Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2015-16) M/s. B&C Energy Infra Pvt. Ltd., Vs. Deputy Commissioner of 405, Chandra Prabhu Corporate Income Tax, House, B/h. Sales India Show Mehsana Circle, Room, Modhera Char Rasta, Mehsana Mehsana-384002 [PAN No.AAFCB1482R] (Appellant) .. (Respondent) Shri Rushin Patel, A.R Appellant by : Respondent by: Smt. Trupti Patel, Sr. D.R. Date of Hearing 22.04.2025 24.04.2025 Date of Pronouncement O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: These cross appeals have been filed by the Department and the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), Gandhinagar, Ahmedabad vide orders dated 06.09.2019 passed for A.Y. 2015-16.
The Department has taken the following grounds of appeal:-
&1553/Ahd/2019 ACIT vs. M/s. B&C Energy Infra Pvt. Ltd. and B&C Energy Infra Pvt. Ltd. vs. DCIT Asst. Year –2015-16 - 2– “i) Whether, the Ld. Commissioner of Income-Tax (Appeals) has erred in law and on facts in admitting the additional evidences without drawing satisfaction on one or more of the circumstances laid down in Rule 46A of the I.T. Rules 1962, when the AO has given ample opportunities to the assessee to furnish the requisite deails. ii) Whether, the Ld. Commissioner of Income-Tax (Appeals) has erred in law and on facts in admitting the additional evidence merely relying on the decisions without examining their applicability on the facts of the case of the assessee. iii) Whether, the Ld. Commissioner of Income-Tax (Appeals) has erred in law and on facts in deleting the addition u/s.68 of the I.T. Act of Rs. 3,41,90,000/- out of the addition made of Rs. 4,61,90,000/-. iv) On the facts and circumstances of the case, the Ld. Comissioner of Income-Tax (Appeals) ought to have upheld the order of the Assessing Officer. v) It is, therefore prayed that the order of the Ld. Commissioner of Income-tax (Appeals) may be set aside and that of the Assessing Officer be restored. vi) The appellant prays for leave, to amend or alter any ground or add a new ground which may be necessary.”
The Assessee has taken the following grounds of appeal:-
“1. Ld. CIT(A) has erred in law and facts in confirming the addition of Rs. 4,00,000/- in respect of loan received from Labhuben Ashvindbhai Patel by presuming it as unexplained due to non submission of details of unsecured loan of Rs.4,00,000/- received by Labhuben A. Patel.
2. Ld. CIT(A) has erred in law and facts in confirming the addition of Rs. 1,16,00,000/- in respect of loan received from Megdutbhai H. Patel by presuming it as unexplained though the evidence of source of money provider was submitted by way of his details.
3. CIT(A) has erred in law and facts by not giving further opportunity for submitting evidences of sources of fund of money providers after considering the circumstances of difficulty to obtained such evidences.”
The brief facts of the case are that assessment order under Section 143(3) of the Act was passed on 01.12.2017 and demand of Rs. 1,94,40,450/- was raised on the assessee. The assessee, aggrieved by the order of the Assessing Officer, filed an appeal before Ld. CIT(A) who gave substantial relief to the assessee and after giving appeal effect, the demand was reduced &1553/Ahd/2019 ACIT vs. M/s. B&C Energy Infra Pvt. Ltd. and B&C Energy Infra Pvt. Ltd. vs. DCIT Asst. Year –2015-16 - 3– to Rs. 37,25,740/-, which as per Department is still pending. Further, as per the Department the assessee is also liable to pay interest on outstanding demand under Section 220(2) of the Act which comes to Rs. 25,33,503/-. Therefore, as per the Department the total outstanding demand is of Rs. 62,59,243/-. Further, penalty proceedings under Section 271(1)(c) of the Act have also been initiated against the assessee, which are pending adjudication. The contention of the Ld. Counsel for the assessee is that since the Income Tax Department has not made any claim before NCLT though it got adequate opportunity of representation, no further demand is liable to be paid by the assessee. Before us, the Counsel for the assessee submitted that the Resolution Plan of the assessee has been approved by NCLT vide it’s order dated 06.02.2023 copy of which was placed before us at Page No. 1 to 45 of the Paper Book. The Contention of the Counsel for the assessee was that the Income Tax Department has not made any claim before NCLT and therefore, after approval of the Resolution Plan by NCLT, the Department’s appeal could not be proceeded with and is liable to be dismissed. In this regard, the Counsel for the assessee drew our attention to relevant pages of the order of NCLT at Page No. 59-60 of the Paper Book, containing the list of claims received by NCLT in response to the public announcement. The Counsel for the assessee submitted that the claim of the Income Tax Department was not listed therein. The Counsel for the assessee also referred to Pages 12-15 of the Paper Book and pointed out that in the list of claim of creditors admitted in the Resolution Plan, it did not include any claim of the Income Tax Department. Accordingly, no demand is liable to be paid by the assessee and all income tax demands against the assessee stands extinguished.
&1553/Ahd/2019 ACIT vs. M/s. B&C Energy Infra Pvt. Ltd. and B&C Energy Infra Pvt. Ltd. vs. DCIT Asst. Year –2015-16 - 4– 5. We have heard the rival the contentions and perused the material on record.
6. On going through the facts of the instant case and the contents of the order dated 06.12.2023 passed under Section 30(6) r.w.s. 31 of IBC, 2016 by Hon’ble NCLT, Ahmedabad, we observe that evidently, Income Tax Department has not made any claim against the assessee before NCLT in respect of it’s outstanding demand. This factual position is not in dispute. Therefore, the limited issue for consideration before us is that once the Department has admittedly not made any specific claim before NCLT in respect of the outstanding demand for the impugned year under consideration, then in such circumstance, whether the appeal of the Department is liable to be dismissed and no outstanding demand would survive against the assessee.
7. In the case Ghanashyam Mishra & Sons (P.) Ltd. vs. Edelweiss Asset Reconstruction Co. Ltd. [2021] 126 taxmann.com 132 (SC)/[2021] 166 SCL 237 (SC)/[2021] 227 COMP CASE 251 (SC)[13-04-2021], the Supreme Court held that Central Government, any State Government or any local authority to whom an operational debt is owed would come within ambit of ‘operational creditor’ as defined under sub-section (20) of section 5 paragraph-102.1. The relevant paragraph of the judgment is reproduced below: "102.1. That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of 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 &1553/Ahd/2019 ACIT vs. M/s. B&C Energy Infra Pvt. Ltd. and B&C Energy Infra Pvt. Ltd. vs. DCIT Asst. Year –2015-16 - 5– 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."
8. In the case of ACIT (OSD) vs. GAIL Mangalore Petrochemicals Ltd. [2025] 171 taxmann.com 17 (Delhi - Trib.)[08-01-2025], the ITAT held that once a resolution plan is approved by NCLT under section 31 of IBC, new claims by Income Tax Department for dues arising prior to plan’s effective date cannot be considered, and such claims stand extinguished to extent provided in resolution plan
9. In the case of TUF Metallurgical (P.) Ltd. vs. Union of India [2023] 157 taxmann.com 424 (Delhi)/[2024] 182 SCL 315 (Delhi)[12-12-2023], the Delhi High Court held that where pursuant to initiation of CIRP of corporate debtor, RP invited claims from creditors, however, respondent/Revenue had not submitted its claim before RP to recover tax claims to be paid by corporate debtor for assessment year 2017-18 and meanwhile resolution plan for corporate debtor was approved by NCLT, right of respondent/Revenue to recover amount due had extinguished. While passing the order, the Delhi High observed as under:
Thence, the short question before us is as to whether the respondent/revenue can justifiably claim and recover from the petitioners any amount of money towards income tax that accrued prior to approval of Resolution Plan under section 31 of the Code.
In the case of Ghanshyam Mishra & Sons (P.) Ltd. (supra), relied upon by the petitioner/assessee, it was held by the Supreme Court as under: "94. We have no hesitation to say that 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 &1553/Ahd/2019 ACIT vs. M/s. B&C Energy Infra Pvt. Ltd. and B&C Energy Infra Pvt. Ltd. vs. DCIT Asst. Year –2015-16 - 6– that the 2019 Amendment is declaratory and clarificatory in nature and therefore retrospective in operation. ** ** ** 102.1 That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of 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. .......... .......... 102.3 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."
The above quoted legal position and the judicial precedent were reiterated and referred to in the subsequent judgments in the cases of Ruchi Soya Industries Ltd. v. Union of India[2022] 6 SCC 343/[2022] 139 taxmann.com 266/172 SCL 361 (SC) and Sree Metaliks Ltd. v. Additional Director General2023/DHC/001118/[2023] 149 taxmann.com 401/177 SCL 458 (Delhi). Most recently, vide order dated 7-7-2023, the Supreme Court, referring to the law laid down in the case of Ghanshyam Mishra & Sons (P.) Ltd. (supra) summarily dismissed a bunch of appeals in case titled Commissioner of Central Excise and Service Tax Vadodra v. EMCO Ltd. [Civil Appeal No. 8189/2019 with Civil Appeals No. 5701-5703 of 2019]/2023 (385) ELT 644 (SC).
In the present cases, as described above, the admitted factual matrix is that the notices and orders impugned in these writ petitions pertain to the income tax claims of the respondents/revenue pertaining to the period much prior to the date of approval of the Resolution Plan. The impugned notices and orders were issued by the respondents/revenue admittedly subsequent to the public announcement under section 15 of the Code regarding CIRP process pertaining to the petitioner/assessee. As noted above, pertaining to the WP(C) 10528/2022, the public announcement under section 15 of the Code called for submission of claims by 21-1-2019, but the respondents/revenue did not file any claim till that date or even thereafter; it is only subsequent to approval of the Resolution Plan vide order dated 5-11-2019 of the Tribunal, (which order was communicated to respondents/revenue on 2-12-2019) that the respondents/revenue issued the impugned Assessment Order and Demand Notice both dated 12-12-2019. Similarly, in the other writ petition WP(C) 10628/2022, the impugned notices and orders were issued by the respondents/revenue much subsequent to the public announcement dated 30-9-2019 of commencement of CIRP under section 13 of the Code; vide order dated 21-2-2022, the Tribunal approved the final &1553/Ahd/2019 ACIT vs. M/s. B&C Energy Infra Pvt. Ltd. and B&C Energy Infra Pvt. Ltd. vs. DCIT Asst. Year –2015-16 - 7– Resolution Plan and that order was communicated by the petitioner/assessee to the respondents/revenue, calling upon the latter to withdraw the earlier notices, but to no avail.
In nutshell, the Resolution Plans qua the petitioners/assessees having been approved by the National Company Law Tribunal on 5-11-2019 (in WP(C) 10528/2022) and on 21-2-2022 (in WP(C) 10628/2022), the tax claims pertaining to the Assessment Year 2017-18 (in WP(C) 10528/2022) and Assessment Year 2014-15 (in WP(C) 10628/2022) stood extinguished.
10. The argument on behalf of respondents/revenue that being the State exchequer, it cannot be bound by the Resolution Process provisions of the Code has been recorded only to be rejected in view of the above quoted extract from the judgment in the case of Ghanshyam Mishra & Sons (P.) Ltd. (supra).
11. In view of the aforesaid, both these writ petitions are allowed and consequently, the notices and orders impugned in the same are set aside.
In the case of Rishi Ganga Power Corporation Ltd. vs. Assistant Commissioner of Income-tax [2024] 158 taxmann.com 72 (Delhi) / [2024] 297 Taxman 123 (Delhi) / [2024] 464 ITR 133 (Delhi) [31-10-2023], the Delhi High Court held that where National Company Law Tribunal admitted insolvency petition against assessee but revenue in terms of Insolvency and Bankruptcy Code, 2016 had not lodged its claim with RP, revenue could not enforce assessment order and demand notice. While passing the order, the Delhi High Court made the following observations:
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 & Sons (P.) Ltd. (supra)].
Since the revenue failed to lodge its claims, the impugned demands raised by the revenue stand automatically extinguished. [See Ruchi Soya Industries Ltd. (supra) and Sreemetaliks Ltd. v. Addl. Director General [2023] 149 taxmann.com 401/177 SCL 458 (Delhi), 2023/DHC/001118 (at para 53)] &1553/Ahd/2019 ACIT vs. M/s. B&C Energy Infra Pvt. Ltd. and B&C Energy Infra Pvt. Ltd. vs. DCIT Asst. Year –2015-16 - 8– 27.1 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.
In the instant facts, we observe that the assessment was completed and demand was raised on the assessee on 01.12.2017, whereas the order of NCLT under Section 30(6) r.w.s. 31 of IBC was passed on 06.12.2023. In the Resolution Plan, the Department had not filed any claim for recovery of tax demand with respect to outstanding demand against the assessee. Therefore, in light of the facts of the assessee’s case and the judicial precedents cited above, the Department cannot now claim and recover from the assessee an amount of arrears that accrued prior to approval of Resolution Plan under Section 31 of IBC.
In the result, the appeal of the Department is dismissed and the appeal of the assessee is allowed. This Order is pronounced in the Open Court on 24/04/2025 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 24/04/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��थ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,