Case Law Details
S.S. Enterprises Vs DCIT (ITAT Delhi)
Introduction: In a pivotal ruling that underscores the importance of compliance with procedural guidelines, the Income Tax Appellate Tribunal (ITAT) Delhi, in the case of S.S. Enterprises Vs DCIT, has quashed an assessment order and a notice of demand issued to the appellant for the Assessment Year 2015-16. This decision was primarily based on the absence of the Document Identification Number (DIN) in these documents, a requirement mandated by CBDT Circular No.19/2019 dated 14.08.2019.
Detailed Analysis: The appellant, S.S. Enterprises, challenged the order of the Commissioner of Income Tax (Appeals)-XXIV, Delhi, which arose from the assessment order dated 30.03.2022 passed under Section 147 r.w. Section 143(3) of the Income Tax Act, 1961. A significant point of contention was the absence of DIN on the assessment order and the subsequent notice of demand issued under Section 156 of the Income Tax Act, which was argued to be in violation of the procedural guidelines set by the Central Board of Direct Taxes (CBDT).
CBDT Circular No.19/2019 mandates the inclusion of DIN in every income tax communication to ensure proper documentation and tracking. The appellant’s counsel argued that the absence of DIN rendered these documents legally invalid, a position supported by several High Court judgments and decisions of Co-ordinate Benches of the ITAT that were cited during the proceedings.
The ITAT, after careful consideration of the submissions and precedents, concurred with the appellant. It noted that the assessment order and notice of demand were indeed issued without the requisite DIN, making them non-compliant with the CBDT circular. The Tribunal highlighted that separate communication of DIN after the issuance of the assessment order does not rectify this procedural lapse. Accordingly, the ITAT ruled in favor of the appellant, quashing both the assessment order and the notice of demand for non-compliance with mandatory procedural requirements.
Conclusion: This ruling by the ITAT Delhi is a clear affirmation of the necessity for strict adherence to procedural guidelines set forth by the CBDT, particularly concerning the inclusion of DIN in income tax communications. It underscores the judiciary’s commitment to ensuring that administrative procedures are followed meticulously, safeguarding the legal rights of taxpayers. The decision sets a precedent for similar cases, emphasizing the critical nature of procedural compliance in the issuance of tax-related communications. By invalidating the assessment order and notice of demand for failing to include the DIN, the ITAT has reinforced the importance of transparency, accountability, and traceability in tax administration processes.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-XXIV, Delhi (‘CIT(A)’ in short) dated 03.10.2023 arising from the assessment order dated 30.03.2022 passed by the Assessing Officer (AO) under Section 147 r.w. Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2015-16.
2. When the matter was called for hearing, the ld. counsel for the assessee stated at the outset that both the assessment order passed under Section 147 r.w. Section 143(3) dated 30.03.2022 as well as the notice of demand issued under Section 156 suffers from substantial defect owing to the fact that none of these two communications bear any Document Identification Number (DIN) mandated by Circular No.19/2019 dated 14.08.2019. The counsel also submitted that the assessee had questioned the non-availability of DIN on the body of notice of demand before the CIT(A) which was decided with disfavor. However, the assessee also now raised the grounds of appeal no.2 to contend that the assessment order itself is vitiated due to violation of Circular No.19 of 2019 as such assessment order do not bear any DIN in the body of the order. The DIN has been separately marked for such assessment order by a separate intimation letter dated 30.03.2022 issued on 31.03.2022. Such intimation letter to communicate the DIN separately outside, the assessment order is not permissible in view of the CBDT Circular as interpreted by several High Courts and the Division Benches.
2.1 The ld. counsel also sought permission to read ground no.2 of the main grounds as additional grounds filed under Rule 11 of the income Tax (Appellate Tribunal) Rules 1963. In the wake of the glaring facts, such leave is granted and the ground raised being purely legal in nature and having regard to that it emanates from the facts on record. Such ground is admitted for adjudication.
2.2 The ld. counsel adverted to the assessment order passed under Section 147 r.w. Section 143(3) of the Act and pointed out that there is no reference to any DIN in the body of the assessment order as required by the circular. However, a separate intimation letter dated 30.03.2022 has been issued which assigns DIN to the assessment order. The ld. counsel submitted that the assessment order has been issued on 30.03.2022 which read in conjunction with notice issued under Section 271(1)(c) of the Act whereas the intimation letter dated 30.03.2022 has been actually issued on the next date, i.e., 31.03.2022 as demonstrable from the screen shot obtained from the Income Tax portal placed on record. It was thus contended that firstly, the DIN is not recorded in the body of the communication, i.e., assessment order under Section 147 of the Act and consequently such DIN has been intimated to the assessee after the issuance of the assessment order. No reasons have been assigned for not assigning the DIN in the body of the assessment order.
2.3 The ld. counsel pointed out that such a situation has been clearly addressed by the Hon’ble Bombay High Court in the case of Ashok Commercial Enterprises vs. ACIT, 459 ITR 100 (Bom.). The Hon’ble High Court took note of the circular in a nuanced manner and observed that where the DIN is not found mentioned in the body of the assessment order and no reason has been provided for not mentioning DIN number in the order of the Assessing Officer, in such a situation, the assessment order will lose its validity. Subsequent separate communication of DIN is a superfluous exercise as observed by the Hon’ble High Court.
2.4 Similar view has been expressed by the Co-ordinate Benches rendered in the case of Smt. Sharda Devi Bajaj and others vs. DCIT, ITA No. 3006, 3008 & 3009/Del/2006 dated 15.11.2023; Abhimanyu Chaturvedi and Ors vs. CIT, ITA No.2486, 2487 & 2488/Del/2022 dated 03.08.2023; Tregarron Ltd. vs. ACIT, ITA No.307, 308 & 309/Del/2023 order dated 09.11.2023. The ld. counsel submitted that all the judgments have stated in chorus that it is mandatory in the light of the CBDT Circular that DIN number is required to be compulsorily mentioned in the body of the communication as defined in the circular which includes the assessment order as well as the notice of demand in question subject to exceptional circumstances as provided in paragraph 3 of the CBDT circular. The ld. counsel pointed out that no such exceptional circumstances as listed in paragraph 3 of the circular has been demonstrated in the present case. The ld. counsel thereafter referred to the decision rendered by the Co-ordinate Bench in Finesse International Design Pvt. Ltd. vs. DCIT, ITA No.1298/Del/2021 dated 13.12.2023 to submit that no DIN has been assigned at all to the notice of demand without which the assessment order is of no consequence. Under such circumstances also, the assessment order is rendered superfluous. The ld. counsel thus submitted that the assessment order as well as the notice of demand requires to be quashed on this preliminary ground alone.
3. The ld. DR for the Revenue in rebuttal submitted that DIN has been duly issued in so far as the assessment order is concerned as intimated by separate intimation letter dated 30.03.2022. Substantial compliance to the CBDT circular has thus been made. It was further submitted that the circular of the CBDT should not be read like a statute to give such strict interpretation where compliance of identification of assessment order on the records of Income Tax Department has been carried out. The ld. DR thus submitted that the assessment order should not be disturbed based on such purported procedural defect.
4. I have carefully considered the rival submissions and perused the assessment order, the notice of demand and also the first appellate order. The material referred to and relied upon in the course of hearing has been taken into account in terms of Rule 18(6) of the Income Tax (Appellate Tribunal) Rules 1963.
4.1 It is the case of the assessee that assessment order as well as the notice of demand do not survive in law and is rendered nonest due to non mentioning of DIN in the body of such communication/order as called upon by CBDT Circular No.19 of 2019 dated 14.08.2019. I observe that DIN has not been mentioned in the body of assessment order. However, DIN has been separately issued and intimated to the assessee vide letter dated 30.03.2022 which appears to have been issued on 31.03.2022, i.e., subsequent to the issuance of assessment order. Thus, it is evident that at the time of issue of assessment order DIN was not assigned. Be that as it may, no DIN is found in the body of the assessment order. Similarly, no DIN has been generated at all while issuing the notice of demand under Section 156 of the Act.
4.2 The issue is found to be squarely covered in favour of the assessee in the judgment rendered in Ashok Commercial (supra) and thus rendered by the Tribunal in Smt. Sharda Devi (supra), Abhimanyu Chaturvedi and Ors. (supra), Pratap Singh Yadav (supra), Tregarron Ltd. (supra), Finesse International Design Pvt. Ltd. (supra).
4.3 In consonance with the view expressed in the judgments noted above, I am constraint to observe that the assessment order, giving rise to the cause of action in the present appeal, is nonest in law. Likewise, notice of demand under Section 156 is also nonest and bad in law.
4.4 I therefore find merit in the plea of the assessee for quashing the assessment order at the threshold. The assessment order as well as the notice of demand in question thus stands quashed.
In such a view of the matter, I am not inclined to address the issue raised on merits.
In the result, the appeal of the assessee is allowed.
Order was dictated and pronounced in the open Court on 02/01/2024
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