IL&FS RAIL LIMITED,GURGAON vs. AC/DCIT, GURGAON,HARYANA

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ITSSA 4136/DEL/2025Status: DisposedITAT Delhi28 January 2026AY 2015-168 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeals, finding that there was no deliberate latches on the part of the assessee. The Tribunal noted the explanation provided by the assessee regarding the "peculiarity and complexity" of the IL&FS Group's debt default and the ongoing resolution process, and that the delay was not objected to by the Revenue. Subsequently, the Tribunal observed that the assessee's contention that the appeals could not be proceeded with due to the grant of moratorium by the Union of India, as mentioned in the NCLAT order, was not controverted by the Revenue. Considering this, the Tribunal held that the appeals had become of "academic interest only." Therefore, the appeals were dismissed, but with liberty granted to the assessee to file fresh appeals, if advised, upon the final outcome of the proceedings before the NCLAT. No specific issue was left undecided, as the appeals were dismissed on the basis of being academic.

What were the facts?

The assessee, IL & FS Rail Limited, filed appeals before the Income Tax Appellate Tribunal (ITAT) challenging orders passed by the CIT(Appeals) for assessment years 2008-09 to 2015-16. These appeals were filed with a delay of approximately 1154 days. The CIT(Appeals) had dismissed the assessee's appeals on merits due to non-representation and failure to file written submissions, despite notices. The assessee sought condonation of delay, citing the complexity and financial constraints arising from the IL&FS Group's debt default, the exit of key employees, and the ongoing resolution framework initiated by the Union of India, which significantly impacted its operations and workforce. The assessee argued that strict application of the limitation law would be counterintuitive to the larger public interest served by the resolution process.

What were the issues?

1. Whether the delay in filing the appeals by the assessee can be condoned under Section 153A(1)(b) of the Income Tax Act, 1961, considering the circumstances of the IL&FS Group's financial distress and ongoing resolution process. Assessee's Contention: The assessee argued that the delay was due to "sufficient cause" arising from the "peculiarity and complexity" of the IL&FS Group's debt default, the "exit of crucial employees," the "group-wise resolution initiated by the Union of India," and the "massive burden on the remaining minimal work force." They relied on Supreme Court judgments in Collector, Land Acquisition v. Mst. Katiji, Madanlal v. Shyamlal, and Basawaraj & Anr. v. Spl. Land Acquisition Officer to argue for a liberal construction of "sufficient cause" to advance substantial justice. They also contended that strict application of the limitation law would be counterintuitive to the larger public interest served by the resolution process. Revenue's Contention: The judgment notes that the delay was "not objected by the Ld. DR."

Which sections of the Income-tax Act were involved?

Section 153A(1)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI

Before: Ms. MADHUMITA ROY & SHRI NAVEEN CHANDRA

For Appellant: Shri Rahul Sateeja, Adv.; &, Shri Vikrant A. Maheshwari, Adv
For Respondent: Shri Mahesh Kumar, CIT(DR)
Hearing: 19.01.2026Pronounced: 28.01.2026

PER BENCH:

The instant appeals, preferred by the assessee, are directed against separate

orders of the Ld. CIT(Appeals)-3, Gurgaon in the proceedings under Section

2 ITA Nos. 4129-4136/Del/2025

153A(1)(b) of the Income Tax Act, 1961 (herein after referred to as the “Act”).

Relevant details are tabulated as under:

Sl. No./ITA Order appealed against AO’s order(s) No./assessment year 1. IT(SS)A No. CIT(A)-3, Gurgaon - order dt. 21.02.2022 DCIT, CC-1, Gurgaon - 4129/Del/2025 (A.Y. [ 552/CIT(A)-3/GGN/2019-20] Order dt. 30.12.2019. 2008-09) 2. IT(SS)A No. CIT(A)-3, Gurgaon - order dt. 16.02.2022 DCIT, CC-1, Gurgaon - 4130/Del/2025 (A.Y. [ 553/CIT(A)-3/GGN/2019-20] Order dt. 30.12.2019. 2009-10) 3. IT(SS)A No. CIT(A)-3, Gurgaon - order dt. 16.02.2022 DCIT, CC-1, Gurgaon - 4131/Del/2025 (A.Y. [ 554/CIT(A)-3/GGN/2019-20] Order dt. 30.12.2019. 2010-11) 4. IT(SS)A No. CIT(A)-3, Gurgaon - order dt. 15.02.2022 DCIT, CC-1, Gurgaon - 4132/Del/2025 (A.Y. [ 555/CIT(A)-3/GGN/2019-20] Order dt. 30.12.2019. 2011-12) 5. IT(SS)A No. CIT(A)-3, Gurgaon - order dt. 21.02.2022 DCIT, CC-1, Gurgaon - 4133/Del/2025 (A.Y. [ 556/CIT(A)-3/GGN/2019-20] Order dt. 30.12.2019. 2012-13) 6. IT(SS)A No. CIT(A)-3, Gurgaon - order dt. 16.02.2022 DCIT, CC-1, Gurgaon - 4134/Del/2025 (A.Y. [ 557/CIT(A)-3/GGN/2019-20] Order dt. 30.12.2019. 2013-14) 7. IT(SS)A No. CIT(A)-3, Gurgaon - order dt. 15.02.2022 DCIT, CC-1, Gurgaon - 4135/Del/2025 (A.Y. [ 558/CIT(A)-3/GGN/2019-20] Order dt. 30.12.2019. 2014-15) 8. IT(SS)A No. CIT(A)-3, Gurgaon - order dt. 17.02.2022 DCIT, CC-1, Gurgaon - 4136/Del/2025 (A.Y. [ 559/CIT(A)-3/GGN/2019-20] Order dt. 30.12.2019. 2015-16)

2.

All these appeals were heard analogously having regard to the identical facts

and are being disposed of by a single composite order for the sake of convenience.

3.

The bunch of instant appeals filed by the assessee are barred by limitation

for about 1154 days. The order impugned passed by the Ld. CIT(A)-3, Gurguaon is

dated 16.02.2022 whereby and whereunder the appeal was dismissed on merit that

too upon recording the fact of despite notices having been issued to the assessee

3 ITA Nos. 4129-4136/Del/2025 the assessee was never represented neither filed any written submissions. The

assessee has filed application for condonation of delay in each appeal, along with

affidavit, explaining the inordinate delay in filing the appeal, with relevant

following averments:

“21. The Appellant humbly submits that the peculiarity and complexity of the Appellant's context i.e. the IL&FS Group debt default, the exit of crucial employees post the debt debacle, the group-wise resolution that was initiated by the Union of India, the time it took to conceive and approve the IL&FS Resolution Framework to address orderly resolution of public money owed by the IL&FS Group (including the Appellant) to major public sector banks, pension funds, etc. and the massive burden on the remaining minimal work force of the Appellant to give primacy to providing assistance required by investigative agencies viz., SFIO in investigating the affairs of the IL&FS Group (including the Appellant) itself constitute a "sufficient cause" for condonation of delay by this Hon'ble Tribunal.

22.

The Appellant, especially, after the commencement of moratorium and being classified as Red Entity, has been under severe constraints pertaining to finance and subject matter expertise.

23.

Considering the fact that the funds at the disposal of Appellant will ultimately flow for the benefit of all creditors, it is noteworthy that all the facts be brought to the fore in interest of all creditors.

24.

The public policy behind the law of limitation is that there shall be peace in the society which stems from the Latin maxim interest reipublicae ut sit finis litium (translated as "it is in the interest of the state that there be an end to litigation"). The peculiarity of the present case is that the IL&FS Group is in the pursuit of arriving at a resolution which would bring quietus and peace to numerous financial entities funded by the public. The strict

4 ITA Nos. 4129-4136/Del/2025 application of law of limitation in the present case will be counterintuitive as holding the appeals to be time-barred will affect the larger public interest being served by the resolution process initiated by the Central Government. It is a well settled principle of law that the "sufficient cause" should receive a liberal construction and warrants judicious exercise of discretion so as to advance substantial justice as against procedural lapse. There has neither been negligence nor mala fide intentions on the part of the Appellant that led to the delay in filing of appeal. Thus, the delay may be condoned in the light of the judgment of the Hon'ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji, 1987 AIR 1353 SC; Madanlal v. Shyamlal, AIR 2002 SC 100; Basawaraj & Anr. v. Spl. Land Acquisition Officer, (2013) 14 SCC 81.

25.

It is, humbly, submitted that the present appeal was not filed within limitation solely on account of the aforementioned chain of events leading to the delay and not for any extraneous reasons, and that the delay was neither intentional nor deliberate.

26.

Further, it is also submitted that there has been no deliberate intention to cause delay that could be attributed to the Appellant. The Appellant submits that it does not in any way stand to benefit by filing the present appeal with delay, therefore, the delay of 1152 days deserves to be condoned in larger interest of justice.”

4.

Having regard to the explanation rendered by the assessee as above, which is

also not objected by the Ld. DR, when no deliberate latches on the part of the

assessee is found in dealing with the matter, the applications for condonation of

delay in filing the appeals by the assessee are allowed and the appeals are admitted

for adjudication.

5 ITA Nos. 4129-4136/Del/2025 5. It is the case of the assessee that by and under the order dated 12.10.2018 the

Ld. NCLT refused to grant interim order granting the prayer of moratorium in

assessee’s group cases made by the Union of India against Infrastructure Leasing

and Financial Services Ltd. (“IL & FS” in short) and its 348 group companies

rather the NCLAT in appeals granted an order of stay as appearing at pages 16 &

17 of the paper book filed before us in the following manner:

“ORDER 15.10.2018- These appeals have been listed on urgent mentioning and taken up for admission even on a holiday taking into consideration the nature and importance of the appeals. 2. From the impugned order dated 12th October, 2018 in MA 1173/2018 in C.P. No. 3638(MB)/2018, we find that the National Company Law Tribunal (Tribunal' for short) while accepted that no petition under any of the provision of the Insolvency and Bankruptcy Code, 2016 ("1&B Code" for short) can be preferred by any party for initiation of Corporate Insolvency Resolution Process' against 'Infrastructure Leasing and Financial Services Limited' ('IL&FS' for short) and its 348 Group Companies till the Central Government issue appropriate notification with regard to one or other making the provisions applicable to them, refused to pass the interim order in view of prayer of 'Moratorium' made by the Appellant Union of India'. Otherwise the Tribunal has appreciated the difficulties which are being faced by the IL&FS' and its 348 Group Companies. 3. The questions arise for consideration in these appeals are: (1) Whether the Tribunal can pass appropriate order under Section 241 read with Section 242 of the Companies Act, 2013 for resolution of the problems faced by the Company in a time-bound manner for maximisation of value of assets of the Company, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders, and in case of failure of resolution pass appropriate order of liquidation; and

6 ITA Nos. 4129-4136/Del/2025 (ii) Whether the Tribunal in exercise of powers conferred Under Section 242 (1) (b) read with Section 242 (2)(m) and Section 242(4) of the Companies Act, 2013 read with Rule 11 of the National Company Law Tribunal Rules, 2016, can pass appropriate interim order similar to order under Section 14 of the Insolvency and Bankruptcy Code, 2016. 4. According to Mr. Tushar Mehta, Learned Solicitor General for the Appellant Union of India' and Mr. Ramji Srinivasan, Learned Senior Counsel for the IL&FS', the Tribunal has much wider power under Sections 241 and 242 of the Companies Act, 2013 than the powers vested under provisions of Insolvency and Bankruptcy Code, 2016. 5. Taking into consideration the nature of the case, we are of the view that five largest creditors should be also impleaded as party Respondents to these appeals in the representative capacity of the Creditors. Learned counsel for the Appellant(s) will make necessary correction in the cause title and other pages of the appeals in course of the day. Defects, if pointed out by office, may be removed before the next date. 6. Issue notice on Respondents, including newly impleaded Respondents by speed post. Requisite along with process fee, if not filed, be filed in course of the day. If the Appellant(s) provides the e-mail address of Respondents, let notice be also issued through e-mail. Dasti service is permitted particularly in the newly impleaded Respondents. Post these appeals for admission' on 13th November, 2018 on the top of the list. Taking into consideration the nature of the case, larger public interest and economy of the nation and interest of the Company and 348 group companies, there shall be stay of (i) The institution or continuation of suits or any other proceedings by any party or person or Bank or Company, etc. against 'IL&FS' and its 348 group companies in any Court of Law/Tribunal/Arbitration Panel or Arbitration Authority, and (ii) Any action by any party or person or Bank or Company, etc. to foreclose, recover or enforce any security interest created over the assets of 'IL&FS' and its 348 group companies including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

7 ITA Nos. 4129-4136/Del/2025 (iii) The acceleration, premature withdrawal or other withdrawal, invocation of any term loan, corporate loan, bridge loan, commercial paper, debentures, fixed deposits, guarantees, letter of support, commitment or comfort and other financial facilities or obligations vailed by 'IL&FS' and its 348 group companies whether in respect of the principal or interest or hedge liability or any other amount contained therein. (iv) Suspension of temporarily the acceleration of any term loan, corporate loan, bridge loan, commercial paper, debentures, fixed deposits and any other financial facility by the 'IL&FS' and its 348 group companies by any party or person or Bank or Company, etc. as of the date of first default. (v) Any and all banks, financial institutions from exercising the right to set off or lien against any amounts lying with any creditor against any dues whether principal or interest or otherwise against the balance lying in any bank accounts and deposits, whether current or savings or otherwise of the 'IL&FS' and its 348 group companies. The interim order will continue until further orders and not be applicable to any petition under Article 226 of the Constitution of India before any Hon'ble High Court or under any jurisdiction of the Hon'ble Supreme Court. (Justice S.J. Mukhopadhaya) Chairperson

(Justice A.I.S. Cheema) Member (Judicial)”

6.

Having regard to the grant of moratorium made by the appellant Union of

India as mentioned above the Ld. Counsel appearing for the assessee submitted

that the instant appeals cannot be proceeded with, which fact has also not been

controverted by the Ld. DR. Thus, considering the entire aspect of the matter at

this stage we find that the instant appeals preferred by the assessee now become of

academic interest only and therefore, stand dismissed accordingly. However,

8 ITA Nos. 4129-4136/Del/2025 liberty is granted to the assessee to file fresh appeal(s), if so advised, on the final

outcome of the proceedings before the NCLAT. Ordered accordingly.

7.

In the result, assessee’s appeals stand dismissed accordingly.

Order pronounced in open court on 28.01.2026.

Sd/- Sd/- ( NAVEEN CHANDRA) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28.01.2026. *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI

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