Income Tax Order passed u/s 263 without mention of DIN Invalid: ITAT

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. Based on the statement recorded from the employees of the assessee, Shri Shivaramu, the AO made an addition of Rs. 2,70,00,000 in the hands of the assessee towards deposits made into the account of Shri Shivaramu and his brother by the assessee and completed the assessment u/s.147 r.w.s.144 of the Act.

Subsequently the PCIT issued a show cause notice for the reason that in the statement recorded Shri Shivaramu had stated about the cash withdrawals to the tune of Rs.17 crores in a span of 15 days by the assessee and the AO while completing the assessment did not make any enquiries in this regard. The assessee submitted before the PCIT giving reasons for the cash withdrawals and that the AO has applied his mind while completing the assessment after taking into account the details furnished by the assessee before the AO. However the PCIT did not accept the submissions of the assessee and proceeded to set aside the order of the AO passed u/s.147 r.w.s. 144 for doing fresh assessment on the point of payments of Rs.17 crores. Aggrieved the assessee has preferred this appeal before the Tribunal.

The assessee raised 6 grounds pertaining to the revision order passed by the PCIT setting aside the order of the AO to make a fresh assessment on the point of payments amounting to Rs.17 crores. The assessee also made application for admission of additional grounds wherein the issue is contended on legal grounds in this appeal. The legal grounds relate to the validity of the order u/s. 263 for the reason that the order issued is a manual order and does not contain Document Identification Number [DIN] which is not in accordance with the instruction of Central Board of Direct Taxes (CBDT) issued vide circular no.19/2019 dated 14.08.2019.

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.

ITAT Order:

In assessee’s case, it is noticed as per the appeal set filed, that the revision order dated 15.3.2021 does not contain the DIN. The PCIT on the same day had issued an intimation whereby the DIN of the order u/s. 263 was communicated to the assessee. The argument of the ld DR that the intimation dated 15.03.2021 is part of the order and that there is no violation cannot be accepted as generating the DIN by separate intimation is allowed to be done to regularise the manual order (Para 5 of the circular) provided the manual order is issued in accordance with the procedure as contained in Para 3. It is also submitted by ld DR that in the records with the revenue, the DIN is manually written in the order u/s.263 and it is only a clerical error that a wrong 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.

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