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TMI Blog2021 (12) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of approval of Resolution Plan under Insolvency and Bankruptcy Code, 2016 on the ground that Respondent No. 1 - Assessing Officer had a reason to believe that the income chargeable to tax of the Corporate Debtor has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961?" 4. There are two connected Petitions herein. The impugned notice in WP No. 2948 of 2021 is dated 25.03.2021 and in WP No. 2965 is dated 24.03.2021. For the sake of convenience, the facts of Writ petition No. 2948 of 2021 are being considered. The Petitioner - Murli Industries Ltd., is a company registered under the Companies Act, 1956, and is engaged in the business of manufacture and sale of cement. According to the Petitioner, the Petitioner - company had filed its return of income for the assessment year 2014 - 15 on 29.09.2014 declaring a loss of Rs. 2,80,30,74,365/-. The Petitioner's case was selected for scrutiny by the Income Tax Authorities and an order to that effect was passed on 27.12.2016 under Section 143(3) read with Section 144 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). Respondent No. 1 is the Assessing Officer of the Petitioner who has issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by National Company Law Appellate Tribunal, New Delhi (hereinafter referred to as "NCLAT") by an order dated 24.01.2020. The Resolution Plan was made effective from 25.08.2020. 7. In this background, learned counsel for the Petitioner contends that the Resolution Plan having been approved by the Adjudicating Authority i.e., the NCLT under IBC and the effective date for making the resolution Plan operational having been notified as on 25.08.2020, the Respondents - Income Tax Department could not have issued the impugned notice dated 25.03.2021 i.e., subsequent to the approval of the Resolution Plan. The contentions are based on the proposition that the claims which were not a part of the Resolution Plan are not maintainable against the Corporate Debtor, nor can any claim be initiated thereafter and hence, the Respondents are not entitled to initiate any proceedings for recovery of any dues from the Petitioner (Corporate Debtor). 8. There is no dispute that the claim raised through the impugned notice was not a part of the Resolution Plan. However, Shri Bhattad, learned counsel for the Respondent Nos. 1 and 2, has come up with a defense that the claim raised through the impugned no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any creditor including the Central Government, State Government or any local authority is bound by the resolution plan once it is approved by an adjudicating authority under sub-section (1) of Section 31 of the Insolvency and Bankruptcy Code, 2016. 2.2. (ii) As to whether the amendment to Section 31 by Section 7 of Act 26 of 2019 is clarificatory/declaratory or substantive in nature? 2.3 (iii) As to whether after approval of resolution plan by the adjudicating authority a creditor including the Central Government, State Government or any local authority is entitled to initiate any proceedings for recovery of any of the dues from the corporate debtor, which are not a part of the resolution plan approved by the adjudicating authority?" 11. While settling the answer to the aforesaid questions, the Hon'ble Supreme Court has elaborately discussed series of its judgments. We will cite only those findings that are helpful in answering the question involved in the present Petition. 12. As held by the Hon'ble Supreme Court, one of the dominant objects of the IBC is to see that an attempt has to be made to revive the Corporate Debtor and make it a going concern. For that a Resolution A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities. The legislature, noticing that on account of obvious omission, certain tax authorities were not abiding by the mandate of I&B Code and continuing with the proceedings, has brought out the 2019 amendment so as to cure the said mischief. We therefore hold, that the 2019 amendment is declaratory and clarificatory in nature and therefore retrospective in operation. 98. It is a cardinal principle of law, that a statute has to be read as a whole. Harmonious construction of sub section (10) of Section 3 of the I&B Code read with sub sections (20) and (21) of Section 5 thereof would reveal, that even a claim in respect of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority would come within the ambit of 'operational debt'. The Central Government, any State Government or any local authority to whom an operational debt is owed would come within the ambit of 'operational creditor' as defined under subsection (20) of Section 5 of the I&B Code. Consequently, a person to whom a debt is owed would be covered by the definition of 'creditor' as defined under subsection (10) of Section 3 of the I&B Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued." 17. A careful reading of the above findings, would show that even a claim in respect of dues arising under any law for the time being in force, including claims under the Income Tax Act, 1961 which is payable to the Central Government or the State Government, would come within the ambit of Operational Creditors. Further, the claim of operational creditors will also include a claim of statutory authority like Income Tax Department on account of money receivable pursuant to an imposition by a statute. The Hon'ble Supreme Court has also upheld the view taken by the Rajasthan High Court holding that the demand notices issued by the Central Goods and Service Tax Department, for a period prior to the date on which NCLT has granted its approval to the Resolution Plan, are not permissible in law. The concluding remarks of the Hon'ble Apex Court are that, on the date of approval of the Resolution Plan by the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 147 of the Income Tax Act, 1961 creates a deeming fiction of cases where the income chargeable to tax has escaped assessment. Clause (a) deals with a situation where no return of income has been furnished by the assessee although his total income exceeded maximum amount which is not chargeable to income tax. Clause (b) deals with a situation where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowances or relief in the return. There are other Clauses also that would indicate the reasons for escaping the assessment. The point is, once the public announcement is made under the IBC by the Resolution Professional calling upon all concerned, including the statutory bodies, to raise claim, it would be expected from all the stakeholders to diligently raise their claim. The Income Tax authorities in that sense, ought to have been diligent to verify the previous years' assessment of the Corporate Debtor as permissible under the law and to raise the claim in the prescribed form within time before the Resolution Professio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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