ITAT Delhi Judgments — January 2024

The Tribunal allowed the appeal regarding disallowance of purchases, stating that sales cannot be accepted without corresponding purchases. The Tribunal also allowed the adjustment for commission on standby letter of credit, finding no cost borne by the assessee and full recovery from AEs.

The Tribunal held that the substitution of sale consideration based on the deeming fiction of Section 50C, by itself, does not amount to furnishing inaccurate particulars of income. Relying on High Court judgments, it was noted that such deeming provisions do not automatically lead to penalty in the absence of evidence of mala fide. Furthermore, the penalty notice was found to be defective.

The Tribunal found merit in the assessee's plea regarding reasonable cause for non-attendance and the delay in filing the appeal. It was held that dismissal in limine without determining issues on merits is unjust. The CIT(A) is obligated under Section 250(6) of the Act to dispose of all grounds of appeal.

The Tribunal noted that the assessee's case was proceeded ex-parte as they did not attend. Crucially, the Tribunal found an order from the National Company Law Tribunal (NCLT) imposing a moratorium under Section 14 of the Insolvency and Bankruptcy Code. This moratorium prohibits any legal proceedings against the corporate debtor.

The Tribunal held that it was incumbent upon the CIT(A) to deal with the grounds on merits and provide a reasoned order. While acknowledging the assessee's non-cooperation, the Tribunal found it expedient to restore the matter to the AO.

The Tribunal found that the NFAC had dismissed the appeal 'in limine' without going into the merits of the case. In the interest of justice and fair play, the Tribunal deemed it fit to restore the appeal.