The High Court held that once a resolution plan is approved u/s ...

Once Resolution Plan approved, only listed debts payable; past claims extinguished. No reassessment proceedings allowed.

Case Laws     Income Tax

September 7, 2024

The High Court held that once a resolution plan is approved u/s 31(1) of the Insolvency and Bankruptcy Code, 2016 (IBC), only the debts specified in the resolution plan remain payable. All dues not included in the resolution plan stand extinguished, and no proceedings can be initiated or continued regarding any claim for such dues. The impugned reassessment proceedings pertaining to the assessment year 2016-17 relate to the period prior to the approval of the resolution plan and thus cannot be continued or initiated after the plan's approval. The resolution plan was approved on May 6, 2020, and any attempt to reassess the petitioner-assessee for the assessment year 2016-17 would directly conflict with the law declared in Ghanshyam Mishra, prohibiting the continuation of existing proceedings and initiation of new proceedings related to operations prior to the Corporate Insolvency Resolution Process (CIRP) after the resolution plan's approval. Consequently, the reassessment proceedings, predating the CIRP and relating to the period before the resolution plan's approval, stand extinguished. The petitioner-assessee has begun on a clean slate under new ownership and management after completing the CIRP, and the writ petition was quashed.

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