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TMI Blog2024 (8) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 - DELHI HIGH COURT ] which would prevail and lead us to the inevitable conclusion that the reassessment action would not sustain. Assessee appeal allowed. - HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA For the Petitioner Through: Ms. Kavita Jha Mr. Himanshu Aggarwal, Advs. For the Respondents Through: Mr. Abhishek Maratha, SSC with Mr. Parth Semiwal, Mr. Apoorv Agarwal, JSCs, Ms. Nupur Sharma, Mr. Manav Goyal, Mr. Gaurav Singh, Ms. Divya Verma Mr. Bhanukaran Singh Jodha, Advs. JUDGMENT YASHWANT VARMA, J. 1. The writ petitioner impugns the notice dated 31 March 2021 issued under Section 148 of the Income Tax Act, 1961 [Act] and relating to Assessment Year [AY] 2014-15. A challenge is additionally laid to an order dated 17 February 2022 disposing of the objections which had been submitted by it. 2. Prior to the institution of the present writ petition, the petitioner had instituted W.P.(C) 2053/2022 assailing the Section 148 notice which came to be disposed of by this Court with a direction for the respondents to consider and dispose of the various objections which had been furnished by the writ petitioner before proceeding to commence the reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated Products Limited submitted a Resolution Plan for the consideration of the CoC. Pursuant to deliberations which ensued before the CoC, a revised Resolution Plan came to be tendered on 06 April 2019. The aforesaid Resolution Plan was again revised and submitted for the consideration of the CoC on 24 April 2019 and which ultimately came to be approved on 28 June 2019. The plan was thereafter transmitted for affirmation and approval to the NCLT on 10 July 2019. 8. The NCLT, by its order of 26 October 2020, ultimately came to approve the said plan. The factum of approval of the aforenoted Resolution Plan as well as the order of the NCLT was duly communicated to the respondents by the petitioner on 04 December 2020. 9. It is only thereafter and on 31 March 2021 that the impugned notice under Section 148 came to be issued. Responding to the aforesaid, the petitioner submitted its reply on 26 May 2021. The respondent had thereafter issued notices under Section 142(1) dated 07 September 2021 and 17 December 2021 directing the petitioner to upload its Return of Income online and to furnish all the documents and the information sought in the aforementioned notices. The petitioner additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondents take the position that since they were unable to submit any claim either before the Resolution Professional [RP] or before the NCLT since at that time the assessment proceedings for A.Y. 2018-19 were still pending, the reassessment action is not liable to be interfered with. The respondents further observe that credible information had been received with respect to A.Y. 2014-15 and which would appear to indicate that income amounting to INR 5124 crores appears to have escaped assessment. 14. Learned counsel for the writ petitioner had principally contended that the respondents stand denuded of jurisdiction or authority to commence any action for reassessment pertaining to a period prior to the approval of the Resolution Plan by virtue of Section 31 of the IBC. It was the submission of Ms. Jha that this Court has consistently taken the position that such an action would not sustain bearing in mind the legal position which has come to be conclusively settled by the Supreme Court in Ghanashyam Mishra and Essar Steel. Learned counsel in this connection drew our attention to the following observations as appearing in M Tech Developers:- 7. We note that while dealing with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire and the plan would be unworkable. 94. We have no hesitation to say that the words other stakeholders would squarely cover the Central Government, any State Government or any local authorities. The Legislature noticing that on account of obvious omission certain tax authorities were not abiding by the mandate of the Insolvency and Bankruptcy 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. 4. We also take note of the identical position which was expressed by the Supreme Court in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta where the following pertinent observations came to be made (page 182 of 219 Comp Cas): 105. Section 31 (1) of the Code makes it clear that once are solution plan is approved by the committee of creditors it shall be binding on all stakeholders, including guarantors. This is for the reason that this provision ensures that the successful resolution applicant starts running the business of the corporate debtor on a fresh slate as it were. In SBI v. V. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Code. A successful resolution applicant cannot suddenly be faced with 'undecided' claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would success fully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on afresh slate, as has been pointed out by us hereinabove. For these reasons, the National Company Law Appellate Tribunal judgment must also be set aside on this count. 5. In view of the aforesaid principles, 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. 15. According to Ms. Jha, our Court in Sree Metaliks had come to a similar conclusion as would be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it may otherwise have been possible) in the approved resolution plan. The terms contained in the approved resolution plan are binding on all stakeholders, including those who could have filed claims but chose not to lodge them. The Revenue, having failed to lodge its claim, cannot enforce the impugned orders and notices, given the binding nature of the approved resolution plan. 26. Section 31 of the 2016 Code, among other things, stipulates that once the resolution plan is approved, it shall be binding on the corporate debtor and its employees, members, and creditors, which includes the Central Government, State Government, Local Authority to whom a debt in respect of payment of dues arising under any law for the time being in force and also on authorities to whom statutory dues are owed. Furthermore, the provision also stipulates that the approved plan will bind the guarantors and other stakeholders involved in forging the same. (See Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd .) through the director. 27. Since the Revenue failed lodge its claims, the impugned demands raised by the Revenue stand automatically extinguished. (See Ruchi Soya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordance with the order of priority in sub-section (2) of Section 53, whichever was higher, and provided for the payment of debts of financial creditors, who did not vote in favour of the resolution plan, in such manner as might be specified by the Board. 46. Under Section 31 IBC, a resolution plan as approved by the Committee of Creditors under sub-section (4) of Section 30 might be approved by the adjudicating authority only if the adjudicating authority is satisfied that the resolution plan as approved by the Committee of Creditors meets the requirements as referred to in subsection (2) of Section 30 IBC. The condition precedent for approval of are solution plan is that the resolution plan should meet the requirements of sub-section (2) of Section 30 IBC. xxxx xxxx xxxx 52. If the resolution plan ignores the statutory demands payable to any State Government or a legal authority, altogether, the adjudicating authority is bound to reject the resolution plan . 53. In other words, if a company is unable to pay its debts, which should include its statutory dues to the Government and/or other authorities and there is no plan which contemplates dissipation of those debts in a phased m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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