Invoices Deemed Bogus By Income Tax Department Cannot Justify Insolvency Proceedings Against Corporate Debtor: NCLAT Principal Bench

The NCLAT Principal Bench ruled that invoices deemed bogus by the Income Tax Department cannot be used as grounds for initiating insolvency proceedings against a corporate debtor. This decision clarifies that insolvency proceedings should be based on substantial financial distress and not merely on allegations of fraudulent invoicing. It highlights the need for clear evidence of insolvency rather than ancillary tax issues when pursuing insolvency actions.