Denial of Effective Hearing During Insolvency: Delhi HC Quashes Rs. 232 Crore Ex Parte Income Tax Assessment

The Delhi High Court has set aside an ex parte income tax assessment order of over ₹232 crore passed against Nayati Healthcare and Research NCR Private Limited, observing that the company was bona fide prevented from presenting its case due to insolvency proceedings. The bench of Justice Dinesh Mehta and Justice Vinod Kumar has observed that both the IRP and the company’s management were bona fide deprived of placing relevant material before the Assessing Officer. While the IRP was legally in control, he lacked familiarity with the company’s transactions and documents. Conversely, the management, though acquainted with the affairs, lacked legal authority to act during insolvency. The petitioner-company had been admitted into insolvency by an order dated July 5, 2024, passed by the National Company Law Tribunal (NCLT), and an Interim Resolution Professional (IRP) was appointed under Section 16 of the Insolvency and Bankruptcy Code, 2016 (IBC). Subsequently, on August 5, 2024, the National Company Law Appellate Tribunal (NCLAT) stayed the Corporate Insolvency Resolution Process (CIRP) period, effectively putting the resolution timeline in abeyance, though the IRP continued in office. The company ultimately exited insolvency after the NCLT closed the CIRP proceedings on January 7, 2026. During this period, the Assessing Officer passed a best judgment assessment order on March 24, 2025, allegedly without effective participation from the company, determining its income at ₹232,17,82,426. The Court held that key aspects — particularly the cost of acquisition of property — were not considered, potentially leading to a high-pitched assessment. It further ruled that relegating the company to an appellate remedy would be illusory, especially given the requirement of depositing 10% of the disputed demand. The Court directed the Assessing Officer to issue a fresh notice detailing proposed additions, grant at least 30 days for response, and pass a fresh order after considering the company’s submissions. The Court clarified that it had not expressed any opinion on the merits of the case. Case Details Case Title: Nayati Healthcare And Research Ncr Private Limited Versus Assessment Officer Citation: JURISHOUR-27-HC-2026(Del) Case No.: W.P.(C) 1554/2026, CM APPL. 7567/2026 & CM APPL. 7568/2026 Date: 16/02/2026 Counsel For Petitioner: Giriraj Subramanium Counsel For Respondent: Shlok Chandra, SSC Click Here To Read Order Read More: Physical Presence on Cut-Off Date Not Mandatory for Promotion Consideration After Inter Commissionerate Transfer: Allahabad High Court

Denial of Effective Hearing During Insolvency: Delhi HC Quashes Rs. 232 Crore Ex Parte Income Tax Assessment

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Denial of Effective Hearing During Insolvency: Delhi HC Quashes Rs. 232 Crore Ex Parte Income Tax Assessment

Membership Required

Latest articles

OIO Service On Assessee Not Complete If Dept. Fails To Prove Service: CESTAT

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Assessment Quashed for Failure to Follow Mandatory S. 148B Procedure in Search-Based Additions: ITAT

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