Hero Fincop Ltd. Vs ACIT (ITAT Delhi)
CIT(A) Cannot Dismiss Issues as “Not Adjudicated” – Hero Fincorp Case Remanded on Section 56(2)(viib) and Collection Charges
The Delhi ITAT partly allowed the appeal of Hero Fincorp Ltd. for AY 2017-18 and held that the NFAC/CIT(A) had acted illegally in refusing to adjudicate substantive grounds by merely stating that “full facts were not available” and dismissing them as “not adjudicated”. The Tribunal ruled that under Sections 250(6) and 251(1), the first appellate authority is duty-bound to decide issues on merits and cannot abdicate jurisdiction by avoiding adjudication.
Accordingly, the Tribunal set aside and remanded (i) the disallowance of provision for collection charges of ₹9.75 crore and (ii) the massive addition of ₹418.66 crore under Section 56(2)(viib) to the CIT(A) for fresh adjudication on merits. The Bench noted that the Assessing Officer had already passed a rectification order under Section 154 deleting the 56(2)(viib) addition on the ground that shares were issued to non-residents, and that the CIT(A) had exceeded jurisdiction by declaring the rectification order “non-est” and restoring the addition without deciding the appeal.
On depreciation on car, the disallowance was upheld. Ultimately, the Tribunal reaffirmed that appellate authorities cannot refuse to decide issues, cannot bypass statutory duties, and must pass reasoned orders on merits. The appeal was thus partly allowed with major issues remanded for fresh decision.
FULL TEXT OF THE ORDER OF ITAT DELHI
The assessee is engaged in the business of ‘Hire Purchase leasing and finance’. This appeal is filed by the assessee against the order of National Faceless Appeal Center (NFAC)/(First Appellate Authority hereinafter referred as “FAA”), Delhi dated 27.03.2024 arising out of assessment order u/s 143(3) of the Act dated 29.12.2019for the Assessment year 2017-18.
