2025 (5) TMI 290 - HC - Income Tax

Reopening of assessment against company under insolvency - Jurisdiction or authority to reopen or assess income for any period prior to the approval of the Resolution Plan - HELD THAT - As management of the Petitioner was taken over by M/s Alankit Finsec Limited. As under the principle of the Clean Slate Theory any dues or liabilities not contemplated in the resolution plan cannot be enforced. Admittedly the question raised by the Petitioner is covered in Petitioner s favour by the earlier decisions of this Court in Ireo Fiveriver Pvt. Ltd. 2024 (4) TMI 665 - DELHI HIGH COURT and Asian Colour Coated Ispat Ltd 2024 (8) TMI 563 - DELHI HIGH COURT Present petition is allowed and the impugned order passed u/s 148A (d) and any further proceedings initiated or any orders passed in respect of AY 2017-18 are hereby set aside.

Summary

The Delhi High Court, through Justice Vibhu Bakhru (oral), allowed the petition challenging the order dated 10.04.2024 passed under Section 148A(d) of the Income Tax Act, 1961, relating to Assessment Year 2017-18. The petitioner sought quashing of the reopening notice and restraint on reassessment proceedings concerning pre-CIRP liabilities, relying on the "Clean Slate Theory" post-approval of its resolution plan by the NCLT under Section 30 of the Insolvency and Bankruptcy Code, 2016.The Court noted the petitioner's contention that the resolution plan extinguished past dues not contemplated therein, including income tax liabilities, referencing the Supreme Court's ruling in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657, and consistent precedents from this Court (Ireo Fiveriver Pvt. Ltd. v. Income Tax Department, 05.03.2024; Asian Colour Coated Ispat Ltd v. ACIT, 2024 DHC 5804-DB).Holding the impugned order and consequent proceedings as unsustainable, the Court set aside the Section 148A(d) order and stayed further reassessment actions for AY 2017-18, thereby affirming that liabilities extinguished by the CIRP resolution plan cannot be reopened under the Income Tax Act. All pending applications were disposed of accordingly.