2023 (12) TMI 879 - AT - Income Tax

Reassessment order issued without mentioning DIN as per CBDT s Circular No.19 of 2019 - legality of communication issued by any income tax authority w/o DIN - HELD THAT - From the perusal of the CBDT Circular No.19 of 2019 dated 14/08/2019, we find that in order to maintain a proper audit trail of all the communication, the CBDT in the exercise of its power u/s 119 of the Act had decided that no communication shall be issued by any income tax authority, inter-alia, relating to assessment to the assessee or any other person, on or after 01/10/2019 unless a computer-generated DIN has been allotted and duly quoted in the body of such communication. In the present case, it is undisputed that such a DIN as required in para 2 of the aforesaid Circular is not mentioned in the body of the assessment order dated 05/12/2019. In Ashok Commercial Enterprises v/s ACIT, 2023 (9) TMI 335 - BOMBAY HIGH COURT as held that the object of the said Circular is clear and laudatory and intended to ensure that proper trail of all assessment and other orders are maintained and further that any deviation therefrom can only be undertaken after prior written approval of the higher authorities under the Act. Accordingly, the Hon ble jurisdictional High Court quashed the communication issued without mentioning DIN as per CBDT s Circular No.19 of 2019. As para 2 of CBDT Circular No.19 of 2019 specifically mentions that the computer-generated DIN is to be duly quoted in the body of communication, which in the present case is the assessment order dated 05/12/2019. Therefore, we are of the considered view that the intimation letter dated 09/12/2019 intimating that the DIN generated in respect of the computation sheet may be treated as common DIN for the relevant order and all its annexures is not sufficient compliance with the aforesaid Circular No.19 of 2019, as no DIN is mentioned in the body of assessment order passed on 05/12/2019. Accordingly, the assessment order dated 05/12/2019 passed under section 143(3) read with section 147 of the Act is set aside as being not in compliance with the CBDT Circular No.19 of 2019. Assessee appeal allowed.

Summary

Issues involved:
The appeal by the Revenue challenges relief granted by CIT(A) on merits, while the assessee's cross objection challenges the initiation of reassessment proceedings under section 147 of the Income Tax Act, 1961, along with the manual assessment order lacking Document Identification Number (DIN) as per CBDT Circular No.19 of 2019.

Reassessment Proceedings under Section 147:
The assessee, engaged in banking, filed its return of income for the assessment year 2014-15, which was selected for scrutiny under CASS. The assessment was completed under section 143(3) of the Act, and later, proceedings under section 147 were initiated. The total income was assessed at Rs. 2330,69,73,520 after disallowances under sections 35D and 36(1) of the Act.

Non-Compliance with CBDT Circular No.19 of 2019:
The assessment order dated 05/12/2019 was passed manually without mentioning the required DIN. The Revenue argued that the intimation letter dated 09/12/2019, providing a common DIN for the order and its annexures, was sufficient. However, it was found that the manual issuance of the order did not comply with the CBDT Circular, which mandates the quoting of DIN in all communications related to assessment.

Legal Precedents and Compliance:
The CBDT Circular emphasizes the need for a proper audit trail through the allotment of DIN in communications. Failure to adhere to this requirement renders the communication invalid. Judicial decisions, such as Ashok Commercial Enterprises v/s ACIT and CIT v/s Brandix Mauritius Holdings Ltd., have upheld the importance of complying with the Circular. The absence of DIN in the assessment order led to the quashing of the order for non-compliance.

Decision and Dismissal of Grounds:
The assessment order was set aside due to non-compliance with the CBDT Circular. As the relief was granted on this issue, other jurisdictional grounds raised by the assessee were considered academic and dismissed. The Revenue's appeal on merits was also dismissed as the assessment order was quashed. Consequently, the cross objection by the assessee was allowed, and the Revenue's appeal was dismissed.

Conclusion:
The Appellate Tribunal ITAT Mumbai ruled in favor of the assessee, setting aside the assessment order due to non-compliance with the CBDT Circular No.19 of 2019. The decision highlights the significance of following procedural requirements in assessments to maintain transparency and accountability in tax proceedings.