TMI Blog2023 (11) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... e concerned, it will have to suffer the same fate as the penalty which was imposed, and the consequential demand that was created had its genesis in the failure of the previous management of RGPCL in responding to the statutory notices. These notices concerned the aspects mentioned in the first notice issued under Section 143(2) of the 1961 Act. Thus, having regard to the fact that the revenue had not lodged its claim, despite the publication of the public announcement by the Resolution Professional inviting claims from creditors, including statutory/operational creditors such as the revenue, no provision could be made [even if it may otherwise have been possible] in the approved RP. The terms contained in the approved RP are binding on all stakeholders, including those who could have filed claims but chose not to lodge them. The revenue, having failed to lodge its claim, cannot enforce the impugned orders and notices, given the binding nature of the approved RP. Section 31 of the 2016 Code, among other things, stipulates that once the RP is approved, it shall be binding on the corporate debtor and its employees, members, and creditors, which includes the Central Government, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 143(3) of the 1961 Act and concerns Assessment Year (AY) 2017-18. Via the said assessment order, RGPCL s income was assessed at Rs. 28,93,60,000/-against a loss declared by it amounting to Rs. 3,13,43,192/. The aforesaid assessed income resulted from an addition of an equivalent amount under Section 68 of the 1961 Act vis- -vis unexplained credits. The Assessing Officer (AO), via the same assessment order, also initiated penalty proceedings against RGPCL under Section 271AAC of the 1961 Act. 1.3 Accordingly, a demand amounting to Rs. 12,05,47,497/- was raised via notice dated 06.12.2019. RGPCL was granted 30 days to defray the tax demand. 1.4 For convenience, the penalty order passed on 21.11.2019, the demand notice dated 22.11.2019, and the assessment order as also the consequent demand notice dated 06.12.2019, will be collectively referred to as impugned orders and notices , unless the context requires otherwise. Backdrop: 2. The issue culled out hereinabove as regards the legal tenability of the impugned notices and orders, would require us to set forth the backdrop in which the instant writ action came to be instituted in this court. 3. As mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable thereto. 7. Apparently, a revised financial proposal was submitted by KCPL on 28.06.2018. The revised resolution plan of KCPL, which included the financial proposal, was accepted by the Committee of Creditors [COC] on 30.06.2018. By this time, the other entities, i.e., AEPL and APPL, were out of the fray. 8. Thus, after going through the usual rigours provided under the 2016 Code and the extant regulations, the RP filed by KCPL was approved by the NCLT on 13.11.2018. Among other things, the NCLT, while approving the plan, adverted to the following: 19. The learned counsel for the RP submitted on instructions that no claim with regard to statutory dues and labour dues have been received. The learned counsel for the resolution professional submitted that as per Form H (Annexure A-3 of diary No.3415 dated 10.09.2018), all the provisions of the Code and the Regulations were complied with and that the approval of the resolution plan was made by 100% voting share of the financial creditors in the meeting of the CoC held on 30.06.2018 and therefore, the resolution pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned demand notice dated 06.12.2019 being issued to the petitioner under Section 156 of the 1961 Act. RGPCL was, thus, called upon to pay Rs. 12,05,47,497/-. 15. The record shows that on 11.02.2020, the new management, which had taken over the affairs of RGPCL, wrote to the AO, explaining the reasons for non-participation in the assessment proceedings. A request was also made for the deletion of the additions made via the impugned assessment order having regard to the fact that the moratorium, as ordered by the NCLT, was in place. Since there was no response from the revenue, RGPCL took recourse to the instant writ action. 16. Notice in the instant writ petition was issued on 18.05.2020. While issuing notice, an interim direction was passed to the effect that the impugned income tax demand will not be enforced against RGPCL. Furthermore, the said order also indicated that RGPCL was at liberty to file an appeal, if necessary, by moving an application for condonation of delay. 16.1 The interim order was made absolute during the pendency of the writ petition on 23.01.2023. Accordingly, the interlocutory application, i.e., CM No.11017/2020, was disposed of. Submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, Mr Sharma drew our attention to the counter-affidavit, which broadly captured the date and events we have adverted to in the earlier part of this judgment. However, an emphasis was made that the reply to the notices issued under Section 143(2) and 142(1) of the 1961 Act was tendered by the new management quite late in the day. Reasons and Analysis: 21. Having heard learned counsel for the parties, what is not in dispute insofar as the instant case is concerned is that some of the notices issued under Section 143(2) of the 1961 Act predated the order dated 13.11.2018 passed by the NCLT, whereby KCPL s RP was approved. These notices are dated 09.08.2018, 28.09.2018 and 30.09.2018. These notices adverted to the fact that additions concerning share application money and depreciation claimed by RGPCL were proposed to be made for AY 2017-18 [Financial Year (FY) 2016- 17]. Thus, limited scrutiny was proposed. The notices were based on the ROI filed by RGPCL. Therefore, the additions to RGPCL's income were, quite clearly, on the anvil. The argument that the proposal had not fructified into tax demand is flawed for the following reason: 21.1 A perusal of The Insolven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the revenue had not lodged its claim, despite the publication of the public announcement by the Resolution Professional inviting claims from creditors, including statutory/operational creditors such as the revenue, no provision could be made [even if it may otherwise have been possible] in the approved RP. The terms contained in the approved RP are binding on all stakeholders, including those who could have filed claims but chose not to lodge them. The revenue, having failed to lodge its claim, cannot enforce the impugned orders and notices, given the binding nature of the approved RP. 26. Section 31 of the 2016 Code, among other things, stipulates that once the RP is approved, it shall be binding on the corporate debtor and its employees, members, and creditors, which includes the Central Government, State Government, Local Authority to whom a debt in respect of payment of dues arising under any law for the time being in force and also on authorities to whom statutory dues are owed. Furthermore, the provision also stipulates that the approved plan will bind the guarantors and other stakeholders involved in forging the same. [ See Ghanashyam Mishra and Sons Priva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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