Assessment Order Passed After Approval of Resolution Plan by NCLT is Not Part of Claim to Be Made Before RP | HC

Case Details: Surya Exim Ltd. v. Union of India - [2024] 161 taxmann.com 749 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & Niral R. Mehta, JJ.
• Dhinal A. Shah for the Petitioner. 
• Karan G. Sanghani for the Respondent.

Facts of the Case

Assessee was subjected to insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. The Committee of Creditor approved the resolution plan, and the NCLT approved the same. The approved resolution plan specifically stated that the resolution applicant would not be liable for any reassessment, reopening, revision, review, or other proceedings under the direct and indirect tax statutes for any period before the effective date.

After the NCLT approval, the CIT(A) passed the assessment order for the relevant assessment year. The assessee contended that the CIT(A) could not have issued the notices for hearing, as the pending proceedings before the CIT (Appeals) after 01.07.2022 would lapse. The CIT(A) could not have passed an order on 13.03.2023 and also could not have issued the notice under section 156 of the Act, 1961 on 23.03.2023 pertaining to the assessment order 2018-19 as the entire reassessment proceedings stand extinguished in view of the provision of section 31 read with section 238 of the IBC.

High Court Held

The Gujarat High Court held that the demand 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 of a claim that is part of the resolution plan. The proceedings continued under section 147, read with section 144 of the Income Tax Act, 1961, by the respondent, and were also not a proceeding with respect to a claim 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 assessee challenging the assessment order would extinguish on 01.07.2022 as no demand would remain in existence in the absence of any claim raised before the RP by the respondent authority.

List of Cases Reviewed

• Ghanshyam Mishra & Sons (P.) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. reported in (2021) 9 SCC 657 (para 11) followed.