Insolvency resolution and company dissolution bar continuation of tax recovery for pre-plan dues once claims stand extinguished.

Income-tax proceedings and recovery of pre-resolution tax dues could not continue against a company that had undergone corporate insolvency resolution, was later liquidated, and had been dissolved by the NCLT. Applying the effect of Section 31(1) of the Insolvency and Bankruptcy Code, 2016, the Tribunal noted that claims not forming part of an approved resolution plan stand extinguished, and once the company ceased to exist, no proceedings could be maintained in its name. The tax demand could not be recovered from the dissolved company, and the appeal became infructuous.

---

---

Issues: Whether income-tax proceedings and recovery of demand could continue against a company that had undergone insolvency proceedings and was subsequently dissolved, and whether the assessee's appeal had become infructuous.

Analysis: The assessee-company had been admitted to corporate insolvency resolution process, thereafter liquidated, and ultimately dissolved by the National Company Law Tribunal. The Department did not dispute the factual position that the company had ceased to exist. Relying on the effect of Section 31(1) of the Insolvency and Bankruptcy Code, 2016, and the principle that claims not forming part of an approved resolution plan stand extinguished, the Tribunal held that statutory dues and proceedings for the period prior to the resolution plan could not continue. Once the company stood dissolved, no proceedings could be maintained in its name.

Conclusion: The Revenue was not entitled to recover the impugned tax claim from the dissolved assessee-company, and the appeal was dismissed as infructuous.

---