Deputy Commissioner of Income-Tax, Central Circle-1(3), Bangalore V. M/s. Practo Technologies Private Limited, Bangalore

MA 209/BANG/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 9118 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-01-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-01-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 24-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRATHIK SHAH; POST INSTEAD
• Section: 263; 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., VICE PRESIDENT AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER MP No.209/Bang/2023 [in ITA No.154/Bang/2022] Assessment year : 2017-18 The Deputy Commissioner of Income Tax, Central Circle 1(3), Bengaluru. Vs. Practo Technologies Private Limited, 371, 1 st Cross, Koramangala 3 rd Block, Bengaluru – 560 034. PAN: AACCN 8042Q APPELLANT RESPONDENT Appellant by : Shri Subramanian S., Jt.CIT(DR)(ITAT), Bengaluru. Respondent by : S/Shri Dhanesh Bafna, Prathik Shah, CAs and Manju L. Prasad Date of hearing : 12.01.2024 Date of Pronouncement : 19.01.2024 O R D E R Per Laxmi Prasad Sahu, Accountant Member This miscellaneous petition is filed by the revenue seeking rectification in the order of the Tribunal dated 16.06.2023 stating as under:- “1. The ITAT has held that the directions of DRP dated 30/12/2021 under section 144C(5) of Income-tax Act to be invalid and deemed to have been never issued on the ground that at the time of issuing directions dated 30.12.2021, DIN was not quoted in the order which is mandatory as per the CBDT Circular No 19/2019 dated 14-8-2019. The ITAT has further relied on the decision in the case of Intrado EC India Pvt. Ltd. Vs. DCIT: MP No.209/Bang/2023 Page 2 of 11 IT(TP) A No. 239/Bang/2021 (2023) 147 taxmann.com 380 (Bangalore — Trib.) (09.11.2022) 2. Procedure involved in issuing DRP directions through the ITBA portal: a) The Manual preparation of the Directions and then subsequent uploading of scanned copy of the same on the ITBA portal is done as per the ITBA-DRP Instruction No. 1 issued by the CBDT vide F.No. System/ITBA/Inst/International Taxation/DRP/183 /2016-17-8668 dated 30/12/2016 wherein vide Para 3(h), the following instruction has been given: h. Manual to System: Through the facility of "Manual to System" user can upload the final order! signed order prepared outside the ITBA system by scanning the same and selecting manual to system as a mode of generating the DRP Order. Such uploaded order will be linked with DRP Proceedings and the DRP Proceedings will then be marked as completed. b) The ITBA facilitates uploading the order signed manually and generating DIN for such orders. When the DRP follows "Manual to System" functioning in respect of the Directions to the assessee u/s 144C of the Act, as per the above instruction, such DRP direction are initially prepared outside the system and manually signed by all the panel members. A scanned copy of the signed Directions prepared manually is uploaded on ITBA to generate the Document Identification Number (DIN). The moment a DIN is generated and the directions u/s 144C(5) of the Act is uploaded to the System, the directions are communicated to the assessee. c) After DIN is generated for such directions of the DRP, an 'Intimation Letter' is issued to the assessee through the ITBA system. This Intimation Letter is issued only for the limited purpose of intimating to the assessee that Directions prepared manually and now uploaded on ITBA has the specific DIN. d) Both the above communications to the assessee i.e., DRP directions and intimation letter are communicated to the assessee on email ID available in the system records and such email is automatically pushed to the Assessee's email by the ITBA system MP No.209/Bang/2023 Page 3 of 11 itself. Further, a copy of the Directions along-with the intimation letter is forwarded through India Speed Post service to the address of the assessee. 3. In the instant case, the signed and scanned copy of Directions was uploaded in ITBA through Manual to System module as per the ITBA Instructions. Accordingly, as prescribed, the above procedure has been followed to issue DRP Directions in the instant case wherein Directions of the DRP u/s 144C(5) of the Act dated 30/12/2021 are prepared outside the system, manually signed by the members of the DRP and then uploaded on ITBA system to generate DIN. DIN generated by the system for such Directions issued by the DRP is ITBA/DRP/M/144(C)R021-22/1038293314(1). 4. The above fact of DRP Directions having been issued on 30/12/2021 and that such Directions have the specified DIN was communicated to the assessee on 31/12/2021 by issuing an intimation Letter". This communication dated 31/12/2021 is having the DIN 'ITBA/ORP/S/91/2021-22/1038293464(1).. This intimation states that order u/s 144C(5) dated 30/12/2021 is having DIN ITBA/DRP/M/144(C)/2021-22/1038293314(1). Screenshot of the ITBA portal showing DIN generated while issuing DRP Directions on 30/12/2021 and issuance of the intimation letter on 31/12/2021 is enclosed in Annexure 1 to this Petition. 5. From the above, it is evident that a valid DIN was generated at the time of issuing directions i.e., on 30/12/2021. Therefore, it is not a case where DRP Directions are issued manually or issued without a DIN. DRP Directions in this case, though prepared manually outside the system, have been communicated to the assessee through ITBA after generating a DIN. Such issuance of DRP directions and communicating the same to the assessee has taken place on 30/12/2021 itself i.e., within the date of limitation. Screenshot of the ITBA portal showing communication of the DRP Directions u/s 144C of the Act dated 30/12/2021 and Intimation Letter dated 31/12/2021 to the assessee on the respective dates is enclosed in Annexure 2 to this Petition. MP No.209/Bang/2023 Page 4 of 11 6. Further, since the DRP Directions in this case were not issued manually without a DIN, recording of reasons as required as per Para 3 of the CBDT Circular No. 19/2019 is not applicable in this case. 7. However, when the DRP Directions were served physically through Post Service, inadvertently, the DIN of the intimation letter i.e., ITBA/DRP/S/91/2021-22/1038293464(1) was handwritten on the DRP directions instead of the DIN ITBA/DRP/M/144(C)/2021-22/1038293314(1) which pertains to such Directions. This is a mistake apparent from records as the mistake has been committed inadvertently in writing the correct DIN manually on the DRP Directions. C. Mistakes apparent from records in the order of the Hon'ble ITAT In view of above facts of the case, there are mistakes apparent from records in the order of the Hon'ble ITAT as below: 1. The sequence of events furnished by the assessee and reproduced at Para 6 of the order of the Hon'ble ITAT is not correct as per facts of the case. Claim of the assessee that DRP Directions issued u/s 144C of the Act dated 30/12/2021 and copy of the DRP Directions dated 30.12.2021 served vide email to the AR do not have DIN is not correct Further, quoting of wrong DIN which is handwritten on the copy of the Directions dated 30.12.2021 served to the assessee through the Speed Post Service is an inadvertent mistake apparent from record. It does not invalidate the fact that a valid DIN has been generated while issuing DRP Directions on 30/12/2021 and the same was intimate to the assessee on 31/12/2021. 2. Further, claim of the Ld. AR of the assessee reproduced in Para 8 of the order of the Hon'ble ITAT is that DRP Directions does not specify any of the exceptions specified the Para 3 of the Circular or written approval of the Chief Commissioner / Director General of Income Tax. Further, claim of the Ld. AR of the assessee reproduced in Para 9 of the order of the Hon'ble ITAT is that while Ld. DRP attempted to regularise the manual issuance of DRP directions dated 30/12/2021 by generating DIN subsequently vide intimation letter dated 31/03/2021, the Ld. DRP has failed to appreciate that the regularisation of a manual MP No.209/Bang/2023 Page 5 of 11 order is possible only if such manual order is passed owing to any of the exceptional circumstances mentioned in the circular. However, since DRP Directions u/s 144C of the Act dated 30/12/2021 are not issued manually and therefore, Para 3 of the CBDT Circular 19/2019 is not applicable in the instant case, the above claims of the assessee are devoid of merits. 3. Further, claim of the Ld. AR of the assessee reproduced in Para 10 of the order of the Hon'ble ITAT that a wrong DIN has been handwritten on the DRP Directions received vide post on 06/01/2022 is an inadvertent mistake apparent from record wherein DIN of the Intimation Letter has been handwritten on the copy of the DRP Directions served to the assessee by post instead of writing DIN of the DRP Directions generated while manual to system upload. This inadvertent mistake does not alter the validity of the DRP Directions which are issued through the ITBA system and a DIN has been allotted to such Directions. 4. Further, claim of the Ld. AR of the assessee reproduced in Para 11 of the order of the ITAT that once the manual communication is not in conformity with Para 3 and 4 of the Circular, the said communication shall be rendered invalid and deemed to have never been issued is devoid of merits as DRP Directions dated 30/12/2021 are not issued manually and therefore, Para 3 and 4 of the CBDT Circular 19/2019 are not applicable in the instant case. Accordingly, claim of the Ld. AR of the assessee that once the document is deemed to have never been issued, subsequently endorsing of a DIN and that too wrong DIN by hand would not be relevant is infructuous. 5. In view of above facts of the case and considering ITBA- DRP Instruction No. 1 issued by the CBDT vide F.No. System/ITBA/Inst/International Taxation/DRP/183/2016-17- 8668 dated 30/12/2016, since a valid DIN has been generated while issuing DRP Directions on 30/12/2021 and this fact was intimated to the assessee on 31/12/2021 vide a separate intimation letter, there is a mistake apparent from records in the order of the Hon'ble ITAT which has observed in Para 20 of its MP No.209/Bang/2023 Page 6 of 11 order that at the time of passing the DRP Order dated 30/12/2021, DIN was not quoted in the order. 6. Further, ITAT has relied on the decision in the case of Intrado EC India Pvt. Ltd. Vs. DCIT: IT(TP) A No. 239/Bang/2021 (2023) 147 taxmann.com 380 (Bangalore - Trib.) (09.11.2022). In this case, order u/s 263 of the Act was issued manually which does not bear the signature of the authority passing the order. Further, there was no reference to the fact of the order being issued manually without a DIN. However, the instant case is not a case where communication i.e., directions of the DRP are issued manually. DRP directions in the instant case have been prepared manually outside system and then uploaded on ITBA portal and issued as per the ITBA-DRP Instruction No. 1 issued by the CBDT vide F.No. System/ ITBA/Inst/InternationalTaxation/DRP/183/2016-17-8668 dated 30/12/2016. Further, Para 3 of the Circular No. 19/2019 is not applicable in this case which was the issue involved in the case of Intrado EC India Pvt. Ltd. Vs. DCIT: IT(TP) A No. 239/Bang/2021 (2023) 147 taxmann.com 380 (Bangalore - Trib.) (09.11.2022). Therefore, facts of the case are different from the facts in the case of Intrado EC India Pvt. Ltd. Vs. DCIT: IT(TP) A No. 239/Bang/2021 (2023) 147 taxmann.com 380 (Bangalore - Trib.) (09.11.2022). 7 As seen from the above facts of the case, there are mistakes apparent from records in the order of the Hon'ble ITAT which are summarised below: a) That the Directions of the DRP dated 30/12/2021 are riot issued manually but are issued as per Manual to System Functionality in ITBA. b) That Para 3 and 4 of the Circular No. 19/2019 issued by the CBDT are not applicable in the instant case. c) That a valid DIN was generated at the time of issuing DRP Directions dated 30/12/2021. MP No.209/Bang/2023 Page 7 of 11 d) That the DIN of the DRP Directions dated 30/12/2021 was communicated to the assessee on 31/12/2021 vide an Intimation Letter.” 2. The ld. DR reiterated the above submissions in the petition and submitted that the Tribunal has held that the DRP directions dated 30.12.2021 is invalid in the eyes of law since DIN was not mentioned in the DRP order which was mandatory as per CBDT Circular No.19/2019. He submitted that merely not quoting DIN in the DRP order is not violation of CBDT Circular since in the present case a valid DIN has been generated as per the CBDT Instructions dated 30.12.2021 and this fact was intimated to the assessee on 31.12.2021 vide a separate intimation letter. He submitted that the DRP directions are issued as per Manual to System Functionality in ITBA. He submitted that the observation in para 10 of the order that a wrong DIN has been handwritten on the DRP directions received vide post on 06.01.2022, is an advertent mistake apparent from record wherein DIN of the intimation letter has been handwritten on the copy of the DRP Directions served to the assessee by post instead of writing DIN of the DRP directions. However, this inadvertent mistake does not alter the validity of the DRP directions issued through ITBA system and a DIN has been allotted to such directions. Hence the observation of the Tribunal in the order that DIN was not mentioned in the DRP order is not correct. He therefore submitted that the order of the Tribunal may be rectified accordingly. 3. On the other hand, the ld. AR submitted that the revenue has filed appeal against the order of the Tribunal passed on 16.06.2023 MP No.209/Bang/2023 Page 8 of 11 which has been admitted by the Hon’ble jurisdictional High Court framing the following questions of law :- “1. Whether, on the facts and in the circumstances of the case and law, the Tribunal’s order can be said as perverse in nature in holding that directions issued by dispute Resolution Panel under section 144C(5) dated 30/12/2021 is invalid on the ground that the DIN was not mentioned and therefore assessment order passed in pursuance to said directions is invalid in law ignoring that assesse-company was in receipt of an electronic communication of the DRP with DIN on 31/12/2021 and as such condition set out in Para 2 of the Circular No.19 of 2019 issued by CBDT is followed in letter and spirit 2. Whether, on the facts and in the circumstances of the case and law, the order passed by Tribunal is perverse in nature in holding that directions issued by DRP is invalid ignoring that in present case, no communication has been issued to assesse manually as the manual direction of DRP communicated to the assesse was with the intimation letter in whose body DIN of manual direction of DRP was mentioned in line with para 2 of Circular No.19/2019 and as such, para 3 of the Circular is also not applicable to facts of present case. 3. Whether, on the facts and in the circumstances of the case and law, the order passed by Tribunal is perverse in nature in placing reliance on Para 4 of the Circular No.19 of 2019 which states that any communication which is “not in conformity” with para-2 and para-3 of the circular, shall be treated as invalid and shall be deeded to have never been issued, whereas, in present case, no communication was made to the assesse manually without DIN and as such para 4 of the said circular is also not applicable in this case. 4. Whether, on the facts and in the circumstances of the case and law, the order passed by Tribunal is perverse in nature in not considering that the electronic communication of the DRP directions which was received by assesse on 31/12/2021 and as such assesse on this count cannot be said to have been put to any prejudice?” MP No.209/Bang/2023 Page 9 of 11 4. The ld. AR for the assessee submitted that once the appeal is admitted and the questions of law are framed by the Hon’ble High Court, the same issue cannot be raised before the Tribunal by way of miscellaneous petition u/s. 254 of the Act. In this regard, he relied on the decision of the Special Bench of the Tribunal in the case of Tata Communications Ltd. v. JCIT [2009] 121 ITD 384 (Mumbai)(SB). 5. The ld. DR submitted that similar issue has been admitted by the Hon’ble Supreme Court in the SLP in the case of CIT v. Brandix Mauritius Holdings Ltd, 149 taxmann.com 238 (SC). 6. After hearing both the parties and perusing the material on record, we note that the revenue has filed miscellaneous petition against the order of the Tribunal dated 16.06.2023. Against the very same order of the Tribunal, the revenue has also filed appeal before the Hon’ble jurisdictional High Court which has been admitted and questions of law are framed, which is pending adjudication. When the issue is pending before the High Court, the same cannot be agitated before the Tribunal. On similar issue, in the case of Tata Communications Ltd. (supra) the Special Bench of Mumbai Tribunal has held as under:- “19. It may further be pointed out that legal question relating to entitlement of the assessee to deduction under section 80-IA of the Income-tax Act has already been admitted by the Hon'ble Bombay High Court, as per order dated 24-11-2008 in Income- tax Appeal No. 73/2008. The substantial question framed by Their Lordships is as under :— MP No.209/Bang/2023 Page 10 of 11 "Whether on the facts and in the circumstances of the case, the appellant is entitled to a deduction under section 80-IA of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') in respect of the two Earth Stations set up at Halisahar (Calcutta) and Korattur (Madras) during the relevant assessment year." 20. We are of the opinion that when question is pending before the Hon'ble Bombay High Court, it is not right for the assessee to agitate same or part of the question before the Tribunal. The assessee has now to show the Hon'ble High Court that the conditions of section 80-IA are satisfied on the facts and in the circumstances of the case and that he is entitled to relief under the above section. As far as Tribunal is concerned, question has already been decided and the Tribunal is now functus officio, so far as deduction of eligibility of section 80-IA is concerned. It is for Their Lordships of Hon'ble Bombay High Court to adjudicate on the correctness or otherwise of the decision of the Tribunal. In this view of the matter, as also bearing in mind the entirety of the case and the preceding discussions, we are of the considered view that the rectification petition filed by the assessee under section 254(2) of the Act must fail. No interference is thus called for.” 7. In view of pendency of appeal before the Hon’ble High Court, the issue cannot be raised before the Tribunal by way of petition u/s. 254 of the Act and respectfully following the above decision of the Special Bench (supra), the miscellaneous petition filed by the revenue is dismissed. Pronounced in the open court on this 19 th day of January, 2024. Sd/- Sd/- ( GEORGE GEORGE K. ) (LAXMI PRASAD SAHU ) VICE PRESIDENT ACCOUNTANT MEMBER Bangalore, Dated, the 19 th January, 2024. / Desai S Murthy / MP No.209/Bang/2023 Page 11 of 11 Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.