Section 238 of the Income Tax Act
Income-tax Act, 2025: s.432
Section 238 of the Income-tax Act, 1961 corresponds to section 432 (Person entitled to claim refund in certain special cases) of the Income-tax Act, 2025.
Read section 432 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 238 is Ghanashyam Mishra And Sons. v. Edelweiss Asset Reconstruction (126 Taxmann.com 132), cited in 192 of the 184 judgments on BharatTax that turn on this section.
Leading authorities on Section 238
Once a resolution plan is approved under Section 31(1) of the IBC, claims not included in the plan are extinguished and cannot be pursued. This applies to statutory dues owed to the government and other authorities.
The law does not compel individuals to perform impossible actions. The administration of law must consider this general exception in specific cases, acknowledging that it does not intend to compel impossibilities.
Arbitration proceedings cannot be initiated or continued after a moratorium under section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 (IBC) has come into effect.
The Insolvency and Bankruptcy Code, 2016 overrides any other enactment, including the Income Tax Act, when an NCLT has declared a moratorium under Section 14 of the IBC. Proceedings against the assessee are barred during the moratorium.
All claims, including statutory dues, that predate the approval of a resolution plan under the IBC stand extinguished by operation of law. No proceedings can be initiated or continued for such claims if they are not part of the approved plan.
The moratorium period under the Insolvency and Bankruptcy Code, 2016, will be excluded when calculating the limitation period for proceedings involving a corporate debtor. The Assessing Officer can seek re-institution of an appeal if the resolution process concludes.
Income tax proceedings initiated against a corporate debtor under section 148 for assessment years prior to the approval of a resolution plan under the Insolvency and Bankruptcy Code (IBC) are invalid, as the IBC aims to provide certainty by extinguishing all claims not part of the resolution plan.
Reopening assessment proceedings under Section 147 is permissible within four years, even if full and true particulars were provided during the original assessment, provided the Assessing Officer forms a prima facie opinion of underassessment or escapement of income.
Appeals filed by an assessee without permission from the NCLT or a letter of authority from the Interim Resolution Professional are not maintainable.
Appeals filed by a corporate debtor before the Tribunal are dismissed as infructuous when proceedings cannot continue against the corporate debtor after an NCLT order, due to the moratorium period under the IBC Code.