TMI Blog2022 (12) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is allowed. - ITA No. 625/Bang/2021 - - - Dated:- 6-12-2022 - SHRI GEORGE GEORGE K. , JUDICIAL MEMBER AND Ms. PADMAVATHY S , ACCOUNTANT MEMBER Appellant by : Shri Hemant Pai , CA Respondent by : Smt. Vandana Ramachandan, CIT(TP1)(DR)(ITAT), Bengaluru ORDER Per Padmavathy S. , Accountant Member This appeal is against the order u/s. 263 of the Income-tax Act passed by the Principal Commissioner of Income Tax (Central), Bangalore [PCIT] dated 15.3.2021 for the assessment year 2011-12. 2. The assessee, an individual is a contractor earning business income from contract receipts apart from rental income and interest income. The assessee filed the return of income for AY 2011-12 on 30.09.2011 declaring an income of Rs.2,58,15,614. The case was selected for scrutiny under CASS and the assessment was completed u/s.143(3) by making disallowance of agricultural income of Rs.5,00,000 and disallowance of expenses with respect to machinery maintenance of Rs.4,50,000. The case was reopened based on the information received from ITO(Inv) Unit 3(1) with regard to the search conducted and the undisclosed income offered by the assessee during the course of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te any or all of the grounds at the time of hearing the appeal. 5. The ld AR while praying for the admission of the additional ground submitted that if the additional ground is admitted and adjudicated on the legal issue of DIN not being available on the revision order, then the issues contended through main ground will become academic. The ld DR on other hand objected to the admission of the additional grounds. 6. We have heard both the parties on the admission of additional ground and following the Hon ble Supreme Court judgment in the case of M/s National Thermal Power Co. Ltd. Vs. CIT, 229 ITR 383 (SC), the additional grounds are admitted for adjudication. 7. Accordingly we will proceed to adjudicate the additional ground first. The ld AR submitted that the order u/s. 263 is a manual order without any DIN mentioned therein and therefore the order passed u/s. 263 is in violation of the CBDT Circular No.19 of 2019 dated 14.8.2019.The ld. AR drew our attention to paragraph 3 of the said circular wherein the CBDT has laid down certain procedures to be followed when a manual order is issued under exceptional circumstances. The ld. AR argued that the assessee is not aware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistration. Presently, almost all notices and orders are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as communication ) were found to have been issued manually, without maintaining a proper audit trail of such communication. 2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income-tax Act, 1961 (hereinafter referred to as the Act ), has decided that no communication shall be issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1st day of October, 2019 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. 3. In except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manual communication for the reasons mentioned in para 3(v) shall be sent to the Principal Director General of Income-tax (Systems) within seven days from the date of its issuance. 7. Further, in all pending assessment proceedings, where notices were issued manually, prior to issuance of this Circular, the Income-tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31th October, 2019. Sd/- (Sarita Kumari) Director (ITA.II)CBDT. 14. From the plain reading of the Circular, it is clear that the effective 1st October 2019, no communication shall be issued unless a DIN is allotted and is quoted in the body of the letter except under exceptional circumstances as mentioned in Para 3 which also lays down certain procedures to be followed for issue of manual order under certain circumstances. Accordingly, the manual communication should mention the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner/ Director General of Income-tax for issue of manual communication in a specific format. Para 4 of the circular states that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorized as belonging to a class, can thus be given the benefit of relaxation of law by issuing circulars binding on the taxing authorities. 13.3 In the matter of CIT v. Smt. Nayana P. Dedhia [2004] 141 Taxman 603/270 ITR 572 (AP), the Hon'ble Andhra Pradesh High Court held that the guidelines issued by the Board in exercise of powers in terms of section 119 of the Act relaxing the rigours of law are binding on all the officers responsible for implementation of the Act and, therefore, bound to follow and observe any such orders, instructions and directions of the Board. 13.4 In the decision of Dy. CIT v. Sunita Finlease Ltd. [2011] 11 taxmann.com 241/330 ITR 491 (Chattisgarh) it was held by the Hon'ble High Court of Chhattisgarh in para 16 that the administrative Instruction No. 9/2004 issued by the Central Board of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound to be struck down under article 14 of the Constitution. In the facts of the case, it is not necessary for us to decide whether the intention of CBDT was to restrict the period of issuance of notice from the date of filing the return laid down under section 143(2) of the I.T. Act. [emphasis supplied by us by underline] 14. Considering the facts on record, perusal of the impugned order, submissions made by the Ld. Counsel and the department, CBDT circular and the judicial precedents including that of Hon'ble Supreme Court and the jurisdictional High Court of Calcutta, we are inclined to adjudicate on the additional ground in favour of the assessee by holding that the order passed by the Ld. CIT(E) is invalid and deemed to have never been issued as it fails to mention DIN in its body by adhering to the CBDT circular no. 19 of 2019. Accordingly, additional ground taken by the assessee is allowed. Having so held on the legal issue raised by the assessee in the additional ground, the grounds relating to the merits of the case requires no adjudication. Accordingly, the appeal of the assessee is allowed in terms of above observations and findings. 16. We further notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g DIN is written instead of what is given in the intimation dated 15.03.2021. As rebuttal the ld AR submitted a true copy of the order u/s.263 duly certified by the Notary where it is noticed that the order u/s.263 does not have any DIN mentioned therein manually. Therefore from the perusal of facts and records it is clear that the order u/s.263 neither contains the DIN in the body of the order, nor contains the fact in the specific format as stated in Para 3 that the communication is issued manually without a DIN after obtaining the necessary approvals. Therefore we are of considered view that the impugned order is not in conformity with Para 2 and Para 3 of the CBDT circular. In view of these discussions and respectfully following the decision of the coordinate bench of the Tribunal in the case of Dilip Kothari (supra), we hold that the order passed u/s.263 is invalid and shall be deemed to have never been issued as per Para 4 of the CBDT circular as the order is not conformity with Para 2 and Para 3. It is ordered accordingly. 11. In the result, the appeal by the assessee is allowed. Pronounced in the open court on this 6th day of December , 2022 . - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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