Egis International S.A. Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi recently adjudicated a noteworthy case involving Egis International S.A. and Assistant Commissioner of Income Tax (ACIT). The core issue revolved around whether non-compliance with an e-notice, due to the concerned employee leaving the company, could be considered a “reasonable cause.”
The Grounds of Appeal
Egis International raised multiple issues, questioning the legality and fairness of the decisions made by the Commissioner of Income Tax (Appeals) and the Assessing Officer. These ranged from transfer pricing adjustments to the validity of the ex-parte order passed by the Commissioner.
Non-Compliance Due to Employee’s Exit
A key point in this case was the non-compliance with electronic notices. Egis International argued that the e-notices did not reach the concerned officials as the employee managing the matter had left the company. This was later affirmed by an affidavit from an authorized signatory of Egis.
The Tribunal’s View
ITAT Delhi gave considerable weight to the “reasonable cause” of non-compliance. It took into account the affidavit submitted by Egis International and concluded that non-compliance wasn’t deliberate. Based on these grounds, ITAT Delhi directed that the case be sent back to the Commissioner of Income Tax (Appeals) for de novo adjudication.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal filed by the assessee is directed against the order dated 15.09.2021 of the Ld. Commissioner of Income Tax (Appeals) –42, Delhi (“CIT(A)”) pertaining to Assessment Year (“AY”) 2016-17.
2. The assessee has raised the following grounds:-
“General Ground
1. That the Learned Commissioner of Income-tax (Appeal) (Ld. CIT (AY) has grossly erred on facts and in law in passing the impugned order on an ex-parte basis without providing adequate opportunity of being heard to the Appellant. To this extent, the order passed is against the principles of natural justice and liable to be quashed.
Transfer Pricing Grounds
2 The Learned Assessing Officer (Ld AO) (along with the Learned Transfer Pricing Officer (Ld TPO)-under reference from the Ld AO) and Ld. CIT(A) has erred on facts and in law in making an addition of INR 2,28,49,247/- to the returned income of the Appellant.
A. Provision of ‘Technical Services’ and ‘Availing of Sub-Consultancy Services’
3. The Ld AO/Ld TPO/Ld CIT(A) erred on facts and in law in modifying/ amending the quantitative filter, with a prejudiced intention of making an addition to the returned income of the Appellant, for rejection of comparable companies and to disregard the transfer pricing documentation.
4. The Ld AO/ Ld TPO/ Ld CIT(A) erred on facts and in law in not appreciating that none of the conditions set out in section 92C(3) of the Act are satisfied in the present case. While doing so, the Ld AO/ Ld TPO/ Ld CIT(A) grossly erred in not acknowledging that:
