Gujarat High Court
Maruti Koatsu Cylinders Ltd vs Dy Commissioner Of Income Tax, Circle ... on 16 July, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 7470 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
===============================================================
1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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MARUTI KOATSU CYLINDERS LTD.
Versus
DY COMMISSIONER OF INCOME TAX, CIRCLE 2(1)(1) OR HIS
SUCCESSOR & ANR.
================================================================
Appearance:
MR SN DIVATIA(1378) for the Petitioner(s) No. 1
MR NIKUNT K RAVAL(5558) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 16/07/2024
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) Heard learned advocate Mr.S.N.Divatia for the petitioner and learned advocate Mr.Rudram Page 1 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined Trivedi for learned advocate Mr.Nikunt K. Raval for the respondents.
1. Rule, returnable forthwith. Learned advocate Mr.Rudram Trivedi waives service of notice of rule for and on behalf of the respondents.
2. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the order under Section 148A(d) of the Income Tax Act, 1961 (for short 'the Act') dated 20th March, 2023 for Assessment Year 2019-20.
3. The brief facts of the case are as under :
3.1. It is the case of the petitioner that the petitioner was carrying on business of manufacturing seamless steel cylinder and a Page 2 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined Corporate Insolvency proceeding was initiated before the National Company Law Tribunal (for short 'the NCLT') who by order dated 25th May, 2018 under the provisions of Insolvency and Bankruptcy Code, 2016 appointed an Interim Resolution Professional (IRP) who was subsequently confirmed as Resolution Professional (RP) by Committee of creditors and had taken control and custody of the management and operations of the petitioner-
Company.
3.2. The NCLT by order dated 16.08.2019 approved the Resolution Plan. The National Company Law Appellate Tribunal by order dated 03.05.2019 instructed the Resolution Professional to ensure the company remains a going concern. The NCLT passed the final order on 22.10.2019, by virtue of which the Page 3 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined petitioner-Company written off bank loans, statutory dues waived off by the NCLT. 3.3. It also appears from the record that an order under Section 127(2) of the Act dated 11.01.2023 was passed by the Principal Commissioner of Income Tax, Vadodara-I transferring the case of the petitioner from Vadodara to Central Circle-1(1) Ahmedabad i.e. before the respondent No.2 with immediate effect. However, in spite of the above facts, the respondent No.1-Assessing Officer at Vadodara issued the notice under Section 148A(b) of the Act on 14.02.2023 calling upon the petitioner to show cause as to why the notice under Section 148 of the Act should not be issued for re-opening of the assessment for Assessment Year 2019-20.
Page 4 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024
NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined 3.4. As per the notice under Section 148A(b) of the Act, there was information that petitioner-Company had not filed return of income for Assessment Year 2019-20 though there were transactions by way of time deposits of Rs.1,00,31,962/- and interest income of Rs.93,440/-.
3.5. The petitioner however could not file the response due to the change in place of Office and mail ID etc. and therefore, the respondent No.1 passed the impugned order under Section 148A(d) of the Act on 20 th March, 2023 holding that income to the tune of Rs.1,01,25,402/- had escaped assessment for the year under consideration. 3.6. The notice under Section 148 was issued as a consequence of the aforesaid Page 5 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined order.
4.1. Learned advocate Mr.S.N.Divatia for the petitioner has submitted that the impugned order passed under Section 148A(d) of the Act as well as the notice under Section 148 of the Act are without jurisdiction as the respondent No.1 situated at Vadodra could not have assumed the jurisdiction to re-open the assessment for Assessment Year 2019-20 after the order of transfer of the case from Vadodara to Ahmedabad was passed on 11.01.2023 under Section 127(2) of the Act. 4.2. It was further submitted that in view of the decision of the Hon'ble Supreme Court of India in case of Ghanashyam Mishra & Sons (P.) Ltd. Versus Edelweiss Asset Reconstruction Co. Ltd. reported in (2021) Page 6 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined 126 taxmann.com 132/166 SCL 237 (SC), once the NCLT has approved the resolution plan, all the past dues shall stand extinguished and the respondent-authority could not have assumed the jurisdiction to re-open the assessment as the same would have achieved the finality. 4.3. Learned advocate Mr.S.N.Divatia invited the attention of the Court to the following observations made by the Company Law in the final order dated 22.10.2019 :
"It is further clarified in the Resolution Plan that all dues and any amount payable under the Companies Act 2013/1956, Income Tax Act, VAT etc. including taxes, duties, additional fees, penalties, interest, fines, cases, unpaid taxes, unpaid Tax Deducted at Source/tax collected at Source, which is not admitted or contingent, whether part of the above Page 7 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined claim or not, pertaining to any period prior to the CIRP commencement date whether part of due diligence finding or not or assisted or unassisted, crystallized or un-crystallized, known or unknown, secured or unsecured, disputed, present or future shall stand extinguished by virtue of the order of this Adjudicating Authority.
As such, all statutory dues outstanding as on date and that on the date of approval of the Resolution Plan shall stand extinguished. No amount is proposed under the Resolution Plan towards the Statutory Dues."
4.4. Learned advocate Mr.S.N.Divatia referred to and relied upon the decision of this Court in similar facts in case of Surya Exim Ltd. Versus Union of India reported in (2024) 161 taxmann.com 749 (Gujarat) in support of his submissions, more particularly, paragraph No.8.5 of this decision which reads Page 8 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined as under :
"8.5. Referring to the decision of Ultratech Nathdwara Cement Ltd. (supra) it was submitted that the facts of the said case are identical to the facts of the present case as in the said case also, the demand notices, issued after the late of order of NCLT approving the resolution plan, have been quashed and set aside. It was submitted that the demand notice dated 18.07.2019 was received for tax dues for the Financial Year 2016-17 and thereafter on 22.01.2021, assessment order was passed whereby the respondent No.5 confirmed the demand of interest in lieu of delayed payment of GVAT and CST for the period of 01.04.2016 to 01.11.2016 which was after the date of the order passed by the NCLT on 20.11.2018 and the NCLAT order dated 14.11.2018."
5. On the other hand, learned advocate Mr.Rudram Trivedi for the respondent-authority Page 9 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined submitted that the petitioner could not filed the reply to the notice under Section 148(b) of the Act and as such, the respondent No.1 had no option but to pass the order under Section 148A(d) of the Act. It was also submitted that the petitioner did not file the return for Assessment Year 2019-20 and therefore, there is clear case of escapement of income.
6. Having heard the learned advocates for the respective parties, it is apparent that after the order of transfer of the case of the petitioner passed on 11.01.2023 under Section 127(2) of the Act, the respondent No.1- Assessing Officer has no jurisdiction to issue the notice for re-opening for the Assessment Year 2019-20. Even otherwise, as held by this Court in case of Surya Exim Ltd. (Supra), Page 10 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined when the NCLT has approved the application filed under Section 13(6) of IBC, 2016 and resolution plan submitted by the applicant was approved, the respondent-Assessing Officer would not have any jurisdiction to re-open the assessment with regard to the Assessment Year 2019-20. This Court has observed as under :
"11. The Hon'ble Apex Court in case of Ghanashyam Mishra & Sons (P.) Ltd. (supra) has held that once a resolution plan is duly approved by the adjudicating authority under sub-
section (1) of section 31 of IBC, 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 stake holders. On the date of approval of the resolution plan by the adjudicating authority all such claims which are not Page 11 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined part of the resolution plan shall stand extinguished and no person is entitled to initiate or continue any proceeding in respect to a claim which is not part of the resolution plan.
12. The above observations are contained in para 102 of the date which reads as under:
"102. In the result, we answer the questions framed by us as under:
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 Page 12 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024 NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined 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 of to a claim, which is not part of the resolution plan.
102.2 The 2019 Amendment to section 31 of the I & B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which the I & B Code has come into effect.
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 if approval under section 31 could be continued."Page 13 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024
NEUTRAL CITATION C/SCA/7470/2023 JUDGMENT DATED: 16/07/2024 undefined
7. In view of the above settled legal position and the facts of the case which are squarely applicable in the facts of the case, the impugned notice under Section 148 as well as the order passed by the respondent No.1 under Section 148A(d) of the Act are not tenable and are accordingly, quashed and set aside. Rule is made absolute to the aforesaid extent. No orders as to cost.
(BHARGAV D. KARIA, J) (NIRAL R. MEHTA,J) PALAK Page 14 of 14 Downloaded on : Fri Aug 02 22:10:36 IST 2024