Reassessment During CIRP Unsustainable After NCLT Resolution Plan Approval: ITAT Delhi

The ITAT Delhi has held that reassessment proceedings under Section 147 of the Income-tax Act cannot survive once a Corporate Insolvency Resolution Plan approved by the NCLT results in takeover of the corporate debtor under the Insolvency and Bankruptcy Code. The Tribunal observed that claims relating to periods prior to the approved resolution plan stand extinguished if they are not included in the plan. Consequently, tax demands raised through reassessment for such earlier periods cannot be enforced against the restructured entity. Upholding the order of the CIT(A), the Tribunal dismissed the Revenue’s appeal and reaffirmed the overriding effect of an approved resolution plan under the IBC.