Tribunal dismisses appeals due to approved resolution plan under Insolvency and Bankruptcy Code

The Tribunal dismissed the assessee's appeals against the orders of the Commissioner of Income Tax (Appeals) due to the approval of the resolution plan by the National Company Law Tribunal (NCLT). The Tribunal emphasized the extinguishment of claims not included in the approved plan under the Insolvency and Bankruptcy Code, citing the binding nature of such plans on stakeholders. The decision highlighted the impact of resolution plans on pending proceedings and granted liberty for representation by the Interim Resolution Professional, leaving open the possibility of restoring the appeals in the future.

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Issues involved:
- Appeals filed by the assessee against separate orders passed by the Learned Commissioner of Income Tax (Appeals)
- Approval of resolution plan by the National Company Law Tribunal (NCLT) affecting the demands raised in the assessment orders
- Interpretation of Section 14 of the Insolvency and Bankruptcy Code, 2016 regarding moratorium and extinguishment of claims not part of the resolution plan
- Applicability of Section 156A of the Income Tax Act for modification and revision of demands based on NCLT orders

Analysis:

Issue 1: Appeals filed by the assessee against separate orders passed by the Learned Commissioner of Income Tax (Appeals)
The assessee filed eleven appeals against orders passed by the Learned Commissioner of Income Tax (Appeals) arising from assessment orders under the Income Tax Act, 1961. The appeals covered Assessment Years 2010-11 to 2017-18 and AY 2019-20 to 2020-21.

Issue 2: Approval of resolution plan by the National Company Law Tribunal (NCLT) affecting the demands raised in the assessment orders
The assessee cited the approval of a resolution plan by the NCLT under the Insolvency and Bankruptcy Code, 2016, which led to a request for the modification, revision, reduction, or cancellation of the demands raised by the Assessing Officer. The assessee relied on legal precedents to support the argument that once a resolution plan is approved, claims not part of the plan stand extinguished, impacting the demands made by the tax authorities.

Issue 3: Interpretation of Section 14 of the Insolvency and Bankruptcy Code, 2016 regarding moratorium and extinguishment of claims not part of the resolution plan
The Tribunal analyzed Section 14 of the Insolvency and Bankruptcy Code, 2016, which declares a moratorium prohibiting certain actions by the corporate debtor. The provision states that claims, including statutory dues, not part of the resolution plan are extinguished once the adjudicating authority approves the plan. The Tribunal referred to a High Court judgment emphasizing the binding nature of approved resolution plans on stakeholders and the extinguishment of dues not included in the plan.

Issue 4: Applicability of Section 156A of the Income Tax Act for modification and revision of demands based on NCLT orders
The Tribunal considered the insertion of Section 156A in the Income Tax Act by the Finance Act, 2022, allowing for the modification and revision of demands in cases where an order by the Adjudicating Authority impacts the tax liabilities of the assessee. The Tribunal noted the provision for modifying demands based on NCLT or Supreme Court orders under Section 156A.

In conclusion, the Tribunal dismissed the appeals of the assessee as not maintainable in the present format due to the approval of the resolution plan by the NCLT and the consequent moratorium declared under the Insolvency and Bankruptcy Code. The Tribunal granted liberty to the Interim Resolution Professional to represent the assessee in the future, indicating the possibility of restoring the appeals. The decision highlighted the impact of resolution plans on pending proceedings and the extinguishment of claims not covered in the approved plan.

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