The Entire revisionary action is nullified by the notice issued under Section 263 without a DIN
Fact and issue of the case
This appeal is filed by the Assessee as against the Revision order dated 30.03.2022 passed by the Principal Commissioner of Income Tax (Appeals)-3, Ahmedabad arising out of the assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2017-18.
The brief facts of the case is that the assessee is Private Limited Company engaged in Real Estate Business and Development of Commercial Project called “Titanium-1”. For the Assessment Year 2017-18, the assessee filed its Return of Income declaring total income of Rs. 5,50,49,400/- and book profit of Rs. 8,68,04,958/-under Minimum Alternative Tax (MAT). The Return of Income was taken up for scrutiny assessment, to verify the sales turnover since higher turnover reported in Service Tax Return as compared to Income Tax Return and also to verify the earning of exempt income. The Assessing Officer issued show cause notices u/s. 142(1) on 18.06.2019, 30.08.2019, 18.10.2019 and considered the submissions of the assessee and accepted the income returned by the assessee by passing regular assessment order u/s. 143(3) of the Act dated 22.11.2019.
On perusal of the above assessment order by the Ld. PCIT, the same is found to be erroneous in so far as it is prejudicial to the interest of Revenue on the wrong disallowance u/s. 14A and consequently normal provision of Income Tax could be applicable and not that of MAT. Therefore a show cause notice dated 02.03.2022 was issued to the assessee calling for his explanation, by fixing the case for hearing on 08.03.2022. It is stated in the show cause notice that the above Revision proceedings is getting time bar on 31.03.222, hence the assessee was required to comply with the SCN by the given date and time, failing which Revision proceedings shall be finalized on the basis of the material available on record and merits of the case and no adjournment will be granted to the assessee.
The assessee vide its detail reply submitted its objection on the Revision proceedings. After considering the same, Ld. PCIT set aside the assessment with a direction to the Assessing Officer to recompute the disallowance u/s. 14A r.w. Rule 8D after giving opportunity to the assessee.
Aggrieved against this Revision order, the assessee is in appeal before us. Ld. Counsel Mr. Vartik Chokshi appearing for the assessee raised preliminary objection before us that both the show cause notice dated 02.03.2020 and Revision order dated 30.03.2022 passed by the Ld. PCIT does not carry Documents Identification Number (hereafter referred to as ‘DIN’). Therefore as per CBDT Circular No. 19/2019 dated 14.08.2019, the above Revision proceedings itself is invalid in law and the entire Revision proceedings are liable to be quashed.
Observation of the court
The Hon’ble Delhi High Court in the case of CIT Vs. Brandix Mauritius Holdings Ltd. (cited supra) held as follows: “…
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 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 whether any substantial question of law arises for consideration, which, inter alia, would require the Court to examine whether the issue is debatable or if there is an alternate view possible. Given the language employed in the 2019 Circular, 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 applied the provisions of the 2019 Circular and thus, reached a conclusion in favour of the respondent! assessee.
Accordingly, the appeal filed by the appellant! revenue is closed.”
Therefore in our considered opinion, the initiation of Revision proceedings by issuing Show Cause Notice without DIN and passing Revision order dated 30.03.2022 without DIN are invalid in law.
In the result, the appeal filed by the Assesse is hereby allowed.
Order pronounced in the open court on 08-11-2023
Read the full order from here
Nova-Properties-Private-Limited-Vs-PCIT-ITAT-Ahmedabad-2
