No S.263 Notice after Resolution Plan Approval on Extinguishment of Corporate Debtor’s Tax Liabilities: Gujarat HC [Read Order]
In the instant case, the Resolution Plan provided for the waiver and extinguishment of all unassessed/assessed tax liabilities for the period prior to the approval from NCLT
![No S.263 Notice after Resolution Plan Approval on Extinguishment of Corporate Debtor’s Tax Liabilities: Gujarat HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/ujarat-HC-Tax-Ruling-S.263-Notice-IBC-Corporate-Debtor-Tax-Relief-taxscan-.jpg "No S.263 Notice after Resolution Plan Approval on Extinguishment of Corporate Debtor’s Tax Liabilities: Gujarat HC [Read Order]")
The Gujarat High Court recently ruled that the Principal Commissioner of Income Tax (PCIT) could not issue a notice under Section 263 of the Income Tax Act, 1961 to revise the assessment order of an assessee once the Corporate Insolvency Resolution Plan (CIRP) is approved, which extinguishes all prior tax liabilities. AMW Auto, engaged in manufacturing components for automotive...
The Gujarat High Court recently ruled that the Principal Commissioner of Income Tax (PCIT) could not issue a notice under Section 263 of the Income Tax Act, 1961 to revise the assessment order of an assessee once the Corporate Insolvency Resolution Plan (CIRP) is approved, which extinguishes all prior tax liabilities.
AMW Auto, engaged in manufacturing components for automotive industries, had filed its income tax return for Assessment Year (A.Y.) 2020-21, declaring a loss of ₹17.09 Crores. The case was scrutinized, and the assessment was completed under Section 143(3) read with Section 144B of the Act.
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Subsequently, the company underwent insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 with the National Company Law Tribunal (NCLT) approving its Resolution Plan on 12.10.2023. The Resolution Professional explicitly waived all unassessed and assessed tax liabilities prior to the approval date.
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Despite this, the Revenue proceeded to issue a notice under Section 263 seeking to revise the assessment order, prompting AMW Auto to challenge it before the High Court.
B.S. Soparkar, representing AMW Auto, argued that under Section 31 of the IBC, all dues of the corporate debtor, except those specified in the Resolution Plan, stood extinguished, as affirmed by the Supreme Court in Committee of Creditors of Essar Steel Ltd. v. Satish Kumar Gupta (2020) and Ghanshyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021). He further contended that the notice was meritless as the provision under Section 92BA(i) of the Act, which the IT Commissioner sought to invoke, had been omitted in 2017.
Karan G. Sanghani, Senior Standing Counsel for the Revenue, conceded the legal position under IBC while submitting that the Court may not enter into the merits of the issuance of notice under Section 263 of the Act.
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The Division Bench of Justice Bhargav D. Karia and Justice D.N. Ray assessed the Resolution Plan and observed that all tax liabilities, including penalties and interest, prior to the NCLT approval date stood extinguished once the Resolution Plan was approved.
In such regard, the Notice issued by the Revenue stood legally untenable and lacked merit, prompting the Gujarat High Court to quash the notice issued under Section 263.
To Read the full text of the Order CLICK HERE
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