TaxTMI 
TaxTMI 
2026 (7) TMI 1891
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....r 1 Invalidity of assessment order due to manual signing under e proceedings, On the facts and in law, the learned CIT(A) erred in sustaining the assessment order passed under section 143(3) read with section 254 of the Income-tax Act, 1961, although the order was manually signed despite the entire assessment proceedings having been conducted through the electronic assessment framework/e-proceedings. The appellant submits that, under the CBDT instructions governing faceless and electronic assessments, an assessment order is mandatorily required to be digitally signed. Manual signing renders the order invalid, non-est, and void ab initio. This defect goes to the root of jurisdiction and is not a curable irregularity. Consequently, the assessment order deserves to be quashed, and all additions sustained therein are liable to be deleted. Ground no 2 Assessment framed on a non-existent entity The learned CIT(A) erred in law and on facts in upholding an assessment order passed in the Permanent Account Number of a non-existing entity, which had ceased to exist as on the date of the assessment order. It is settled law that an assessment framed ....
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.... allowable under section 37 [1] The learned CIT(A) erred in law and on facts in confirming the disallowance of housekeeping and other expenses, despite the appellant having demonstrated that such expenses were incurred wholly and exclusively for business purposes and are allowable under section 37(1) of the Act. These expenses were routine, recurring, and revenue in nature, incurred for the maintenance, cleanliness, and smooth functioning of the appellant's business premises and operations. The learned CIT(A) failed to appreciate the business exigencies and commercial realities under which such expenditure was necessarily incurred. Ground number 7 The learned CIT(A) erred in confirming the disallowance in a mechanical manner, without considering the appellant's detailed submissions explaining the nature, necessity, and business nexus of the housekeeping and other expenses. The impugned appellate order does not address the specific factual explanations placed on record and therefore fails to qualify as a reasoned and speaking order. Ground number 8 The learned CIT(A) erred in upholding the disallowance by disregarding the documentary evid....
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....nd, or withdraw any of the foregoing grounds of appeal at or before the hearing of the appeal. 2. The facts of the case are that the assessee is a private limited company engaged in the manufacture and trading of oil seals, bearing seals, engine seals, radial shaft seals, wheel seals, and similar products, and also manufactures large-size bearings. The assessee filed its return of income on 30 November 2014 declaring a total loss of Rs.62,52,90,853. The return was processed under section 143(1) and was thereafter selected for scrutiny. The assessment was completed under section 143(3) on 23 December 2016, determining the total loss at Rs.60,10,55,965. In appeal, the assessee obtained marginal relief, and the matter ultimately reached the Coordinate Bench in ITA No. 1773/Bang/2018. By order dated 16 March 2022, the Tribunal restored the matter to the file of the Assessing Officer for fresh adjudication on the issues relating to unreconciled tax deducted at source reflected in Form 26AS and the ad hoc disallowance of housekeeping and other expenses. Pursuant thereto, an order was passed on 28 April 2023 under section 143(3) read with section 254 of the Income-tax Act. In that orde....
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....arty confirmation and was therefore unverifiable. However, relief was granted to the extent of rectifying the typographical mistake in the figures under section 154 of the Act. Accordingly, the assessee's appeal was partly allowed. 4. Aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. The learned authorised representatives, Shri Aditya Monosobdar and Shri Yashwanth Kumar D. N., Chartered Accountants, appeared on behalf of the assessee and filed a detailed paper book running into 169 pages, along with written submissions. They were heard at length. Whether the assessment order manually signed by the ld AO makes it invalid, non est Answer : NO 9 Section 282A (1) and (2) 5. On Ground No. 1, the learned authorised representative submitted that the assessment order passed by the Assessing Officer under section 143(3) read with section 254 of the Income-tax Act is invalid, as it was manually signed despite the entire assessment proceedings having been conducted through the electronic assessment framework/e-proceedings. It was submitted that, under the CBDT instructions governing faceless and electronic assessments, an assessment order is mandatori....
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....er, including notices under section 142(1), and all other communications were issued electronically and served on the assessee through the e-proceedings interface. The assessee, in turn, filed its responses, submissions, and supporting documents through the same electronic interface in accordance with the prescribed procedure. 1.5 The impugned assessment order, being the final culmination of the electronic proceedings, was nevertheless signed manually by the Assessing Officer. A perusal of the assessment order received by the assessee confirms that the signature appearing thereon is a manual ink signature and not a digital signature, as mandatorily required under the applicable CBDT instructions. 1.6 In addition, the appellant submits a further and materially distinguishing fact that merits the Hon'ble Bench's consideration. On the same date on which the impugned assessment order was passed and manually signed, the Assessing Officer issued a penalty notice bearing a valid and operative digital signature. This fact, apparent from the record and capable of verification, establishes that both the digital signing infrastructure and the Assessing Officer's digital sign....
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....elhi], ITA No. 566/Del/2026. * UCWEB Mobile Private Limited v. Deputy Commissioner of Income-tax [ITAT Delhi], ITA Nos. 929 & 2355/Del/2022. 1.12 The appellant further relies on the judgment of the Hon'ble Supreme Court in Chandra Kishore Jha v. Mahavir Prasad and Others, wherein it was held as follows: "It is well settled salutary principle that if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner." 1.13 The appellant also relies on the judgment of the Hon'ble Supreme Court in Cherukuri Mani v. Chief Secretary, Government of Andhra Pradesh, wherein the Court held as follows: "Where the law prescribes a thing to be done in a particular manner following a particular procedure, it shall be done in the same manner following the provision of law, without deviating from the prescribed procedure the government order in the present case, directing detention is clear violation of the prescribed manner and contrary to the provision of law" 1.14 The Hon'ble Court further approved the settled principle, consistently followed in a long line of decisions, that where....
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....ection 282A of the Act, which deals with authentication of notices and other documents, provides that where any notice or other document is required to be issued by an income-tax authority, it shall be signed and issued in paper form, or communicated in electronic form, by that authority in accordance with the prescribed procedure. The relevant procedure is prescribed under Rule 127A of the Income-tax Rules, 1962. The second proviso further provides that any notice or document issued, served, or given for the purposes of the Act shall be deemed to be authenticated if the name and office of the designated income-tax authority are printed, stamped, or otherwise written thereon. 8. Thus, section 282A (1) prescribes the modes of authentication for notices and other documents. Where a notice or document is issued in paper form, it must be duly signed. Where it is communicated electronically, it must be issued in accordance with the procedure prescribed under Rule 127A of the Income-tax Rules, 1962. The provision therefore recognizes two distinct modes of communication: (i) signed if issuance in paper form and (ii) electronic communication in the manner prescribed by the Rules. 9. ....
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....nsidered the said Instruction, particularly paragraph 4.2, and in paragraph 8 accepted the contention regarding the requirement of digital signature. In paragraph 10, the Bench also referred to the decisions of the Hon'ble Supreme Court, which have been cited before us as well, and concluded that the defect was incurable. However, it appears that the attention of the Coordinate Bench was not drawn to paragraph 4.5 of the Instruction, which recognizes circumstances in which manual proceedings may be conducted, or to paragraph 4.6, which states that the Instruction is to be followed through electronic mode "as far as possible". 14. Further, on a careful reading of the Tribunal's order, we find no reference to section 282A of the Act. The decision was therefore rendered without considering the statutory provision governing authentication, which stands higher in the legal hierarchy than administrative circulars or instructions. For this reason, it cannot be treated as a binding precedent on the issue before us. Although a precedent may bind where it lays down a clear principle on a common-law or constitutional issue, a decision turning on the interpretation of a specific statutory p....
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....e no arguments were advanced in support of this ground, it is dismissed. 21. Ground No. 4 alleges violation of the principles of natural justice in the remand proceedings. As no arguments were advanced on this ground, it is dismissed. 22. Ground No. 5 concerns the treatment of revenue expenditure as capital expenditure. The facts show that, under the head "other repairs," the assessee recorded purchases from M/s Metal Impacts. The Assessing Officer noted that invoices Nos. 94, 95, 146 and 39 related to items such as heavy-duty racks and main modules. He held that these items provided enduring benefit, were liable to be capitalized, and did not form part of the housekeeping expenses debited to the profit and loss account. Accordingly, the expenditure was disallowed as capital in nature, and the learned CIT(A) confirmed the findings. 23. It was submitted before us that the assessee uses slotted-angle racks and heavy-duty racks as integral parts of its day-to-day business operations for storing, organizing, and moving products. The assessee contended that, in its industrial and commercial setting, these racks serve a function materially different from ordinary or domestic rac....
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....he orders of the lower authorities and direct the Assessing Officer to delete the disallowance of Rs.23,02,587 and treat the expenditure as revenue expenditure. If any depreciation has been allowed pursuant to the order of the learned CIT(A), the same shall be withdrawn. Accordingly, Ground No. 5 of the appeal is allowed. 25. Ground No. 6 concerns the disallowance of consumables issued to the shop floor and debited under housekeeping and other expenses, amounting to Rs.35,87,477. The Assessing Officer made the disallowance on the ground that no supporting invoices were furnished and that the claim was based only on internal journal entries. In paragraph 11 of the assessment order, he noted that the ledger description read "Mapix miscellaneous issued to the department" and held that, in the absence of invoices or other supporting evidence, the entries appeared to be internally generated. The disallowance of Rs.35,87,477 was thereafter confirmed by the learned CIT(A). 26. Having heard the parties, we find that the assessee furnished complete details of the consumables issued to the shop floor, as set out in Annexure III to the submissions from page 56 onwards. The details ident....
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....owance was rightly made. 31. We have considered the rival submissions. Section 37(1) allows deduction only of expenditure incurred wholly and exclusively for the purposes of business. The assessee has not substantiated how the contribution to the Uttarakhand Relief Fund satisfies this requirement. Mere proof of payment, genuineness of expenditure, or recording in the books of account is insufficient for allowance under section 37(1) unless the business purpose is also established. In the absence of such evidence, we find no infirmity in the orders of the lower authorities. Accordingly, Ground No. 9 of the appeal is dismissed. 32. Ground No. 10 relates to the write-off of old advances given by the assessee as non-recoverable. The assessment order shows that, in paragraph 9, the Assessing Officer examined the ledger extracts of other expenses furnished by the assessee and noted certain transactions described as old advances written off as non-recoverable and classified under discounts to customers. According to the Assessing Officer, the assessee did not furnish information, invoices, documents, or clarification to substantiate that the claimed expenses were allowable. He there....