AMW Auto Component Limited Vs ACIT (Gujarat High Court)
In this case before the Gujarat High Court, the petitioner challenged the validity of a notice issued under Section 148 of the Income-tax Act, 1961 dated 31.03.2025 seeking to reopen assessment proceedings. The petitioner company had undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016, initiated by a financial creditor and admitted by the adjudicating authority on 01.09.2020. During the CIRP, an Interim Resolution Professional invited claims from creditors, and a resolution plan for revival of the company was approved by the National Company Law Tribunal (NCLT) on 12.10.2023.
Read SC Judgment in this case: SC Upholds Quashing of Reopening Tax Notice Due to IBC Clean Slate Doctrine
The approved resolution plan expressly provided that all tax liabilities, whether assessed or unassessed, for periods prior to the NCLT approval date would stand extinguished. This included liabilities relating to income tax, penalties, interest, TDS demands, and any proceedings arising under various provisions of the Act. The plan further stated that no proceedings could be initiated or continued in respect of such liabilities after approval.
The petitioner contended that in view of Section 31 of the Insolvency and Bankruptcy Code, once a resolution plan is approved, all claims not included in the plan stand extinguished and are binding on all stakeholders, including government authorities. Reliance was placed on decisions of the Supreme Court which held that upon approval of a resolution plan, all prior claims are frozen and cannot be pursued further.
