Synopsis

The petitioner company was undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. A resolution plan was approved by the National Company Law Tribunal on 1st November 2021. The plan expressly provided that all tax liabilities (assessed and unassessed) under the Income Tax Act, 1961 shall stand waived and extinguished. Subsequently, the Income Tax Department issued a notice under Section 148 and an order under Section 148A(d) dated 5th April 2023 seeking to reopen the assessment for Assessment Year 2016-17. The petitioner challenged the notice. The Gujarat High Court, relying on the Supreme Court decisions in Essar Steel (2020) and Ghanshyam Mishra (2021), held that once a resolution plan is approved under Section 31 of the IBC, all claims not part of the plan stand extinguished. Consequently, the reassessment notice and order were quashed. The petition was allowed.

Court: High Court of Gujarat at Ahmedabad

Coram: Honourable Mr. Justice A. S. Supehia and Honourable Mr. Justice Pranav Trivedi

Date of Judgment: 17th April 2026

Citation: Special Civil Application No. 14368 of 2024 

Core Law: Insolvency and Bankruptcy Code, 2016 – Section 31 (approval of resolution plan); Income Tax Act, 1961 – Section 148 (reassessment), Section 148A (notice for reassessment); extinguishment of tax dues upon approval of resolution plan

2. Legal Framework

Major laws and provisions involved

• Insolvency and Bankruptcy Code, 2016 – Section 31 (approval of resolution plan binding on all stakeholders); Section 30(6); Section 7 (initiation of CIRP)

• Income Tax Act, 1961 – Section 148 (reassessment notice), Section 148A (procedure for reassessment)

• Constitution of India, 1950 – Article 226 (writ jurisdiction)

Key legal principles applied

Resolution plan approved under Section 31 IBC is binding on all stakeholders: Once the adjudicating authority approves a resolution plan, it becomes binding on the corporate debtor, its employees, members, creditors, including the Central Government, State Government, and local authorities. All claims that are not part of the resolution plan stand extinguished.

Tax dues (assessed and unassessed) are extinguished if not included in the resolution plan: The Supreme Court in Ghanshyam Mishra held that statutory dues owed to the Central Government, if not part of the resolution plan, shall stand extinguished, and no proceedings in respect of su

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