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2024 (5) TMI 164
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....e, 2016 (the Code), 100% shareholding of UGSL was acquired by AM Mining India Pvt. Ltd. (Resolution Applicant) and thereafter the name of UGSL was changed to the present name, i.e., AMNS Khopoli Limited. 4. Respondent No. 1 is the Assessing Officer (A.O.) who has issued the notice dated 31st May 2023 under Section 143(2) of the Income Tax Act, 1961 (the Act) informing petitioner that the income tax return for Assessment Year 2022-23 for relevant Financial Year 2021-22 has been selected for scrutiny assessment. This was followed by notices dated 28th August 2023, 8th January 2024 and 29th January 2024 issued by Respondent No. 2, the Jurisdictional Assessing Officer (JAO), under Section 142(1) of the Act. All these notices are impugned in this petition. 5. Mr. Dhond states it appears that the statement made in Paragraph No. 14 that all impugned notices have been issued in Mumbai is not entirely correct. The first notice issued under Section 143(2) of the Act was actually issued from Delhi. 6. It is petitioner's case that on 1st October 2020 the National Company Law Tribunal (NCLT), Mumbai admitted a petition filed by the State Bank of India under Section 7 of the Code agains....
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....rd. The Resolution Applicant, for effective implementation of the Plan, shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed. iv. The moratorium under Section 14 of the Code shall cease to have effect from this date. v. The Applicant shall supervise the implementation of the Resolution Plan and file status of its implementation before this Authority from time to time, preferably every quarter. vi. The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with copy of this Order for information. vii. The Applicant shall forthwith send a certified copy of this Order to the CoC and the Resolution Applicant, respectively for necessary compliance. 7. Following the order passed dated 14th October 2022 by the NCLT and the implementation of the Resolution Plan, name of "UGSL" was changed to "AMNS Khopoli Limited" as mentioned earlier. 8. It is petitioner's case that in terms of the Resolution Plan approved by NCLT any claim and/or liability pertaining to the period prior to the effective date, i.e., 10th November 2022 (Eff....
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....ent or former) or otherwise) shall stand extinguished and discharged with effect from the Effective Date and the Corporate Debtor and/or the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. 3. Without prejudice to the generality of paragraph 2 above, the Claims relating to the Corporate Debtor shall stand waived, extinguished, abated, discharged in perpetuity in the manner set out herein. ..... j. All Claims (whether unclaimed, contingent or crystallized, known or unknown, filed or not filed) of Governmental Authorities in relation to all Taxes which the Corporate Debtor was or may be liable to pay (including with respect to financial years under assessment or open for assessment subsequent to the Effective Date as per the statute of limitation under the relevant Law), all deductions and all withholding Taxes on any payment, as required under Applicable Law and pertaining to the period until the Effective Date or on account of the steps undertaken for the implementation of the Resolution Plan shall stand extinguished on the Effective Date and the Corporate Debtor and/or the Resoluti....
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....re, whether or not set out in the balance sheets of the Corporate Debtor or the profit and loss account statements of the Corporate Debtor will be deemed to have been written off fully, and permanently extinguished and no adverse orders passed in the said matters should apply to the Corporate Debtor or the Resolution Applicant. Upon approval of this Resolution Plan, all new inquiries, assessments, reassessments, rectifications, revisions, surveys, summons, investigations, notices, suits, claims, disputes, litigations, arbitrations or other judicial, regulatory (including any Tax Proceedings) or administrative proceedings will be deemed to be barred and will not be initiated or admitted against the Corporate Debtor in relation to any period until the Effective Date and the Corporate Debtor and/or the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. 12. No Governmental Authority (including regulatory, judicial and quasi-judicial authority) shall issue any orders, directions, decrees, Judgments etc. that will be in contravention of the provisions of the Resolution Plan (including the financial plan). ....
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....ed to initiate/continue the assessment proceedings. (b) The notices issued u/s 143(2) and 142(1) of the I.T. Act are an essential part of the assessment proceedings and therefore, the same may be lawfully continued under the Income-tax Act 1961. Thus, after careful consideration of various contentions of the assessee, it is concluded that the assessment proceedings requires to be lawfully continued under the Income Tax Act, 1961. (c) On finalization of assessment proceedings, demand if any shall not be enforced. 11. In the affidavit in reply respondents have taken the same stand. Ms. Gokhale further submitted that though the accepted position is Revenue will not be able to recover any money from petitioner even if it is found that the tax paid was less than what the tax payable based on the assessment proceedings, completion of assessment proceedings will aid the Revenue from taking further steps against the ex-promoters of petitioner. A similar situation came up for consideration before this court in the case of Alok Industries Limited vs. Assistant Commissioner of Income Tax (2024) 161 taxmann.com 285 (Bombay) where the court following the judgment of t....
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....ities (including in relation to Taxes, and all other dues and statutory payments to any Governmental Authority), relating to the period prior to the Closing Date, shall stand fully and finally discharged and settled. The closing date of the resolution plan is the date when the resolution plan has been given effect to, i.e., 14th September, 2020. 4. After the resolution plan has been given effect to, respondent No. 1 has initiated reassessment proceedings against petitioner for assessment year 2013-14 by issuing a notice under section 148 of the Act dated 27th February, 2021. Although, petitioner filed objections to the initiation of reassessment proceedings by submitting, inter alia, that the proceedings for assessment year 2013-14, being a period prior to the closing date are non-est and could not have been initiated by the Income-tax Department in view of the resolution plan approved by the NCLT, respondent No. 1, vide order dated 6th December 2021, rejected the submission of petitioner by inter alia holding that ".......all income tax proceedings are not always for recovery of tax, it can be used for collection of evidence of third parties, ex-promoters etc......''. ....
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....g the course of submission, the Learned ASG stated that in view of the legal position as it stands under the Code, once resolution plan has attained finality, new management and company can get the benefit of clean slate principle. While the department does not dispute that such benefit has to go to new management, the Learned ASG further submitted that while department would not go to the new management, this cannot, however, result into direct benefit to the erstwhile Directors to make them go scot-free from their evasions and misdeeds. Therefore, some assessment and fact finding process is required to be carried out, where erstwhile Directors' role is given a closer scrutiny. 10. Even then, in our view, for reasons recorded above, Section 148 read with Section 147 of the Act cannot be applied against the company and the present management. 11. Considering the contentions of the parties, averments in the Petition, the affidavit in reply and the statement of learned ASG:- (a) issue of notice under section 148 of the Act to petitioner company after the approval of the resolution plan for a period prior to closing is invalid and bad in law, having been iss....
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.... under the Code, the Assessing Officer shall modify the demand payable in conformity with such order. This section further makes it clear that effect of the resolution plan is required to be given to by the Assessing Officer. (d) The argument of the revenue that, proceedings under section 148 of the Act initiated for collection of evidence in respect of third parties, ex-promoters, etc. is not within the scope and ambit of section 147 / 148 of the Act, as reassessment proceedings under the said section can only be initiated for bringing to tax income which has escaped assessment, is correct. Further, petitioner's present management is ex-facie not aware of the relevant facts in respect of the period sought to be reopened and may well be incapable of properly participating in reassessment proceedings. In this view of the matter the proposed reassessment proceedings (no matter what the purpose) would be a futile endeavour. (e) Insofar as the contention/submission of the revenue regarding the possible liability of previous management, the Revenue may take whatever steps are available to them in law to take action, if any, against ex-promoter, other third parties, but....
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....te of the Tribunal's order, clarifying that such notices would stand abated. All assessment proceedings relating to the period prior to the completion date would stand terminated with all consequential liabilities being abated. That apart, as per paragraph No. 17.7 (c) of the resolution plan, the corporate debtor is entitled to carry forward the unabsorbed and accumulated losses and to utilize such amounts to set off future tax obligations. 71 From the tone and tenor of the impugned notices what is evident is that respondents are seeking to pass assessment order under Section 143 (3) of the Act since the case of petitioner No. 1 was selected for limited scrutiny under CASS. However, the period of the assessment order would be a period covered by the resolution plan. We have already noticed that petitioner No. 1 through the resolution professional had filed return of income prior to order of the Tribunal approving the resolution plan. When arithmetical mistake was pointed out by the Income Tax Department, post such approval, petitioner No. 1 carried out the correction and submitted revised return lowering the figure of loss sustained by petitioner No. 1. Such a revised ....
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....cated. As per Regulation 7 of the 2016 Regulations, operational creditors must file their claims with proof in the prescribed form, i.e., Form B appended to the Schedule. Regulation 7, when read alongside particulars sought against Sr. No. 6 of Form B, would drive home the point that it can include claims that are disputed. The information sought, among other things, against Sr. No.6 of Form B points in this direction : Particulars xxx xxxxxx 6. Details of any dispute as well as the record of pendency or order of suit or arbitration proceedings. xxx xxxxxx 30. Furthermore, the definition of claim contained in Section 3(6) (a) of the 2016 Code puts these aspects beyond doubt: "3. Definitions.- In this Code, unless the context otherwise requires,- xxx xxxxxx (6) "claim" means- (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; xxx xxxxxx" 31. Therefore, the submission advanced on behalf of the revenue insofar as the tax demand, which is the subject matter of the impugned order and notice....
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....reemetaliks Limited Vs. Additional Director General and Ors., 2023/DHC/001118 (at para 53)]. 37. Therefore, the submission made on behalf of the revenue that it should be allowed to enforce the impugned orders and notices is misconceived in law. Conclusion: 38. Thus, for the foregoing reasons, we are inclined to quash the impugned notices and orders. It is directed accordingly. 14. On Ms. Gokhale's submissions that Revenue's attempt is not to recover any dues from petitioner but only wants to complete the assessment proceedings so that they may take action against the ex-promoters should the need arise, we are afraid even that will not be appropriate because in the Resolution Plan it says : l. Upon approval of the Resolution Plan by the Adjudicating Authority, all Non-Compliances of the Corporate Debtor for the period until the Effective Date or on account of the steps undertaken for the implementation of the Resolution Plan (including but not limited to those relating to Tax, securities laws and foreign exchange regulations), shall be deemed to be waived by all the Governmental Authorities. 9. From the Effective Date, all inquiries, ....
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....r the Code, despite the public announcement being issued by the IRP, as prescribed under the Code. 16. The impugned notice issued under Section 143(2) of the Act by Respondent No. 1 and the consequential impugned notices issued under Section 142(1) of the Act by Respondent No. 2 and all subsequent communications issued by Respondent No. 2 pursuant to the aforementioned impugned notices are bad in law since assessment and inquiry under the Act is sought to be initiated in gross violation of provisions of the Code in as much as it relates to a period prior to the Effective Date. 17. The impugned notice issued under Section 143(2) of the Act and the impugned notices issued under Section 142(1) of the Act and all subsequent actions undertaken pursuant to the impugned notices issued under Section 142(1) of the Act are bad in law as no proceedings can be initiated against petitioner for a period prior to the Effective Date. Pertinently, the Resolution Plan provides that new claims, disputes, litigations or other judicial or administrative proceedings (including assessments) etc., will be deemed to be barred and shall not be initiated or admitted against Petitioner in relation to an....