TMI Blog2023 (6) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... tant batch of six cases pertaining to the income of assessee therein M/s. Murali Industries Ltd., involves five assessment years i.e., 2007-08, 2008-09, 2009-10, 2010-11 and 2006-07 case-wise respectively. The assessee s and Revenue s twin cross-appeals ITA.No.167/Nag/2011 and ITA.No.12/Nag./2012 for assessment year 2007-08 arise against the CIT(A)-1, Nagpur s order No. CIT(A)-I/292/09-10 dated 03.10.2011 in proceedings u/s. 144 of the Income Tax Act, 1961. The Revenue s next three appeals i.e., ITA.Nos.500, 501/Nag./2014 and ITA.No.117/Nag./2017 involving assessment years 2008-09, 2009-10 and 2006-07; case-wise, respectively are directed against the CIT(A)-III, Nagpur s separate orders dated 28.08.2014 [in former twin] in Case Nos. CIT(A)-III/310/10-11, in Case No. CIT(A)-III/289/11-12 and dated 17.01.2017 [in third assessment year in case No. CIT(A)-1/80/2014-15] respectively. Relevant proceedings herein are u/s. 143(3) of the Income Tax Act, 1961, except in assessment year 2006-07 wherein the order was passed u/s. 143(3) r.w.s. 254 of the Income Tax Act, 1961. The assessee s remaining appeal ITA.No.101/Nag./2015 for assessment year 2010-11 has emanated from the CIT(A)-1, Nagpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Act, 1961 (hereinafter referred to as the Act ). Respondent No. 1 is the Assessing Officer of the Petitioner who has issued the impugned notice. Respondent No. 2 is the Principal Commissioner of Income Tax, who has the administration jurisdiction over the cases of the Petitioner and who has allegedly granted approval for issuance of impugned notice. Respondent No. 3 is the Union of India and is the employer of Respondent Nos. 1 2. The Respondent No. 1 - Assessing Officer has issued the notice dated 25.03.2021 under Section 148 of the Act, seeking to reopen the concluded assessment of the Petitioner company for the assessment year 2014 - 15. The Petitioner has challenged the legality and validity of the said notice mainly on the ground that it is contrary to the decision of the Hon'ble Supreme Court of India in the case of Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited and others reported in 2021(9) SCC 657. 5. In the present case, one M/s. Edelweiss Asset Reconstruction Company Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC ) to initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Resolution Plan. However, Shri Bhattad, learned counsel for the Respondent Nos. 1 and 2, has come up with a defense that the claim raised through the impugned notice could not be a part of the Resolution Plan inasmuch as the claim was not crystallized at that time. According to him, the notice has been issued under Section 148 of the Act on the ground that the income chargeable to tax for the assessment year 2014-15 has escaped assessment and therefore, the Petitioner has been called upon to submit its return under the provisions of the Income Tax Act, 1961. The claim itself has been disclosed subsequent to the approval of the Resolution Plan and therefore, it could not have been raised before the Resolution Professional under the CIRP proceedings. Thus, according to Mr. Bhattad, such statutory claim is maintainable even after the approval of the Resolution Plan. In fact, he has raised a preliminary objection of maintainability of the Petition by contending that once notice under Section 148 is issued, a proper course of action for the noticee is to file its returns and if he so desires, then to seek reasons for issuing notice. After which, the Respondent No. 1 - Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. As held by the Hon'ble Supreme Court, one of the dominant objects of the IBC is to see that an attempt has to be made to revive the Corporate Debtor and make it a going concern. For that a Resolution Applicant has to prepare a Resolution Plan on the basis of the Information Memorandum containing various details that have been gathered by Resolution Professional after having received various claims in response to the statutorily mandated public notice. The resolution plan is approved by Committee of Creditors (hereinafter referred to as COC ). The Resolution Plan is then required to be approved by the Adjudicating Authority i.e., NCLT and once it is approved, the management is handed over under the plan to the Successful Resolution Applicant so that the Corporate Debtor is able to pay back its debt and get back on its feet. 13. The Adjudicating Authority conducts an enquiry in terms of Section 30(2) of IBC on the point as to whether the Resolution Plan provides, inter alia, the repayment of the debts of Operational Creditors in the prescribed manner and that the plan does not contravene any provisions of the law for the time being in force. In that sense, once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ambit of 'operational creditor' as defined under subsection (20) of Section 5 of the I B Code. Consequently, a person to whom a debt is owed would be covered by the definition of 'creditor' as defined under subsection (10) of Section 3 of the I B Code. As such, even without the 2019 amendment, the Central Government, any State Government or any local authority to whom a debt is owed, including the statutory dues, would be covered by the term 'creditor' and in any case, by the term 'other stakeholders' as provided in sub section (1) of Section 31 of the I B Code. 99. The Division Bench of the Rajasthan High Court in D.B. Civil Writ Petition No.9480 of 2019 in the case of Ultra Tech Nathdwara Cement Ltd. vs. Union of India Ors., by judgment and order dated 7.4.2020 has taken a view, that the demand notices, issued by the Central Goods and Service Tax Department, for a period prior to the date on which NCLT has granted its approval to the resolution plan, are not permissible in law. While doing so, the Rajasthan High Court has relied on the judgment of this Court in the case of Committee of Creditors of Essar Steel India Limited through Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that the demand notices issued by the Central Goods and Service Tax Department, for a period prior to the date on which NCLT has granted its approval to the Resolution Plan, are not permissible in law. The concluding remarks of the Hon'ble Apex Court are that, on the date of approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the 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 a part of the Resolution Plan. The expression 'that no person will be entitled to initiate any proceedings' would include the proceedings in the nature of notice issued under Section 148 of the Income Tax Act, 1961. 18. As we understand from the above rulings, the aim and object of IBC is to revive the Corporate Debtor by putting quietus to the claims against it. Providing certainty to the Resolution Applicant of no claims in future against the Corporate Debtor appears to be the essence of the Resolution Plan. Such inference could further be substantiated on the ground that the provisions of the IBC (Section 238 of IBC) have an overr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the statutory bodies, to raise claim, it would be expected from all the stakeholders to diligently raise their claim. The Income Tax authorities in that sense, ought to have been diligent to verify the previous years' assessment of the Corporate Debtor as permissible under the law and to raise the claim in the prescribed form within time before the Resolution Professional. In the present case, the Income Tax Authorities failed to do so and therefore, the claim stood extinguished. 22. As stated earlier, there could be a contingency where statuary claim is raised after the approval of the Resolution Plan, owing to receipt of information of the Corporate Debtor having suppressed certain facts while filing returns of the previous years, which then could not be a part of the Resolution Plan. To counter such a situation, the statutory authorities will have to explore the possibility of raising such claims before the Resolution Professional or Adjudicating Authority, as the case may be, by requesting to make certain provisions for payment of statutory claims in the Resolution Plan. Whether to accept such claim is a matter that should be left to the COC, the Resolution Profess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er category - 3 above. Accordingly, the preliminary objection is rejected. 27. We hold that both the Petitions are maintainable. Both the Petitions are allowed. The impugned notices dated 25.03.2021 and 24.03.2021 are hereby quashed and set aside. 4. Learned DR vehemently contested the assessee s foregoing submissions and pleaded that the departmenal stand herein raising the impugned demands in all these five assessment years deserves to be confirmed. 5. We have given our thoughtful consideration to the foregoing rival contentions regarding preliminary issue of the assessee s resolution plan under the 1BC as concluded in light of hon ble jurisdictional High Court s decision that the same indeed carries precedence over the income tax dues as per hon ble Apex Court decision in Ghanshyam Mishra s case (supa). Faced with the situation, we adopted the hon ble jurisdictional High Court reasoning mutatis mutandis to allow assessee s twin appeals ITA.No.167/Nag./2011 and ITA.No.101/Nag./2015 for the assessment year 2007-08 and 2010-11. The Revenue s four appeals ITA.Nos.12/Nag./2012, ITA.Nos.500 501/Nag./2014 and ITA.No.117/Nag./2017 fail, subject to all just exceptions. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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