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2024 (2) TMI 1554 - AT - Income TaxAssessment order as time barred - AO has not generated the DIN and the order was issued manually against mandate of the CBDT Circular No.19 of 2019 - HELD THAT - The order as per the records of the postal department for the first time was dispatched/booked on 14.02.2020. All the noted relevant factors would show that the order was not passed by the AO within the stipulated period therefore he did not adopt the regular practice of generating DIN number uploading the order on the Income Tax website or portal and sending the order through email. There is no evidence on the file either direct or indirect or even circumstantial to show that the order was passed by the AO on or before the last date of limitation for the same i.e. on 31.12.2019. Therefore we have no hesitation to hold that the assessment order in this case is time-barred. The assessee succeeds on this legal ground. Excess claim of expenditure on account of purchase - Additions have been made by the Assessing Officer on account of difference in figures of consumption of cotton viscose fibre polyester - As the total purchases of the assessee of all the materials duly matched and there is no difference of purchases. The ld. counsel has duly demonstrated the aforesaid contention by referring to reconciliation statement vis- -vis accounts of the assessee which have been examined by us. In view of this even on merits the addition made by the AO is not sustainable and the same is accordingly ordered to be deleted. Appeal of the assessee stands allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal issues considered by the Appellate Tribunal in this appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Validity and Limitation of the Assessment Order Legal Framework and Precedents: The Income Tax Act prescribes a limitation period for passing assessment orders, which in this case was 31.12.2019. The CBDT Circular No.19 of 2019 mandates the generation of a DIN on all assessment orders to ensure traceability and to establish the date of issuance. The Coordinate Bench precedent in 'Tata Medical Centre Trust vs. CIT' and the Hon'ble Delhi High Court decision in 'CIT (International Taxation) v. Brandix Mauritius Holdings Ltd.' were cited regarding the invalidity of orders lacking DIN. However, the Supreme Court has stayed the latter decision, creating some uncertainty. Court's Interpretation and Reasoning: The Tribunal examined the facts and found that the assessment order was dispatched to the assessee only on 14.02.2020 and delivered on 15.02.2020. The Assessing Officer did not generate any DIN number, contrary to the CBDT Circular. The absence of DIN and failure to upload the order on the Income Tax portal or send it via email reinforced the inference that the order was not passed within the limitation period. Key Evidence and Findings: The assessee submitted postal consignment details (Consignment No.EW236466055IN) showing dispatch on 14.02.2020. The Assessing Officer's letter confirmed the same consignment number and admitted no DIN was generated. The Tribunal noted that even if the dispatch date was accepted as 21.01.2020 (as claimed by the Assessing Officer), it was still after the prescribed date of 31.12.2019. No evidence, direct or circumstantial, was produced to prove the order was passed before the limitation period expired. Application of Law to Facts: The Tribunal applied the principle that the date of dispatch is not determinative if the order was passed before the limitation period. However, here, the absence of DIN and non-compliance with prescribed procedures indicated the order was passed late. The Tribunal held that the order was time-barred and thus invalid. Treatment of Competing Arguments: The Department sought to verify the date of order passage but failed to produce evidence contradicting the assessee's claim. The Tribunal gave weight to the procedural lapses and the absence of DIN over the Department's assertions. Conclusion: The assessment order dated 23.12.2019 is held to be barred by limitation and invalid for want of compliance with the CBDT Circular regarding DIN generation. Issue 2: Validity of Assessment Order for Lack of DIN Number Legal Framework and Precedents: CBDT Circular No.19 of 2019 requires all assessment orders to bear a DIN to ensure authenticity and proper record-keeping. The Coordinate Bench decision in 'Tata Medical Centre Trust vs. CIT' and the Delhi High Court ruling in 'Brandix Mauritius Holdings Ltd.' held that orders without DIN are invalid and deemed never issued. Court's Interpretation and Reasoning: The Tribunal acknowledged the non-generation of DIN by the AO despite the mandate. However, since the Supreme Court has stayed the Delhi High Court's decision, the Tribunal refrained from deciding definitively on this ground and proceeded to consider the limitation issue. Key Evidence and Findings: The Assessing Officer's letter confirmed no DIN was generated. The Tribunal noted this as a procedural lapse but did not base its final decision solely on this ground due to the Supreme Court stay. Application of Law to Facts: The Tribunal recognized the procedural defect but deferred the issue in light of the Supreme Court stay. Treatment of Competing Arguments: The assessee relied on precedents to assert invalidity, while the Department did not contest the absence of DIN but sought to justify the order's validity on other grounds. Conclusion: The Tribunal did not decide on this ground but noted the procedural lapse as a relevant factor supporting the assessee's contention. Issue 3: Justification of Addition of Rs. 9,09,15,394 under Section 69C Legal Framework and Precedents: Section 69C of the Income Tax Act deals with unexplained expenditure and allows the Assessing Officer to make additions where expenditure is not satisfactorily explained. Court's Interpretation and Reasoning: The AO made additions on the basis of alleged discrepancies in consumption figures of cotton, viscose fiber, and polyester, concluding there was an excess claim of expenditure. The assessee explained that the difference arose due to return of excess purchases of cotton and an arithmetical error by the auditor in adjusting stock values. Key Evidence and Findings: The assessee demonstrated through reconciliation statements that the opening stock of cotton was Rs. 9.09 crores, purchases were Rs. 9.40 crores, and returns of Rs. 9.09 crores were mistakenly adjusted against staple fiber instead of cotton. The total purchases reconciled correctly, negating any unexplained expenditure. Application of Law to Facts: The Tribunal applied the principle that additions under section 69C require a clear and unexplained discrepancy. Since the assessee satisfactorily explained the difference as an accounting/arithmetic error and reconciled the figures, the addition was not justified. Treatment of Competing Arguments: The AO relied on consumption figures and discrepancies, while the assessee provided documentary evidence and reconciliation to refute the claim. Conclusion: The Tribunal held the addition of Rs. 9,09,15,394 as unsustainable and ordered its deletion. Issue 4: Admissibility and Consideration of Additional Grounds of Appeal Legal Framework and Precedents: The assessee sought to file additional grounds of appeal which were purely jurisdictional and legal issues, relying on Supreme Court and High Court precedents to support their admission. Court's Interpretation and Reasoning: The Tribunal admitted the additional grounds as they did not require verification of facts but pertained to legal and jurisdictional questions. Key Evidence and Findings: The additional grounds challenged the validity and limitation of the assessment order, which were central to the Tribunal's consideration. Application of Law to Facts: The Tribunal considered these grounds in its analysis of limitation and validity. Treatment of Competing Arguments: No opposition to admission of additional grounds was recorded. Conclusion: Additional grounds were admitted and decided upon merits. 3. SIGNIFICANT HOLDINGS The Tribunal held that:
Core principles established include the necessity of compliance with procedural mandates such as DIN generation for assessment orders, strict adherence to limitation periods for passing assessment orders, and the requirement that additions under section 69C must be based on unexplained and verifiable discrepancies. The final determination was to allow the appeal, quash the assessment order as barred by limitation, and delete the impugned addition on merits.
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