Assessment, appeal, and order communications made without a DIN are invalid

Fact and issue of the case

This appeal by the assessee is preferred against the order of the CIT(A)-24, New Delhi dated 21.06.2022 pertaining to A.Y. 2016-17.

The assessee has raised the following grounds of appeal :-

On the facts and circumstances of the case, the order passed by the learned CIT(A) is bad both in the eyes of law and on facts.

On the facts and circumstances of the case, the issue of notice and proceedings initiated thereto under section 153C of the Act is bad in law, being barred by limitation and hence the assessment order passed in consequence thereto is liable to be quashed.

On the facts and circumstances of the case and in law, the assessment order passed by the AO is barred by limitation.

On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C and the assessment order passed in consequence thereto are bad in law in the absence of any incriminating material belonging to the assessee being found during the search.

On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in dismissing the appeal preferred by the assessee without considering the fact that the impugned assessment order has been passed without issuance of statutory notices as required under the law.

(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in making addition of Rs. 15,93,770/- treating the same unexplained money u/s 69A of the

(ii) That the above addition has been confirmed by arbitrarily rejecting the explanations and the evidences brought on record by the assessee.

(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming addition of 23,907/-on account of commission treating the same as unexplained money u/s 69C of the Act.

(ii) That the said addition has been made at the rate of 1.5% on the above alleged amounts of unexplained money without there being any basis for the same.

On the facts and circumstances of the case, the learned CIT(A) has grossly erred both on facts and in law in confirming the above additions ignoring the fact that assessee’s name is not appearing anywhere in any of the statements recorded during the course of search.

On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that assessment order has been passed by AO on the basis of surmises and conjectures, without there being any adverse material on record.

On the facts and circumstances of the case, the learned CIT(A) has erred both oh facts and in law.

Vide letter dated 09.05.2023 the assessee sought permission to raise additional ground of appeal as the same goes to the root of the matter.

The assessee has raised the following additional ground of appeal :-

The applicant has filed the above said appeal No. 1 902/Del/2022 on 18th August, 2022 against the order dated 21.06.2022 passed by the learned Commissioner of Income Tax (Appeals)-24, New Delhi under Section 250 of the Income Tax Act.

That while filing the appeal, the applicant has raised 12 grounds of appeal.

However, while filing the appeal the appellant inadvertently has left out the ground of appeal relating to order passed by Ld. AO being null and void as the same is in violation of CBDT Circular No. 19/2019 dated 1 4th August, 2019.

That accordingly, the applicant is filing additional ground of appeal.

That it is submitted that the following additional ground may kindly be taken as the same goes to the root of the issue and all the facts are already on record: “

On the facts and circumstances of the case, the assessment order is null and void as the same is in violation of CBDT Circular No. 19/2019 requiring mandatory DIN. ”

That the ground revised in this application is legal ground going to the root of the matter, and all the facts relating to the same are already part of record.

That in the circumstances, it is prayed that the additional grounds may be taken on record.

Observation of the court

This order of the Tribunal was upheld by the Hon’ble Delhi High Court order dated 20.03.2023 in ITA No.163/2023 the relevant findings reads as under :-

Therefore, any communication which is not conformity with the provisions of paragraph 2 and 3 of the 2019 Circular is to be treated as invalid, as if it was never issued [See paragraph 4 of the 2019 Circular.]

In a nutshell, Communications referred to in the 2019 Circular would fall in the following slots :

i. Those which do not fall in the exceptions carved out in paragraph 3 (i) to (v)

ii. Those which fall in the exceptions embedded in paragraph 3 (i) to (v), but do not adhere to the regime set forth in the 2019 Circular

Therefore, whenever communications are issued in the circumstances alluded to in paragraph 3 (i) to (v), i.e. are issued manually without a DIN, they require to be backed by the approval of the Chief Commissioner/ Director General. The manual communication is required to furnish the reference number and the date when the approval was granted by the concerned officer. The formatted endorsement which is required to be engrossed on such a manual communication, should read as follows : “……….

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 and with the approval of the Chief Commissioner / Director General of Income Tax vide number dated ….”

As indicated hereinabove, insofar as communications falling in circumstances alluded to in paragraph 3 (i) to 3 (iii) are concerned, the process of regularization in the manner indicated in paragraph 5, should take place within fifteen (15) working days of its issuance. This period of regularization with regard to the circumstance referred to in paragraph 3 (v) is reduced to seven (7) days, and is required to be marked to the Principal Director General of Income-Tax (Systems) [see paragraph 6 of the 2019 Circular] 9. In the instant case, there is nothing on record to show that, according to the appellant/ revenue, failure to allocate DIN arose out of the “exceptional circumstances” which are set forth in paragraph 3 of the 2019 Circular. It is, however, the case of the appellant/ revenue, both before this court and before the Tribunal, that failure to allocate DIN was a mere mistake. Using this as the foundation, the argument put forth before us is that the mistake can be corrected by taking recourse to Section 292B of the Income Tax Act, 2961 [ in short “the Act”] XXXXXX

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.

The object and purpose of the issuance of the 2019 Circular, as indicated hereinabove, inter alia, was to create an adult trail. Therefore, the communication relating to assessments, appeals, orders etcetra which find mention in paragraph 2 of the 2019 Circular albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular.

The logical sequitur of the aforesaid reasoning can only be that the Tribunal’s decision to not sustain the final assessment order dated 15.10.2019, is a view that cannot call for our interference.

As noted above, in the instant appeal all that we are required to consider is question of law arises for consideration, which, inter alia, would require the Court issue is debatable or if there is an alternate view possible. Given the language employed in the 2019 Circular, issued is debatable or if there is neither any scope for debate not is there any leeway for an alternate view.

We find no error in the view adopted by the Tribunal. The Tribunal has simply the 2019 Circular and thus, reached a conclusion in favour of the respondent/ assessee.

Accordingly, the appeal filed by the appellant/revenue is closed .

Respectfully following the decision of the coordinate Bench and the Hon’ble jurisdictional High Court (supra) we have no hesitation to hold that the assessment order dated 31.12.2021 framed u/s. 143 (3) r.w.s. 153C of the Act is null and void and

However, in the interest of justice and fair play we deem it fit to give liberty to the revenue to approach this Tribunal as per the provisions if the officer brings on record facts to show that the impugned assessment order falls within the exceptions provided in the aforementioned CBDT circular.

With the above directions the appeal of the assessee is allowed.

Decision announced in the open court on 18.07.2023.