Company in insolvency proceedings cannot continue tax appeal under sections 7, 9, or 10 of IBC

ITAT Nagpur dismissed an appeal filed by a company undergoing Corporate Insolvency Resolution Proceedings (CIRP) under the Insolvency and Bankruptcy Code. The tribunal held that once CIRP commences under sections 7, 9, or 10, continuation of pending proceedings is prohibited. Following the Supreme Court decision in Ghanashyam Mishra And Sons, claims not included in the approved resolution plan stand extinguished, and no person can initiate or continue proceedings for such claims. Since the income tax claims were not part of the resolution plan and NCLAT had jurisdiction over the matter, the appeal was dismissed as not maintainable, though leave was granted to restore if necessitated by CIRP orders.

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Issues Involved:
The appeals filed by the assessee against the orders of the National Faceless Appeal Centre for the assessment years 2010-11, 2015-16 & 2016-17, involving Corporate Insolvency Resolution Proceedings (CIRP) and the interpretation of the Insolvency and Bankruptcy Code, 2016.

ITA No.182/NAG/2022, A.Y. 2010-11:
The judgment considered the implications of the Insolvency and Bankruptcy Code, 2016 (the Code) and the decision in Ghanashyam Mishra And Sons vs. Edelweiss Asset Reconstruction regarding moratorium under section 13 of the Code. It was highlighted that once a resolution plan is approved, claims stand frozen and extinguished if not part of the plan. The judgment referred to the decision of the Jurisdictional High Court in Murli Industries Limited vs. ACIT, emphasizing the extinguishment of claims not included in the resolution plan upon approval by the Adjudicating Authority under Section 31 of the Code. The judgment concluded that during CIRP proceedings, the appeal cannot be proceeded with, and dismissed the appeal while granting leave to seek restoration based on CIRP outcomes.

ITA Nos.183 to 185/NAG/2022, A.Ys. 2010-11, 2015-16 & 2016-17:
The judgment held that the facts and issues in the remaining three appeals were identical to ITA No.182/NAG/2022 for A.Y. 2010-11. Therefore, the decision in ITA No.182/NAG/2022 applied to these appeals as well, resulting in the dismissal of all four appeals of the assessee.

In summary, the judgment addressed the appeals related to Corporate Insolvency Resolution Proceedings and the application of the Insolvency and Bankruptcy Code, 2016. It emphasized the freezing and extinguishment of claims not included in the resolution plan upon approval by the Adjudicating Authority. The appeals were dismissed based on the above considerations, with the decision in ITA No.182/NAG/2022 being applied to the remaining three appeals.

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