VAIBHAV GOEL & ANR. versus DEPUTY COMMISSIONER OF INCOME TAX & ANR.

VAIBHAV GOEL & ANR. versus DEPUTY COMMISSIONER OF INCOME TAX & ANR.

The Supreme Court held that where statutory dues (including income tax demands) for periods prior to approval of a resolution plan are not part of the approved plan they stand extinguished under Section 31(1) of the IBC; accordingly the Income Tax Department's demands for assessment years 2012-13 and 2013-14 raised after approval of the Resolution Plan are invalid and unenforceable, and the impugned NCLT and NCLAT orders dismissing the Monitoring Professional's challenge without reasons and imposing costs were set aside.

Parties
Appellants (joint Resolution Applicants): Vaibhav Goel & Anr.; Respondents (income Tax Department): Deputy Commissioner of Income Tax & Anr.; Second Respondent (monitoring Professional): Monitoring Professional
Jurisdiction
India
Judgment Date
20 March 2025
Procedural Posture
Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Appeal Against NCLAT Judgment Dated 25.11.2021; Final Judgment by the Supreme Court Delivered on 20 March 2025
Outcome
Appeal allowed
Legal Topics
Resolution Plan, Statutory Dues, Extinguishment of Claims, Binding Effect of Approved Resolution Plan, Clean Slate Principle, Demand Notices, Contingent Liabilities
Insolvency and Bankruptcy Code, 2016 Income Tax Act, 1961 Resolution Plan Statutory Dues Extinguishment of Claims Binding Effect of Approved Resolution Plan Clean Slate Principle Demand Notices +1 more

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Parties

Vaibhav Goel & Anr.

Appellants (joint Resolution Applicants)

Deputy Commissioner of Income Tax & Anr.

Respondents (income Tax Department)

Monitoring Professional

Second Respondent (monitoring Professional)

Procedural Posture

Appeal Under Section 62 of the Insolvency and Bankruptcy Code, 2016 / Appeal Against NCLAT Judgment Dated 25.11.2021; Final Judgment by the Supreme Court Delivered on 20 March 2025

Legal Issues

  1. 1 Whether income tax demands raised after approval of a resolution plan for assessment years prior to approval are extinguished if they were not part of the approved resolution plan
  2. 2 Whether the approved resolution plan is binding on the Income Tax Department and extinguishes pre-approval statutory dues not included in the plan
  3. 3 Whether the NCLT erred in dismissing the Monitoring Professional's application without reasons and imposing costs

Ratio Decidendi

The Supreme Court held that where statutory dues (including income tax demands) for periods prior to approval of a resolution plan are not part of the approved plan they stand extinguished under Section 31(1) of the IBC; accordingly the Income Tax Department's demands for assessment years 2012-13 and 2013-14 raised after approval of the Resolution Plan are invalid and unenforceable, and the impugned NCLT and NCLAT orders dismissing the Monitoring Professional's challenge without reasons and imposing costs were set aside.

Court Disposition

Appeal allowed

Orders

  • Impugned orders of the National Company Law Tribunal dated 17.09.2020 and the National Company Law Appellate Tribunal dated 25.11.2021 set aside
  • Demands raised by the Income Tax Department for assessment years 2012-13 and 2013-14 declared invalid and unenforceable as they were not part of the approved Resolution Plan