2023 (9) TMI 386 - AT - Income Tax

Validity of assessment order u/s 143(3) r.w.s 263 - no intimation of DIN for the impugned order - HELD THAT - Intimation produced by the Revenue only informs the assessee that the impugned order is sent by speed post/mail. It is not the intimation of DIN for the impugned order. The Ld. Dy. CIT has erred in treating the DIN for intimation letter dated 31.12.2019 placed on record by the Ld. CIT-DR as DIN for the impugned order. As gone through the CBDT Circular No. 19/2019 (F No. 225/95/2019-ITA II) o maintain audit trail of all communication, no communication shall be issued by any Income Tax Authority to the assessee or any other person on or after the 1st day of October, 2019 unless a computer generated DIN has been allotted and is duly quoted in the body of such communication. Undoubtedly the impugned assessment order is one such communication which has been issued by the Ld. AO without allotting a computer generated DIN and duly quoting in the body of the impugned assessment order. There is thus clear violation of the specific requirement under the CBDT Circular No. 19/2019 to quote the DIN in the body of the impugned assessment order. The case of the assessee is that the communication, namely the assessment order dated 30.12.2019 is not only without mention of DIN in the body of the order, there is no material on the record mentioning the reason for non-issuance of DIN. Furthermore, the letter of intimation of DIN dated 24.01.2020 is also not within fifteen (15) working days of the issuance of the impugned assessment order dated 30.12.2019. There is thus violation of the mandate enshrined of the CBDT Circular No. 19/2019 dated 14.08.2019. Therefore, the consequence mentioned in para 4 of the said Circular, namely that the impugned assessment order dated 30.12.2019 be treated as invalid and non-est in the eye of law should follow. We are in agreement with the above contentions of the assessee. Case followed BRANDIX MAURITIUS HOLDINGS LTD. 2023 (4) TMI 579 - DELHI Assessee appeal allowed.

Issues Involved:
1. Validity of the order passed under section 143(3) read with section 263 of the Income Tax Act, 1961.
2. Denial of benefit of beneficial ownership under Article 11 of the India-Cyprus Double Tax Avoidance Agreement (DTAA).
3. Deduction of interest paid on unsecured loans under section 57 of the Act.
4. Calculation of interest under Sections 234A, 234B, 234C, and 244A of the Act.
5. Initiation of penalty proceedings under section 271(1)(c) of the Act.
6. Validity of the order due to the absence of Document Identification Number (DIN).

Summary:

1. Validity of the Order Passed Under Section 143(3) Read with Section 263:
The assessee challenged the final assessment order dated 30.12.2019, arguing it was issued without following the statutory requirement of Section 144C to pass a draft assessment order first. The assessee also contended that the assessment was protective without any substantive assessment, rendering it nugatory. The demand raised was claimed to be unenforceable, citing the Bombay High Court's judgment in Sushil Kumar v CIT. Additionally, the assessee argued that the order was barred by limitation as it was served on 02.01.2020, beyond the statutory deadline.

2. Denial of Benefit of Beneficial Ownership:
The assessee argued that the AO erred in holding that it was not the "beneficial owner" of interest income earned on Compulsory Convertible Debentures (CCDs), thus denying tax treaty relief under Article 11 of the India-Cyprus DTAA. The AO's decision was claimed to be based on preconceived notions without appreciating the evidence and commercial purpose of the entity, as established in Vodafone International Holdings B.V. v. UOI.

3. Deduction of Interest Paid on Unsecured Loans:
The assessee contended that the AO erred in not allowing the deduction of interest paid on unsecured loans under section 57 of the Act, which was incurred wholly and exclusively for earning interest income from CCDs.

4. Calculation of Interest Under Sections 234A, 234B, 234C, and 244A:
The assessee argued that the AO erred in calculating interest under these sections while determining the tax liability.

5. Initiation of Penalty Proceedings Under Section 271(1)(c):
The assessee contended that the AO erred in initiating penalty proceedings under this section.

6. Validity of the Order Due to Absence of DIN:
The additional ground raised by the assessee was that the impugned order did not contain a Document Identification Number (DIN), violating CBDT Circular No. 19/2019. The Tribunal found that the order indeed lacked a DIN and was not regularized within the stipulated 15 working days. Consequently, the order was deemed invalid and 'non-est' in law, as per the CBDT Circular and supported by the Delhi High Court's decision in CIT (International Taxation) v. Brandix Mauritius Holdings Ltd.

Conclusion:
The Tribunal allowed the additional ground raised by the assessee, declaring the assessment order dated 30.12.2019 invalid due to the absence of a DIN. Consequently, the appeal was allowed without adjudicating the merits of the other grounds.

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