The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) has declared that an assessment order issued without quoting the Document Identification Number (DIN) will be considered as non-issued under Section 263 of the Income Tax Act, 1961.
The assessment order passed for the assessment year 2015-16 under section 143(3) of the Income Tax Act. After reviewing the order and assessment record, the Principal Commissioner of Income Tax (PCIT) found the order to be erroneous and prejudicial to the interest of the revenue.
Consequently, the PCIT canceled the assessment and directed the Assessing Officer to redo the assessment while ensuring the authenticity of the transactions related to unsecured loans, including identity, creditworthiness, and genuineness.
The assessee questioned the order passed under Ssection 263 of the Income Tax Act on the ground that it violated the procedure prescribed by the CBDT Circular No. 19/2019, dated 14/08/2019. The circular mandates maintaining a proper audit trail of all communication to the assessee without quoting a computer-generated DIN on or after 01/10/2019.
The counsel for the assessee argued that the order should be treated as ‘non est‘ in the eye of the law for violating this procedure. The Counsel for the revenue argued that the order passed under Section 263 of the Income Tax Act dated 23/03/2020 had a document number [DIN & Document No. ITBA/REV/M/REV5/2020-21/1027201902(1)], which indicated that there was no violation of the circular.
The Counsel representing the revenue also emphasized that a meritorious case should not be rejected solely based on a discrepancy in the DIN. The merits of the case must be thoroughly examined, and if the order under Section 263 of the Income Tax Act is otherwise legal and valid, it should not be disregarded.
The bench consisting of two members, the Judicial Member K. Narasimha Chary and the Accountant Member Rama Kanta Panda observed that all communication must contain a computer-generated DIN. Failure to do so would render the communication invalid.
The ITAT Bench further added that the order passed under section 263 of the Act did not contain any reasons or statement in the prescribed format to explain Paragraph 4 of the circular clearly states that any communication not in conformity with paragraphs 2 and 3 shall be treated as invalid and deemed to have never been issued.
Therefore, any reason other than the exceptions mentioned in paragraph 3 would not save a communication issued without a DIN. Appeal filed by the assessee got allowed in result.
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