A piece of good news for insolvency professionals as the central government has increased its powers. Professionals can now verify the income tax returns of bankrupt companies. Furthermore, It is also the duty of professionals to comply with the regulations set forth for certain company tax returns that are governed by income tax (24th Amendment) Rules 2021 issued by the Ministry. In this article, we will read about the latest news of Professionals who can now verify income tax returns of bankrupt companies.
New Amendment Rules to Verify Income Tax returns of Bankrupt Companies
In order to check tax returns of firms who are suffering bankruptcy, the Ministry has revised the Income Tax Rules. These new rules enable resolution specialists or insolvency professionals designated by the National Corporate Law Tribunal (NCLT) to check Income Tax Returns of such bankrupt companies.
The new rules are as follows
- The Income-tax (24th Amendment) Rules, 2021, notified by the ministry on Wednesday also made it the obligation of the resolution professional to follow the rules meant for tax return preparers of certain assessees as per IANS
- The new rules allow the resolution professional to furnish details of the documents given by the assessee for preparation of the return as well as details of the scope and findings of any examination.
- It also allows them to check what the representative has done on such documents in case of a company undergoing bankruptcy proceedings as stated by IANS.
- Under paragraphs (c) and (cd) of Section 140 of the IT Act, the return on income for a business and a limited liability partnership can be verified by any other person as may be prescribed by the board.
- The gazette notification said that in the Income-tax Rules, 1962 after rule 12A, the following rule shall be inserted. Namely: “12AA. The prescribed person for the purposes of clause (c) and clause (cd) of section 140.
- For the purpose of clause (c) or clause (cd), as the case may be, of section 140, any other person shall be the person, appointed by the Adjudicating Authority for discharging the duties and functions of an interim resolution professional, a resolution professional, or a liquidator, as the case may be, under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and the rules and regulations made thereunder.”
Who are resolution professionals? What do they do?
At the beginning of insolvency, the adjudicating body needs to designate a person to perform the whole procedure. Thus, This individual is the resolution professional or the interim resolution professional(IRP) or insolvency or the resolution professional.
The IRP or resolution professional is responsible for conducting procedures. He is also responsible for determining the company debtor’s activities as a matter of course.
Benefits of New Amendment Rules to Verify Income Tax returns of Bankrupt Companies
The new update in rules to verify Income Tax Returns of Bankrupt Companies will certainly have many advantages. For instance, it will allow the liquidation process to be quick. Similarly, the new rules will speed up the resolution process for stressed assets in the country.
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