Sec. 263 order without Document Identification Number deemed non-existent: ITAT

Case Details: Dilip Kothari v. Principal Commissioner of Income-tax (Central) [2023] 146 taxmann.com 442 (Bangalore-Trib.)

Judiciary and Counsel Details

• • George George K, Judicial Member & Ms Padmavathy S, Accountant Member
  • Narendra Kumar Jain, Advocate for the Appellant.
  • K. Sankar Ganesh, Jt.CIT (DR) (ITAT) for the Respondent.

Facts of the Case

A search operation was conducted on the assessee’s premises and notice was issued by the Assessing Officer (AO). In response, assessee filed its return of income and consequently, the assessment was completed.

From the assessment records, the Principal Commissioner of Income Tax (PCIT) noticed that a partner from the firm, in which the assessee was also a partner, declared certain income as his share from such partnership firm. Said share was related to cash received by the firm from a person with whom a JDA was entered into by the partnership firm.

PCIT noticed that AO hadn’t conducted any inquiry with regard to such cash paid. Considering such omission as prejudicial to the interests of revenue, PCIT issued notice for revision under section 263. Upon hearing, PCIT issued the order manually without any serial number or Document Identification Number (DIN).

Aggrieved by the order, the assessee preferred an appeal to the Bangalore Tribunal.

ITAT Held

The Tribunal laid reliance on the CBDT Circular No. 19/2019, dated 14-8-2019 whereby it is stated that every communication from the department shall be issued with appropriate DIN quoted on the body of order except under exceptional circumstances. Also, certain guidelines have been prescribed in case of issuing manual communications.

In case of manual communications, such communication shall specifically state the fact that the communication is issued manually without a DIN and the date for approval of the Chief Commissioner/Director General of Income-tax.

Further, where a manual communication is not sent in conformity with the above-mentioned specifications, it shall be treated as invalid.

PCIT contended that DIN is generated through a separate intimation, however, such an argument cannot be accepted. Issuing separate intimations will not regularise the manual order issued earlier without a DIN.

Since the order issued under section 263 was not in conformity with the guidelines prescribed under the circular, the order was invalid and was deemed to have never been issued.

List of Cases Reviewed

• • Tata Medical Centre Trust v. CIT (E) [2022] 140 taxmann.com 431/196 ITD 302 (Kol. – Trib.) (para 18) followed.

List of Cases Referred to

• • National Thermal Power Co. Ltd. v. CIT [1998] 97 Taxman 358/229 ITR 383 (SC) (para 8)
  • Tata Medical Centre Trust v. CIT (E) [2022] 140 taxmann.com 431/196 ITD 302 (Kol-Trib) (para 12)
  • Brandix Mauritius Holdings Ltd. v. Dy. CIT [IT Appeal No. 1542 (Delhi) of 2020, dated 19-9-2022] (para16).