The Bombay High Court quashed fresh income tax reassessment proceedings initiated against a company that had already undergone resolution under the Insolvency and Bankruptcy Code. The court held that once an insolvency resolution plan is approved, the company cannot be reassessed for pre-resolution tax periods, even if the Enforcement Directorate supplies new information. The IBC's moratorium and clean-slate principle shield the resolved company from such proceedings.

This ruling sits at the intersection of two powerful statutes: the Income Tax Act, 1961, and the Insolvency and Bankruptcy Code, 2016. The core principle at stake is the 'clean-slate doctrine' embedded in IBC Section 31 — once the National Company Law Tribunal approves a resolution plan, the successful resolution applicant takes over a company free of all prior liabilities not expressly included in the plan. The Supreme Court confirmed this in Ghanashyam Mishra & Sons v. Edelweiss ARC (2021), holding that claims not part of the approved plan are extinguished.

The Income Tax department frequently attempts to reopen assessments under Section 147/148 of the Income Tax Act, arguing that fresh information — here from the ED — constitutes 'reason to believe' income has escaped assessment. The Bombay HC rejected this by affirming that the IBC overrides the Income Tax Act under the non-obstante clause (Section 238 of IBC), which states IBC shall have effect notwithstanding anything inconsistent in any other law.

The moratorium under IBC Section 14 halts all proceedings against the corporate debtor during the resolution process, and the approved plan crystallises this protection permanently for pre-resolution dues. Even a law-enforcement agency's inputs cannot revive tax liability that was extinguished by the NCLT-approved plan. This ruling reinforces the primacy of IBC over sector-specific statutes like the Income Tax Act, a principle the examiner tests repeatedly.