PCIT revision proceedings invalid for failing to quote Document Identification Number in show cause notice

ITAT Ahmedabad held that revision proceedings initiated by PCIT without quoting Document Identification Number (DIN) in show cause notice and revision order were invalid. Despite DIN being communicated to assessee next day, none of the exceptional circumstances under CBDT Circular 19/2019 existed to justify non-quoting of DIN. PCIT failed to obtain prior written approval from Chief Commissioner for manual communication and violated mandatory circular requirements. Since CBDT circulars are binding on revenue authorities, entire revision proceedings deemed never initiated. Assessee's appeal allowed.

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Issues Involved:
1. Validity of Show Cause Notice (SCN) and Revision Order without Document Identification Number (DIN).
2. Compliance with CBDT Circular No. 19/2019 regarding DIN.

Summary:

Issue 1: Validity of Show Cause Notice (SCN) and Revision Order without Document Identification Number (DIN):

The Assessee appealed against the Revision order dated 30.03.2022 by the Principal Commissioner of Income Tax (PCIT), which arose from the assessment order under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2017-18. The PCIT found the assessment order erroneous and prejudicial to the interest of Revenue due to wrong disallowance under section 14A, and issued a show cause notice on 02.03.2022. The Assessee objected, stating that the SCN and Revision order did not carry a DIN, making the proceedings invalid per CBDT Circular No. 19/2019.

Issue 2: Compliance with CBDT Circular No. 19/2019 regarding DIN:

The Revenue argued that although the SCN and Revision order did not initially carry a DIN, they were later generated and communicated to the Assessee. The Assessee contended that the Circular mandates that any communication without a DIN is invalid unless it falls under specified exceptional circumstances, which did not apply here. The Tribunal referred to the Circular, emphasizing that any notice or order without a DIN is deemed never issued unless justified under exceptional circumstances and regularized within a specified period.

Judgment:

The Tribunal concluded that the SCN and Revision order were not in conformity with the CBDT Circular No. 19/2019, as they lacked DIN and did not fall under any exceptional circumstances. The Tribunal cited Supreme Court and High Court judgments, reinforcing that Circulars issued under section 119 of the Act are binding on the Revenue. Consequently, the Tribunal deemed the Revision proceedings invalid and quashed them, allowing the Assessee's appeal.

Order:

The appeal filed by the Assessee was allowed, and the order was pronounced in the open court on 08-11-2023.

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