Dismissal of Tax Appeal in CIRP: Resolution Plan Claims Binding

The appeal against the order of the Commissioner of Income Tax (Appeals) was dismissed by the National Company Law Appellate Tribunal due to the ongoing Corporate Insolvency Resolution Proceedings (CIRP) under the Insolvency and Bankruptcy Code, 2016. The Tribunal emphasized that once a resolution plan is approved by the Adjudicating Authority, the claims provided in the plan become binding on the corporate debtor and stakeholders, leading to the dismissal of the appeal. The appellant was advised to pursue remedies before the Adjudicating Authority based on the outcome of the CIRP proceedings.

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Issues:
1. Appeal against the order passed by the Commissioner of Income Tax (Appeals).
2. Corporate Insolvency Resolution Proceedings (CIRP) initiated under the Insolvency and Bankruptcy Code, 2016.
3. Moratorium declared under section 14 of the Code by the National Company Law Appellate Tribunal.
4. Interpretation of provisions under sections 13 and 14 of the Code in light of the decision in Ghanashyam Mishra And Sons case.
5. Effect of the approval of a resolution plan by the Adjudicating Authority on claims against the corporate debtor.
6. Prohibition on the continuation of pending proceedings under the Code.
7. Dismissal of the appeal due to the ongoing CIRP proceedings.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals). The appellant, a company, was under Corporate Insolvency Resolution Proceedings (CIRP) initiated under the Insolvency and Bankruptcy Code, 2016. A moratorium was declared under section 14 of the Code, prohibiting the institution and continuation of proceedings against the assessee. The representation for the Corporate Insolvency Resolution Professional was absent during the proceedings.

2. The Tribunal considered the issue in light of the provisions of the Code and the decision in the Ghanashyam Mishra And Sons case. The Tribunal noted that once a resolution plan is approved by the Adjudicating Authority under Section 31 of the Code, the claims provided in the plan shall stand frozen and be binding on the corporate debtor and stakeholders. Claims not part of the resolution plan shall stand extinguished.

3. The provisions under sections 13 and 14 of the Code, along with the Ghanashyam Mishra And Sons case, indicate that once proceedings are initiated under the Code, the continuation of pending proceedings is prohibited. Upon approval of the resolution plan by the Adjudicating Authority, the claims in the plan become binding on the corporate debtor and stakeholders.

4. The Tribunal held that the appeal cannot proceed during the ongoing CIRP proceedings. Parties were directed to seek remedies before the Adjudicating Authority under the Code. Depending on the outcome of the proceedings, appropriate steps may be taken. The appeal was dismissed in limine, allowing the appellant to seek restoration based on the CIRP outcome. The Tribunal cited a similar decision from the Mumbai Bench in support of this proposition.

5. In conclusion, the appeal of the assessee was dismissed due to the ongoing CIRP proceedings and the prohibition on continuing the appeal during such proceedings. The order was pronounced in open court on November 9, 2022.

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