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Facts
The assessee's appeals were against additions made on account of jewellery, cash, and a wrist watch found during a search, under section 69B. The revenue's appeals challenged the restrictions made by the CIT(A) on these additions and the deletion of an addition concerning paintings.
Held
The Tribunal held that the assessment order dated 30.12.2019 was invalid and void ab initio because it was issued without a Document Identification Number (DIN), which is mandatory as per CBDT Circular No. 19/2019. This decision was based on the consistent view of various High Courts. Consequently, the appeal of the assessee was allowed, and the appeal of the revenue was dismissed.
Key Issues
Whether the assessment order is invalid due to the absence of a Document Identification Number (DIN) as per CBDT Circular No. 19/2019, and whether such an order can be treated as void ab initio.
Sections Cited
69B, 147, 143(3), 292B, 263
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
Before: SH. SAKTIJIT DEY & SH. N. K. BILLAIYA
ORDER PER N. K. BILLAIYA, AM: and 1061/Del/2021 are two cross appeals by the assessee and the revenue preferred against the order of the CIT(A)-26, New Delhi dated 26.06.2020 pertaining to A.Y. 2018-19.
2. The grievance of the assessee read as under :-
“1. That on the facts and circumstances of the case and in law the ld CIT(A) erred in confirming addition of Rs 33,00,000/- u/s 69B on account of jewellery found during the course of search ignoring the explanation and evidence and is against the facts of the case and hence liable to be deleted
2. That on the facts and circumstances of the case and in law the ld CIT(A) erred in confirming addition of Rs 36,29,500/- u/s 69B on account of cash found during the course of search, the source of which have been explained during assessment/ appellate proceeding and hence liable to be deleted
3. That on the facts and circumstances of the case and in law the ld CIT(A) erred in confirming addition of Rs 27,48,000/- u/s 69B on account of wrist watch found during search, the source of which have been explained during assessment/ appellate proceeding and hence liable to be deleted
4. That on the facts and circumstances of the case and in law the ld. CIT (A) erred in confirming addition of Rs 3,84,324/- u/s 69C ignoring the explanation and evidence and is against the facts of the case and hence liable to be deleted
5. That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.”
3. The grievance of the revenue read as under :-
“1. The Ld. CIT(A) has erred in law and on facts in restricting the quantum of addition of Rs. 1,82,22,493/- on account of unexplained jewellery/silver articles u/s 69B of the IT Act 1961 to Rs. 33,00,000/-.
2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,22,00,000/- on account of unaccounted investment in paintings.
3. The Ld. CIT(A) has erred in law and on facts in restricting the quantum of addition of Rs. 47,48,000/- on account of unexplained investment in wrist watches u/s 69B of the IT Act, 1961 to Rs. 27,48,000/-.
4. (a) The Ld. Commissioner of Income Tax (Appeals) is erroneous and not tenable in law and on facts.
(b) The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.
4. At the very outset the assessee moved an application for admission of additional ground which reads as under :-
That on the facts and circumstances of the case the impugned assessment order so passed is null and void, and is also in complete violation of CBDT Circular No.19/2019, since no DIN is mentioned in the entire body of assessment order.
5. Since the additional ground goes to the root of the matter we decided to adjudicate it first.
6. The assessment order is dated 30.12.2019 and runs into 27 pages. The last paragraph of the assessment order reads as under :-
This order has been passed with the prior approval of the Additional CIT(A), Central Range-4, New Delhi vide his approval letter no. Addl. CIT/CR-4/Approval 153-D/2019-20/1227 dated 29.12.2019.
7. The first page of the assessment order is as under:-
8. There is no mention of DIN in the body of the assessment order.
9. The DR has strongly objected to the submission of the assessee and filed a written submission running into 21 pages explaining the need / urgency and the origin of the DIN issue and summarises his entire discussion as follows :-
“1. It is the settled law that any legislation/ circular etc are to be interpreted in such a way that the intention and the purpose behind the legislation get fulfilled/implemented in letter and spirit. In the instant case, both the intention and the purpose i.e. prevention of manual communication and establishing audit trail are fully established.
2. The Hon'ble Supreme Court in various cases has consistently held that a procedural violations have to be corrected if no serious prejudice is caused to a person. Further the Hon'ble Supreme Court has held that the Courts should focus more on doing substantial justice then deciding the cases of procedural /technical violations.
3. The Circular no. 19/2019 talks about the issuance of communications relating to order, notice etc and which has nothing to do so with the passing of the orders like assessment order etc which is governed by provisions of Income Tax Act. It is also reiterated that 263 order was duly communicated electronically with DIN No. on the intimation letter (part of the order only) and as no manual communication was issued and accordingly the instant case is covered by para 2 of the Circular and this case is clearly covered as a case of issuance of electronic communication.
The decision of Hon'ble Delhi High Court in the case of Brandix Mauritius is not applicable as in that case there was no DIN allotted to the order and also the department could not show intimation letter issued in that case and accordingly the High Court did not deal with the issue of assessment order attached with intimation letter bearing DIN of the order.
5. The decision of Hon'ble Kolkata High Court in the case of Tata Medical Centre (cite supra) is also not applicable because in that case also the department could no demonstrate the issuance of DIN/sending of intimation letter with DIN to the assessee.
6. The decision of Hon'ble Bombay High Court in the case of Ashoka Commercial is not applicable because in that case the DIN intimation letter was sent after 15 days. Also no DIN was ever issued in the satisfaction note.
7. The decision of Hon’ble Jharkhand High court in Prakash Lal Khandelwal (cited above) and the Hon’ble Madras High Court in Texmo (cited supra) was applicable in this case because in a both these cases DIN was mentioned on the intimation letter, issued one day after the issuance of order.
8. The decision of Hon'ble Kerala High Court of both single bench and division bench in the case of South Cost Spices is squarely applicable because in that case the Hon'ble High Court clearly decided the issue of DIN on intimation letter as sufficient compliance of Circular No. 19/2019 and there is no requirement of mentioning DIN on the body of the order. Hon'ble Court also held that no prejudice is caused to assessee DIN is not quoted on body of order.
Being the only decision with regard to DIN on intimation letter, being the sufficient compliance of Circular No. 9/2019, it is fully binding on the Hon'ble ITAT because there is no contrary decision on this issue of Hon'ble Jurisdiction High Court. Also the law is fairly settled, that if there is no decision of jurisdictional High Court on a particular issue, then decision of other High Court is fully binding on the Hon'ble Tribunals, even irrespective of this jurisdiction.
10. In several recent cases, the Hon'ble Supreme Court/Hon'ble Delhi High Court have held the procedural violation as technical defaults and did not quash the entire assessment proceedings and remitted the matter back to AO/DRP for fresh consideration.
11. As the issue of mention of DIN on intimation/cover letter sent along with the assessment order/notice etc, being a sufficient compliance of Circular no. 19/2019 and there is no further requirement of quoting DIN on the body of order has been decided by the Hon'ble Kerala High Court and accordingly the various decisions of the Tribunal quoted by assessee's counsel are not being discussed separately because the decision of Hon'ble Kerala High Court is binding on the Tribunal even though some of the coordinate benches has decided the issue otherwise. Moreover, the decision of the Hon'ble Kerala High Court being very recent (i.e. 22.11.2023) other decisions of Hon'ble Bench, has not been considered if any of the ITAT decisions submitted by assessee counsel.”
10. The sum and substance of the entire submission of the DR is that DIN was specifically generated and also duly communicated at the time of issuance of order, both intention and the purpose behind circular was duly complied with and also no prejudice at all has been caused to the assessee.
11. We have given a thoughtful consideration to the orders of the authorities below and have carefully considered the written submissions made by the DR.
It would be pertinent to refer to the CBDT Circular No.19/2019 dated 14.08.2019 which is binding on the AO and is as under :-
The CBDT further clarified the need for the said Circular as under :-
Further clarifying the board issued FAQ as under :-
A perusal of the aforementioned circular read with the clarification and FAQ makes it clear that if the assessment order does not follow the mandate of DIN the same has to be treated as invalid nonest in law as if it has never been issued.
This Tribunal in in the case of Brandix Mauritius Holdings Limited vide order dated 19.09.2022 has considered the aforementioned CBDT circular and held as under :- 4. We have carefully perused the additional grounds of appeal
raised by the assessee mentioned hereinabove. The Hon'ble Supreme Court in the case of National Thermal Power Corporation 229 ITR 383 has laid down the following ratio : “7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assessee the tax liability of an assessee.”
5. In light of the above ratio, we find that this Tribunal is not required to verify any news facts. Therefore, the additional grounds raised are admitted.
6. In light of the above ratio, we find that this Tribunal is not required to verify any new facts. Therefore, additional grounds raised are admitted. “8. Ground No.8 : On facts and circumstances of the case & in law, the Learned Assessing Officer (‘Ld. AO’) erred in issuing the final assessment order under section 147/1440(13) /143(3) of the Income-tax Act, 1961 (‘the Act’) dated 15 October 2019 without quoting the mandatory document identification number (‘DIN’) in conformity with Para-2 and Para-3 of Circular No. 19/2019 dated 14 August 2019 and thus, the said final assessment order deserves to be held as invalid, bad in law and void ab initio.”
7. A perusal of the record shows that the final assessment order along with notice of demands dated 15.10.2019 and it is an undisputed fact that it has been passed/ issued without quoting Document Identification Number (DIN) which is mandatory as per the CBDT Circular No.19/2019 dated 14.08.2019.
8. The ld. DR vehemently stated that DIN was generated but due to upgradation, it was not reflected in the order. It is the say of the ld. DR that the error is not so fatal as to make the assessment order null and void. It would be pertinent to refer to CBDT Circular No.19/.2019 which reads as under :
GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES Circular No.19/2019 New Delhi dated the 14th August 2019 Subject : Generation/ Allotment /Quoting of Document identification Number in Notice/ Order / Summons / letter/ Correspondence issued by the Income-tax Department-reg.
With the launch of various e-governance initiatives, Income tax Department is moving toward total computerization of its work. This' has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax administration. Presently, almost all notices and orders are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Boa rd of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as "communication") were found to have been issued manually, without maintaining a proper aud t trail of such communication.
In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), has decided that no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty prosecution, rectification approval etc to the assessee or any other person, on or after the 151 day of October, 20 19 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication.
In exceptional circumstances such as, - (i) when there are technical difficulties in generating /allotting/ quoting the DIN and issuance Or communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties; or (iii) when due to delay in PAN migration, PAN is lying with non jurisdictional Assessing Officer; or (iv) when PAN of assessee is not avail able and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) When the functionality to issue communication is not available in the system, the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner / Director General of income tax. In cases where manual communication 'is required to be issued due to delay in PAN migration, the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner / Director General of Income-Tax for issue of manual communication in the following format- This communication issues manually without a DIN on account of reason/reasons given in para 3 (i)/3(il)/3 (iii)/3 (iv)/3 (v) of the CBDT Circular No ... dated (strike off those which are not applicable) and with the approval of the Chief Commissioner / Director General oj Income Tax vide number.... dated .. .. "
4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued.
The communication issued manually in the three situations specified in para 3- (i), (ii) or (iii) above shall have to be regularised within 15 working days of its issuance, by - i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; iii. communicating the DIN so generated to the assessee/any other person as per electronically generated pro-forma available on the System.
6. An intimation of issuance of manual communication for the reasons mentioned in para 3(v) shall be sent to the Principal Director General of Income-tax (Systems) within seven days from the date of its issuance.
Further, in all pending assessment proceedings, where notices were issued manually, prior to issuance of this Circular, the income tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31th October, 2019.
Hindi version to follow. (F. No. 225/95/2019-ITA.II) Sd/- Sarita Kumari Director (ITA .II CBDT) 9. A perusal of the aforementioned Circular clearly shows that the CBDT has considered the exceptional circumstances as mentioned in Para 3 of the Circular and, therefore, in our considered opinion, only those circumstances which have been mentioned therein would be considered for non- mentioning of DIN.
In para 3 itself, the Board has made it very clear that in cases where communication is issued manually, it may be done only after obtaining necessary approval of the relevant authorities and communication so issued must indicate the exceptional circumstances provided in the Circular itself. It has been made very clear by the Board that any communication which is not in conformity with Para 2 and 3 of the Circular shall be treated as invalid and shall be deemed to have never been issued.
The impugned order is hit by this mandate of the Board and, therefore, we are inclined to adjudicate Ground No. 8 [supra] in favour of the assessee by holding that the order dated 15.10.2019 framed u/s 147/144C( 13)/143(3) of the Act is invalid and deemed to have never been issued as it fails to mention DIN in its body by adhering to Circular No. 19/2009 dated 14.08.2019.
This order of the Tribunal was upheld by the Hon’ble Delhi High Court order dated 20.03.2023 in the relevant findings reads as under :-
Therefore, any communication which is not conformity with the provisions of paragraph 2 and 3 of the 2019 Circular is to be treated as invalid, as if it was never issued [See paragraph 4 of the 2019 Circular.] 8.1 In a nutshell, Communications referred to in the 2019 Circular would fall in the following slots : i. Those which do not fall in the exceptions carved out in paragraph 3 (i) to (v) ii. Those which fall in the exceptions embedded in paragraph 3 (i) to (v), but do not adhere to the regime set forth in the 2019 Circular 8.2 Therefore, whenever communications are issued in the circumstances alluded to in paragraph 3 (i) to (v), i.e. are issued manually without a DIN, they require to be backed by the approval of the Chief Commissioner/ Director General. The manual communication is required to furnish the reference number and the date when the approval was granted by the concerned officer. The formatted endorsement which is required to be engrossed on such a manual communication, should read as follows : “……. This communication issues manually without a DIN on account of reason/ reasons given in para 3 (i)/3(ii)/3(iii)/3(iv)/3(v) of the CBDT Circular No…… dated …..and with the approval of the Chief Commissioner / Director General of Income Tax vide number ….. dated ….” 8.3 As indicated hereinabove, insofar as communications falling in circumstances alluded to in paragraph 3 (i) to 3 (iii) are concerned, the process of regularization in the manner indicated in paragraph 5, should take place within fifteen (15) working days of its issuance. This period of regularization with regard to the circumstance referred to in paragraph 3 (v) is reduced to seven (7) days, and is required to be marked to the Principal Director General of Income-Tax (Systems) [see paragraph 6 of the 2019 Circular] 9. In the instant case, there is nothing on record to show that, according to the appellant/ revenue, failure to allocate DIN arose out of the “exceptional circumstances” which are set forth in paragraph 3 of the 2019 Circular. It is, however, the case of the appellant/ revenue, both before this court and before the Tribunal, that failure to allocate DIN was a mere mistake. Using this as the foundation, the argument put forth before us is that the mistake can be corrected by taking recourse to Section 292B of the Income Tax Act, 2961 [ in short “the Act”] XXXXXX 18. The argument advanced on behalf the appellant/ revenue, that recourse can be taken to Section 292B of the Act, is untenable, having regard to the phraseology used in paragraph 4 of the 2019 Circular.
19. The object and purpose of the issuance of the 2019 Circular, as indicated hereinabove, inter alia, was to create an adult trail. Therefore, the communication relating to assessments, appeals, orders etcetra which find mention in paragraph 2 of the 2019 Circular albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular.
20. The logical sequitur of the aforesaid reasoning can only be that the Tribunal’s decision to not sustain the final assessment order dated 15.10.2019, is a view that cannot call for our interference.
As noted above, in the instant appeal all that we are required to consider is question of law arises for consideration, which, inter alia, would require the Court issue is debatable or if there is an alternate view possible. Given the language employed in the 2019 Circular, issued is debatable or if there is neither any scope for debate not is there any leeway for an alternate view.
21.1 We find no error in the view adopted by the Tribunal. The Tribunal has simply the 2019 Circular and thus, reached a conclusion in favour of the respondent/assessee.
Accordingly, the appeal filed by the appellant/revenue is closed .
The Hon’ble High Court of Calcutta in a very recent order dated 13.12.2023 in IA No. IA/1/2023 in the case of CIT (E) Vs. RCC Institute of Technology Kolkata has held as under :-
The Hon’ble Jurisdictional High Court and Hon’ble High Courts of Bombay and Calcutta are consistent in annulling the assessment order without DIN, therefore, we are declining the submissions of the DR and respectfully following the decisions of the Hon’ble High Court the assessment order dated 30.12.2019 is held to be null and void and nonest.
Since we have treated the assessment order as nonest we do not find any merit in dwelling in the merits of the case. The additional ground is allowed and appeal of the assessee is allowed and that of the revenue is dismissed.
Order pronounced in the open court on 03.01.2024.