Gujarat High Court
Jyoti Power Corporation Private ... vs Principal Commissioner Of Income Tax-I on 1 October, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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C/SCA/4057/2022 JUDGMENT DATED: 01/10/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4057 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MRS. JUSTICE MAUNA M. BHATT
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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JYOTI POWER CORPORATION PRIVATE LIMITED (NOW KNOWN AS
AUSIL CORPORATION PRIVATE LIMITED)
Versus
PRINCIPAL COMMISSIONER OF INCOME TAX-I
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Appearance:
MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
KARAN G SANGHANI(7945) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MRS. JUSTICE MAUNA M. BHATT
Date : 01/10/2024
ORAL JUDGMENT
(PER : HONOURABLE MRS. JUSTICE MAUNA M. BHATT)
1. Heard learned advocate Mr.B.S.Soparkar for
the petitioner and learned Senior Standing
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Counsel Mr.Karan G. Sanghani for the
respondent.
2. Rule, returnable forthwith. Learned Senior
Standing Counsel Mr.Karan Sanghani waives
service of notice of rule for and on behalf of
the respondent.
3. This petition under Article 226 of the
Constitution of India is filed challenging the
notice dated 13.01.2022 initiating the
revision proceedings under Section 263 of the
Income Tax Act, 1961 (for short 'the Act') for
Assessment Year 2017-18.
4. The brief facts are as under:
4.1. The petitioner is engaged in the
business of electrical transmission line, who
filed its return of income for Assessment Year
2017-18 on 06.11.2017 declaring total loss of
Rs.95,11,56,523/-. The case of the petitioner
was thereafter selected for scrutiny
assessment and order of assessment under
Section 143(3) of the Act was passed on
29.12.2019 determining total loss at
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Rs.82,33,01,219/- after making various
additions and dis-allowances.
4.2. The petitioner-Company thereafter
subjected to insolvency proceedings under the
Insolvency and Bankruptcy Code, 2016 (for
short 'the Code') wherein, a Corporate
Insolvency Resolution Process (for short 'the
CIRP') was initiated vide order dated
05.02.2020. These proceedings were initiated
pursuant to an application made by Bank of
India before National Company Law Tribunal,
Ahmedabad Bench (for short 'the NCLT').
4.3. The NCLT thereafter appointed Interim
Resolution Professional and claims were
invited from various creditors of the
petitioner and in response to the proceedings
initiated before NCLT, among other claims, the
Interim Resolution Professional received the
claim of Rs.1,26,80,855/- from Deputy
Commissioner of Income Tax Rajkot which was
verified and admitted. The Deputy Commissioner
of Income Tax was thus classified as an
Operational Creditor in accordance with the
provisions of the Code. It is case of the
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petitioner that this is the only claim
received from the income Tax Department
pursuant to the public announcement.
4.4. Thereafter on 14.10.2021, the
resolution plan of M/s.Zaveri and Company
Private Limited for revival of the company was
approved under Section 30(6) of the Code. It
is case of the petitioner that in view of
order dated 14.10.2021, all the admitted
claims got extinguished and therefore, the
notice issued under Section 263 of the Act
being unjust and illegal deserves to be
quashed and set aside.
5.1. Learned advocate Mr.B.S.Soparkar for
the petitioner submitted that in view of the
settled legal position and in view of
resolution plan being approved by order dated
14.10.2021, all past dues of the Income Tax
Department got extinguished and therefore, the
notice issued under Section 263 of the Act for
revising the assessment under Section 263 of
the Act for Assessment Year 2017-18 deserves
to be quashed and set aside.
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5.2. In support of his submissions, he
relied upon decision of Hon'ble Supreme Court
in the case of Ghanashyam Mishra & Sons
Private Limited versus Edelweiss Asset
Reconstruction Company Limited & Ors reported
in (2021) 9 SCC 657.
6. On the other hand, opposing the petition,
learned Senior Standing counsel Mr.Karan
Sanghani submitted that the notice issued
under Section 263 of the Act was issued by the
respondent for revising the demand for the
Assessement Year 2017-18. It was submitted
that in view of clear statutory provision, the
powers of the respondent cannot be curtailed
when procedure in accordance with law has been
followed. He further submitted that the
decision relied upon by the petitioner in case
of Ghanashyam Mishra (Supra) is with regard to
extinguishment of the claim after approval of
resolution plan by NCLT as in the present
case, the proceedings under Section 263 of the
Act has been initiated and this being not the
recovery proceedings, the decision would not
be applicable.
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7. Considering the submissions made on behalf
of both the sides and upon perusal of the
record, it is noticed that pursuant to
insolvency proceedings initiated under the
Code, a resolution plan dated 14.10.2021 was
approved by the Tribunal under Section 30(6)
of the Code. It is also on record that the
claim which was lodged by the Deputy
Commissioner of Income Tax, Rajkot was
verified and admitted in the proceedings
before NCLT after consideration of the claim
filed by the Additional Commissioner of Income
Tax, Rajkot. In the decision of Hon'ble
Supreme Court in case of Ghanashyam Mishra
(Supra) it is held as under:
"102. NCLT found, that by email dated
6.1.2018, EARC had submitted its
claim in Form 'C' for an
amount of Rs.648,89,62,395/-. In
response to the said email, RP
sought a clarification, as to whether
the corporate guarantee had been invoked
by the applicant. RP had not received
any response till 21.2.2018 from
EARC. Despite repeated requests
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made by RP, EARC did not respond to the
query made by RP. From the record
placed before NCLT, it was clear, that
EARC had not invoked the corporate
guarantee. NCLT therefore posed a
question to itself, as to whether an
uninvoked corporate guarantee
could be considered as matured
claim of the applicant. NCLT found,
that once the moratorium was applied
under Section 14 of I&B Code, EARC
was prevented from invoking the
corporate guarantee. NCLT further found,
that the OMML's guarantee had not been
invoked by EARC till the date of
completion of CIRP process and once the
moratorium was imposed, it could not
invoke the corporate guarantee. NCLT
therefore found, that there is no
illegality or irregularity in not
admitting the claim of EARC."
8. Thus, in view of above clear provisions of
law no person would be entitled to initiate or
continue any proceedings in respect of any
claim for any dues relating to the period
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prior to approval of resolution plan. In view
of approval of resolution plan, all
liabilities of all stakeholders including that
of Government/ Statutory Authority shall stand
extinguished after approval of the resolution
plan. We therefore, deem it appropriate to
quash and set aside the notice dated
13.01.2022 issued under Section 263 of the
Act. The petition is accordingly allowed. Rule
is made absolute. No orders as to cost.
(BHARGAV D. KARIA, J)
(MAUNA M. BHATT,J)
PALAK
