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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, MAUNA M. BHATT, JJ.
AUSIL CORPORATION PRIVATE LIMITED – Petitioner
Versus
ASSISTANT/DEPUTY COMMISSIONER OF INCOME TAX, RAJKOT – Respondent
Special Civil Application No. 2171 of 2023
Decided On : 01-10-2024
JUDGMENT :
MAUNA M. BHATT, J.
1. Heard learned advocate Mr. B.S. Soparkar for the petitioner and learned Senior Standing Counsel Mr. Karan G. Sanghani for the respondent No. 1.
2. Rule, returnable forthwith. Learned Senior Standing Counsel Mr. Karan Sanghani waives service of notice of rule for and on behalf of the respondent No. 1.
3. This petition under Article 226 of the Constitution of India is filed challenging the notices dated 05.04.2021 and 29.07.2022 issued under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’) and order dated 29.07.2022 passed under Section 148A(d) of the Act for Assessment Year 2015-16.
4. The brief facts are as under:
4.2. It is the case of the petitioner that the petitioner was subjected to insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (for short ‘the Code’) wherein a Corporate Insolvency Resolution Process (for short ‘the CIRP’) was initiated vide order dated 05.02.2020 pursuant to an application made by Bank of India before the Hon'ble National Company Law Tribunal, Ahmedabad Bench (for short ‘the NCLT’).
4.3. The Tribunal appointed an Interim Resolution Professional who made a public announcement in accordance with Sections 13, Section 15 and other relevant provisions of the Code read with Regulation 6 of the Insolvency Regulations, 2016 thereby inviting claims from various creditors of the petitioner and in response thereto, among other claims, the Interim Resolution Professional received a claim of Rs.1,26,80,855/- from the Deputy Commissioner of Income Tax, Rajkot which was verified and admitted in its entirety. The Deputy Commissioner of Income Tax, Rajkot was thus classified as an Operational Creditor in accordance with provisions of the Code and this was the only claim received from the Income Tax Department pursuant to the public announcement.
4.4. It is the case of the petitioner that under the CIRP, the Resolution Plan of one M/s. Zaveri & Co. Private Limited for the revival of the Petitioner was approved by the Hon'ble Tribunal on 14.10.2021 under Section 30(6) of the Code. The said Resolution Plan provided for payment of total amount of Rs.10,00,000/- to the Operational Creditors on a pro-rata basis against their admitted claims of Rs.59,44,51,751/-. The Deputy Commissioner of Income Tax has thus been paid Rs.21,332/- on pro-rata basis in accordance with the Resolution Plan.
4.5. The Petitioner has been issued the impugned notice under section 148 of the Act dated 05.04.2021 in the name of Jyoti Power Corporation Private Limited asking the Petitioner to file a return of income of AY 2015-16. The Petitioner had challenged the jurisdiction to issue the notice as well as validity of the same before this Court vide Special Civil Application No. 6170 of 2022 which was eventually disposed of vide order dated 05.05.2022 in view of the judgment of the Hon'ble Supreme Court in the case of Union of India and Others vs. Ashish Agarwal.
4.6. Thereafter, on 26.05.2022, the petitioner has received a notice in consequence to the judgment of the Hon’ble Supreme Court in the case of Union of India and Others vs. Ashish Agarwal along with reasons recorded for re-opening of assessment.
4.7. The Petitioner filed the primary objection vide letter dated 10.06.2022 in line with the direction of the Hon'ble Supreme Court and to drop the proceedings.
4.8. Thereafter on 29.07.2022, the respondent No. 1 has passed the order under Section 148A(d) of the Act rejecting objections of the petitioner.
4.9. Being aggrieved and dissatisfie
Approval of a resolution plan under the Insolvency and Bankruptcy Code extinguishes all past dues, including those owed to statutory authorities, preventing further claims.
All claims of the Income Tax Department are extinguished upon approval of a resolution plan under the Insolvency and Bankruptcy Code, preventing reassessment notices for periods prior to insolvency.
Once a resolution plan is approved under the Insolvency and Bankruptcy Code, no claims can be pursued for dues prior to that approval, rendering subsequent assessment orders and notices invalid.
Alternate remedy would not operate as a bar for invoking jurisdiction under Article 226 of the Constitution of India in at least three contingencies, namely, where writ petition has been filed for en....
The extinguishment of liabilities under the IBC 2016 post-resolution plan approval necessitates a review of any notices issued for prior assessment years, emphasizing procedural fairness.
The court emphasized the importance of the respondent deciding the petitioner's objections in accordance with the law before taking any further steps in pursuance of the impugned notice.
The approval of a resolution plan by the NCLT extinguishes all claims not included in the plan, preventing re-opening of assessments by tax authorities.
Approval of a resolution plan under the IBC extinguishes all past dues, preventing any assessment or demand for liabilities incurred prior to that approval.
Upon approval of a resolution plan under IBC, all claims not expressly included therein, including tax liabilities, are extinguished and cannot be pursued.
The approval of a Resolution Plan under the Insolvency and Bankruptcy Code extinguishes all tax liabilities, preventing the issuance of notices under Section 263 of the Income Tax Act.
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