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TMI Blog2022 (11) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said premises of the assessee. 3. The AO issued a notice u/s. 153C in response to which the assessee filed the return of income on 9.9.2019 declaring an income of Rs.26,49,310, Rs.38,38,820 and Rs.47,74,730 for the AYs 2014-15 to 2016-17. The AO called for production of documents and evidence based on which he completed the assessment u/s. 153C r.w.s. 143(3) accepting the returned income filed by the assessee. 4. The PCIT noticed from the assessment record that Mr. Pramod Kumar Bhandari, who is a partner along with the assessee in the firm by name M/s Pacific Heights has declared an additional income of Rs.1,05,00,000 being his share of 14% of cash received from Mr. D V Harish, MD of Davanam Constructions with whom a JDA is being entered into by the partnership firm. The PCIT noticed that the AO has not conducted any enquiry with regard to the cash paid and to that extent he treated the assessment order as being erroneous and prejudicial to the interests of the revenue. 5. The assessee in response to show-cause notice submitted that the statement recorded from Mr. Pramod Bhandari was subsequently retracted and therefore revising the order of assessment based on the retra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the income-tax Appellate Tribunal to decide the appeal according to law." 7. The assessee also made application for admission of additional grounds wherein the issue is contended on legal grounds in all these appeals. The legal grounds relate the validity of the order u/s. 263 for the reason that the order issued is a manual order and does not contain Document Identification Number [DIN] which is not in accordance with the instruction of Central Board of Direct Taxes (CBDT) issued vide circular no.19/2019 dated 14.08.2019. The relevant common additional grounds as in ITA No.403/Bang/2022 are extracted below:- 1.1 The above referred appeal is in respect of the order passed by the Principal Commissioner of Income Tax (Central), Bangalore (`PCIT') u/s 263 of the Income Tax Act, 1961 (Viet') on 24.03.2022. It is stated therein that the assessment order passed under section 143(3) r.w.s 153D of the Act dated 10.12.2019 is erroneous as it is prejudicial to the interests of the revenue. 1.2 The learned PCIT has referred to the statement of Mr.Pramod Bhandari recorded during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said circular states that such communication shall be treated as 'invalid' and shall be deemed to have never been issued'. 1.8 In the present case, the order has been issued manually. There is no mention about the fact of issuing the present order manually without a DIN by obtaining an approval from prescribed authority in the prescribed format in the body of the impugned order. In terms of para 4 of the CBDT circular, such a lapse renders this impugned order as invalid and deemed to have never been issued. 1.9 The Appellant had not raised the above ground in the grounds of appeal filed. This is a legal ground. All the details to adjudicate the ground are on record and therefore the legal ground should be admitted. 1.10 Subsequent to filing of appeal, the Honourable Kolkata Tribunal in the case of Tata Medical Centre Trust vs CIT 120221 140 taxmann.com 431 (Kolkata-Tribunal) gave decision on similar facts. The Tribunal held that order passed by the Ld. CIT(E) u/s 263 is invalid and deemed to have never been issued as no DIN is mentioned in the body of the Order by adhering to the CBDT Circular no. 19 of 2019. 1.11 The Appellant submits that it is fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 2 & 3 of the said Circular shall be treated as invalid. The ld. AR prayed that the order u/s. 263 be quashed on this legal ground. 11. The ld. DR submitted that the order u/s. 263 is dated 24.3.2022 and the PCIT has attached the intimation with the DIN number along with the order u/s. 263. The ld. DR therefore submitted that the DIN is very much part of the order u/s. 263 and therefore the argument of the ld. AR on the validity of the order u/s. 263 does not have merit. The ld DR also submitted that as per Circular, DIN was mandated for maintaining proper audit trail of all communications and therefore the PCIT generating DIN in a separate intimation on the same date of the order u/s. 263 is valid and need to be considered along with the order u/s. 263. 12. In rebuttal, the ld. AR submitted that as per para 2 of the Circular, the DIN allotted should be duly quoted in the body of such communication and not through a separate intimation. The ld AR also brought to our attention that the PCIT has sent two intimations with different DIN for the same order u/s.263 which is not in conformity with the requirement mentioned in para 2 of the circular and also not in sync with the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e body of such communication. 3. In exceptional circumstances such as, - (i) when there are technical difficulties in generating / allotting / quoting the DIN and issuance of 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 nonjurisdictional Assessing Officer; or (iv) when PAN of assessee is not available 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 issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nication issued manually not in conformity with Para-2 and Para-3 of the circular, shall be treated as invalid and shall be deemed to have never been issued. 15. We also notice that the Kolkata Bench of the ITAT in the case of Tata Medical Centre Trust (supra) has considered a similar issue and held that - "13. From the above submissions and arguments, we note that it is an undisputed fact that the impugned order u/s. 263 of the Act has been issued manually which does not bear the signature of the authority passing the order. Further, from the perusal of the entire order, in its body, there is no reference to the fact of this order issued manually without a DIN for which the written approval of Chief Commissioner/Director General of Income-tax was required to be obtained in the prescribed format in terms of the CBDT circular. We also note that in terms of para 4 of the CBDT circular, such a lapse renders this impugned order as invalid and deemed to have never been issued. 13.1 It is also important to note about the binding nature of CBDT circular on the Income-tax Authorities for which gainful guidance is taken from the decision of Hon'ble Supreme Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistrative officer in view of the statutory provision contained in section 143(2), which provides for limitation of 12 months for issuance of notice under section 143(2). While giving its finding, the Hon'ble High Court of Chhattisgarh placed reliance on the decisions in the case of UCO Bank (supra) and Nayana P. Dedhia (supra). 13.5 Hon'ble jurisdictional High Court of Calcutta in the case of Amal Kumar Ghosh v. Asstt. CIT [2014] 45 taxmann.com 482/225 Taxman 229 (Mag.)/361 ITR 458 dealt with the issue relating to CBDT circular which according to the Department cannot defeat the provisions of law. While giving its observations and finding on the issue, the Hon'ble Court referred to the decision of Hon'ble Chhattisgarh High Court in the case of Sunita Finlease Ltd. (supra), which are as under: 7. We have considered the rival submissions advanced by the learned Advocates. Even assuming that the intention of CBDT was to restrict the time for selection of the cases for scrutiny within a period of three months, it cannot be said that the selection in this case was made within the aforesaid period. Admittedly, the return was filed on 29th October, 2004 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of the ITAT in the case M/s.Brandix Mauritius Holdings Ltd., vs DCIT (ITA No.1542/Del/2020 dated 19.09.2022) 17. In assessee's case there is no dispute about the fact that the impugned order u/s. 263 of the Act has been issued manually. It is also noticed that the DIN for the order is generated through two separate intimations one bearing the same date as the date of the order u/s.263 and the other is dated 25.03.2022. The argument of the ld DR that the intimation dated 24.03.2022 is part of the order and that there is no violation cannot be accepted as generating the DIN by separate intimation is allowed to be done to regularise the manual order (Para 5 of the circular) provided the manual order is issued in accordance with the procedure as contained in Para 3. On perusal of the order u/s.263, it is noted that the order neither contains the DIN in the body of the order, nor contains the fact in the specific format as stated in Para 3 that the communication is issued manually without a DIN after obtaining the necessary approvals. Therefore, we are of considered view that the impugned order is not in conformity with Para 2 and Para 3 of the CBDT circular. 18. In view of thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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