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TMI Blog2023 (5) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed 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. 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 in the case of CIT v. Hero Cycles [ 1997 (8) TMI 6 - SUPREME COURT] wherein it was held that circulars bind the ITO but will not bind the appellate authority or the Tribunal or the Court or even the assessee. Commissioner did not generate DIN either in the notice or in the impugned order, therefore, the impugned order is quashed and appeal of the assessee is allowed. - I.T.A. No. 503/KOL/2020 - - - Dated:- 27-3-2023 - Shri Rajpal Yadav, Vice-President (KZ) And Shri Rajesh Kumar, Accountant Member Shri Sunil Surana, FCA, appeared on behalf of the assessee Shri G. Hukugha Sema, CIT, appeared on behalf of the revenue ORDER Per Rajpal Yadav, Vice-President ( KZ ) : - The assessee is in appeal before the Tribunal against the order of ld. Principal Commissioner of Income Tax-1, Kolkata dated 18.02.2020 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not bear DIN. Similarly the impugned order does not bear DIN. Therefore, in view of two decisions of ITAT, Kolkata referred above, the impugned order is not sustainable and it is quashed. However, for the purpose of completeness of the finding and demonstrating the reasoning, we deem it appropriate to take note of the following finding from ITA No. 432/KOL/2020 dated 22.11.2022, which reads as under:- 5. We have considered the rival submission. We find that the issue is squarely covered by the decision of the Coordinate Bench of the Tribunal in the case of Tata Medical Centre Trust vs. CIT (supra). The relevant part of the order of the Tribunal for the sake of ready reference is reproduced as under: 11. We have heard the rival submissions and perused the material available on record and given our thoughtful consideration to the submissions made by both the parties. Before adverting on the issue in hand, the CBDT Circle No. 19/2009 dated 14.08.2019, copy of which is placed in the paper book pages 68-69, is reproduced hereunder for ready reference: Circular No. 19/2019 Government of India Ministry of Finance Department of Revenue Central Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munication 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 issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner/ Director General or Income-Tax for issue of manual communication in the following format- .. This communication issues manually without a DIN on account of reason/ reasons given in para 3(i)/ 3(ii)/ 3(iii)/ 3(iv)/ 3(v) of the CBDT Circular No ...dated (strike off those which are not applicable) and with the approval of the Chief Commissioner I Director General of Income Tax vide number .... dated 4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the prescribed format. Thus, it is observed from the said circular that all the communications mentioned therein have to be either generated and issued electronically with DIN or in certain exceptional circumstances the communication may he issued manually without DIN, fact of which along with its written approval has to be stated in the body of the said communication, failing which, para 4 of the said circular states that such communication shall be treated as invalid and shall be deemed to have never been issued . 12.1. On a specific query by the bench to the Ld. CIT, DR to point out if there was any exceptional circumstance which led to the manual issue of the order u/s. 263 of the Act, he pointed out that the only possibility of exceptional circumstance as mentioned in the CBDT Circular, could be as listed in para 3(i) which mentioned that when there are technical difficulties in generating / allotting/ quoting the DIN and issuance of communication electronically . For this he requested for verification of the case records. 12.2. On this aspect, Ld. Counsel for the assessee submitted that it is undisputed and verifiable fact that the impugned order is not an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly you may send a written reply so as to read me on or before the date mentioned above. Particulars of mistake proposed to be rectified 1. On verification of records, it is revealed that the assessee had earned interest income amounting to Rs.91.37 lacs on corpus funds and Rs.27.3 lacs on other earmarked funds . It is observed that though interest received under Rs.91.37 lacs had been added back to the income side as per I F account in the assessment order. Interest income received or earmarked fund (Rs.21.31 lacs) has not been taken as income. The same needs to be treated as part of income. 2. An amount of Rs.5,18,29,615 has been deducted towards apportion from patient care fund from total income as per I F A/c while computing taxable income for the AY 2015-16. It reveals that you had actually added the same amount as receipt under the hand revenue from operation in the I F account. The amount has been spent towards normal course of activities of the assessee during the year. Thus deduction of Rs.5,18,29,615/- as apportion from patient care fund in the I F A/c from the income of the assessee without corresponding deduction in the expenditure side has actually re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of assessment records, it has been found that the following exemptions were allowed by the Assessing Officer beyond the permissible scope as per Income Tax Act: (i) In the instant case, the assessee claimed 'Provision for doubtful debts amounting to Rs.37.40 lakh under the head Other expenses as application of fund. As per provision of the Act, mere provision would not be allowable as a deduction and the actual writing off of the debt was a necessary pre-condition. Therefore, only the actual expenditures made during the year can be treated as application. As such, the said amount of Rs.37.40 lakh is required to be added back to the income of the assessee. (ii) Scrutiny of the assessment order revealed that, an amount of Rs.5,18.29.615 has been deducted towards Apportion from patient care fund (SL. 461) of the table at paragraph 4 of the order from Total income as per I E A/c', while computing taxable income of the assessee for the AY 2016-17. Further scrutiny revealed that the assessee had actually added the said amount as receipt under the head. (iii) In view of the above, the Assessing Officer has erred in allowing capital expenditure Rs. 4989.53 lakhs towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 405 dated 31.03.2021 Copy forwarded to: 9. Addl. CIT (Exemptions), Range-1, Kolkata 10. AC/DC Circle-l(l), Kolkata. 11. Assessee. Sd/- ( B. K. Shrivastava ) TRO (Exemptions), Kolkata 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 v. Hero Cycles [1997] 228 ITR 463 (SC) wherein it was held that circulars bind the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving 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 [2014] 361 ITR 458 (Cal) 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 case was selected for scrutiny on 6th July, 2005. It may be pointed out that Mrs. Gutgutia was, in fact, reiterating the views taken by the learned Tribunal which we also quoted above. By any process of reasoning, it was not open for the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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