freight Services Limited

> NCLT judgment dated 2024-02-22. Citation: TCN-2024-NCLT-02466. The case involves an application (IA No. 1001/2022) filed in connection with a Corporate…

- **Court:** NCLT
- **Order date:** 22 Feb 2024
- **Citation:** TCN-2024-NCLT-02466
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/rrc-international-freight-services-limited-00f8e0bd

## Summary

### Background

The case involves an application (IA No. 1001/2022) filed in connection with a Corporate Insolvency Resolution Process (CIRP) against RRC International Freight Services Limited. The CIRP commenced on 26.12.2018, and a liquidation order was passed on 22.10.2019. During the liquidation, the Income Tax Authorities issued notices under Section 142(1) of the Income Tax Act, which culminated in an assessment order dated 10.03.2021. Subsequently, proceedings under Section 270A and 270AAC were initiated, leading to show cause notices and penalties imposed on the Corporate Debtor.

## Facts

The Corporate Insolvency Resolution Process (CIRP) against RRC International Freight Services Limited commenced on 26.12.2018, followed by a liquidation order on 22.10.2019. During liquidation, the Income Tax Authorities issued notices under Section 142(1) of the Income Tax Act, leading to an assessment order dated 10.03.2021 assessing the Corporate Debtor's total income at Rs.3,44,86,678/-. Subsequently, proceedings under Sections 270A and 270AAC were initiated, resulting in show cause notices dated 10.03.2021, 10.06.2021, and 27.12.2021. Consequently, penalties of Rs.1.5 Lakhs (order dated 07.12.2021) and Rs.1,66,211/- (order dated 14.01.2022) were imposed. The Liquidator argued that these penalties were wrongly imposed during CIRP and liquidation, and the Income Tax

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## Issues and analysis

### Issue 1: Whether the Income Tax Authorities could impose penalties on the Corporate Debtor during the CIRP …

**Ratio:** The imposition of penalties during CIRP and liquidation violates the moratorium

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**Reasoning:** The court reasoned that during the CIRP and liquidation, a moratorium is in place to

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**Interpretation:** The moratorium under the IBC prevents any recovery action against the corporate

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**Application:** The court applied this principle to the specific facts, holding that the

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## Parties

- **Judges:** ANIL RAJ C…; Kuldip Kumar…
- **Appellants:** Ashish…
- **Respondents:** RRC International…; Additional/Joint/D…
- **Advocates:** Amey Ha…; Geeta Lun…

## Timeline

- **2018-12-26 — CIRP Commen…**: Corporate Insolvency Resolution Process commenced against RRC International Freight…
- **2019-10-22 — Liquidation…**: Liquidation order passed in…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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