Gujarat High Court
V S Texmills Private Limited vs Texmills Private Limited V/S Assistant ... on 9 May, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/9098/2024 ORDER DATED: 09/05/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 9098 of 2024
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V S TEXMILLS PRIVATE LIMITED
Versus
ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(1),
AHMEDABAD
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Appearance:
MR TUSHAR HEMANI, SR ADVOCATE WITH MS VAIBHAVI K
PARIKH(3238) for the Petitioner(s) No. 1
MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE P. M. RAVAL
Date : 09/05/2025
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE P. M. RAVAL)
1. Heard learned senior advocate Mr.Tushar Hemani
assisted by learned advocate Ms.Vaibhavi Parikh for the
petitioner and learned advocate Ms.Maithili Mehta for the
respondent.
2. Rule returnable forthwith. Learned advocate
Ms.Maithili Mehta waives service of notice of rule for and on
behalf of the respondent.
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3. Having regard to the controversy arising in the
present petition in narrow compass, with the consent of
learned advocates appearing for the respective parties, the
matter is taken for final disposal today.
4. By way of the present petition, the petitioner has
challenged recovery notices dated 4.3.2024 and 9.4.2024
issued by the respondent under the provisions of the
Income Tax Act for the assessment year 2017-18 raised for
the year under consideration consequent to passing of the
penalty order dated 18.10.2021 under section 271(1)(c) of
the Income Tax Act as well as penalty order dated
24.11.2021 under section 270-A of the Income Tax Act.
5. Brief facts of the case are as follow.
5.1 The Corporate Insolvency Resolution Process
under the Insolvency and Bankruptcy Code 2016 was
initiated against the petitioner before the National Company
Law Tribunal, Ahmedabad and eventually, resolution plan
was approved by the committee of creditors which was
further approved by the NCLT, Ahmedabad vide order dated
1.1.2020 passed in IA No.664 of 2019 in CP (IB)
No.299/NCLT/AHM/2018.
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C/SCA/9098/2024 ORDER DATED: 09/05/2025
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5.2 On 15.12.2023, the petitioner was communicated
by the Income Tax Department via email that there are
certain outstanding in the case of the petitioner to which
the petitioner responded online on 15.12.2023 itself
categorically stating that they disagree with the demand
raised by the respondent in view of the order passed by the
NCLT, Ahmedabad dated 1.1.2020.
5.3 On 29.2.2024, the petitioner requested the
respondent to cancel outstanding demand for the year
under consideration.
5.4 On 4.3.2024, the respondent authority issued the
recovery notice for the year under consideration and on
7.3.2024, the petitioner vide letter dated 5.3.2024
responded to the said notice with a request to cancel
outstanding demand in case of the petitioner.
5.5 The respondent thereafter issued recovery notice
dated 9.4.2024 raising demand of Rs.1,26,02,075/- raised
pursuant to penalty order dated 24.11.2021 passed under
section 270A of the Income Tax Act as well as demand of
Rs.2,02,200/- raised pursuant to penalty order dated
18.10.2021 passed under section 271AAC of the Income Tax
Act for the year under consideration coupled with the fact
that none of the above order dated 18.10.2021 under
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C/SCA/9098/2024 ORDER DATED: 09/05/2025
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section 271AAC nor penalty order under section 270A dated
24.11.2021 were served upon the petitioner. Hence, the
present petition.
6. Learned senior advocate Mr.Tushar Hemani has
relied upon the decision of the Honourable Apex Court in
the case of Ghanashyam Mishra and Sons Pvt.Ltd Vs
Delweiss Asseet Reconstruction Co.Ltd, reported in (2021) 9
SCC 657 and has argued that once the order under section
31 of the IBC has been passed by the NCLT, Ahmedabad
whereby the resolution plan submitted in the course of CIRP
proceedings initiated in the case of the petitioner has been
approved, in such circumstances, the impugned recovery
notices issued by the respondent in relation to outstanding
demand for the year under consideration are bad in law,
unjustified, contrary to law and hence, the same are
required to be quashed and set aside.
7. Learned standing counsel Ms.Maithili Mehta
appearing for the respondent has argued that as per the
judgment delivered in the case of Rainbow Private Limited,
statutory dues of the Income Tax Department are to be
considered as secured creditors and therefore, demand
notices issued are in accordance with law and no
interference is required at the hands of this Court.
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C/SCA/9098/2024 ORDER DATED: 09/05/2025
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8. Having perused the documents placed on record
by the petitioner which have gone uncontroverted by the
respondent authority, what emerges on record is that vide
order dated 1.1.2020, the NCLT, Ahmedabad has approved
the resolution plan, whereas the notices by the respondent
authority were issued on 4.3.2024 and 9.4.2024 for the
assessment year 2017-18. Thus, once the resolution plan is
approved and the respondent having not claimed demand
for the assessment year 2017-18 in the said resolution plan,
such dues, if not forming part of the resolution plan, shall
stand extinguished and no proceedings in respect of such
dues for the period prior to the date on which the
adjudicating authority (NCLT) grants its approval under
section 31 could be continued. This has been specifically
held by the Honourable Apex Court in the case of Vaibhav
Goel and another Vs Deputy Commissioner of Income Tax
and another, reported in 2025 INSC 375 where the
judgment in the case of Ghanashyam Mishra and Sons Pvt
Ltd (supra) has been referred to and demands made by the
Income Tax Department were held to be invalid and
unenforciable. Para 95 reads as under.:
"95. In the result, we answer the questions framed by
us as under:
(i) That once a resolution plan is duly approved by the
Adjudicating Authority under subsection (1) of Section
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31, the claims as provided in the resolution plan shall
stand frozen and will be binding on the Corporate
Debtor and its employees, members, creditors,
including the Central Government, any State
Government or any local authority, guarantors and
other stakeholders. On the date of approval of
resolution plan by the Adjudicating Authority, all such
claims, which are not a part of resolution plan, shall
stand extinguished and no person will be entitled to
initiate or continue any proceedings in respect to a
claim, which is not part of the resolution plan;
(ii) 2019 amendment to Section 31 of the I&B Code is
clarificatory and declaratory in nature and therefore
will be effective from the date on which I&B Code has
come into effect;
(iii) Consequently all the dues including the statutory
dues owed to the Central Government, any State
Government or any local authority, if not part of the
resolution plan, shall stand extinguished and no
proceedings in respect of such dues for the period prior
to the date on which the Adjudicating Authority grants
its approval under Section 31 could be continued."
9. In view of the settled proposition of law and
considering the facts on hand, admittedly, the impugned
notices are issued for the assessment year 2017-18 much
after approval of the resolution plan on 1.1.2020, the
notices at Annexure-A dated 4.3.2024 and 9.4.2024 for the
assessment year 2017-18 are required to be quashed and
set aside and accordingly, the same are quashed and set
aside.
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10. Rule is made absolute to the aforesaid extent with
no order as to costs.
(BHARGAV D. KARIA, J)
(P. M. RAVAL, J)
H.M. PATHAN
