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TMI Blog2024 (4) TMI 937X X X X Extracts X X X X X X X X Extracts X X X X ..... tion plan shall stand extinguished and no person is entitled to initiate or continue any proceeding in respect to a claim which is not part of the resolution plan. In view of the above conclusion arrived at by the Apex Court after considering the entire Scheme of the IBC, the demand which was raised pursuant to the order by issuing the demand notice cannot be said to be in respect to a claim which is part of the resolution plan. The proceedings which were continued under section 147 r.w.s. 144 by the respondent, was also not a proceeding in respect to a claim which is not part of the resolution plan. In such circumstances, the notices issued by the CIT (A) and reference for the hearing of the appeals filed by the petitioner challenging the assessment order would extinguish on 01.07.2022 as no demand would remain in existence in absence of any claim raised before the RP by the respondent authority - so far as the framing of the reassessment pertaining to the Assessment Year 2018-19 in absence of any demand pending as on 01.07.2022 and as such demand raised subsequently would not be a part of the claim to be made before the RP. As no demand to be claimed was in existence when the NLC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, challenged the assessment order by draft amendment which was granted vide order dated 11.04.2023. The petitioner thereafter filed another amendment to join Assistant Commissioner of Income Tax, Central Circle 2, Surat as respondent No. 3 which was also granted by this Court vide order dated 08.08.2023. 7. Brief facts of the case are that the petitioner-company was subjected to insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 ['IBC' for short] as application (CP(IB) No. 247/2020) under section 7 of the IBC was preferred by the Financial Creditor-State Bank of India on 03.02.2021. The petition of the bank was admitted and the Creditor Insolvency Resolution Process ('CIRP' for short) was initiated by the National Company Law Tribunal (NCLT)and one Mr. Sunilkumar Kabra was appointed as Interim Resolution Professional ('IRP' for short) on 05.02.2021 by the NCLT. 7.1 On 05.02.2021, IRP made a public announcement of the CIRP of the petitioner company and called upon its creditors to submit its claim with requisite proofs. The Committee of Creditor [COC] was also formed by the IRP on 26.02.2021. 7.2 In the fourteenth COC meeting on 14.12.2021, the members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor in accordance with the terms and conditions of such agreements/MoUs/contracts; g. The RP shall complete the accounting entries to give effect to the resolution plan in the Books of Account as per the applicable Accounting Standards and provisions of the Companies Act, 2013; h. The management of the Corporate Debtor shall be handed over to the Board of Directors as may be nominated by the Resolution Applicant for proper running operations of the business of the Corporate Debtor; i. The Board of Directors of the Corporate Debtor shall also be reconstituted and procedural compliances shall be done to give effect to such reconstitution; j. The Resolution Applicant shall, pursuant to the resolution plan approved under Section 31(1) of the Code, obtain necessary approvals required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under Section 31 or within such period as provided for in such law, whichever is later, as the case may be; k. All the approvals of shareholders/members of the Corporate Debtor shall be deemed to have been obtained and the provisions made in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutes, or any other law or statute including for any period prior to the Effective Date." 7.5 The petitioner has therefore approached this Court by preferring the petition on the ground that the resolution applicant is not liable for any income tax proceedings prior to the effective date i.e. 01.07.2022. The petitioner has therefore challenged the notices issued by the Commissioner of Income Tax (Appeals) in respect of the assessment years 2013-14 to 2018-19 for fixing the hearing of appeals filed by the petitioner against the assessment orders for the respective assessment years. 7.6 During the pendency of this petition, respondent No. 3 passed the assessment order under section 147 read with section 144 on 13.03.2023 and issued the demand notice under section 156 of the Act raising the demand of Rs. 28,98,48,379/-. 7.7 The petitioner therefore, has preferred the draft amendment and prayed for the following reliefs: "(CC) Your Lordships be pleased to stay the implementation, operation and execution of the order and notice dated 31.03.2022 passed by respondent No. 2 u/s.148A(d) and 148 of the Act (Annexure-F) Colly, order dated 13.03.2023 (Annexure L) made by respondent No.1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Apex Court in the facts of the respective cases. It was held that the reassessment proceedings which were initiated prior to the date of passing of the order by the NCLT approving the resolution plan would not survive. 8.4 Reference was made to the decision of the Delhi High Court in case of Murli Industries Limited through its Dy. Ex. Director (supra) wherein the Bombay High Court in the facts of said case held as under: "21. We may add here that the Explanation to Section 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, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the private company during such period shall be jointly and severally liable for the payment of such tax or other amount unless, he proves that the nonrecovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the said company." We did not come across any such provision under the Income Tax Act, 1961 nor did the parties before us informed of its existence. 24. We, accordingly, record our answer in the negative to the question framed." 8.5 Referring to the decision of M/s. Ultratech Nathdwara Cement Ltd(supra) it was submitted that the facts of the said case are identical to the facts of the present case as in the said case also, the demand notices, issued after the date of order of NCLT approving the resolution plan, have been quashed and set aside. It was submitted that the demand notice dated 18.07.2019 was received for tax dues for the Financial Year 2016-17 and thereafter on 22.01.2021, assessment order was passed whereby the respondent No. 5 confirmed the demand of interest in lieu of delayed payment of GVAT and CST for the period of 01.04.2016 to 01.11.2016 which was after the date of the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the resolution plan reads as under: "13.2 Any breach of the terms of this Resolution plan or default in the performance of the obligations hereunder by any of the foregoing persons or any inaccuracy or inadequacy in the information contained in the IM shall cause irreparable damage to the RA and its proposal to revive the CD. Accordingly, in case of such breach of default or inaccuracy, the RA shall have the right to such remedies as may be available under applicable law (in addition to specific performance and/or filing an application with the AA in accordance with IBC)". 9.1 It was also pointed out that as per the clause (e) of the order, as regard to relief prayed under the provisions of the Income Tax Act, the Corporate Debtor or Resolution Applicant is required to approach the Income Tax Authorities who shall take a decision on relief and concession sought by the Resolution Applicant in accordance with the provisions of the Act, 1961. It was however, submitted that the demand raised by the order dated 13.03.2023 for the Assessment Year 2018-19 was not crystalized or made available to lodge a claim before the RP during the resolution process and as no demand was in existenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng which the application shall be deemed to be withdrawn before its admission.] Explanation.--For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish-- (a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3). [Provided that if the Adjudicating Authority has not ascertained the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of approval under sub-section (1),-- (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. [(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.] Section 238 Provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. In view of the above conclusion arrived at by the Apex Court after considering the entire Scheme of the IBC, the demand which was raised pursuant to the order dated 13.03.2023 by issuing the demand notice dated 20.03.2023 cannot be said to be in respect to a claim which is part of the resolution plan. The proceedings which were continued under section 147 read with section 144 of the Income Tax Act, 1961 by the respondent, was also not a proceeding in respect to a claim which is not part of the resolution plan. In such circumstances, the notices issued by the CIT (A) and reference for the hearing of the appeals filed by the petitioner challenging the assessment order would extinguish on 01.07.2022 as no demand would remain in existence in absence of any claim raised before the RP by the respondent authority. However, so far as the framing of the reassessment pertaining to the Assessment Year 2018-19 in absence of any demand pending as on 01.07.2022 and as such demand raised subsequently would not be a part of the claim to be made before the RP. As no demand to be claimed was in existence when the NLCT passed the order on 01.07.2022 and therefore, the demand which has arisen p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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