Assessment orders under section 148 without Document Identification Number invalid and deemed never issued

ITAT Chandigarh held that assessment orders issued under section 148 without Document Identification Number (DIN) mentioned in the order body are invalid and deemed never to have been issued. The tribunal ruled that non-mentioning of DIN is not a defect curable under section 292B and violates CBDT Circular 19/2019. Following consistent decisions across various tribunal benches and HC precedents including Tata Medical Centre Trust and Brandix Mauritius Holding Ltd., the tribunal set aside the section 147 read with 143(3) order as non-est in law, deciding in favor of the assessee.

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Issues Involved:

1. Validity of the assessment order due to non-compliance with procedural requirements.
2. Legitimacy of the initiation of proceedings under Section 148.
3. Appropriateness of the reassessment under Section 148 based on documents found during a third-party search.
4. Opportunity to cross-examine individuals whose statements were relied upon.
5. Compliance with departmental instructions and procedural irregularities.

Summary:

Issue 1: Validity of the Assessment Order Due to Non-Compliance with Procedural Requirements

The Tribunal addressed the procedural validity of the assessment order, particularly focusing on the absence of a Document Identification Number (DIN) on the assessment order. The assessee argued that the assessment order was non-est and invalid as it was not uploaded on the e-filing portal and lacked a DIN, violating CBDT Circular No. 19/2019. The Tribunal noted that the CBDT Circular mandates the inclusion of a DIN in all communications from the Income Tax Department to ensure transparency and traceability. The Tribunal held that the absence of a DIN on the assessment order rendered it invalid and deemed never to have been issued, following the binding nature of the CBDT Circular on the Assessing Officer. The Tribunal cited multiple judicial precedents supporting this view, including decisions from the Hon'ble Delhi High Court and other Tribunal benches.

Issue 2: Legitimacy of the Initiation of Proceedings Under Section 148

The assessee contended that the initiation of proceedings under Section 148 was unjustified. The Tribunal examined whether the reasons recorded for reopening the assessment were valid. The Tribunal found that the Assessing Officer had reasons to believe that income had escaped assessment due to the booking of bogus expenses, justifying the issuance of notice under Section 148. The Tribunal upheld the initiation of proceedings under Section 148, finding no procedural lapses in this regard.

Issue 3: Appropriateness of the Reassessment Under Section 148 Based on Documents Found During a Third-Party Search

The assessee argued that the reassessment under Section 148 was based solely on documents found during a search at a third party's premises, which should have warranted action under Section 153C instead. The Tribunal noted that the Assessing Officer had relied on documents and statements obtained during the search, which indicated that the assessee had booked bogus expenses. The Tribunal upheld the reassessment under Section 148, finding that the Assessing Officer had sufficient grounds to believe that income had escaped assessment.

Issue 4: Opportunity to Cross-Examine Individuals Whose Statements Were Relied Upon

The assessee claimed that no opportunity was provided to cross-examine individuals whose statements were relied upon by the Assessing Officer. The Tribunal acknowledged this contention but did not provide a detailed ruling on this issue, as the primary ground of appeal regarding the procedural validity of the assessment order was sufficient to decide the case.

Issue 5: Compliance with Departmental Instructions and Procedural Irregularities

The assessee argued that the assessment proceedings were not conducted in compliance with departmental instructions, specifically the mandatory digital conduct of proceedings and the requirement to mention DIN on all communications. The Tribunal found that the assessment order was manually issued without a DIN, violating CBDT Circular No. 19/2019. The Tribunal noted that the procedural irregularities, including the failure to upload the order on the e-filing portal and the absence of a DIN, rendered the assessment order invalid.

Conclusion:

The Tribunal set aside the reassessment order under Section 147 read with Section 143(3) due to non-compliance with procedural requirements, particularly the absence of a DIN on the assessment order. Other grounds of appeal were deemed academic and not adjudicated. The appeal of the assessee was partly allowed, with the assessment order being treated as non-est in the eyes of the law.

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