Finding that the tax allegedly escaping the assessment pertains to Assessment Year 2020-21, which is prior to the approval of the Resolution Plan and does not form part of the Resolution Plan, the Bombay High Court ruled that the Income Tax Authorities cannot proceed against the Taxpayer (Petitioner) for alleged escapement of tax for the period which is prior to the approval of the Resolution Plan by National Company Law Board (NCLT).
The Division Bench comprising Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla observed that the reopening proceedings during the period of moratorium were clearly contrary to the law declared by the Apex Court in Ghanshyam Mishra & Sons Pvt Ltd vs Edelweiss Asset Reconstruction Company Ltd. & Ors. [(2021) 9 SCC 657] and Alchemist Asset Reconstruction Company Ltd. vs. Hotel Gaudavan (P.) Ltd – [(2017) 88 taxmann.com 202 (SC)]. Thus, the Bench allowed the petition and concluded that the Income Tax Department is not permitted to proceed with the reassessment proceedings in furtherance of the notice issued under Section 148 of the Income Tax Act.
The Bench also took note of the order of the NCLT [approving the Resolution Plan], which indicated that all past claims and statutory dues against the Petitioner stood extinguished. Further, referring to the decision in the case of Vaibhav Goel vs Deputy Commissioner of Income Tax [(2025) 255 Company Cases 266 (SC)], the Bench reiterated that the demand made after approval of Resolution Plan by an Adjudicating Authority, is invalid and once a Resolution Plan is approved by the NCLT, no belated claim can be included therein that was not made earlier.
The observation came as an answer to the reassessment proceedings initiated by the Income Tax Department vide notice issued u/s 148A(b) as well as the order passed u/s 148A(d) of the Income Tax Act, on the premise of approval of the Resolution Plan by the NCLT. It was contended by the Petitioner that before even the initiation of the reassessment proceedings, the NCLT Mumbai had admitted an application filed by Asset Reconstruction Company u/s 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) and declared a moratorium u/s 14 of the IBC by appointing the Resolution Professional.
Cases Relied On:
Ghanshyam Mishra & Sons Pvt Ltd vs Edelweiss Asset Reconstruction Company Ltd. & Ors. [(2021) 9 SCC 657]
Alchemist Asset Reconstruction Company Ltd. vs. Hotel Gaudavan (P.) Ltd – [(2017) 88 taxmann.com 202 (SC)]
Vaibhav Goel vs Deputy Commissioner of Income Tax [(2025) 255 Company Cases 266 (SC)]
Appearances:
Senior Advocate Prakash Shah and Advocate Jas Sanghavi, for the Petitioner
Advocate Vipul Bajpayee, for the Respondent
