Clean slate insolvency principle bars enforcement of unadmitted tax claims after approval of a resolution plan.

Once a resolution plan is approved in corporate insolvency resolution proceedings and the Revenue's claim is not admitted, prior tax liabilities covered by the process do not survive against the successful resolution applicant. The approved resolution plan operates on a clean slate basis, so assessment and consequential demand for the relevant year cannot be enforced where no challenge was filed against the non-admission of the Revenue's claim. The ITAT Delhi quashed the assessment and demand in favour of the assessee.

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Issues: Whether the assessment and consequent tax demand could survive after approval of the resolution plan under the insolvency process, where the Revenue's claim had not been admitted.

Analysis: The assessee had undergone corporate insolvency resolution process, and the resolution plan was approved by the Committee of Creditors and the National Company Law Tribunal. The Revenue's claim raised in the insolvency proceedings was not admitted, and no challenge had been filed against that non-admission. In such circumstances, the approved resolution plan operates on a clean slate basis, and the successful resolution applicant cannot be burdened with liabilities not surviving the process.

Conclusion: The assessment and consequential demand for the year were quashed, and the issue was decided in favour of the assessee.

Ratio Decidendi: Once a resolution plan is approved and the Revenue's claim stands unadmitted, the claim does not survive against the successful resolution applicant, and prior tax liabilities covered by the insolvency process cannot be enforced.

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