2024 (5) TMI 685 - AT - Income Tax

Income tax proceedings against company in Liquidation/dissolved - initiate or continue any proceedings in respect to a claim, which is not a part of the resolution plan - Corporate Insolvency Resolution Proceedings (CIRP) are pending against the assessee and as of now, Hon'ble National Company Law Appellate Tribunal (NCLAT) is seized with the jurisdiction - HELD THAT - A reading of the provisions under section 13 and 14 of the Code along with the decision in Ghanashyam Mishra And Sons 2021 (4) TMI 613 - SUPREME COURT clearly shows that once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code, the continuance of the pending proceedings is prohibited and when once they reach the logical conclusion with due approval of the resolution plan by the Adjudicating Authority u/sub section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. At any rate, for the time being, this appeal cannot be proceeded with during the continuance of the proceedings under the Code. Depending upon the result of such proceedings before the adjudicating authority in respect of the corporate debtor, appropriate steps if any, may be taken by the appellant/respondent. We, therefore, granting leave to the appellant in this appeal to seek the restoration of the appeal, if necessitated by the orders in the Corporate Insolvency Resolution Proceedings, dismiss the appeal in limine. Also decided in Murli Industries Limited 2021 (12) TMI 1182 - BOMBAY HIGH COURT on the date of approval of the resolution plan by the Adjudicating Authority, all such claims which are not a part of the resolution plan, shall stand extinguished and no personnel shall be entitled to initiate or continue any proceedings in respect to a claim, which is not a part of the resolution plan. In the present case also, it is not a case of the Department that the claims which are part of subject matter of appeal are part of the resolution plan - Thus, we do not find any merit in the appeal filed by the assessee and hence stands dismissed as not maintainable.

Summary

Issues Involved:
The appeals filed by the assessee against the orders of the National Faceless Appeal Centre for the assessment years 2010-11, 2015-16 & 2016-17, involving Corporate Insolvency Resolution Proceedings (CIRP) and the interpretation of the Insolvency and Bankruptcy Code, 2016.

ITA No.182/NAG/2022, A.Y. 2010-11:
The judgment considered the implications of the Insolvency and Bankruptcy Code, 2016 (the Code) and the decision in Ghanashyam Mishra And Sons vs. Edelweiss Asset Reconstruction regarding moratorium under section 13 of the Code. It was highlighted that once a resolution plan is approved, claims stand frozen and extinguished if not part of the plan. The judgment referred to the decision of the Jurisdictional High Court in Murli Industries Limited vs. ACIT, emphasizing the extinguishment of claims not included in the resolution plan upon approval by the Adjudicating Authority under Section 31 of the Code. The judgment concluded that during CIRP proceedings, the appeal cannot be proceeded with, and dismissed the appeal while granting leave to seek restoration based on CIRP outcomes.

ITA Nos.183 to 185/NAG/2022, A.Ys. 2010-11, 2015-16 & 2016-17:
The judgment held that the facts and issues in the remaining three appeals were identical to ITA No.182/NAG/2022 for A.Y. 2010-11. Therefore, the decision in ITA No.182/NAG/2022 applied to these appeals as well, resulting in the dismissal of all four appeals of the assessee.

In summary, the judgment addressed the appeals related to Corporate Insolvency Resolution Proceedings and the application of the Insolvency and Bankruptcy Code, 2016. It emphasized the freezing and extinguishment of claims not included in the resolution plan upon approval by the Adjudicating Authority. The appeals were dismissed based on the above considerations, with the decision in ITA No.182/NAG/2022 being applied to the remaining three appeals.