2023 (3) TMI 42 - AT - Income Tax

Assessment against assessee company as undergoing Corporate Insolvency Resolution Process (CRIP) - HELD THAT - Assessee company is going through the resolution process before the Hon ble NCLT for which the Resolution Personnel (RP) was appointed in order to manage the FS of the company - AR submitted that a resolution plan dated 21.09.20220 was submitted by the Jalan Fritsch consortium which was amended on several occasion and was passed by a majority votes and was approved by Hon ble NCLT. It is observed that the assessee has failed to make compliance with the notices issued by the lower authorities inspite of several opportunities. Considering the nature of the addition, we are of the considered view that the assessee may be given one last opportunity to present its case before the A.O. As also evident that the considerable amount of time and revenue has been spent by Exchequer in carrying out the assessment proceedings followed the appellate proceedings. The assessee is directed to pay a cost of Rs.25,000/- each in both these appeals for being delinquent before the lower authorities and the same is to be paid towards Prime Minister s Relief Fund within 30 days from the date of this order. The assessee is also directed to appeal and fully co-operate with the A.O. to present its case without any further delay.

Summary

Issues involved:
Challenging assessment order under Income Tax Act, 1961 for Assessment Year, TP adjustment, non-furnishing of details, addition to total income, penalty proceedings, insolvency process impact on evidence submission, request for opportunity to present case, opposition to remand by Revenue, resolution process before NCLT, compliance failure, opportunity to present case, cost imposition, co-operation directive.

Detailed Analysis:

1. Challenging Assessment Order: The appeals were filed challenging the assessment order passed by the Assessing Officer under various sections of the Income Tax Act, 1961, based on the direction of the Dispute Resolution Panel relevant to the Assessment Year in question.

2. Transfer Pricing (TP) Adjustment: The Assessing Officer made TP adjustments for various transactions, including slot rent expenses, aircraft lease rental income, labor charges, commission, reimbursement of expenses, and international transactions, resulting in a substantial addition to the total income of the assessee.

3. Non-Furnishing of Details: Despite multiple notices, the assessee failed to provide necessary details and explanations to the Assessing Officer, citing involvement in Corporate Insolvency Resolution Process (CRIP) before the National Company Law Tribunal (NCLT).

4. Penalty Proceedings: In addition to the income adjustment, penalty proceedings were initiated by the Assessing Officer, further complicating the tax assessment process for the assessee.

5. Impact of Insolvency Process: The assessee's inability to furnish required evidence due to the ongoing insolvency process before the NCLT was highlighted as a major hindrance in the assessment proceedings, leading to a request for an opportunity to present the case.

6. Opposition by Revenue: The Revenue vehemently opposed remanding the case back to the Assessing Officer, arguing that the assessee had sufficient opportunities to present its case before the lower authorities.

7. Resolution Process before NCLT: The assessee's involvement in the resolution process before the NCLT, appointment of Resolution Personnel, and submission of a resolution plan were key factors considered in the decision-making process.

8. Compliance Failure: Despite the resolution process and appointment of authorized representatives, the assessee failed to comply with the notices issued by the tax authorities, leading to delays and complications in the assessment proceedings.

9. Directive for Cooperation: The Tribunal directed the assessee to pay a cost for being delinquent before the lower authorities, cooperate fully with the Assessing Officer, and present its case without further delay to expedite the resolution of the tax assessment.

10. Outcome: The appeals were allowed for statistical purposes, with the Tribunal emphasizing the importance of compliance, cooperation, and timely presentation of the case to facilitate a fair and efficient tax assessment process.