2024 (1) TMI 689 - AT - Income Tax

Initiation of Revision proceedings by issuing Show Cause Notice and passing revision order without quoting DIN - DIN No. was subsequently communicated to the assessee - HELD THAT - We do not find that none of the exceptional circumstances as mentioned in Para 3 (i) to (v) of this Circular No. 19/2019 has arisen for non-quoting of DIN both in the SCN as well as Revision order passed by Ld. PCIT. As per Paragraphs 3 5 of the Circular, in case of manual communication to be issued, prior written approval from the Chief Commissioner/Director General of Income-tax was to be obtained by the PCIT, since DIN was generated and communicated to the assessee to the very next date of issuance of the show cause notice and Revision order. Thus in our considered view, the Office of the PCIT has literally not followed CBDT Circular No. 19/2019. Further the office of the PCIT has not justified in not quoting of DIN even in the Revision order, where the same mistake was committed by it while issuing SCN to the assessee. Therefore Communication namely SCN dated 02.03.2022 and Revision order dated 30.03.2022 are not in conformity with Paragraphs 2 3 of this Circular No. 19/2019 issued by CBDT. Therefore the entire Revision proceedings is to be treated as invalid and shall be deemed to have never been initiated. It is appropriate to quote herein the well settled law that Circular issued by CBDT in exercise of its power u/s. 119 of the Act are binding on the Revenue as held by the Hon ble Supreme Court Judgment in the case of K.P. Varghese Vs. ITO 1981 (9) TMI 1 - SUPREME COURT Hon ble Delhi High Court in the case of CIT Vs. Brandix Mauritius Holdings Ltd. 2023 (4) TMI 579 - DELHI HIGH COURT given the language employed in the 2019 Circular, there is neither any scope for debate not is there any leeway for an alternate view. Therefore in our considered opinion, the initiation of Revision proceedings by issuing Show Cause Notice without DIN and passing Revision order without DIN are invalid in law. Appeal filed by the Assessee is hereby allowed.

Summary

Issues Involved:
1. Validity of Show Cause Notice (SCN) and Revision Order without Document Identification Number (DIN).
2. Compliance with CBDT Circular No. 19/2019 regarding DIN.

Summary:

Issue 1: Validity of Show Cause Notice (SCN) and Revision Order without Document Identification Number (DIN):

The Assessee appealed against the Revision order dated 30.03.2022 by the Principal Commissioner of Income Tax (PCIT), which arose from the assessment order under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2017-18. The PCIT found the assessment order erroneous and prejudicial to the interest of Revenue due to wrong disallowance under section 14A, and issued a show cause notice on 02.03.2022. The Assessee objected, stating that the SCN and Revision order did not carry a DIN, making the proceedings invalid per CBDT Circular No. 19/2019.

Issue 2: Compliance with CBDT Circular No. 19/2019 regarding DIN:

The Revenue argued that although the SCN and Revision order did not initially carry a DIN, they were later generated and communicated to the Assessee. The Assessee contended that the Circular mandates that any communication without a DIN is invalid unless it falls under specified exceptional circumstances, which did not apply here. The Tribunal referred to the Circular, emphasizing that any notice or order without a DIN is deemed never issued unless justified under exceptional circumstances and regularized within a specified period.

Judgment:

The Tribunal concluded that the SCN and Revision order were not in conformity with the CBDT Circular No. 19/2019, as they lacked DIN and did not fall under any exceptional circumstances. The Tribunal cited Supreme Court and High Court judgments, reinforcing that Circulars issued under section 119 of the Act are binding on the Revenue. Consequently, the Tribunal deemed the Revision proceedings invalid and quashed them, allowing the Assessee's appeal.

Order:

The appeal filed by the Assessee was allowed, and the order was pronounced in the open court on 08-11-2023.