Pre-CIRP statutory dues not included in an approved Resolution Plan stand permanently extinguished under IBC Section 31.

The Petitioner No. 1, a ceramics manufacturing company, faced an Income Tax assessment order for A.Y. 2011-12 on 17.12.2018, which was challenged in appeal

Subsequently, an operational creditor initiated Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC)

A Resolution Plan by M/s. Ajita Sil Chem Private Limited was approved by the NCLT on 20.06.2022, which provided for the extinguishment of all pre-appointment liabilities and claims

Despite the Resolution Professional informing the Tax Department of the "clean slate" status, the CIT(Appeals) remanded the old assessment matter back to the Assessing Officer on 27.11.2024

This led to the issuance of a fresh Assessment Order and Demand Notice dated 12.03.2026 for the pre-CIRP period (A.Y. 2011-12)

Whether tax dues and assessment proceedings pertaining to a period prior to the approval of a Resolution Plan under the IBC stand extinguished once the plan is approved by the Adjudicating Authority (NCLT)

Section 31 of the Insolvency and Bankruptcy Code, 2016, which stipulates that an approved resolution plan is binding on all stakeholders, including the Central and State Governments

The "Clean Slate" doctrine established by the Supreme Court in Committee of Creditors of Essar Steel India Ltd. v. Satishkumar Gupta (2020), which prevents a successful resolution applicant from being faced with undecided hydra-headed claims after plan approval

The landmark ruling in Ghanshyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. (2021), confirming that all statutory dues not part of the resolution plan stand extinguished and no proceedings can be initiated or continued for the pre-approval period

The Court examined the specific terms of the approved Resolution Plan, noting that Clause 9 explicitly mandated that all dues under the Income Tax Act, whether crystallized or not, relating to the period prior to the Effective Date, "shall stand extinguished"

The Court reasoned that since the impugned Assessment Order and Demand Notice dated 12.03.2026 sought to recover dues for A.Y. 2011-12—a period well before the approval of the resolution plan on 20.06.2022—they were legally unsustainable

Following the principles in Ghanshyam Mishra, the Court found that the tax department, as a statutory creditor, is bound by the plan; therefore, once the plan attained finality, the department lost the legal authority to revive or continue assessment proceedings for pre-CIRP liabilities

the High Court quashed and set aside the Assessment Order and Demand Notice dated 12.03.2026, ruling that the merits of the assessment were academic given the total extinguishment of the underlying liability. The petition was allowed and Rule made absolute