Finesse International Design Pvt. Ltd. Vs DCIT (ITAT Delhi)
Explore the landmark ITAT Delhi ruling in Finesse Intl. Design Pvt. Ltd. vs. DCIT. CBDT Circular violation deems assessment order invalid. Know more!
Introduction: In a recent case before the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘B’, the appeal filed by Finesse International Design Pvt. Ltd. against the first appellate order was heard. The case, bearing ITA No. 1298/Del/2021, pertained to the assessment year 2017-18. The appeal primarily challenged the addition/disallowance related to cash deposits in the bank account, disallowances in business promotion expenses, and the initiation of penalty proceedings under Section 270A(2) of the Income Tax Act, 1961.
Background: The appeal was centered on the assessment order dated 19.02.2021, passed by the Assessing Officer (AO) under Section 153A r.w.s 143(3) of the Income Tax Act. The appellant raised objections related to the cash deposit, business promotion expenses, and penalty proceedings. Additionally, the appellant submitted applications for the admission of additional grounds challenging the validity of the assessment order.
Additional Grounds Raised: The appellant contended that the assessment order was invalid due to non-compliance with the provisions of CBDT Circular No.19/2019, which mandates the quoting of Document Identification Number (DIN) on all communications. The appellant argued that the approval granted by the Additional Commissioner of Income Tax (Addl. CIT) under Section 153D lacked the mandatory DIN and demand order issued under section 156 were without DIN, therefore making the entire assessment process non-est and invalid.
CBDT Circular Violation: The crux of the appellant’s argument was based on the CBDT Circular, which requires the allotment and quoting of DIN in all communications. The appellant asserted that the absence of DIN on the approval letter from the Addl. CIT rendered the assessment order and subsequent notice of demand under Section 156 null and void.
ITAT’s Ruling: The ITAT acknowledged the additional grounds raised by the appellant and admitted them for adjudication. After evaluating the contentions, the ITAT concurred with the appellant’s argument, emphasizing the significance of strict adherence to the CBDT Circular. The tribunal held that the assessment order, being based on an approval without a DIN, was non-est in law and, therefore, invalid. Consequently, the notice of demand without DIN was also deemed invalid.
Author’s Note: Previously, several high courts have granted relief to taxpayers in instances where assessment orders lacked a valid DIN. This case serves to strengthen support for taxpayers in general, particularly in situations where a valid DIN is not explicitly mentioned in the approval granted under section 153D or the demand notice issued under section 156.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been filed by the assessee against the first appellate order of the Ld. Commissioner of Income Tax (Appeals) – 23, New Delhi (‘CIT(A)’ in short) dated 28.08.2021 arising from the assessment order dated 19.02.2021 passed by the Assessing Officer (AO) under Section 153A r.w.s 143(3) of the Income Tax Act, 1961 (the Act) concerning Assessment Year 2017-18.
2. As per the grounds of appeal, the assessee has challenged the addition/disallowance on account of cash deposit in the bank account to the extent of Rs.78,69,000/- confirmed by the CIT(A) in terms of the provisions of section 68 read with section 115BBE of the Income Tax Act, 1961. The assessee has also raised grievance such as disallowances in business promotion expenses Rs. 4,32,773/- and initiation of penalty proceedings under S. 270A(2) of the Act.
3. Before the Tribunal, the assessee has moved an application for admission of additional ground under Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963 vide letter dated 26.06.2023, which reads as under:
“That the order passed under section 250(6) by the Ld. Commissioner of Income-tax (Appeals) – 23, New Delhi is against law and facts on the file since the order passed by the Ld. Assessing Office is non-est and bad in law in as much as:-
