GAYATRI PROJECTS LIMITED,HYDERABAD V. DCIT., CIRCLE-2(1), HYDERABAD

ITA 1111/HYD/2025

AI Insights

The case involves Gayatri Projects Limited, which filed appeals against the orders of the CIT(A)-National Faceless Appeal Centre, Delhi, for the assessment years 2018-2019, 2020-2021, and 2021-2022. The appeals were initially dismissed in limine by the CIT(A) due to the moratorium under IBC, which was in effect following the company's CIRP. The Tribunal noted a delay of 576 days in filing the appeals, which was condoned based on the principles laid down by the Supreme Court in the case of Collector, Land Acquisition vs MST. Katiji. The Tribunal referenced its earlier decision in the assessee's own case for the assessment year 2016-2017, where it was held that the IBC prevails over the Income Tax Act regarding the initiation of recovery proceedings during the moratorium period but allows for the determination of tax liabilities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 791927 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2018-2019
• Appeal Filed On: 28-06-2025
• Other Referred Cases: Varun Resources Ltd. v. ITO [2024] 164 taxmann.com 748, Collector, Land Acquisition vs MST. Katiji and Others [1987] 167 ITR 471, CIT & Anr. Vs ISRO Satellite Centre [2013] 263 CTR (Kar) 549, Srimaan Industries Private Limited vs ITO [2022] 217 TTJ (Hyd) 120
• Laws Referred To: Income Tax Act, 1961, Insolvency and Bankruptcy Code, 2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: S RAMA RAO
• Keywords: Condonation of delay; Set aside; Rule of consistency; Bonafide belief; Principle of natural justice; Recovery proceedings

Judgement Text

" 1 ITA.Nos.1111, 1112 and 1113/Hyd./2025 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G. ACCOUNTANT MEMBER आ.अपी.सं /ITA Nos.1111, 1112 & 1113/Hyd/2025 Assessment Years 2018-2019, 2020-2021 and 2021-2022 Gayatri Projects Limited, Hyderabad – 500 082. Telangana. PAN AAACG8040K vs. The DCIT, Circle-2(1), Hyderabad – 500 084. (Appellant) (Respondent) िनधाŊįरती Ȫारा /Assessee by: Sri S Rama Rao, Advocate राज̾ व Ȫारा /Revenue by: MS. U Mini Chandran, CIT-DR सुनवाई की तारीख/Date of hearing: 27.11.2025 घोषणा की तारीख/Pronouncement: 10.12.2025 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT : These three appeals by the Assessee are directed against three separate Orders all dated 12.09.2023, 07.09.2023 and 12.09.2023 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, relating to the assessment year 2018-2019, 2020-2021 and 2021-2022, respectively. Printed from counselvise.com 2 ITA.Nos.1111, 1112 and 1113/Hyd./2025 2. At the outset, there is a delay of 576 days in filing these three appeals before the Tribunal. The assessee has filed the application for condonation of delay which is also supported by the affidavit of Resolution Professional of the assessee undergoing the Corporate Insolvency Resolution Process. 3. We have heard the learned Authorised Representative of the Assessee as well as the learned DR on the condonation of delay. The assessee has explained the cause of delay in the affidavit as under : “AFFIDAVIT I, Kanuparthi Sai Ramesh Slo Kanuparthi Prabhakar aged about 70 years, Resolution Professional of Mis Gayatri Projects Ltd (PAN AAACG8040K). Hyderabad, do hereby solemnly affirm and declare that 1. I have filed an appeal for the relevant Financial Year 2017- 18 against the order of CIT(A) -National Faceless Appeal Centre (NFAC) in NFAC/2017-18/10081660 on 28/06/2025 whereas the due date for filing the appeal was 30/11/2023 ie, 2 months from the end of month in which order was received u/s 253(3) of the Income Tax Act, 1961. 2. Corporate Insolvency Resolution Process (CIRP\") was commenced by Hon'ble National Company Law Tribunal (NCLT), Printed from counselvise.com 3 ITA.Nos.1111, 1112 and 1113/Hyd./2025 Hyderabad Bench vide order dated 15th November 2022 in the case of appellant company and Resolution Professional (RP) was appointed who is required to manage the operations of company as a \"going concern\". Due to the commencement of CIRP, many employees particularly all the senior personnel in finance & taxation department have left the organization and is currently operating with very limited staff. 3. Appellant has received the cited CIT(A) order who relied on the order of Hon'ble ITAT, D Bench, Mumbai dated 08/06/2022 wherein it was held that during pendency of CIRP no proceedings can be continued against the appellant and has dismissed the appeal in limini. Believing the issue to be closed and under bonafide belief that no consequential actions will be initiated, appellant has not taken any further steps against the appellate order. 4. Thereafter a revised claim was received from Income Tax Department vide email dated 06/01/2025 Surprisingly penalty was levied for the years where appeal was dismissed in limini. RP has taken appropriate steps under IBC to deal with the claim and has approached his counsel for taking action under Income tax act in view of the settled legal position with respect to adjudication of income tax appeals for companies under CIRP by virtue of judgement of Hon'ble ITAT, Mumbai in the case of Varun Resources Ltd. v. ITO [2024] 164 taxmann.com 748. 5. It is well settled proposition that a liberal and pragmatic view has to be adopted in condonation of delay in the interests of natural justice when there has been no intentional delay in filing of appeal as held by Hon'ble Apex Court in [1987] 167 ITR 471 Collector, Land Acquisition vs MST. Katiji and Others, Hon'ble Printed from counselvise.com 4 ITA.Nos.1111, 1112 and 1113/Hyd./2025 Karnataka High Court in [2013] 263 CTR (Kar) 549 CIT & Anr. Vs ISRO Satellite Centre and more recently by Hon'ble Jurisdictional ITAT Hyderabad bench in [2022] 217 TTJ (Hyd) 120 Srimaan Industries Private Limited vs ITO The above facts are true and correct to the best of my knowledge and belief.” 4. At the outset, we note that for the assessment year 2016-2017 in ITA.No.1110/Hyd./2025, this Tribunal in assessee’s own case has considered the delay of 576 days in filing the appeal before the Tribunal vide Order dated 24.09.2025 in Para-4 as under : “4. We have heard both the parties and perused the petition filed by the assessee seeking for condonation of 576 days in filing the appeal before the Tribunal. We find that, the reasons explained by the assessee in it’s petition are seems to be genuine and bonafide by taking note of chronology of events furnished by the assessee. The Hon’ble Supreme Court in the case of Collector, Land Acquisituon vs., MST Katiji [1987] 167 ITR 471 (SC) has laid down certain principles for condoning the delay and also directed the lower courts to follow a lenient approach for condoning the delay. Going by the principles laid down by the Hon’ble Supreme Court in the case of MST Katiji (supra), there is no dispute if an appeal is dismissed on account of technicalities, a meritorious case may be thrown-out of judicial review. Therefore, while condoning the delay, the courts must have a liberal approach or lenient approach considering the reasons given by the petitioners or Printed from counselvise.com 5 ITA.Nos.1111, 1112 and 1113/Hyd./2025 appellants. Therefore, going by the principles laid down by the Hon’ble Supreme Court in the case of MST Katiji (supra) and also considering the submissions of the assessee, we condone the delay of 576 days in filing the appeal before the Tribunal and admit the appeal for adjudication.” 5. Therefore, by considering the identical facts and circumstances as well as the reasons explained by the assessee, the Tribunal has condoned the delay of 576 days in filing the appeal for the assessment year 2016-2017. Thus, this Tribunal Bench comprising of both of us has already considered this issue of condonation of delay and to maintain rule of consistency, we follow the earlier order of the Tribunal. Accordingly, the delay of 576 days in filing these three appeals are condoned and all the three appeals are admitted for adjudication. 6. The assessee has raised common grounds in all these appeals. The grounds of appeal raised by the assessee for the assessment year 2018-2019 in ITA.No.1111/ Hyd./2025 are as under : 1. “The order of the Ld. CIT(A) in dismissing the appellant's appeal in limini is erroneous in law, contrary to the facts of the case and against principles of equity and natural justice. Printed from counselvise.com 6 ITA.Nos.1111, 1112 and 1113/Hyd./2025 2. Ld. CIT(A) erred in law and on facts in dismissing the appellant's appeal in limini on the ground that a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) was in force, without adjudicating the appeal on merits, despite the fact that determination of tax liability per se is not barred under the IBC. It is a settled position that while recovery proceedings are stayed under Sections 14 and 33(5) of the IBC, adjudicatory proceedings such as appeals involving determination of tax liability must be decided on merits as held by Hon'ble ITAT, Mumbai in the case of Varun Resources Ltd. v. ITO [2024] 164 taxmann.com 748. 3. For these and other reasons that may be urged at the time of hearing, the appellant prays the Honorable Tribunal to kindly remit the appeal back to Ld. CIT(A) for adjudication on merits.” 7. In these appeals including the appeal for the assessment year 2016-2017 [ITA.No.1110/Hyd./2025] were filed against the ex-parte Orders of the learned CIT(A) as there was no representation on behalf of the assessee undergoing the Corporate Insolvency Resolution Process. By considering all these facts, the Tribunal for the assessment year 2016- 2017 has held in Para-10 as under : “10. We have heard both the parties, perused the material on record and had gone through the orders of the authorities below. We find that, Corporate Insolvency Resolution Process [in short “CIRP”] has been initiated in the case of the assessee company Printed from counselvise.com 7 ITA.Nos.1111, 1112 and 1113/Hyd./2025 with effect from 15.11.2022 vide order of NCLT,, Hyderabad and the NCLT, Hyderabad in CP(IB) No.308/2007/HDB./2022 and the NCLT, Hyderabad Bench, Hyderabad has granted moratorium to proceedings including Income Tax proceedings from the date of the Order i.e., from 15.11.2022. Therefore, as per the Order of the NCLT, Hyderabad Bench, Hyderabad, dated 15.11.2022, the moratorium granted to the assessee company is in operation and during the moratorium period, no proceedings can be initiated or continued against the assessee company, except, continuing the pending proceedings for determination of the tax liability. Once moratorium is in place, the Department cannot recover any tax liability from the corporate debtor, since, the provisions of IBC Code, 2016 has over-riding effect on other laws including Income Tax which is very clear from section 178(6) of the Income Tax Act, 1961. In the present case, the assessee company has filed appeal before the learned CIT(A) on 27.04.2022 when the moratorium granted by the NCLT, Hyderabad was in operation. Therefore, in our considered view, the learned CIT(A) shall have two options i.e., (i) to keep the proceedings before him in abeyance or (ii) to continue the proceedings for determination of tax liability without any recovery of tax. In the present case, the learned CIT(A) without considering the relevant facts, has simply dismissed the appeal filed by the assessee company ‘in limine’ by following decision of ITAT, Mumbai Bench, Mumbai Order dated 08.06.2022, however, not referred the case. On the other hand, the assessee company has relied upon the decision of ITAT, Mumbai F-Bench, Mumbai in the case of M/s. Varun Resources Limited, Mumbai vs., ITO-5(3)(1), Mumbai, Order dated 27.05.2024 (supra), where the law has been considered and after considering the relevant facts, it has been held that, the presence of IBC Code, 2016 would prevail over Income Tax Act, 1961. However, Income Tax Authorities have Printed from counselvise.com 8 ITA.Nos.1111, 1112 and 1113/Hyd./2025 limited jurisdiction to assess/determine the quantum of income tax dues, but, have no authority to initiate recovery of such dues on it’s own during the period of moratorium in violation of section 14 or 33(5) of IBC Code, 2016. In our considered view, the law is very clear, in as much as, once the moratorium is granted to the corporate debtor, then, the Income Tax Department cannot proceed to recover any dues, but, there is no bar under the IBC Code, 2016 or under the Income Tax Act, 1961, to continue the proceedings to determine the tax liability. In the present case, the learned CIT(A) without appreciating the relevant facts, has simply dismissed the appeal filed by the assessee company ‘in limine’. Thus, we set aside the Order of the learned CIT(A) and restore the issue back to the file of learned CIT(A) and also direct the learned CIT(A) to reconsider the issue in light of our discussion given hereinabove in the preceding paragraphs. Accordingly, the grounds of appeal of the assessee are allowed for statistical purposes.” 8. Thus, following the earlier orders of this Tribunal and the appeals filed by the assessee before the learned CIT(A) were dismissed in limine due to non-participation of the assessee, we set-aside the impugned orders of the learned CIT(A) for the assessment years 2018-2019, 2020-2021 and 2021-2022 and restore the matters to the record of the learned CIT(A) for fresh adjudication of the appeals on the same terms as directed by the Tribunal in earlier appeal of the assessee for the assessment year 2016-2017. Printed from counselvise.com 9 ITA.Nos.1111, 1112 and 1113/Hyd./2025 9. In the result, these three appeals of the Assessee are allowed for statistical purposes. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 10.12.2025. Sd/- Sd/- [MANJUNATHA G.] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 10th December, 2025 VBP Copy to : 1. Gayatri Projects Limited, 6-3-1090, TSR Towers, Rajbhavan Road, I.M. Colony, Khairatabad, Hyderabad PIN – 500 082. Telangana. 2. The DCIT, Circle-2(1), Signature Towers, Kondapur, Hyderabad – 500 084. 3. The Pr. CIT, Hyderabad. 4. The DR, ITAT, “A” Bench, Hyderabad. 5. Guard file. BY ORDER //True copy// Printed from counselvise.com "