STESALIT LIMITED,KOLKATA vs. A.C.I.T., CIRCLE - 8(2), KOLKATA, KOLKATA

At the outset, the ld. Counsel for the assessee submitted that in view of the order of the Learned National Company Law Tribunal, Kolkata (hereinafter “the ld. NCLT”) dt. 20/07/2018, all the tax liabilities raised against the assessee for the impugned Assessment Years have ceased to exist and, therefore, the order of the Assessing Officer deserves to be set aside. Written submission has been filed and the same reads as follows:- “This is with reference to our Appeal No. 747/748/ 749/Kol/2022 against Order u/s 250 of Income Tax Act, passed by National Faceless Appeal Centre (NFAC) Delhi. We submit as under:

The Appeal against the Order dated 20.07.2018, approving the Resolution Plan, was also dismissed by the Hon'ble NCLT on 26.02.2020 in Company Appeal (AT) (Insolvency) No. 685 of 2019. Therefore, the Resolution Plan has attained Assessment Year: 2012-13 Assessment Year: 2014-15 & Assessment Year: 2017-18 Stesalit Limited 3 finality and is binding on all stakeholders including the Income Tax Department, which was also one of the creditors, which participated in the CIRP.

Pertinently, the alleged transaction which is a subject matter of the present proceedings relate to the AY 2017 - 18, AY 2014-15 and AY 2012-13, when the affairs of the answering Respondent were looked after by its erstwhile management, which has now been changed with the current management of the answering Respondent, as a result of the aforesaid CIRP. As such, the Appeal is liable to be allowed by this Hon'ble Tribunal in view of Section 32A of the Insolvency and Bankruptcy Code, 2016 ("Code").

The Hon'ble Supreme Court in the case of Manish Kumar v. Union of India, (2021) 5 SCC 1 has put forth "The Clean Slate" principle with' respect to the prior liabilities of the Corporate Debtor/Assessee after approval of the Resolution Plan by the Adjudicating Authority. Furthermore, the Hon'ble Delhi High Court in Tata Steel BSL Ltd. vs Union of India (W.P.(CRL) 3037/2019 and CRL.M.A. 39126/2019) has held that it is clear from the express language of the aforementioned provision that a Corporate Debtor would not be liable for any offence committed prior to commencement of the CIRP and the corporate debtor would not be prosecuted if a resolution plan has been approved by the Adjudicating Authority." Hence, the subject proceedings are liable to be quashed by the Ld. Appellate Authority in view of Sections 31,32A and 238 of the Code.

Further, the Hon'ble Supreme Court in a landmark judgment in the matter of Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17, has held that: "It is clear that once the Code gets triggered by admission of a creditor's petition under Sections 7 to 9, the proceeding that is before the adjudicating authority, being a collective proceeding, is a proceeding in rem." The aforesaid principle of law, laid down by the Hon'ble Supreme Court, clarifies that the Corporate Insolvency Resolution Proceedings, being in rem. Hence, the Order passed by an Adjudicating Authority/NCLT/NCLAT in such proceedings shall be binding on all categories of stakeholders mentioned under Section 31(1) of the Code read with Regulation 2(j) of the IBBI (Grievance and Complaint Handling Procedure) Regulations, 2017. 6. In addition to the above the time limit to Appeal to National Company Law Appellate Tribunal u/s 61A of the IBC has also lapsed, thereby Order passed by NCLAT is binding on all categories of stakeholders, including the Income Tax Department.

In the instant case the honorable ITAT had passed an order dated 09.05.2023 (page no. 154-157 of the page book) whereby the tax liabilities of the appellant were ceased, but due to some drafting errors brought in the notice of Honorable IT AT through a misc. application filed on 03.07.2023, the said order was recalled vide order dated 21.09.2023 (page no. 158-161 of the page book) and a fresh date of hearing was assigned via fresh notice. The order cited as: "A perusal of the above reveals that, the Assessee has ceased °its tax liabilities making these appeals before us infructuous and the same are dismissed as such/' Assessment Year: 2012-13 Assessment Year: 2014-15 & Assessment Year: 2017-18 Stesalit Limited 4 Therefore, in the light of aforesaid position of law and a consideration of facts, the Income Tax department being a stakeholder, is unequivocally bound by the Resolution Plan Approved vide Final Order dated 20.07.2018 passed by the Hon'ble NCLT in Company Petition (IB) No.512/KB/2017. Hence, the Impugned Order of the Ld. A.O. is liable to be set aside at the threshold. Your Honors, the Assessee will have no objection to furnish any other information or documents if further required by Your Goodself to enable you to frame and complete the instant assessment. It is needless to state here that a fair and proper opportunity be granted to the Assessee before drawing any adverse inference.”

On the other hand, the ld. D/R vehemently argued supporting the orders of the lower authorities.

We have heard rival contentions and perused the material placed before us. Before us, the assessee which is a limited company has filed appeal for Assessment Year 2012-13, 2014-15 & 2017-18 against the additions made by the Assessing Officer. The assessment u/s 143(3) of the Act for Assessment Year 2012-13 was framed on 31/03/2015, for Assessment Year 2014-15 was framed on 19/12/2016 and for Assessment Year 2017-18 was framed on 23/12/2019. So far as Assessment Year 2012-13 and 2014-15 are concerned, since the order of the ld. NCLT was not available at that point of time, the ld. Assessing Officer had no occasion to examine the same and give effect to the finding of the ld. NCLT. Even for Assessment Year 2017- 18, where the order has been framed on 23/12/2019, we on perusal of the assessment order do not find any discussion referring to the submissions, if any made by the assessee stating about the NCLT order dt. 20/07/2018. 6. Under these given facts and circumstances, where on one hand the assessee is pleading that in pursuance to the order of the ld. NCLT, Kolkata in CP(IB) No. 512/KB/2017 dt. 20/07/2018, all the tax liabilities of the assessee for the impugned Assessment Years stands ceased and on the other Assessment Year: 2012-13 Assessment Year: 2014-15 & Assessment Year: 2017-18 Stesalit Limited 5 hand, the ld. Assessing Officer had no occasion to examine the effect of the order of the ld. NCLT, therefore, since demand has been raised by the Assessing Officer and it is to be ascertained whether the tax liability deserves to cease on account of the order of the ld. NCLT (supra), we restore the matter to the file of the Assessing Officer solely for examining the effect of the order of the ld. NCLT (supra), and then decide in accordance with law.

In the result, appeal of the assessee is allowed is allowed for statistical purposes. Order pronounced in the Court on 21st March, 2024 at Kolkata. (SONJOY SARMA) ACCOUNTANT MEMBER Kolkata, Dated 21/03/2024 *SC SrPs आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील ( ) / The CIT(A)- 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड" फाई/ Guard file.