Drake & Scull Water & Energy India Private Limited Vs National Faceless Assessment Centre (Punjab and Haryana High Court)
The Punjab and Haryana High Court allowed the writ petition and set aside an income tax demand raised against the petitioner company after approval of its resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC). The Court held that once a resolution plan is approved under Section 31(1) of the IBC, all claims not forming part of the approved resolution plan stand extinguished and cannot be enforced thereafter.
The petitioner company underwent the Corporate Insolvency Resolution Process (CIRP) in 2018, and a moratorium came into effect on 30.10.2018. The National Company Law Tribunal (NCLT), Chandigarh, approved the resolution plan on 03.12.2020, and the approval was also published in newspapers. Despite this, the Income Tax Department issued a demand notice dated 30.03.2024 under Section 156 of the Income-tax Act, 1961, seeking recovery of ₹38,45,397 for Assessment Year 2012-13. The petitioner challenged the demand, and on 30.05.2024, the High Court restrained the Department from making any recovery during the pendency of the petition.
In its written response, the Revenue raised only the objection regarding the availability of an alternate statutory remedy but did not dispute the applicability of the Supreme Court’s decision in Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited. During the pendency of the proceedings, despite the interim order, the Department recovered ₹28,62,100 on 19.02.2025 and further recovered ₹9,83,297 and ₹2,87,603 on 27.03.2026 by adjusting the petitioner’s income tax refunds.
