IBC liquidation and going-concern sale rendered income-tax appeals infructuous after closure of liquidation and distribution under the waterfall.

Appeals against additions for earlier assessment years lost practical efficacy after the corporate debtor underwent CIRP, liquidation, sale as a going concern and closure of liquidation under the IBC. The liquidation process had been completed, the successful bidder paid the full consideration, and the NCLT directed that pre-transfer liabilities be addressed within the liquidation waterfall under Section 53. Because those orders were neither stayed nor set aside, the income-tax appeals could not proceed on a basis inconsistent with the completed insolvency process. The appeals were therefore treated as infructuous, with no effective adjudication surviving against the corporate debtor in its present form.

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Issues: Whether the appeals against additions for earlier assessment years survived for adjudication after the corporate debtor underwent CIRP, liquidation, sale as a going concern, and closure of liquidation under the Insolvency and Bankruptcy Code, 2016.

Analysis: The corporate debtor had been admitted to CIRP under Section 7, liquidation was ordered under Section 33, and the resolution professional was appointed liquidator under Section 34. The liquidation process culminated in a sale of the corporate debtor as a going concern under the liquidation framework, with the successful bidder depositing the full consideration and the NCLT granting consequential reliefs. The NCLT further recognised that pre-transfer liabilities were to be dealt with within the liquidation mechanism under the statutory waterfall under Section 53, and subsequently ordered closure of liquidation. As these judicial orders were neither stayed nor set aside, the appellate proceedings under the Income Tax Act could not proceed on a factual and legal footing inconsistent with the completed IBC process.

Conclusion: No effective adjudication survived against the corporate debtor in its present form, and the appeals were held to have become infructuous.

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