Dhanterash Sales Pvt. Ltd. Vs ITO (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT) Kolkata recently rendered a significant decision in the case of Dhanterash Sales Pvt. Ltd. versus the Income Tax Officer (ITO), shedding light on the critical issue of the timeliness of assessment orders. The tribunal ruled in favor of the assessee, highlighting procedural irregularities and lack of evidence regarding the timely issuance of the assessment order. Let’s delve into the details of the case and the tribunal’s decision.
Background of the Case: Dhanterash Sales Pvt. Ltd. filed an appeal against the order dated 01.11.2023 of the National Faceless Appeal Centre under Section 250 of the Income Tax Act. The appeal challenged the validity of the assessment order for the assessment year 2014-15, alleging that it was time-barred and issued without due process.
Legal Grounds Raised by the Assessee: The assessee raised two key legal grounds challenging the validity of the assessment order. Firstly, it argued that the absence of a Document Identification Number (DIN) in the order rendered it invalid, as per CBDT Circular No. 19 of 2019. Secondly, the assessee contended that the order was time-barred, as it was served after the prescribed deadline.
Tribunal’s Analysis and Decision: The tribunal, after considering the submissions of both parties, issued an order on 04.04.2024, directing further scrutiny of the issue regarding the timeliness of the assessment order. The tribunal sought clarification from the Income Tax Officer regarding the date of dispatch of the order and the presence of a DIN number.
Upon examination of the evidence presented, including a letter from the Income Tax Officer dated 05.02.2024, the tribunal found that no DIN number was generated, contrary to CBDT instructions. Furthermore, the assessment order was dispatched only on 21.01.2020, well beyond the stipulated deadline.
Lack of Evidence for Timely Issuance: The tribunal emphasized that the absence of a DIN number and the delayed dispatch of the assessment order raised serious doubts about its timeliness. Despite the CBDT mandate and established procedural norms, the Income Tax Officer failed to adhere to prescribed guidelines.
Merits of the Case: Additionally, the tribunal examined the merits of the additions made by the Assessing Officer. The assessee demonstrated that the differences in consumption figures were attributable to an error in accounting treatment, rather than actual discrepancies in purchases. Consequently, the tribunal ordered the deletion of the additions made by the Assessing Officer.
Conclusion: In conclusion, the ITAT Kolkata ruled in favor of Dhanterash Sales Pvt. Ltd., declaring the assessment order as time-barred due to procedural irregularities and lack of evidence for timely issuance. The tribunal’s decision underscores the importance of adhering to procedural norms and providing substantiated evidence in tax assessments. This ruling serves as a reminder of the taxpayer’s right to a fair and transparent assessment process, ensuring justice and integrity in the realm of taxation.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The present appeal has been preferred by the assessee against the order dated 01.11.2023 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
2. The assessee in this appeal has taken the following grounds of appeal:
“1. For that on the facts and in the circumstances of the case, the impugned order dated 23.12.2019 passed by the A.O was served upon the appellant only on 15.02.2020 and therefore the same being barred by limitation deserves to be quashed.
2. (a) For that on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in confirming the AO’s action of in making addition to the tune of Rs.9,09,15,394 by way of unexplained expenditure u/s 69C of the Act and the same be directed to be deleted in full.
(b) For that on the facts and in the circumstances of the case, the authorities below failed to appreciate that the alleged difference in figures of consumption of cotton, viscose Fiber, polyester had occurred solely on account of incorrect arithmetical adjustment of the stock values in as much as there was no discrepancy whatsoever and therefore the impugned addition deserves to be deleted.
3. For that the appellant craves leave to submit additional grounds and/or amend or alter the grounds already taken either at the time of hearing of the appeal or before.”
3. The assessee has also taken the following additional grounds of appeal:
“We have filed an appeal against the order passed u/s 143(3) read with Section 263 by the Income Tax Officer, Ward 12(3), Kolkata dated 23.12.2019 for the A.Y. 2014-15. In the appeal filed in ITA No. 1184/Kol/2023, the company has challenged the addition of Rs.9,09, 15,394/- made in the impugned assessment order passed pursuant to the order dated 30.01.2019 issued by -Ld. Pr. CIT-4, Kolkata setting aside the assessment order passed u/s 143(3) of the Act dated 13.05.2016. In this regard we wish to file additional grounds of appeal which is enclosed with this letter.
The additional grounds do not need any verification of facts and are purely jurisdictional & legal issues. We therefore, request your Honour to kindly admit the additional grounds and decide on merits. In respect of the above proposition, we rely on the following decisions:
