The Bombay High Court recently ruled that the Income Tax Department could not have proceeded against the Corporate Debtor (Petitioner) after approval of the Resolution Plan by the NCLT, for a period prior to approval of such plan. Reference was made to the decision by the Supreme Court in the case of Vaibhav Goel & Another v/s. Deputy Commissioner of Income Tax & Another [(2025) 255 Company Cases 266 (SC)], as per which “once the Resolution Plan is approved by an Adjudicating Authority, no belated claim can be included therein. If one were to allow this, the Resolution Applicants would not be in a position to recommence the business of the Corporate Debtor with a clean slate”.
The Division Bench comprising Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla affirmed that once a Resolution Plan has been approved in accordance with the provisions of the IBC, the dues of the Income Tax Department would have to be governed by what is stated in the Resolution Plan approved by the NCLT. The Bench also reiterated that once a Resolution Plan is approved by the Adjudicating Authority, no belated claim can be included therein. The Bench therefore allowed the petition, and quashed the order passed u/s 148A(3) as well as the consequential orders/ notices.
Briefly, the petition has challenged the order passed u/s 201(1)/ 201(1A) of the Income Tax Act, along with the Notice of Demand and the reopening notice u/s 148A, on the premise that no demand can be raised upon the petitioner, since prior to initiation of the impugned proceedings, a Resolution Plan came to be approved by the NCLT, Ahmedabad Bench, resulting in extinguishment of the past claims.
Cases Relied On:
Vaibhav Goel & Another v/s. Deputy Commissioner of Income Tax & Another [(2025) 255 Company Cases 266 (SC)]
Alok Industries Ltd., v/s. Assistant Commissioner of Income-tax [2024] 161 taxmann.com 285 (Bombay)
Uttam Galva Metallics Ltd., v/s. Assistant Commissioner of Income-tax [2024] 166 taxmann.com 492 (Bombay)
Ghanshyam Mishra & Sons Pvt. Ltd., v/s. Edelweiss Asset Reconstruction Company Ltd., & Others [(2021) 9 SCC 657]
Appearances:
Advocates Sham V. Walve, Abhishek Khandelwal, and Bhavik Chheda, for the Petitioner
Advocate Y. S. Bhate, for the Respondents