10 June 2024


High Court of Delhi

M. Tech Developers Pvt. Ltd. Vs. National Faceless Assessment Centre and Ors. (Neutral Citation: 2024:DHC:2921-DB)




Once the Resolution Plan came to be duly accepted, the bar created in terms of Section 31 of the IBC would apply

The Petitioner impugns notices issued under Section 144B of the Income Tax Act, 19611 pertaining to Assessment Year 2021-22 dated 27 June 2022 as well as the consequential notices issued under Sections 143(2) and 142(1) of the Act.

The challenge is essentially mounted on the basis of Section 31 of the Insolvency and Bankruptcy Code, 2016, with the Petitioner contending that,once the Resolution Plan came to be duly accepted, the bar created in terms of Section 31 of the IBC would apply, and bearing in mind the decision of the Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd vs. Edelweiss Asset Reconstruction Company Ltd., the Respondents would stand deprived of the jurisdiction or authority to reopen or assess income for any period prior to the approval of the Resolution Plan.

The proceedings before the National Company Law Tribunal commenced upon the filing of a petition under Section 7 of the IBC by Debashish Majumdar. The petition came to be admitted on 12 November 2020 and an order of moratorium came into effect from that date. In terms of the statutory scheme of the IBC, the Corporate Insolvency Resolution Process would also be deemed to have commenced from the aforesaid date.

According to the writ petitioner, the Resolution Professional appointed pursuant to the commencement of CIRP, on 23 November 2020, informed the Income Tax authorities of the pendency of proceedings before the NCLT. This was followed by a communication dated 28 January 2021 in terms of which the RP is stated to have conveyed a request to the Income Tax authorities to lodge their claims in accordance with the provisions of the IBC.

The Petitioner, in terms of the provisions of the Act, furnished its Return of Income for AY 2021-22 on 10 March 2022 declaring a net loss of INR 9,47,64,300. The CIRP proceedings in the meanwhile culminated in the approval of the Resolution Plan being approved by the NCLT on 15 March 2022 and accepting a plan submitted by Sarthi Constructions which had been accepted by the Committee of Creditors. It is only thereafter and on 27 June, 2022 that the Respondents chose to commence proceedings referable to Section 144B of the Act.

The fact that a Resolution Plan once approved would bring the curtains down on any claims pertaining to a period prior to the approval of the RP is no longer res integra.Section 144B power entails proceedings for assessment, reassessment or re-computation being initiated in terms of the faceless procedure of assessment as prescribed therein. Any effort to assess, reassess or re-compute could tend to lean towards a re-computation of liabilities which otherwise stands freezed by virtue of the Resolution Plan having been approved.

Such an action or recourse would clearly be barred by Section 31 of the IBC which binds all creditors of the corporate debtor, including the Central and State Governments or any other local authority to whom a debt is owed. Upon commencement of CIRP, the petition is duly advertised in terms of the provisions made in Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and which would thus constitute due public announcement. The Respondents, therefore, cannot sustain the invocation of Section 144B based on their own failure to lodge a claim within the time stipulated.The impugned notices are quashed. Petition allowed.

Tags : Notices Issuance Legality

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