Indian Kanoon - Search engine for Indian Law

Delhi High Court - Orders

Delhi Baroda Road Carrier Private ... vs Union Of India Through The Income Tax ... on 15 July, 2022

Author: Manmohan

Bench: Manmohan, Manmeet Pritam Singh Arora

                              $~S-184
                              *     IN THE HIGH COURT OF DELHI AT NEW DELHI
                              +     W.P.(C) 10628/2022 & CM APPL.30824/2022
                                    DELHI BARODA ROAD CARRIER PRIVATE LIMITED
                                                                                 ..... Petitioner
                                                 Through: Mr.Puneet Singh Bindra, Advocate
                                                          with Ms.Kanishka Prasad and
                                                          Ms.Simran Jeet, Advocates.

                                                       versus

                                    UNION OF INDIA THROUGH THE INCOME TAX
                                    DEPARTMENT                                ..... Respondent
                                                  Through: Mr.Shekhar Vyas, Advocate for UOI.
                                                           Mr.Sanjay Kumar, Advocate with
                                                           Ms.Easha Kadian, Advocate for
                                                           Revenue.

                              CORAM:
                              HON'BLE MR. JUSTICE MANMOHAN
                              HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
                                                  ORDER

% 15.07.2022 CM APPL.30825/2022 (exemption) Allowed, subject to all just exceptions.

Accordingly, the application stands disposed of. W.P.(C) 10628/2022 & CM APPL.30824/2022 Present writ petition has been filed challenging the order dated 19th March, 2022 passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 ['the Act'] for the assessment year 2014-15 as well as the demand notice dated 19th March, 2022 issued under Section 156 of the Act. Petitioner also seeks directions to the Respondents not to initiate any Signature Not Verified Digitally Signed By:JASWANT SINGH RAWAT Signing Date:18.07.2022 19:08:05 further proceedings against the Petitioner, for any liability pertaining to the period prior to its successful resolution under the Insolvency and Bankruptcy Code, 2016 ['IBC'].

Learned counsel for the petitioner states that the reassessment proceedings are in violation of Section 31(1) read with Section 238 of the IBC, as they pertain to the time period before the approval of the resolution plan of the Petitioner by the NCLT vide order dated 21st February, 2022. He states that the assessment proceedings against the Petitioner could not have been initiated by the Respondent by issuing Section 148 notice dated 31st March, 2022 after the Corporate Insolvency Resolution Process ['CIRP'] commencement date, i.e., after 24th September, 2019, as they were barred under Section 14 of the IBC. He further states that once a resolution plan is approved under Section 31 of the IBC, by the NCLT, all the liabilities of the Petitioner for the period prior to its successful resolution under the IBC stand extinguished and, no proceedings for assessment, recovery or penalty under the IT Act can be initiated against the Petitioner for the said period. In support of his submission, he relies on the decision of the Supreme Court in Ghanshyam Mishra & Sons Pvt Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657, wherein the Supreme Court has held as under:-

"94. We have no hesitation to say that the words "other stakeholders" would squarely cover the Central Government, any State Government or any local authorities. The legislature noticing that on account of obvious omission certain tax authorities were not abiding by the mandate of the I&B Code and continuing with the proceedings, has brought out the 2019 Amendment so as to cure the said mischief. We therefore hold that the 2019 Amendment is declaratory and clarificatory in nature and therefore retrospective in operation.

xxxx xxxx xxxx xxxx 102.1. That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.

xxxx xxxx xxxx xxxx 102.3. Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued."

Learned counsel for the petitioner states that after approval of the Final Resolution Plan submitted by the Petitioner vide order dated 21st February, 2022, the Petitioner addressed multiple representations to the tax authorities seeking withdrawal of the notices issued under Section 142(1) of the Act and termination of the reassessment proceedings in light of the approval of the resolution plan by the NCLT. He, however states that without paying heed to the Petitioner's representations, the Respondents continued to proceed with the reassessment proceedings and then issued the impugned assessment order dated 19th March, 2022.

Issue notice. Mr.Shekhar Vyas, Advocate and Mr.Sanjay Kumar, Advocate accept notice on behalf of the Union of India and Revenue respectively. They pray for and are permitted to file their counter affidavits within four weeks. Rejoinder affidavits, if any, be filed before the next date of hearing.

Till further orders, no recovery/coercive proceedings shall be initiated against the petitioner-company in pursuance to the impugned assessment order, penalty orders and demand notices.

List on 15th September, 2022 along with similar matters MANMOHAN, J MANMEET PRITAM SINGH ARORA, J JULY 15, 2022 TS Signature Not Verified Digitally Signed By:JASWANT SINGH RAWAT Signing Date:18.07.2022 19:08:05