Reassessment proceedings against company post-insolvency resolution cannot continue as clean slate principle applies under IBC 2016

The SC dismissed a special leave petition challenging a HC decision that quashed reassessment proceedings initiated against a company that had undergone corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. The HC held that reassessment proceedings predating the CIRP and relating to the period prior to approval of the resolution plan stand extinguished, as the company had completely changed hands and began operations under new ownership and management on a clean slate. The HC quashed all notices and communications issued by the revenue department in connection with the reassessment proceedings. The SC upheld this decision, ruling that initiation and continuation of proceedings relating to the pre-resolution plan period cannot be pursued, thereby confirming the clean slate principle for companies emerging from successful insolvency resolution.

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The Supreme Court, per Hon'ble Justices Manoj Misra and Ujjal Bhuyan, after hearing counsel, "condoned delay" but declined to interfere with the impugned High Court judgment and order. Consequently, the Special Leave Petition was dismissed, and all pending applications were disposed of.

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