ACIT-2(3)(1), MUMBAI vs. STERLING HOLIDAY RESORTS LIMITED, MUMBAI

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ITA 943/MUM/2024Status: DisposedITAT Mumbai05 June 2026AY 2001-026 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the requirement of DIN in assessment orders was subsequently amended retrospectively by the Finance Act, 2026, making such orders valid even without a DIN if referenced by number. Therefore, the matter needed to be revisited by the CIT(A) on merits.

What were the facts?

The Revenue appealed against the deletion of penalty by the CIT(A) on the grounds that the penalty order lacked a Document Identification Number (DIN). The CIT(A) had held the penalty order void ab initio due to the absence of DIN, relying on CBDT Circular No. 19/2019.

What were the issues?

Whether a penalty order is void ab initio for non-mention of DIN, and whether subsequent retrospective legislative amendments impact the validity of such orders.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 292BA

AI-generated summary — verify with the full judgment below

Before: SHRI SAKTIJIT DEY & SHRI PRABHASH SHANKAR

For Appellant: Shri Abdul Kadir Jawadwala,AR
For Respondent: Shri Shailja Rai, (CIT-DR.)
Hearing: 13.04.2026Pronounced: 05.06.2026

आदेश / O R D E R PER PRABHASHSHANKAR [A.M.] :- The present appeal emanating from the appellate order dated 29.12.2023 is preferred by the Revenue against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to the Penalty order passed u/s. 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 29.01.2020 for the Assessment Year [A.Y.] 2001-02.

ITA No. 943/Mum/2024; Sterling Holiday Resorts Holiday 2. The grounds of appeal are as under: “1. The Ld. CIT(A) erred in deleting the penalty levied u/s 271(1)(c) after relying in case of CIT Vs. Brandix Maurtius Holding Ltd. although Hon‟ble Supreme Court stayed the same order remarking that “not mentioning DIN in assessment orders may be and „irregularity‟ but that does not make it an „illegality‟. 2. The Ld. CIT(A) erred in not adjudicating all the grounds of appeals on merits as the penalty order is held as void ab-initio for non-quoting of DIN in accordance with CBDT Circular No. 19/2019.” 3. The assessee is engaged in selling leisure hospitality services and travel insurance business. It filed its return of income for the assessment year declaring total loss of Rs. 56,47,35,419/-.The assessment proceedings were originally completed under section 143(3) of the Act determining the total loss of Rs. 40,14,61,320/-. Subsequently, the assessment order was set aside under section 263 of the Act by the Commissioner of Income-tax and pursuant to the same, order was passed under section 143(3) read with section 263 of the Act whereby making certain disallowances/ additions were made by the Assessing officer i.e. Claim of long term capital loss of Rs.14,26,80,700/-,addition of Rs.20,64,00,000/-on remission of liability, disallowances pertaining to Ooty property and taxability of remission of liability of Rs.1,38,30,851/-. However, before the ld. CIT(A), the assessee did not press the grounds of appeal and the appeal filed was disposed of whereby the above additions were confirmed by him. No further appeal was filed before the Income tax Appellate Tribunal stated to buy peace. Thereafter, the AO issued a notice under section 274 read with section271(1)(c) of the Act, requesting it to show cause as to why penalty should not be levied against the additions confirmed by the CIT(A). The assessee company filed detailed submissions in response to the aforesaid

ITA No. 943/Mum/2024; Sterling Holiday Resorts Holiday notice discussing the merits of the case and mentioning that it had neither furnished inaccurate particulars of income nor concealed any particulars of income so as to attractpenaltyundersection271(1)(c) of the Act. However, the AO passed the penalty order levying penalty of Rs. 6,48,76,064/- (100% of the amount sought to be evaded) under section 271(1)(c) of the Act.

4.

In the subsequent appeal, the assessee contested the imposition of penalty on the question of non mentioning of DIN and also on merits of the case. It was claimed that the AO erred in issuing theimpugned order manually and without a Document Identification Number as mandated by Circular No19/2019andInstruction No.1dated12February 2018issued by theCBDT.

4.1 It was also contended that the assessee company neither furnished inaccurate particulars of income nor concealed any particulars of income so as to attract penalty under section 271(1)(c) of the Act. It is further highlighted that various judicial courts have held that if bonafide explanation is offered by the assessee and the assessee had disclosed all the material facts to substantiate the explanation offered, just because the claim had been disallowed, the same cannot be a reason to levy the penalty and the penalty if levied should be deleted.

5.

The ld.CIT(A) did not adjudicate the penalty order on merits but considered the absence of DIN as fatal holding that the claim of the assessee was correct as the Circular No.19 of 2019 issued by CBDT had very categorically laid down that any communication which was not in conformity

ITA No. 943/Mum/2024; Sterling Holiday Resorts Holiday with the guidelines laid down in the circular would be treated as invalid and it will be deemed that such communication was never issued. The Circular left no iota of doubt that wherein DIN was not mentioned in any communications then those notices/orders were void ab initio. He also placed reliance on the judgements in the cases of M/s VSK Infra projects v. DCIT 374 ITR 18 (Del) dated 28.01.2022,Sidda Venkata Surya Prakasa Rao v. ACIT 382 ITR 118 (Hyd), M/s Adarsh Developers v. DCIT (2022) 376 ITR 19 (Del) and judgement delivered by Hon’ble Delhi High Court in ITA No.163/2023 dated 20/03/2023 in case of CIT vs Brandix Maurtius Holding Ltd. As in the present case, it was clear that DIN was not issued for the penalty order which was issued on 29.01.2020 i.e. after the issuance of Circular no.19/2019, therefore, he concluded that the penalty order was not valid in eyes of law. Accordingly, the penalty levied was deleted. The other grounds raised by the appellant are not adjudicated as the penalty order was treated void ab initio for non-quoting of DIN in accordance with CBDT Circular.

6.

We have carefully considered the factual matrix of the case. It is evident that the assessee did not contested the additions and disallowances made by the AO before the appellate authorities leading to imposition of penalty u/s 271(1)(c) of the Act. The ld.CIT(A) deleted the penalty on the technical ground claiming that no DIN was mentioned by the AO in the impugned penalty order.

6.1It may be stated here that the requirement of mentioning of DIN has now been amended on retrospective basis vide the Finance Act,2026. The insertion

ITA No. 943/Mum/2024; Sterling Holiday Resorts Holiday of section 292BA of the Act, declares that no assessment under the Act shall be invalid merely because of any mistake, defect or omission in quoting a computer-generated DIN, if the assessment order is referenced by such number in any manner. The Notes on Clauses expressly state that this amendment takes effect retrospectively from 1st October 2019. The Finance Bill also made a parallel change for the Income-tax Act, 2025, under section 522, with effect from 1st April 2026.Circular No. 4/2026 was issued on 31 March 2026 in this regard. Thus, language no order under the 1961 Act shall be invalid merely because of any mistake, defect or omission in quoting a computer generated DIN, so long as the assessment order is referenced by such number in any manner.

7.

In view of such amendment in the Act w.r.t. amendment in the necessity of quoting DIN, on retrospective basis, we are of the considered view that the matter require revisit by the appellate authority. Moreover, he did not adjudicate the grounds pertaining to the merits of the case. We therefore, set aside the appellate order and remit it back to the file of the ld.CIT(A)for passing de novo appellate order, taking into consideration the material change in the statute in respect of DIN after the above stated amendment as also the merits of the case. Therefore, the grounds of appeal are allowed for statistical purposes.

ITA No. 943/Mum/2024; Sterling Holiday Resorts Holiday 8. In the result, the appeal of the Revenue is allowed for statistical purposes.

Order pronounced in the open court on 05/06/2026.

Sd/- Sd/-

SAKTIJIT DEY PRABHASH SHANKAR ( (उपाध्यक्ष/ VICE PRESIDENT) (लेखाकार सदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai ददनाुंक /Date 05.06.2026 Soumili Das / PS

आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीली अविकरण

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