9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (8) TMI 563 - HC - Income TaxValidity of reassessment action initiated against company dissolved - Resolution Plan having been approved by the NCLT - HELD THAT - As it is not the case of the respondents that the NCLT has been moved for the purposes of recall of its order according approval to the Resolution Plan. It is also not their case that the Resolution Plan insofar as it rings in a closure in respect of any claim or demand that may be said to exist in respect of the corporate debtor is liable to be set aside. In fact, the respondents do not appear to have questioned the validity of the Resolution Plan at any stage. We thus find ourselves unable to appreciate how the decision in Rainbow Papers could come to their aid. Viewed in the aforesaid light, it is manifest that it is the view taken by this Court in M Tech Developers 2024 (4) TMI 712 - DELHI HIGH COURT , Sree Metaliks 2023 (2) TMI 682 - DELHI HIGH COURT and Rishi Ganga Power Corporation 2023 (11) TMI 201 - DELHI HIGH COURT which would prevail and lead us to the inevitable conclusion that the reassessment action would not sustain. Assessee appeal allowed.
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961. 2. Impact of the approval of a Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC) on reassessment proceedings. 3. Jurisdiction and authority of the Income Tax Department to commence reassessment actions post-approval of the Resolution Plan. Issue-Wise Detailed Analysis: 1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961: The petitioner impugned the notice dated 31 March 2021 issued under Section 148 of the Income Tax Act, 1961, relating to Assessment Year (AY) 2014-15. The primary contention was that the reassessment action was invalid due to the approval of a Resolution Plan under the IBC, which should preclude any claims for periods prior to the approval. 2. Impact of the Approval of a Resolution Plan Under the Insolvency and Bankruptcy Code, 2016 (IBC) on Reassessment Proceedings: The petitioner argued that the approval of a Resolution Plan under the IBC results in a statutory injunct that bars any claims pertaining to periods before the approval. This argument was supported by precedents from the Supreme Court and the Delhi High Court, including: - Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company (2021) 9 SCC 657: The Supreme Court held that once a Resolution Plan is approved, it binds all stakeholders and extinguishes all pre-existing claims. - Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors. (2020) 8 SCC 531: The Court reiterated that the approved Resolution Plan binds all creditors, including statutory authorities, and extinguishes claims not included in the plan. The petitioner also cited Delhi High Court decisions in M Tech Developers Pvt. Ltd. v. National Faceless Assessment Centre and Rishi Ganga Power Corporation Ltd. v. Assistant Commissioner of Income-tax, which held that reassessment actions for periods prior to the approval of the Resolution Plan are unsustainable. 3. Jurisdiction and Authority of the Income Tax Department to Commence Reassessment Actions Post-Approval of the Resolution Plan: The respondents contended that they were unable to submit claims during the Corporate Insolvency Resolution Process (CIRP) because the assessment proceedings were not concluded. They argued that the reassessment action was justified based on credible information indicating that income amounting to INR 5124 crores had escaped assessment. However, the petitioner countered this by emphasizing the binding nature of the approved Resolution Plan under Section 31 of the IBC, which precludes any reassessment actions for periods before the plan's approval. The Delhi High Court in Sree Metaliks Limited v. Additional Director General and Ors. supported this view, stating that statutory authorities must submit their claims during the CIRP, and failure to do so extinguishes their claims. The respondents also referenced the Supreme Court's decision in State Tax Officer v. Rainbow Papers Ltd. (2023) 9 SCC 545, which held that a Resolution Plan must meet the requirements of Section 30(2) of the IBC, including payment of dues to operational creditors. However, the Court found this case inapplicable as the respondents had not sought to recall the NCLT's approval of the Resolution Plan. Conclusion: The Delhi High Court concluded that the reassessment action was unsustainable in light of the binding nature of the approved Resolution Plan under Section 31 of the IBC. The Court quashed the impugned notice under Section 148 for AY 2014-15 dated 31 March 2021, aligning with its previous decisions in M Tech Developers, Sree Metaliks, and Rishi Ganga Power Corporation.
|
