Vimal Oil And Foods Limited Vs ACIT (Gujarat High Court)
The Gujarat High Court disposed of a batch of writ petitions by a common judgment, treating one petition as the lead matter. The petitions challenged the notice dated 13.04.2023 issued under Section 148 of the Income-tax Act, 1961, and the order passed under Section 148A(d) seeking to reopen the assessment for Assessment Year 2019-20.
The reassessment proceedings originated from a notice issued under Section 148A(b), which was based on a search and seizure action conducted on 08.12.2021 in the case of CFM Asset Reconstruction Private Limited (CFM ARC) and related entities. The notice referred to acquisition of the petitioner’s non-performing assets by CFM ARC, stating that debts aggregating to ₹9,454.85 lakhs had been acquired for ₹5,050 lakhs, resulting in a haircut of ₹4,405.85 lakhs. It was alleged that the petitioner “might have claimed” deduction of interest on such loans that had never been paid and that the liability had ceased to exist, leading to issuance of the notice.
The petitioner responded that it had undergone the Corporate Insolvency Resolution Process (CIRP) initiated by the National Company Law Tribunal (NCLT). Since no resolution plan was approved, the NCLT ordered liquidation on 19.12.2019. The liquidator thereafter sold the petitioner as a going concern to Arrhum Tradelink Private Limited under a sale agreement dated 03.03.2021. According to the petitioner, the acquisition was on a “clean slate” basis under the Insolvency and Bankruptcy Code, 2016, with all past liabilities and investigations standing extinguished. Despite these submissions, the Assessing Officer passed an order under Section 148A(d), concluding that income of ₹13.52 crore had escaped assessment and issued a notice under Section 148.
