TaxTMI 
TaxTMI 
2024 (1) TMI 156
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....edings, it was revealed that the assessee has created a web of sub-contractor firms having its registered address either at the residential / office premises of the then Chartered Accountant of the Company or at the residential address of the company's main accountant. The alleged sub contractors firms have been used by the assessee company to book bogus expenses to bring down its overall profits. Thereafter basis this information in his possession, the AO issued notice under section 148 dt. 20/03/2019 stating that on analysis of the report of the Investigation Wing and the returned income, it is clear that the bogus expenses of Rs. 10,30,66,089/- has been booked by the assessee company during the year under consideration and therefore, he has reason to believe that the amount of Rs. 10,30,66,089/- has escaped assessment within the meaning of Section 147 of the Act read with Clause (c) of Explanation 2 to Section 147. In the reasons so recorded, it has been stated by the AO that the escapement of income has happened due to failure on the part of the assessee company to disclose truly & fully the materials facts regarding accommodation entries as source of them remained unverified /....
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....action of the Learned Assessing Officer in making an addition of Rs. 10,30,66,089/- on account of payments made to the sub- contractor firms by holding that the same are allegedly bogus. 2. That the Learned CIT(A) further gravely erred in upholding the action of the Learned Assessing Officer in resorting to initiation of proceedings u/s 148. 3. That the Learned CIT(A) further gravely erred in upholding the action of the Learned Assessing Officer in proceeding with the re-assessment u/s 148 despite the fact that the entire reliance has been made by the Learned Assessing Officer on some alleged documents found during the course of search u/s 132 at the premises of the third party, and if at all any action was warranted, should have been by resort to Section 153-C. 4. That the Learned CIT(A) further gravely erred in upholding the impugned addition of Rs. 10,30,66,089/- despite the fact that no opportunity was provided to cross examine the person on whose statement the reliance has been placed by the Learned Assessing Officer. 5. That the Learned CIT(A) further gravely erred in upholding the validity of the assessment order despite the fact that the proceedings had not been con....
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....e Ld. AO to take the documents in manual mode, which was declined. However, the appellant was given another opportunity to file its reply online, which was duly done. Thus, it is the submission of the appellant that the same principal should apply to both sides and therefore in the absence of an order being passed in digital mode, the assessment order should be treated as null and void. 7.3 It was further submitted that CBDT circular No. 19/2019 dated 14.08.2019 also mandated very officer issuing any communication, order, etc to anyone to mention DIN in the body of the order. In the case of the appellant's order, there is no DIN mentioned on the assessment order passed u/s 148 of the Act. In fact, there is a DIN mentioned on the demand notice, but not on the assessment order. The DIN that is mentioned on the demand notice is also written manually and does not appear to meet the requirements of the statute. 7.4 It was submitted that both the assessment order and the notice of demand were issued under separate sections and therefore require a different DIN. The appellant has filed a set of assessment order, demand Notice and computation sheet, issued by the same Assessing Offic....
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....re the Ld. CIT (A). 7.8 It was submitted that a table capturing various communications is detailed at page 9 of the paper book and also in written submissions before Ld. CIT(A) which reveals that the Ld. AO has conducted the entire proceedings electronically, but the orders have been generated and passed manually without mentioning the DIN. 7.9 In this regard, our reference was further drawn to the written submissions filed before the Ld. CIT(A) and the contents thereof read as under: "The above ground challenges the Assessment Order as being non-est and bad in law in as much as the same has been passed in violation of the provisions of the Act and by-passing the procedures laid down in various circulars issued by the Central Board of Direct Taxes (CBDT) relating to the conduct of assessment proceedings through 'e-proceeding facility' during the Financial Year 2019-20 which were mandatory for compliance by the Ld. AO. The Income Tax Department, as a part of its initiative towards digital transformation of business processes and encouraging transparency and convenience has gradually been working towards introducing applications/procedures/facilities which provide integrated pl....
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.... are required to produce/ cause to produce their response/ evidence to any notice/ communication/ show-cause issued by the Assessing Officer electronically (unless specified otherwise) through their 'E-filing' account on the 'E-filing' portal. For smooth conduct of assessment proceedings through 'E-Proceeding', it is further directed that requisition of information in cases under ' E-Proceeding' should be sought after a careful scrutiny of case records. In following cases, where assessment is to be framed during the financial year 2019- 20, 'E-Proceeding' shall not be mandatory: a. Where assessment is to be framed under section(s) 153A, 153C and 144 of the Act. In respect of assessments to be framed under section 147 of the Act, any relaxation from e-proceeding due to the difficulties in migration of data from ITO to ITBA etc. shall be dealt as per clause (f) below; b. In set-aside assessments; c. Assessments being framed in non-PAN cases; d. Cases where Income-tax return was filed in paper mode and the assessee concerned does not yet have an 'E-filing' account; e. In all cases at stations connected through the VSAT or wit....
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....to dispense with the e-proceedings mode. It is humbly submitted that a review of the record of the entire proceedings, in any mode, makes it clear that there is no whisper about intimation of his intention to do so thereby laying bare her decision to stick to the e-proceedings mode for conduct and culmination of the assessment proceedings. In this connection, before proceeding ahead, Your Honour's kind attention is invited to the provisions of Section 153(2) of the Act which provides that no order for assessment, re-assessment and re-computation shall be made u/s 147 of the Act after the expiry of nine months from the end of the Financial Year in which the notice u/s 148 of the Act was served. In the instant case, the notice u/s 148 of the Act was served on the Appellant on 20.03.2019 and accordingly it was mandatory on the part of the Ld. AO to pass the order on or before December 31, 2019. Taking forward the above discussion, in the earlier scenario wherein manual conduct of assessment proceedings was done, order passed on or before December 31, 2019 would be said to be passed within the limitation period. However, in an e-proceedings scenario, it was incumbent on the Ld. AO ....
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....tting/ quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties; or (iii) when due to delay in PAN migration, PAN is lying with non-jurisdictional Assessing Officer; or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) When the functionality to issue communication is not available in the system, the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner / Director General of income tax. In cases where manual communication is required to be issued due to delay in PAN migration. the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written ....
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....h involve generation of DIN, any sort of communication shall be invalid and shall be deemed to have never been issued. Accordingly, this makes the Assessment order without any DIN invalid and bad and will deemed to have never been issued. It may however be noted that DIN has only been manually written on the demand notice u/s 156, which again is not in compliance with the guidelines in the circular. Further, as per the information available with the Appellant, no approval has been obtained from the CCIT/ DGIT neither any intimation has been given to the Principal DGIT to deviate from the procedure prescribed in Circular No. 19/2019 issued by the CBDT. Moreover, the notice was not served on the Appellant on the 'e-filing' portal, rather it was sent through courier which is again in contravention to the CBDT circular 27/ 2019 as was discussed supra. The order was not uploaded on the ITBA portal even till the time barring date of Dec 31, 2019 and even till date. We have enclosed a screenshot of the e-proceedings module on the ITBA portal dated Sep 08, 2020 which clearly shows that no communication has been uploaded by the department on the portal even till date. Therefore, even after ....
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....ment expected the Appellant to be extremely cautious of the e-proceedings procedure and wanted it to upload submissions in time, when it was department's turn as regards following the e-proceedings procedure by uploading the order on the portal, it not only failed to do so but by-passed all prescribed guidelines to create an arbitrary demand on the Appellant. It is important to highlight the fact that when all the communications from the Department (right from issue of notice u/s 148 to supply of reasons to disposal of objections to other notices issued during the conduct of assessment)came with a valid communication reference, then why the assessment order was passed without issuing a valid computer-generated DIN. The table below captures a summary of the communications from department from time to time in the instant case for Your Honour's ready reference: S.No. Particulars Manner Communication Reference 1. Notice u/s 148 of the Act 20.03.2019 Electronic ITBA/AST/S/148/2018-19/1015373181(1) 2. Notice requiring to furnish details and return of income pursuant to above notice 22.08.2019 Electronic ITBA/AST/F/17/2019-20/1017522374(1) 3. Supply of reaso....
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....hile filing appeal before your goodself in Form No. 35. Without prejudice to above, a copy of screenshot of system showing DIN no. of the said order is attached herewith as Annexure-2 for reference. Thus, submissions of assessee are factually incorrect, hence denied." 7.11 Further, our reference was drawn to the submission filed by the assessee in response to the remand report and the contents thereof read as under: "The Ld. Assessing Officer has shared screen shot showing the fact that the order was dispatched by mail on 18th December2021. However, the Ld. Assessing Officer has not controverted the fact that the order was not uploaded on the income tax portal as the appellant has already filed the screenshot of its portal. Further, the Ld. Assessing Officer has only shared the screen shot of dispatch of the order and has not controverted the fact that the order was signed manually and was also served manually on the appellant Moreover, the DIN is also hand written on the order. The assessee's ground relates to non-adherence to the circular issued by the CBDT and therefore making the order non-est In fact the Ld Assessing Officer has nowhere controverted the appellant st....
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....that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner / Director General of Income-fax for issue of manual communication in the following format- " .. This communication issues manually without a DIN on account of reason/reasons given in para 3(i)/3(ii)/3(iii)/3(iv)/3(v) of the CBDT Circular No ...dated (strike off those which are not applicable) and with the approval of the Chief Commissioner / Director General of Income Tax vide, number .. .. dated . .. . 4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued. 5. The communication issued manually in the three situations specified in para 3- (i), (ii) or (iii.) above shall have to be regularised within 15 working days of its issuance, by - i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; iii. communicating the DIN so generated to the assessee/any other person as per electronically generated pro forma available on the System. 6. An intimation of issuance of manual communication for the reason....
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....ctronically. Further as per circular no. 19/2019 of the CBDT all communication by the Income Tax Authorities after 01.10.2019 shall mandatorily are to be sent through the computer generated DIN no. which should be duly quoted in the body of such communication except where due to technical difficulties in generating the DIN no., the communication may be issued manually but only after recording reasons in writing and with prior approval of the Chief Commissioner of Income Tax of the Director General of Income Tax; whereas in the present case the assessment order bears no DIN and therefore such assessment order was invalid, bad and deemed to have been never issued. It was stated that DIN no. has been manually written on the demand notice u/s 156 of the Act which was not in compliance with the above circular. Further the demand notice and assessment order were not uploaded on the e-filing portal of the appellant; rather it was sent through the courier. Even till date no such communication has been uploaded on the ITBA portal of the appellant. Therefore the assessment order was invalid and bad in law. 8.2 Facts and discussion of the case and material on record in this case have been g....
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....come Tax Authorities on or after 01.10.2019 unless a computer generated DIN has been allotted and is duly quoted in the body of such communication. Therefore the AO was to generate such DIN no. before issuing/ communicating such assessment order along with demand notice to the appellant. It is observed that the AO has complied with the requirement of circular no. 19/2019 by generating the DIN no. through the ITBA portal on 17.12.2019 and quoting the same in the body of demand notice before uploading the same for communication to the appellant on 17.12.2019 electronically. The AO has uploaded the said reassessment order on the assessment module of the ITBA portal on 17.12.2019 after incorporating DIN no. which is also appearing in the screen shot of the portal of the AO, reproduced as above. Merely because the DIN no has been mentioned manually in the demand notice would not make it invalid. Though the AO has not mentioned the DIN no in the body of the assessment order, however such omission on the part of the AO is covered by the provision of section 292B of the Act as such assessment order was in substance and effect in conformity with or according to the intent and purpose of thi....
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....of the Ld. AR that the assessment proceedings have not been conducted electronically as the various notices have been issued through the assessment module of the ITBA portal and reassessment order has also been duly uploaded on such portal on 17/12/2019 and which has been dispatched to the assessee on 18/12/2019 electronically to the registered email account of the assessee within the limitation period. It was accordingly submitted that there is no merit in the contentions advanced by the Ld. AR and therefore the same deserves to be dismissed. 9. We have heard the rival contentions and purused the material available on record. The sum and substance of the contentions advanced by the ld AR relates to non-compliance by the Assessing officer, with the Circular no. 19/2019 dated 14/08/2019 as well as Circular no. 27/2019 dated 26/09/2019 issued by the Central Board of Direct Taxes, while passing the reassessment order u/s 147 r/w 143(3) dated 17/12/2019 for the impugned assessment year 2012-13. It is not in dispute that these CBDT Circulars were subsisting and applicable at the relevant point of time i.e, at the passing of the reassessment order by the Assessing officer and are curren....
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.... and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) When the functionality to issue communication is not available in the system, the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner / Director General of income tax. In cases where manual comll1unication 'is required to be issued due to delay in PAN migration. the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner / Director General of Income-Tax for issue of manual communication in the following format- . . .. This communication issues manually without a DIN on account of reason/reasons given in para 3 (i)/3(iI)/3 (iii)/3 (iv)/3 (v) of the CBDT Circular No ... dated .... . (strike off those which are not applicable) and with the approval of the Chief Commissioner / D....
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....approval of the Chief Commissioner / Director General of income tax. It has been further provided that the communication issued under aforesaid exceptional circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner / Director General of Income- Tax for issue of manual communication in the specified format as so provided in the aforesaid circular. Therefore, there is no bar on manual communication, however only in a scenario of exceptional circumstances so envisaged in the circular, the manual communication can be issued. However, before such manual communication is issued, there are certain laid down steps and procedure which has been prescribed by the CBDT and which has to be necessarily followed by the income tax authority and no relaxation therein has been envisaged and thus, has to be strictly followed by the income tax authority as part of standard operating standards and procedures. It has been provided that firstly, the reasons in writing have to be recorded by the income tax authority in the file stating the exact exceptional circumstances in a particular case (out of....
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....tances, and the fact of obtaining any written approval of the Chief Commissioner / Director General of Income-Tax in this regard for issue of manual communication in the specified format as so provided in the aforesaid circular. The communication so issued is thus not in compliance with paragraph 3 of the aforesaid circular issued by the CBDT as well. 17. We therefore find that there is non-compliance by the Deputy Commissioner of Income Tax, Central Circle 1, Chandigarh, with both paragraph 2 and paragraph 3 of the aforesaid CBDT Circular in terms of laid down steps and procedure as part of standard operating standards which have been prescribed, vide issuing the reassessment order passed u/s 143(3) r/w 147 of the Act dated 17/12/2019. Therefore, as so provided by CBDT in paragraph 4 of the aforesaid circular, the consequence of any such communication which is issued in violation of and non-compliance with paragraph 2 and 3 is that the same has to be treated as invalid and shall be deemed to never been issued. 18. Before we proceed further, we refer to the contentions advanced by the Ld. CIT/DR and the findings of the ld CIT(A) in paragraph 8.2 of the impugned order wherein he h....
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....ice of demand can be issued. There are thus close connection between the two and one cannot be read in absence of the other. If one has to challenge the findings of the AO in the assessment order, effectively, the person is challenging the assessment order and the consequent tax liability in terms of notice of demand. These are matters on the judicial side of the case and there cannot be any dispute in this regard. 21. At the same time, on the administrative side, if we look at the Circular no. 19/2019 dated 14/08/2019, in paragraph 2 of the said Circular, it has been provided that the CBDT in exercise of its powers under section 119 of the Income-tax Act, 1961 has decided that no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 20 19 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. The emphasis is clearly on each and every communicatio....
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....al Board of Direct Taxes ('Board'), in exercise of its powers under section 119 of the Income-tax Act,1961 ('Act') and in accordance with provision of section 2(23C) of the Act, hereby directs as under: (i) In all cases (other than the cases covered under the 'e-Assessment scheme, 2019' notified by the Board), where assessment is to be framed under section 143(3) of the Act during the financial year 2019-20, it is hereby directed that such assessment proceedings shall be conducted electronically subject to exceptions in para below. Consequently, assessees are required to produce/ cause to produce their response/ evidence to any notice/ communication/ show-cause issued by the Assessing Officer electronically (unless specified otherwise) through their 'E-filing' account on the 'E-filing' portal. For smooth conduct of assessment proceedings through 'E-Proceeding', it is further directed that requisition of information in cases under 'E-Proceeding' should be sought after a careful scrutiny of case records. (ii) In following cases, where assessment is to be framed during the financial year 2019-20, `E-Proceeding' shall not be mandatory: a. Where assessment is to be framed under se....
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....to be framed under section 143(3) of the Act during the financial year 2019-20, such assessment proceedings shall be conducted electronically. It has been provided that the assessees are required to produce their response/ evidence to any notice/ communication/ showcause issued by the Assessing Officer electronically (unless specified otherwise) through their 'E-filing' account on the 'E-filing' portal. Then, in paragraph (iii), it has been stated by the CBDT that issue of notices and departmental communications in such cases shall be strictly governed by the guidelines issued by CBDT vide its Circular No. 19/2019 dated 14.08.2019 regarding generation/ allotment/ quoting of Document Identification Number (DIN). We therefore find that the CBDT through the aforesaid Circular has reiterated the earlier guidelines in terms of Circular No. 19/2019 and has stated that the same has to be strictly followed while issuing notices and communication as part of conduct of proceedings electronically. 24. In the instant case, we find that notice u/s 148 dated 20/03/2019, supply of reasons for initiating proceedings u/s 148 to the assessee vide communication dated 22/08/2019, order disposing off ....
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....e guidelines, principles or procedures to be followed by other income tax authorities in the work relating to assessment or collection of revenue or the initiation of proceedings for the imposition of penalties and any such order may, if the Board is of opinion that it is necessary in the public interest so to do, be published and circulated in the prescribed manner for general information. (b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise 11[any income-tax authority, not being [a Joint Commissioner (Appeals) or] a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law; (c) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order for reasons to be specified therein, relax any requirement contained in any of the provisions of Chapter IV or C....
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....sessee. Once the said threshold is satisfied as not in dispute in the instant case, the subordinate authorities to whom the directions and instructions are issued by CBDT have to strictly observe and follow such directions and instructions as the same have become part of standards laid down by CBDT which have to be followed as part of standing operating procedure. The sub-ordinate authorities cannot therefore decide to apply the same standard in one case and not apply the same in another case stating that where the standards are not followed and applied, no prejudice is caused to the assessee. Therefore, in the instant case, as we have noted above, there is non-compliance to the CBDT circulars by the Assessing officer, it will remain non-compliant and the said non-compliance cannot be made good by holding that reassessment order so issued without DIN has been issued within the limitation period so prescribed under the statue and that the same has been sent through speed post and received by the assessee, thus no prejudice is caused to the assessee in terms of non-receipt of the said reassessment order and its right to appeal is not effected by any manner. 27. The matter relating t....
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....ns stipulated in the proviso to section 2 (15)." 114. Circular No. 1/2009 dated 27.03.2009 contains explanatory notes to provisions of the Finance Act, 2008. It inter alia reads as follows: "5. Streamlining the definition of "charitable purpose" 5.1 Sub-section (15) of section 2 of the Act defines "charitable purpose" to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility. It has been noticed that a number of entities operating on commercial lines are claiming exemption on their income either under sub-section (23C) of section 10 or section 11 of the Act on the ground that they are charitable institutions. This is based on the argument that they are engaged in the "advancement of an object of general public utility" as is included in the fourth limb of the current definition of "charitable purpose". Such a claim, when made in respect of an activity carried out on commercial lines, is contrary to the intention of the provision. 5.2 With a view to limiting the scope of the phrase "advancement of any other object of general public utility", sub-section (15) of section 2 has been amended to provide that the ad....
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.... was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to the effect such transactions and not to bring them within the mischief of the new provision. The officers were, therefore, asked to intimate to all the companies that if the loans were repaid before the 30th June, 1955, in a genuine manner, they would not be taken into account in determining the tax liability of the shareholders to whom they may have been advanced. In other words, past transactions which would normally have attracted the stringent provisions of s. 12(1B) as it was introduced in 1955, were substantially granted exemption from the operation of the said provisions by making it clear to all the companies and their shareholders that if the past loans were genuinely refunded to the companies, they would not be taken into account under s. 12(1B). Section 12(1B) would, therefore, normally apply to loans granted by the companies, to their respective shareholders with full notice of the provisions prescribed by it." 117. This court ultimately upheld the amendments. As is evident, the judgment noticed that the circula....
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....at the question of whether circulars or explanatory notes issued by the executive are binding aids of construction was not discussed; more importantly, the court first interpreted the statute, in its own terms, and then cited the circular. 120. That circulars are per se not binding upon courts, in regard to interpretation of a statutory provision and, at best are guides or aid to interpretation for departmental authorities, who are bound to take them into account, was pithily stated in Keshavji Ravji & Co. and Ors. v. Commissioner of Income Tax113 where the court observed as follows: "This contention and the proposition on which it rests, namely, that all circulars issued by the Board have a binding legal quality incurs, quite obviously, the criticism of being too broadly stated. The Board cannot preempt a judicial interpretation of the scope and ambit of a provision of the 'Act' by issuing circulars on the subject. This is too obvious a proposition to require any argument for it. A circular cannot even impose on the tax payer a burden higher than what the Act itself on a true interpretation envisages. The task of interpretation of the laws is the exclusive domain of th....
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....s the three Judge Bench decision in Sirpur Paper Mills Ltd. v. Commissioner of Wealth Tax [1970]77ITR6(SC) in which Section 13 of the Wealth Tax Act corresponding to Section 5(8) of the Income Tax Act, 1922 fell for consideration. This Court took the view that the instructions issued by the Board may control the exercise of the power of the departmental officials in matters administrative but not quasi-judicial. There is yet another decision of a three Judge Bench which seems to make a dent on the weight of the proposition that the circulars of the Board, even if they are plainly contrary to the provisions of the Act, should be given effect to and binding on the authorities concerned in the administration of the Act. That is the case of Keshavji Ravji & Co. v. I.T. Commissioner [1990] 183 ITR 1(SC)" 122. In view of a conflict between decisions, on the binding nature of circulars issued by the Board (in the context of decisions of authorities dealing with indirect taxation issues) this court, by a five-judge decision, in Ratan Melting and Wire Industries (supra) held that "6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the ....
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....hich can be seen from the omission of section 282B, which have been felt by the authorities concerned and can also be seen from the contents of the said Circular where it has been stated that "With the launch of various e-governance initiatives, Income-tax Department is moving toward total computerization of its work. This' has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax administration. Presently, almost all notices and orders are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as "communication") were found to have been issued manually, without maintaining a proper audit trail of such communication". In order to fill the said statutory vacuum and other stated objectives, the CBDT came out with the aforesaid circular in exercise of its powers u/s 119 of the Act. One can debate as to why Section 282B when was initially introduced, subsequent....
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....ernational Taxation)-1 Vs. Brandix Mauritius Holding Ltd. (supra) where the Hon'ble High Court vide its order dated 20/03/2023 has held that Circular issued by CBDT is binding on the Assessing officer and recourse to section 292B is untenable having regard to phraseology used in paragraph 4 of 2019 circular and the details findings read as under: "12. We have heard learned counsel for the parties. The present appeal is preferred under Section 260A of the Act. The Court's mandate, thus, is to consider whether or not a substantial question of law arises for consideration. 12.1 As noted above, the impugned order has not been passed on merits. 13. The Tribunal has applied the plain provisions of the 2019 Circular, based on which, it has allowed the appeal preferred by the respondent/assessee. 14. The broad contours of the 2019 Circular have been adverted to by us hereinabove. 14.1 Insofar as the instant case is concerned, admittedly, the draft assessment order was passed on 30.12.2018. 15. The respondent/assessee had filed its objections qua the same, which were disposed of by the Dispute Resolution Panel [DRP] via order dated 20.09.2019. 16. The final assessment order wa....
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....tional validity of Sections 2(6-A)(e) and 12(1-B) which were introduced in the Indian Income Tax Act, 1922 by the Finance Act, 1955 with effect from April 1, 1955. These two sections provided that any payment made by a closely held company to its shareholders by way of advance or loan to the extent to which the company possesses accumulated profits shall be treated as dividend taxable under the Act and this would include any loan or advance made in any previous year relevant to any assessment year prior to Assessment Year 1955-56, if such loan or advance remained outstanding on the first day of the previous year relevant to Assessment Year 1955-56. The constitutional validity of these two sections was assailed on the ground that they imposed unreasonable restrictions on the fundamental right of the assessee under Article 19(1)(f) and (g) of the Constitution by taxing outstanding loans or advances of past years as dividend. The Revenue however relied on a circular issued by the Central Board of Revenue under Section 5(8) of the Indian Income Tax Act, 1922 which corresponded to Section 119 of the present Act and this circular provided that if any such outstanding loans or advances of....
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....] 17.3 Also see the following observations of a coordinate bench in Back Office IT Solutions Pvt. Ltd. v. Union of India, 2021 SCC OnLine Del 2742, in the context of the impact of circulars issued by the revenue: "24....In this context, tax administrators have to bear in mind the well established dicta that circulars issued by the statutory authorities are binding on them, although, they cannot dictate the manner in which assessment has to be carried out in a particular case. A Circular cannot be side-stepped causing prejudice to the assessee by bringing to naught the object for which it is issued. [See: K.P.Varghese vs. Income-tax Officer1, [1981] 7 Taxman 13 (SC); Also see: UCO Bank, Calcutta v. Commissioner of Income Tax, W.B., (1999) 4 SCC 599]." 18. The argument advanced on behalf the appellant/revenue, that recourse can be taken to Section 292B of the Act, is untenable, having regard to the phraseology used in paragraph 4 of the 2019 Circular. 19. The object and purpose of the issuance of the 2019 Circular, as indicated hereinabove, inter alia, was to create an audit trail. Therefore, the communication relating to assessments, appeals, orders, etcetera which find ment....
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....urt decision in case of K.P Varghese vs ITO and Delhi High Court decision in case of And Back office IT Solutions Pvt ltd. vs UOI and held that recourse to Section 292B is untenable having regard to phraseology used in paragraph 4 of 2019 circular. It was held that any communication relating to assessment, appeals, orders, etc albeit without DIN can have no standing in law having regard to paragraph 4 of 2019 circular. No contrary authority has been brought to our notice. The legal proposition so laid down in the said case therefore squarely applies in the instant case wherein the Assessing officer has issued the reassessment order without mention of DIN on body of the order and therefore, the communication so issued can have no standing in eyes of law and is invalid and deemed never to have been issued and recourse to section 292B cannot be taken. The contention advanced by the Ld. CIT DR thereafter stand duly addressed and cannot be accepted. 32. Again, in the context of CBDT Circular no. 19/2019 dated 14/08/2019, we find that the matter came up for consideration before the Hon'ble Bombay High Court in case of Ashok Commercial Enterprises vs Assistant Commissioner of Income tax ....
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....n electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties: or (iii) when due to delay in PAN migration. PAN is lying with non jurisdictional Assessing Officer; or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) when the functionality to issue communication is not available in the system, the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner/ Director General of income-tax. In cases where manual communication is required to be issued due to delay in PAN migration, the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner/ Director General o....
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....der dated 28th September 2021 does not bear a DIN and further that the said order issued without a DIN does not bear the required format set out in paragraph 3 of the Circular and, therefore, the impugned assessment orders for Assessment Year 2011-2012 to 2019-2020 ought to be treated as invalid and deemed never to have been issued. We find support for this view in Brandix Mauritius Holdings Ltd. (Supra) where the Hon'ble Delhi High Court has held that an order passed in contravention of the said Circular is void, bad in law and of no legal effect. Paragraphs 16 to 17.1, 18 and 19 read as under: 16. The final assessment order was passed by the Assessing Officer (AO) on 15.10.2019, under Section 147/144(C) (13/143(3) of the Act. Concededly, the final assessment order does not bear a DIN. There is nothing on record to show that the appellant/revenue took steps to demonstrate before the Tribunal that there were exceptional circumstances, as referred to in paragraph 3 of the 2019 Circular, which would sustain the communication of the final assessment order manually, albeit, without DIN. 16.1. Given this situation, clearly paragraph 4 of the 2019 Circular would apply. 17. Paragrap....
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....he said Circular is clear and laudatory and intended to ensure that proper trail of all assessment and other orders are maintained and further that any deviation therefrom can only be undertaken after prior written approval of the higher authorities under the Act. Therefore, the satisfaction note dated 13th July 2021 and the impugned order of assessment dated 28th September 2021 ought to be treated as invalid and deemed never to have been issued;" 33. In the aforesaid case, the facts of the matter were that among various contentions challenging the assessment order passed u/s 153C r/w 144, one of the contentions raised before the Hon'ble High Court was that the assessment order doesn't bear a DIN and reference was drawn to the CBDT Circular no 19/2019 as well as the Hon'ble Delhi High Court decision referred supra. The Revenue in its submissions stated that the assessment order dated 28/09/2021 and notice of demand dated 28/09/2021 was communicated to the assessee vide letter dated 30/09/2021 having computer generated DIN and thus, the communication of assessment order and notice of demand is done only after creation of DIN number and the same is in compliance with the CBDT Circul....
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....Kol/2022, for the assessment year 2016-17. The revenue has raised the following substantial questions of law for consideration :- a) Whether in the facts and in the circumstances of the case the Tribunal was justified in law to quash the order passed under Section 263 of the said Act on the ground of not mentioning any DIN despite the fact that the DIN for the said order was duly generated and communicated to the assessee through intimation letter along with the said order ? b) Whether in the facts and in the circumstances of the case the Tribunal was justified in law in not appreciating the fact that the intimation letter enclosing the order passed under Section 263 specifically mentioned that "Order u/s 263 Dt. 31.03.2021 is having Document No. (DIN) ITBA/REV/M/REV5/2020-21/1032079241(1)", which forms an integral part of the order passed under Section 263? c) Whether in the facts and in the circumstances of the case the Tribunal was justified in law in not appreciating the fact that the DIN which was duly generated and communicated along with the order passed under Section 263 to the assessee was in compliance of the Circular No. 19/2019 dated 14.08.2019 issued by CBDT ? ....
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....swered by the revenue and therefore the learned Tribunal came to the conclusion that the order passed under Section 263 does not satisfy the requirement mandated by the CBDT Circular. Thus, we find no substantial question of law arises for consideration in this appeal. Accordingly, the appeal is dismissed. The stay application IA No.GA/1 /2023 is also dismissed" 35. In the aforesaid case, briefly the facts of the case are that the assessment was originally completed under section 143(3) of the Act. Subsequently, the Ld. CIT(E), Kolkata issued a show cause and thereafter, an order under section 263 was passed against which the assessee moved in appeal before the Coordinate Kolkata Bench and by way of additional grounds of appeal, it was contended that the order passed by the Ld. CIT(E) was null and void as it fails to mention any DIN number on its body or adhering to Circular number 19/2019 issued by CBDT. The Coordinate Kolkata Bench gave a finding that the order under section 263 has been issued manually which doesn't bear the signature of the authority passing the order. Further, it was held that from the perusal of the order passed under section 263 of the Act in its enti....
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....ble Calcutta High Court and therefore we are clearly guided by the said proposition so laid down by the Hon'ble Calcutta High Court that where the department has set down a standard for itself, the department is bound by that standard and cannot act with discrimination and apply the same selectively in some cases and ignore in other cases. 37. The Coordinate Kolkata Bench thereafter held the order passed by the Ld. CIT(E) as invalid and never been issued as it fails to mention DIN number in its body by adhering to CBDT Circular No. 19/2019. Thereafter the matter was carried in appeal before the Hon'ble Calcutta High Court. During the course of hearing, the Ld. Counsel for the Revenue submitted that the Tribunal was not justified in not appreciating the fact that intimation letter enclosing the order passed under section 263 was having a DIN number and which forms the integral part of the order passed under section 263 of the Act. The Hon'ble High Court didn't accept the said submissions and held that in the intimation letter, there is nothing mentioned as to why in the substantive order, the DIN number was not mentioned as mandated in the CBDT Circular more particularly in paragra....
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....circular issued by the department. Learned counsel appearing for the revenue/ department states that petitioner has participated in the proceedings and only after consideration of his reply the reassessment proceedings have been concluded. In the facts of the present case, we are not inclined to entertain the writ petition in view of the availability of statutory alternative remedy. The petitioner has otherwise participated in the proceedings. All questions of fact and law are otherwise left open for appropriate examination by the appellate authority. The main argument is that the order is without jurisdiction since notices were not issued on DIN. This argument is noticed only to be rejected since no prejudice is shown to have been caused to the petitioner on account of issuance of manual notices. Admittedly, the petitioner has acknowledged receipt of such notice and has also submitted his objections, which have been duly adverted to. Non-issuance of notice on DIN would thus not be a ground to entertain the writ petition, notwithstanding the availability of alternative remedy. Subject to the observations made above, this petition is consigned to records." 41. In the aforesai....
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....ocedure laid down by CBDT which have to be necessarily followed. The sub-ordinate authorities cannot decide to apply the same standard in one case and not apply the same in another case stating that where the standards are not followed and applied, no prejudice is caused to the assessee. 42. Further, the Hon'ble Kerela High Court in case of South Coast Spices Pvt Ltd vs Principal Commissioner of Income tax (Writ petition no. 33771 of 2023 dated 16/10/2023) reported in 2023:Kerela:63576 has held as under: "4. The satisfaction notes recorded by the Assessing Authority, which have been placed on record in Exts.P19 to P24, would suggest that the Assessing Authority has examined the documents and recorded satisfaction for issuing notices under Section 153C of the IT Act. The petitioner has demanded the satisfaction note, and the letter issued by the Assistant Commissioner of Income Tax in Ext.P18, whereby the satisfaction notes have been provided to the petitioner on his demand, would disclose that the letter bears the DIN number. The satisfaction note need not bear the DIN number, and this Court does not find any substance in the submission of the learned Counsel for the petitioner ....
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....otting/ quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties: or (iii) when due to delay in PAN migration. PAN is lying with non-jurisdictional Assessing Officer; or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) when the functionality to issue communication is not available in the system, the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner/ Director General of income-tax. In cases where manual communication is required to be issued due to delay in PAN migration, the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written ap....
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....oner may avail the remedy of appeal against the impugned assessment orders if so advised. Thus, the writ petition, with the aforesaid observation, is hereby dismissed. 43. In the aforesaid case, a writ petition was moved by the petitioner before the Hon'ble High Court assailing the assessment order passed u/s 153C of the Act and it was contended that the satisfaction note recorded prior to issue of notice u/s 153C of the Income Tax Act doesn't contain the document identification number (DIN) which is in violation of the Circular issued by the department and therefore, the whole proceedings are invalid. The Hon'ble High Court has however refused to entertain the writ petition and held that the satisfaction note is a document prepared by the Assessing officer which is kept in the file, and unless an assessee demands the satisfaction note, it is not required to be provided to the assessee and there was thus, no requirement to have a DIN number in the satisfaction note recorded by the Assessing Authority. At the same time, when the satisfaction note was provided to the petitioner, the communication bears DIN. The Hon'ble High Court has thus laid emphasis on internal documentation to....
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....2022, therefore the assessment order could not have been communicated to the petitioner prior to 31.03.2022. Accordingly, the assessment order is barred by limitation as the same was communicated after 31.03.2022. The Petitioner contended that DIN is mandatory for uploading of any manual order. 8. The case of the Revenue is that the assessment order dated 31.03.2022 passed in the case of the petitioner for AY 2014-15 is not barred by the limitation period provided under Section 153(3). It is submitted that Section 153 (3) provides the time line only for making of an assessment order and not for communicating or issuing the assessment order. Accordingly, what is required under Section 153(3) is that the assessment order may be made by the given date and the same is clear from Section 153 (3) of the Act. 9. To decide the rival contentions of the parties' section 153 of the Act is quoted hereunder: 153. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable: Provided that in respect of an order of assessment relating to the assessmen....
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....n of order' are all different acts or things. It is to be considered that section 153 (3) regulates only making of order. There is no restriction or limitation period prescribed under Section 153 (3) for 'issue of order', 'uploading of order on web portal' or 'communication of order'. The Hon'ble Supreme Court in the case of CIT v. Mohd. Meeran Shahul Hameed, (2022) 1 SCC 12, while interpreting Section 263 of the Income Tax Act, 1961, which uses similar expression like Section 153 (3), has held the following: "4.2. While deciding the aforesaid issues and question of law, Section 263(2) of the Income Tax Act, which is relevant for our consideration is required to be referred to, which reads as under: "263. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed." 4.3. On a fair reading of sub-section (2) of Section 263 it can be seen that as mandated by sub-section (2) of Section 263 no order under Section 263 of the Act shall be "made" after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. Therefore the word....
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....in the period of limitation prescribed under sub section (2) of Section 263 of the Act. The present appeal is allowed accordingly. No costs." 11. In the case at hand, the order sheet at Annexure-B to the supplementary affidavit of the revenue dated 07.12.2022, shows that the assessment order was made/generated on 31.03.2022 and the intimation letter was issued on 03.04.2022. Therefore, the contention of the petitioner, that the said assessment order, dated 31.03.2022 which was uploaded on the web portal on 01.04.2022 and communicated to the petitioner on 03.04.2022 is barred by limitation, is misconceived and not sustainable in law, inasmuch as, section 153 (3) controls only making of order. There is no restriction or limitation period prescribed under Section 153 (3) for 'issue of order', 'uploading of order on web portal' or 'communication of order. 12. Further, in the present case the assessment order, dated 31.03.2022, was uploaded on web portal on 01.04.2022, which is just the next day after 31.03.2022, and even the DIN was generated on 01.04.2022. Accordingly, the delay, if any, in uploading or DIN was just of one day. In this factual background, it is also to be consid....
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....loaded on the next day. In the absence of such legal provision, it cannot be held that the assessment order, dated 31.03.2022, which was uploaded on 01.04.2022, is invalid in law. At the cost of repetition, the different expression used by the legislature at different places has certainly a different objective. Making of the order and communication of the order are two different things. Even the circular stipulates communication of the order and not making of the order as it says every communication relating to assessment, appeal, order etc. shall have a DIN on the body of the order. 14. The Petitioner has contended that impugned order is antedated. It is a purely factual issue also disputed by the revenue. As such, the petitioner has a statutory alternate remedy to challenge the assessment order before the Commissioner of Income Tax (Appeals) where he may raise such plea. 15. Consequently, the instant writ application is dismissed. Petitioner has failed to satisfy any of grounds to invoke the writ jurisdiction of this Court by passing the statutory alternative remedy. The petitioner is at liberty to avail the alternate remedy to challenge the impugned assessment order. He ....
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....conflict with Section 282 of the Act read with Rule 127 of the Income Tax Rules and what is relevant is the date of communication which in the instant case is 03/04/2022 will after the cutoff date of 31/03/2022 and it was contended that what is relevant is issue as well as services of any communication within the prescribed limit so prescribed by the statute. It was further contended that the assessment proceedings have become time barred as only on 03/04/2022, the order dt. 31/03/2022 was uploaded on the web portal of the assessee and communicated to the email address of the assessee only on 01/04/2022 indicating the DIN number of the impugned order and a corrigendum was also issued on 11/04/2022 in order to cover up the anomalies and defect in the order and it was contended that the order and the communication dt. 01/04/2022 shows that the order was antedated. In response, the Ld. Counsel for the Revenue submitted that Section 153(1) and 153(2) used the expression "shall" for prescribing the time limit for making the relevant assessment order and Section 153(3) uses the expression "may" for prescribing the time limit for making the relevant assessment order. It was submitted that....
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....rder. Accordingly, the writ petition was dismissed and at the same time assessee was granted liberty to avail the alternate remedy to challenge the assessment order on merits of the case. 48. We therefore find that even though the contentions have been raised by the assessee regarding the binding nature of the CBDT Circular and non mentioning of DIN on the body of the assessment order as well as the fact that the order is barred by the limitation in terms of Section 153(3) of the Act, the Hon'ble High Court has mainly examined the provision of Section 153(1), 153(2) and 153(3) and held that the provisions of Section 153(3) only provides for making of the assessment order and not for communicating or issuing the assessment order and has held that the expression used in Section 153(3) cannot be interpreted and applied in a stricter sense and the order so issued by not barred by limitation. We therefore find that the said decision cannot comes to the aid of the Revenue in as much as there is no specific finding which has been recorded by the Hon'ble High Court discussing the contention raised by the assessee regarding the binding nature of the CBDT Circular and non mentioning of the ....