ITAT Dismisses Revenue and Assessee Appeals in Sahara Airlines Tax Dispute After IBC Proceedings:

The Income Tax Appellate Tribunal (ITAT), Delhi, dealt with ten appeals and a cross-objection arising from various assessment and penalty proceedings concerning Sahara Airlines Ltd., now known as Jet Lite (India) Ltd. The Revenue primarily challenged the relief granted by the CIT(A), alleging that the assessee had adopted a modus operandi involving false expenditure for evading tax. The Tribunal heard the appeals together considering their common factual background.

During the proceedings, the Tribunal noted that Sahara Airlines had been taken over by Jet Airways (India) Ltd. after acquisition of 100% shares, following which Sahara Airlines came to be known as Jet Lite (India) Ltd. from May 15, 2007. The Tribunal further considered the insolvency proceedings concerning Jet Lite. The Supreme Court, in State Bank of India Vs Consortium of Mr. Murari Lal Jalan Case, had directed liquidation of Jet Airways after finding that the approved resolution plan had not been implemented. Subsequently, the NCLT Mumbai appointed a liquidator on November 26, 2024.

The Tribunal observed that the resolution plan had provided for treatment of operational creditors, including Government and Income Tax Department claims, with the liquidation value of operational creditors being stated to be nil. However, there was nothing before the Tribunal to establish that the Income Tax Department's claims for the assessment years involved had been admitted in the resolution or liquidation proceedings.

In view of the insolvency proceedings and the settled legal position concerning claims not forming part of an approved resolution plan, the Tribunal dismissed the appeals filed by the Department as well as the assessee. The Tribunal held that the matters were governed by the consequences flowing from the IBC resolution process and the extinguishment of claims not forming part of the approved resolution framework.