2024 (4) TMI 665 - HC - Income Tax

Reassessment proceedings against company dissolved / insolvent - Jurisdiction or authority to reopen or assess income for any period prior to the approval of the Resolution Plan - petitioner is the corporate debtor and the Resolution Plan in respect of which came to be approved by NCLT - HELD THAT - The successful resolution applicant cannot be foisted with any liabilities other than those which are specified and factored in the Resolution Plan and which may pertain to a period prior to the resolution plan itself having been approved. See GHANASHYAM MISHRA AND SONS PRIVATE LIMITED 2021 (4) TMI 613 - SUPREME COURT and COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT We allow the instant writ petition and set aside the impugned order under Section 148A(d). Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the interpretation of Section 148A(d) of the Income Tax Act, 1961 in relation to a reassessment notice issued to a corporate debtor post-approval of the Resolution Plan by the National Company Law Tribunal (NCLT) for Assessment Year 2017-18.

Summary:

Issue 1: Reassessment Notice Post-Approval of Resolution Plan
The petitioner, a corporate debtor, challenged a reassessment notice issued under Section 148A(d) of the Income Tax Act, 1961 for the Assessment Year 2017-18, which pertained to a period before the approval of the Resolution Plan by the NCLT. The court considered the legislative intent behind the Insolvency and Bankruptcy Code (I&B Code) to revive the corporate debtor and make it a going concern, as highlighted in previous judgments.

Issue 2: Binding Nature of Resolution Plan
Referring to the Supreme Court's decisions in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. and Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta, the court emphasized that a resolution plan approved by the Committee of Creditors becomes binding on all stakeholders, including guarantors. The court held that the successful resolution applicant should not be burdened with liabilities not specified in the Resolution Plan approved by the NCLT.

Conclusion:
Based on the principles established in the aforementioned judgments, the court allowed the writ petition, setting aside the impugned reassessment order dated 30 July 2022 under Section 148A(d) of the Income Tax Act, 1961. The judgment reaffirmed that liabilities imposed on the successful resolution applicant must align with those specified in the approved Resolution Plan and should not extend to periods predating the plan's approval.