Lalit Aggarwal, Kathua V. DCIT CEN CIR, JAMMU, Jammu and Kashmir

ITA 177/ASR/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0241 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-06-2024
• Assessment Year: misc
• Appeal Filed On: 02-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA BHAURAOJI NINAWE
• Keywords: Condonation of delay
• Section: 131; 143(3); 153A; 250; 153; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 Lalit Aggarwal, 36B Industrial Extension Area, Near Hatli Morh, Kathua Jammu and Kashmir. [PAN:AABPA7622H] (Appellant) Vs. DCIT, Central Circle, Jammu and Kashmir (Respondent) Appellant by Sh. Rohit Kapoor, CA and Sh. V.S. Aggarwal, ITP Respondent by Sh. Hitendra Bhauraoji Ninawe, CIT. DR Date of Hearing 01.07.2024 Date of Pronouncement 12.08.2024 ORDER Per: Udayan Das Gupta, JM This appeal is presented by the assessee against the order of the Ld. CIT (A) -5, Ludhiana, order dated 16/01/2024, passed u/s 250 (6) of the Act 61, confirming the addition of Rs. 15,50,090/- made by the Ld. AO, u/s 143(3) of the Act 1961. 2. It is pointed out by the registry that this appeal has been filed belated by 18 days. The assessee has filed an application requesting for condonation of delay on I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 2 medical grounds. He stated that assessee was undergoing treatment in Gupta Hospital and Research Centre with Radiculopathy left lower limb. In support of his contention he has furnished a Certificate from the Hospital Authority. Considering the medical reasons, the delay is hereby condoned. 3. The grounds of appeal of the assessee are as under: “1. On the facts and circumstances of the case, the Ld. CIT(A) vide order u/s 250(6) has erred in confirming the addition to the tune of Rs. 1550090/- made by the AO in order passed u/s 143(3). 2. That the CIT(A) has erred in law and in facts in confirming the addition of Rs. 1550090/- made by the AO on account of unexplained cash and unexplained jewellery by invoking the "□visions of section 115BBE without appreciating the explanation offered by the assessee. 3. That the CIT(A) has erred in confirming addition to the tune of Rs. 670000/- out of total cash of Rs. 1300000/- found during the course of search without appreciating that cash of Rs. 300000/- was received by the assessee from deceased Mother-in-law Smt. Indra Rani. 4. That the CIT(A) has erred in confirming addition of Rs. 370000/- on account of unexplained cash u/s 69A. The addition has been confirmed without allowing the benefit of cash withdrawal amounting to Rs. 370000/- from partnership firm M/s Cemcom Cement for the period 05.11.2020 to 17.11.2020 I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 3 on the premise that there was a time gap between the date of withdrawal and date of search i.e. 06.01.2021. 5. That the CIT(A) has erred in confirming addition in respect of 167 grams of jewellery valuing at Rs. 880090/- by partially disallowing the benefit of instruction no 1916. That the CIT(A) has confirmed the addition on the basis of surmises and conjecture that said jewellery includes diamond without separately identifying the diamond. 6. That the CIT(A) has erred in not appreciating that the assessment framed under section 143(3) is bad in law as the statutory approval U/s 153D was granted in a mechanical manner and without application of mind as the approval and order were made on same day 29.09.2022. 7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off.” 4. In course of hearing before the tribunal the assessee has taken an additional ground of appeal which is reproduced as under: “1. That the CIT(A) has erred in confirming the addition of Rs. 1550090/- made by the AO ignoring the fact that the assessment framed u/s 143(3) is bad in law since the same is without mentioning DIN which is a mandatory requirement.” 5. The facts of the case are that the assessee is an individual and engaged in the business of trading of steel, gypsum, coal, and crusher machinery on rent. Apart I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 4 from that he is also a partner in the firm M/s Aggarwal Equipment and is the sole proprietor of “M/s Cemcon Cement and M/s Balaji Engineering Works”. There was a search on the assessee conducted on 06.01.2021 and pursuant to the search notice u/s 153A has been issued, against which the assessee has filed the return on 15.3.2022 declaring total income of the Rs.54,19,320/-. Thereafter assessment order was passed on 29.09.2022, u/s 143(3) making an addition of Rs.1,79,19,196/- the breakup of the additions made by the AO are as follows: Assessed by the AO in Order u/s 143(3) As Sustained by the ld. CIT(A) Unexplained money (cash found during search) (page No 12 &13of A.O. order) 13 ,00 ,000 670000 Page No 35 and 38-39 of CIT(A) order Unexplained jewellery (jewellery found during search) (P age No 5 & 18 of A.O. order) 35 ,15 ,090 880090 Page No 39-40 of CIT(A) order Exemption u/s 10(37) denied 10013603 Allowed Perquisites in hands of assessee 840000 Allowed Diary seized 2250503 Allowed Total 1,79 ,19 ,196 15 ,50 ,090 6. In the first appellate proceedings the ld. CIT(A) has allowed substantial relief to the assessee, but due to reasons contained in his appeal order, he has I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 5 sustained an addition of Rs.6,70,000/- on account of unexplained cash found during search and Rs.8,80,090/- on account of unexplained jewellery found during the search. 7. Now, the assessee is in appeal before the Tribunal, challenging the above two additions sustained by the first appellate authority. He has taken various grounds contained in the memorandum of appeal in Form No. 36 all relating to the above two issues. Before the Tribunal the assessee has filed an additional ground of appeal regarding non mentioning of DIN. 8. The ld. AR of the assessee submits that additional ground taken by the assessee goes to the root of the assessment proceedings and it does not require any new facts to be investigated, and as such he prays that in view of the Hon’ble Apex Court’s Judgment in the case of NTPC vs. CIT reported in 229 ITR 383, the additional ground being a legal ground, may please be admitted to be taken up for hearing on merits. 8.1 Respectfully following the law laid down by the Hon’ble Apex Court, we admit the additional grounds of appeal to be heard on merits, because it goes to the root assessment order itself. 8.2 First, we take up the additional ground of the assessee. I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 6 9. In course of hearing, the ld. AR of the assessee has filed written submission on the additional ground taken by the assessee, the relevant portion of which is reproduced as follows: “9.2 The order passed under section 143(3) lacks compliance with Circular No. 19/2019 dated 14th August 2019."The circular issued by the CBDT explicitly mandates the inclusion of a Document Identification Number (DIN) to ensure the traceability and authenticity of the document." 9.3 Your Honor's kind attention is drawn towards para no 4 of the circular no 19/2019 where the board has specifically stated that any communication which is not in conformity with para no 2 and 3 shall be treated as invalid and shall be deemed to have never been issued. The phraseology of para no 4 clearly depicts that any communication made without DIN is nonest in the eyes of law. Therefore, the demand created in pursuance to order passed u/s 143(3) is bad in law. 9.4 That the object and purpose of the circular no 19/2019 is to maintain proper audit trail of all communication. Therefore, the communication relating the assessment, appeals and order as placed in Para no 2 of circular no 19/2019 are required to be followed strictly. It is a settled law that the DIN should be quoted in the body of the order and not to be communicated separately. 9.5 That it is a settled law that the circulars are binding on the income tax department. The object of the circular no 19/2019 is clear and intended to ensure proper audit trail for all assessment years. As such, since in the instant case, the final assessment order passed by I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 7 Assessing Officer does not bear any DIN and there was nothing on record to show that there were exceptional circumstances as mentioned in Circular No. 19/2019 which would sustain communication of final assessment order manually without DIN, thus, the impugned final order could not be sustained. The brief text of the circular no 19/ 2019 of the CBDT is reproduced here under: - Section 119 of the Income Tax Act, 1961 – Income Tax Authorities – Instructions to Subordinate Authorities General /Allotment/Quoting of Identification Number In Notice/Order/Summons/Letter/Correspondence Issued by the Income Tax Department Circular No. 19/ 2019 [F.NO. 225/95/2019-ITA.II), Dated 14-8-2019 With the launch of various e-governance initiatives, Income-tax Department is moving toward total computerization of its work. This has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax- administration. 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. I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 8 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 exceptional circumstances such as, — (i) when there are technical difficulties in generating/allotting/quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties: or (iii) when due to delay in PAN migration. PAN is lying with non- jurisdictional Assessing Officer; or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) When the functionality to issue communication is not available in the system, I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 9 the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner/Director General of income- tax. In cases where manual communication is required to be issued due to delay in PAN migration, the proposal seeking approval for issuance of manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state 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 the following format- " .. This communication issues manually without a DIN on account of reason/reasons given in para3(i)/3(ii)/3(iii)/3(iv)/3(v) of the CBDT Circular No ...dated (strike off those which are not applicable) and with the approval of the Chief Commissioner/Director General of Income Tax vide number.... dated .... 4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued. 5. The communication issued manually in the three situations specified in para 3- (i), (ii) or (iii) above shall have to be regularized within 15 working days of its issuance, by — i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 10 iii. communicating the DIN so generated to the assessee/any other person as per electronically generated pro-forma available on the System. 6. An intimation of issuance 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.” 10. In support of above his arguments, the ld. AR has relied on the following judgment: “a) [2024] 162 taxmann.com 225 (Bombay) High Court of Bombay Hexaware Technologies Ltd, v. Assistant Commissioner of Income-tax, Circle 15(1)(2) b) [2023] 149 taxmann.com 238 (Delhi) High Court of Delhi Commissioner of Income- tax (International Taxation)-! v. Brandix Mauritius Holdings Ltd c) 154 taxmann.com 600 (Calcutta) High Court of Calcutta Principal Commissioner of Income Tax Exemption, Kolkata Vs. M/s Tata Medical Centre Trust, Kolkata. I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 11 d) [2023] 153 taxmann.com 211 (Pune - Trib.) IN THE ITAT PUNE BENCH 'B' Prabhakar Amruta Shillak v. Income-tax Officer. e) [2023] 146 taxmann.com 442 (Bangalore - Trib.) IN THE ITAT BANGALORE BENCH 'A' Dilip Kothari v. Principal Commissioner of Income-tax (Central) f) [2023] 149 taxmann.com 287 (Kolkata - Trib.) In the ITAT Kolkata Bench Commissioner of Income-tax (Exemptions) v. Tata Medical Centre Trust.” 11. Relying on the above judgments, the ld. AR of the assessee prays that in the instant case, since the assessment order dated 29.09.2022 has been passed without any DIN in the body of the assessment order, the order will be deemed to have never been issued. 11.1 Similarly, he also points out to the copy of the demand notice u/s 156 of the Act issued by the AO on 29.09.2022 without any DIN mentioned on the same. Hence, it should be deemed to be held that it has never been issued. As such, he prays that the assessment order and the demand notice being legally not valid should be quashed, as if never issued. 12. The ld. DR relied upon the order of the ld. CIT(A) but could not counter the argument stated by the assessee and he has not been able to point out DIN neither in the order of the AO nor in the demand notice issued by the AO. I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 12 13. We have heard, the submission of both the counsels and considered the materials on record. We find that the assessment order has been issued by the AO without mentioning of any DIN (Documentation Identification Number) which is in violation of the provisions of circular no. 19 dated 14.08.2019 and there was nothing on record to show that there were exceptional circumstances as mentioned in Circular No. 19/2019 which would sustain communication of final assessment order manually without DIN. Failure to allocate DIN is not an error which can be corrected by invoking the provisions of section 292B of the Act. 13.1 Identical views has been taken by the Coordinate Benches of the Tribunal, in the following cases: “i. [2023] 153 taxmann.com 211 (Pune - Trib.) ITAT PUNE BENCH 'B' Prabhakar Amruta Shillak v. Income-tax Officer. ii. [2023] 146 taxmann.com 442 (Bangalore - Trib.) ITAT BANGALORE BENCH 'A' Dilip Kothari v. Principal Commissioner of Income-tax (Central) iii. [2023] 149 taxmann.com 287 (Kolkata - Trib.) ITAT KOLKATA BENCH 'B' Commissioner of Income-tax (Exemptions) v. Tata Medical Centre Trust.” 13.2 Since, we have already decided the issue in favour of the assessee in the matter of DIN, the other grounds of appeal on merits taken by the assessee are not adjudicated by us. I.T.A. No.177/Asr/2024 Assessment Year: 2021-22 13 13.3 So, respectfully following the judgment of the Hon’ble High Courts and following the views taken by the Coordinate Benches of the Tribunal we hold that the assessment order u/s 143(3) and the demand notice u/s 156 dated 29.09.2022 cannot be legally sustained and it has to be treated that both has never been issued and will cease to have effect in the eyes of law. As such, the appeal of the assessee is allowed. 14. In the result, the appeal of the assessee bearing ITA No. 177/Asr/2024 is allowed. Order pronounced in the open court on 12.08.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order