Landmark Precedent: Hon’ble Gauhati High Court Reaffirms IBC Supremacy Over Income Tax Proceedings.
In a significant legal development strengthening the Insolvency and Bankruptcy Code (IBC), the Hon’ble Gauhati High Court has delivered a landmark ruling in Meghalaya Infratech Limited v. DCIT & Ors. [WP(C)/3007/2023 & WP(C)/3001/2023], reinforcing the primacy of the IBC over the Income Tax Act.
Key Highlights of the Judgment:
a) Quashing of Section 153C Proceedings: The High Court held that income tax proceedings initiated under Section 153C for Assessment Years (AY) 2011–12 and 2016–17—commenced after the National Company Law Tribunal (NCLT) had already approved the resolution plan on 18 May 2020—were completely without jurisdiction.
b) Reaffirmation of the “Clean Slate” Doctrine: Consequent to the ruling, the Court set aside the impugned assessment orders and demand notices dated 29 March 2023. It reiterated that under Section 31(1) of the IBC, a successful resolution applicant cannot be burdened with belated, unsubmitted statutory claims after the approval of the resolution plan.
Legal Significance:
This crucial decision provides strong judicial backing to the “clean slate” principle, ensuring that corporate debtors are protected from historical liabilities post-resolution, thereby safeguarding investor confidence and the restructuring process.