Swan Defence and Heavy Industries Ltd. Vs ACIT (Bombay High Court)
The Bombay High Court considered a writ petition challenging an order dated 4 March 2025 passed under Sections 201(1) and 201(1A) of the Income Tax Act, 1961, along with a related demand notice for Assessment Year 2019–20. The petitioner argued that the proceedings were merely academic because no tax demand could be raised for the said year after approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC). The National Company Law Tribunal (NCLT), Ahmedabad Bench, had approved the resolution plan submitted for the corporate debtor on 23 December 2022 under Section 31 of the IBC. The petitioner relied on paragraph 23 and 24 of the NCLT order, which indicated that all past claims stood extinguished, with reference to the Supreme Court’s judgment in Ghanshyam Mishra & Sons. The petitioner had informed the Assessing Officer of these facts in response to the show-cause notice issued under Section 148A(1). However, the Assessing Officer proceeded to hold that the case warranted issuance of notice under Section 148, relying on a Madras High Court ruling that the IBC cannot be used to dilute the rights of the Income Tax Department.
