The Calcutta High Court has ruled that the provisions of the Insolvency and Bankruptcy Code (IBC) override the Income Tax Act.
The Calcutta High Court has ruled that the provisions of the Insolvency and Bankruptcy Code (IBC) override the Income Tax Act.
Date : 05-06-2025
Posted By : Intellex Strategic Consulting Private Limited
The Calcutta High Court has ruled that the provisions of the Insolvency and Bankruptcy Code (IBC) override the Income Tax Act.
Here's a breakdown of the case:
*Case Details:*
- *Petitioner:* Srei Equipment Finance Limited
- *Assessment Years:* 2016-17 and 2019-20
- *Notice Issued:* Under Section 148A(b) of the Income Tax Act
*Key Points:*
- The court held that the proceedings initiated by the Income Tax Department, starting from the issuance of notice under Section 148A(b), are without jurisdiction and unsustainable in law.
- The National Company Law Tribunal (NCLT) had approved a resolution plan for the corporate debtor, which overrides the Income Tax Act's provisions.
- The court relied on Section 238 of the IBC, which states that the provisions of the Code shall have effect notwithstanding anything inconsistent contained in any other law.
- The Supreme Court has also previously held that once a resolution plan is approved, all claims not part of the plan shall stand extinguished, and no person can initiate or continue proceedings in respect of such claims .
*Important Observations:*
- *Moratorium Period:* The court noted that during the moratorium period, no proceedings can be initiated or continued against the corporate debtor.
- *Locus Standi:* The court rejected the department's objection regarding the petitioner's locus standi, holding that the corporate debtor has the right to file a writ petition.
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- *Overriding Effect:* The court emphasized that the IBC's provisions shall override the Income Tax Act's provisions in cases of inconsistency .
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