TaxTMI 
TaxTMI 
2024 (9) TMI 426
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....sentially, the Impugned Proceedings entailed issuance of notices under: i) Section 153C (Assessment of income of any other person); ii) Section 143 (2) (Assessment); iii) Section 142 (1) (Inquiry before assessment); and iv) Section 133 (6) (Power to call for information) Resolution of the Petitioner-Assessee: 4. The Petitioner-Assessee was admitted into a CIRP by an order dated June 26, 2018 passed by the National Company Law Tribunal, New Delhi ("NCLT"). Various processes under the IBC were undertaken. Eventually, the company came to be resolved pursuant to a resolution plan finalized by the Committee of Creditors, and approved by the NCLT under Section 31 of the IBC by an order dated May 6, 2020 [The record shows that this order was pronounced on April 30, 2020, but delivered on May 6, 2020.]. The resolution plan, as approved by the NCLT, entails a full waiver of all tax and tax-related interest dues pertaining to the period prior to commencement of the CIRP. 5. Evidently prior to the commencement of the CIRP, on April 17, 2018, the Revenue had carried out search and seizure action under Section 132 of the Act against the Vinod Jatia g....
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....nst the Vinod Jatia group and the alleged tax violations indulged in by that group. The Revenue has asserted that the submissions of the Petitioner-Assessee do not find support from any legal provision. The Reply Affidavit admits that tax demands that relate to past claims would indeed stand waived, but insinuates that the Revenue's pursuit of proceedings does not relate to past claims and is consequently, legitimate. Yet, the Reply Affidavit indeed confirms that the search and seizure proceedings were initiated prior to commencement of CIRP. The Reply Affidavit does not explain how the Impugned Proceedings relate to liabilities emerging after the CIRP. The implicit contention of the Revenue is that tax liabilities that are crystallized after the commencement of the CIRP would not be past tax claims and would constitute future liability because these liabilities did not exist in a crystallized form prior to the CIRP, and therefore such liabilities would not stand resolved by the resolution plan. 10. On March 28, 2022, a Division Bench of this Court, on a prima facie examination of the matter granted ad interim relief by restraining the Revenue from taking any further steps, whet....
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....vided under sub-section (3) of Section 61 of the I&B Code, is no more res integra. 65. Bare reading of Section 31 of the I&B Code would also make it abundantly clear that once the resolution plan is approved by the adjudicating authority, after it is satisfied, that the resolution plan as approved by CoC meets the requirements as referred to in sub-section (2) of Section 30, it shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders. Such a provision is necessitated since one of the dominant purposes of the I&B Code is revival of the corporate debtor and to make it a running concern. 67. Perusal of Section 29 of the I&B Code read with Regulation 36 of the Regulations would reveal that it requires RP to prepare an information memorandum containing various details of the corporate debtor so that the resolution applicant submitting a plan is aware of the assets and liabilities of the corporate debtor, including the details about the creditors and the amounts claimed by them. It is also required to contain the details of guarantees that have been given in relation to the debts of the corporate debtor by other p....
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....t the words "other stakeholders" would squarely cover the Central Government, any State Government or any local authorities. The legislature noticing that on account of obvious omission certain tax authorities were not abiding by the mandate of the I&B Code and continuing with the proceedings, has brought out the 2019 Amendment so as to cure the said mischief. We therefore hold that the 2019 Amendment is declaratory and clarificatory in nature and therefore retrospective in operation. 95. There is another reason which persuades us to take the said view. Clause (10) of Section 3 of the I&B Code defines "creditor" thus: "3. (10) "creditor" means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder;" 96. Clauses (20) and (21) of Section 5 of the I&B Code define "operational creditor" and "operational debt" respectively as such: "5. (20) "operational creditor" means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; (21) "operational debt" means a claim in respect....
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....Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. 102.2. The 2019 Amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which the I&B Code has come into effect. 102.3. Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued. [Emphasis Supplied] 15. It is therefore cryst....
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....graphs 15 and 16 of AMNS Khopoli are noteworthy and are extracted below:- 15. In the circumstances, since the Resolution Plan expressively provides that no person shall be entitled to initiate any proceedings or inquiry, assessment, enforce any claim or continue any proceedings in relation to claims so long such result to a period prior to the Effective Date of the Resolution Plan, i.e., 10th November 2022 impugned notices are bad in law. Further, the impugned notices are bad in law also because respondents failed to take into account that after approval of the Resolution Plan by the NCLT, a creditor including the Central Government, State Government or local authority is not entitled to initiate proceedings on the Resolution Applicant, in relation to claims which are not part of the Resolution Plan approved by the NCLT. Pertinently, respondents had not submitted any claims to the IRP, as required under 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....