25 August 2021
Persons notified for signing Income Tax Returns and to act as Authorized Representative
With the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC), insolvency professionals viz: resolution professional, an interim resolution professional or a liquidator are empowered to devise a plan to re-structure/revive a company if it is unable to pay its debts, via Corporate Insolvency Resolution Process and, if that fails too, to liquidate the company.

While IBC empowers insolvency professionals to manage the affairs of the corporate debtor, exercise powers of the board of directors, undertake compliances, etc. on behalf of a corporate debtor, similar enabling provisions were missing under the Income Tax Act, 1961 (the Act) (except for signing tax return in case of a company, against whom insolvency application has been admitted). Finance Act 2020 amended the provisions of the Act, thereby authorizing 'any other person' to sign the tax return of a Company & Limited Liability Partnership. Similarly, provisions of 'Authorized representative' were amended to provide that 'any other person' would be eligible to act as an authorized representative in any of the proceedings under the Act. The term 'any other person' however, was not prescribed or notified.

The Central Board of Direct Taxes (CBDT) has recently notified that any person appointed by the Adjudicating Authority for discharging duties of an insolvency professional viz: resolution professional, an interim resolution professional or a liquidator would get covered under 'any other person' both for the purposes of signing the tax return as well as to act as an authorized representative in case of a company and an LLP.
Our Comments
The notification of insolvency professionals for tax return filing and 'authorized representative' has brought in clarity and also synced both the statutes. With this, the process of tax return filing and/or completion of any proceedings under the Act, is expected to sail smoothly.
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