2024 (12) TMI 28 - AT - Income Tax

Assessment order and the demand notice has been issued without any DIN mentioned - non- issue of separate DIN in separate communication - HELD THAT -We find that the assessment order and the demand notice has been issued without any DIN mentioned in the order and similarly, no DIN has been mentioned in the demand notice issued u/s 156 either, which is not as per provisions of the CBDT circular no 19 dated 14/08/2019, and there is nothing on record to show that there were any exceptional circumstances which would sustain communication of final assessment order manually without DIN and the failure to allocate DIN is an error which could not be rectified by invoking the provisions of section 292B of the Act 61 . Moreover, even if we consider the common DIN generated on 25/11/2019, even then also we find, that in case of the demand notice issued u/s 156 of the Act 61, the same is dated 26th November, 2019, which means that on the date of generation of the common DIN, there was no demand notice u/s 156 in legal existence. There are identical judgments of various benches on this issue, that the basic requirement is the quoting of the DIN number on the body of the assessment order and on the demand notice. Subsequent generation of DIN either on the same day or next day and intimated to the assessee by way of separate communication does not satisfy the conditions of para 3 and 4 of the said circular. Thus, we hold that the assessment order u/s 144/ 147 dated 25/11/2019 and the demand notice u/s 156 dated 26/11/2019, (in Form - 7), cannot be legally sustained and it has to be treated that both has never been issued and will cease to have effect in the eyes of law. Legality of notice issued u/s 148 - As pertaining to the recorded reasons (undated) and the corresponding approval granted by the Ld. PCIT, Jammu, dated 26/07/2018, and we are in agreement with the assessee that there has not been any proper application of mind resulting in an objective satisfaction of the higher authority, and according approval to an incorrect figure of quantum of income which had escaped assessment, which are at great variance with each other, as mentioned in approval and recorded reasons, cannot be legally sustained. As such respectfully following the observation in the case of Teleperformance Global Service (P) Ltd, 2024 (3) TMI 1082 - BOMBAY HIGH COURT we hold that the notice issued u/s 148 of the Act 61, was to be quashed and set aside. Assessee appeal allowed.

Summary

Issues Involved:

1. Legality of the assessment framed under sections 144/147 without mentioning DIN as per CBDT Circular No. 19/2019.
2. Validity of the mechanical and non-application of mind in granting statutory approval for reassessment.
3. Treatment of total bank deposits as gross turnover and application of 8% net profit rate.
4. Additional grounds of appeal regarding discrepancies in recorded reasons and approval amounts.

Detailed Analysis:

1. Legality of Assessment Without Mentioning DIN:

The primary issue in the appeals was the non-mentioning of the Document Identification Number (DIN) in the assessment orders and demand notices issued under sections 144/147 and 156, respectively. The assessee argued that this omission violated the CBDT Circular No. 19/2019, which mandates that any communication issued by the tax authorities must contain a DIN. The Tribunal noted that the assessment order and demand notice lacked a DIN, and subsequent generation of a common DIN did not rectify this deficiency. Citing various judicial precedents, the Tribunal concluded that the absence of a DIN rendered the assessment order and demand notice invalid, as they were not in compliance with the CBDT circular.

2. Validity of Mechanical Approval for Reassessment:

The assessee also challenged the validity of the approval granted for the reassessment proceedings, arguing that it was mechanical and lacked proper application of mind. The Tribunal examined the recorded reasons and the approval form, noting discrepancies in the amounts mentioned. The recorded reasons cited transactions totaling Rs. 1,70,59,886/-, while the approval mentioned only Rs. 22,36,520/-. The Tribunal agreed with the assessee that the approving authority did not apply its mind, as evidenced by the variance in figures and the undated recorded reasons. Consequently, the Tribunal held that the reassessment notice issued under section 148 was invalid due to the lack of proper approval.

3. Treatment of Bank Deposits and Application of Net Profit Rate:

The assessee contested the treatment of total bank deposits as gross turnover and the application of an 8% net profit rate on these deposits. The Tribunal, however, did not delve into the merits of this issue, as the appeals were decided in favor of the assessee on the legal grounds related to DIN and approval discrepancies.

4. Additional Grounds of Appeal:

The assessee raised additional grounds concerning the discrepancies between the recorded reasons and the approval amounts. The Tribunal admitted these additional grounds as they were legal in nature and went to the root of the proceedings. Upon examination, the Tribunal found that the discrepancies further supported the lack of proper application of mind by the approving authority, reinforcing the decision to quash the reassessment notice.

Conclusion:

The Tribunal allowed the appeals for both assessment years, holding that the assessment orders and demand notices were invalid due to non-compliance with the CBDT circular on DIN and the lack of proper approval for reassessment. The Tribunal did not address the merits of the other grounds of appeal, as the legal issues were dispositive.