Issuance of Manual Final Assessment Order without DIN: ITAT quashes Income Tax Scrutiny Assessment u/s 143(3) [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has quashed the Income Tax Scrutiny Assessment under section 143(3) due to the issuance of a manual assessment order without a Documentation Identification Number (DIN).

The assessee Teleperformance Global Services Private Limited was engaged in the business of providing IT-enabled services. The assessee filed the return of income for AY 2017-18 declaring NIL income as per the normal provisions of the Act and book profits of Rs.1,38,16,45,117 under Section 115JB of the Income Tax Act,1961.

The return was originally processed under Section 143(1) where the income under the normal provisions was assessed at Rs.77,37,83,380 and the income under Section 115JB was retained at the same as in the return of income. Subsequently, the return was selected for scrutiny under CASS and the statutory notices are duly served on the assessee.

Since the assessee had international transactions with its Associated Enterprise (AE) a reference was made to the Transfer Pricing Officer in order to determine the arm’s length price of the international transactions. The TPO made a TP adjustment of Rs.7,90,77,518.

The assessing officer passed a draft assessment in which the assessing officer retained the disallowances made under section 143(1) Rs.6,05,18,177 and besides the TP adjustment, the assessing officer further made a disallowance of Rs.70,87,66,411 towards depreciation on goodwill and also disallowed the unabsorbed depreciation of Rs.1,45,93,19,199.

The assessed income as per the draft assessment order was Rs.2,30,76,81,305. The aggrieved assessee filed its objections before the dispute resolution panel (DRP).

The DRP gave partial relief towards the adjustment made in the intimation under Section 143(1) and upheld the TP adjustment and other disallowances made by the assessing officer. The assessing officer passed the manual final assessment order in which the income was assessed at Rs.2,25,88,39,614 as per the directions of the DRP.

The counsel for the assessee submitted that the final order passed under Section 143(3) read with Section 144C(13) is in violation of the CBDT Circular No.19 of 2019 and the said order is a manual order without any DIN mentioned therein. Further added that the assessing officer had given a separate intimation stating that DIN has been generated for the said manual order. He argued that the assessee is not aware for the exceptional circumstances under which the manual order is issued.

Counsel for the revenue submitted that the assessing officer has regularized the order under Section 143(3) read with Section 144C (13) issued without a DIN with a separate communication and the same should be considered as part of the order.

He also submitted that as per the Circular, DIN was mandated for maintaining a proper audit trail of all communications and therefore the assessing officer generating DIN in a separate intimation is valid and needs to be considered along with the order under Section 143(3) read with Section 144C(13). He further argued that the procedural lapse of issuing an order without DIN cannot render the entire assessment proceedings invalid.

The tribunal bench, consisting of judicial member Amit Shukla and accountant member Padmavathy, observed that the orders passed under Section 143(3) read with Section 144C(13) for the assessment years 2017-18 and 2018-19 were invalid and deemed to have never been issued, as per Para 4 of the CBDT circular, due to non-conformity with Para 2 and Para 3.

The appeal filed by the assessee was allowed, and the appeal of the revenue was dismissed.

To Read the full text of the Order CLICK HERE

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