Technical Defects Do Not Invalidate Assessment: ITAT Upholds Validity of Digitally Signed DIN-Based Orders in Income Tax Case [Read Order]

The appellant, Rohilkhand Educational Charitable Trust, Bareilly, a registered charitable trust under Section 12A of the Income Tax Act, 1961, is engaged in medical education and hospital services. The case arose after the Principal Commissioner of Income Tax (PCIT), Lucknow, cancelled the trust’s registration under Section 12AA(3) by an order dated 20 March 2019. Consequently, the Assessing Officer (AO) denied exemptions under Sections 11 and 12 and completed the assessment by treating the trust’s receipts as taxable income.

Complete practical guide to Drafting Commercial Contracts, Click Here

The assessee challenged the assessment primarily on technical grounds, pointing out that the assessment order uploaded on the Income Tax Department’s portal did not mention the name of the assessee, PAN, assessment year, or even the Section under which the order was passed. It was contended that these omissions rendered the order invalid in law.

The Commissioner of Income Tax (Appeals) [CIT(A)] rejected this contention, holding that the assessment was properly completed and that minor omissions could not invalidate an otherwise lawful order.

Appearing for the appellant, Rakesh Garg, contended that the omission of the assessee’s name, PAN, and assessment year in the assessment order was a substantive defect that could not be cured under Section 292B. It was argued that a valid assessment order must contain all identifying particulars, and the absence of such details rendered it unenforceable in law.

It was further submitted that the AO failed to issue a valid demand notice and computation sheet, as the figures mentioned in these documents did not correspond with the final assessed income. Therefore, both the assessment order and the consequential demand notice were invalid, and the proceedings should be quashed in entirety.

Appearing for the Revenue, S.H. Usmani, argued that the assessment order was validly passed and carried a Document Identification Number (DIN) along with a digital signature of the AO, fulfilling all statutory requirements. It was submitted that the absence of the assessee’s name or PAN in the order did not vitiate the proceedings, as the order could be clearly identified with the assessee through the DIN-generated demand notice.

It was further argued that any clerical or typographical errors could be rectified under Section 292B and Section 154 of the Income Tax Act, 1961, and that the assessment order must be read in conjunction with the digitally signed demand notice. Therefore, there was no legal infirmity in the assessment.

The Bench comprising of Sudhanshu Srivastava, Judicial Member and Nikhil Choudhary, Accountant Member held that the assessment order was valid and enforceable, notwithstanding the missing details. The Tribunal observed that the assessment order carried a valid DIN, was digitally signed, and was accompanied by a corresponding demand notice issued to the assessee. These factors clearly established the identity of the assessment and the assessee to whom it pertained.

Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc... Click Here

The Tribunal further clarified that Section 292B of the Income Tax Act, 1961, protects such orders from invalidation on account of technical or procedural errors. Thus, it was ruled that where an order is passed in substance and effect in conformity with or according to the intent and purpose of the Act, the same shall not be invalid merely by reason of any mistake, defect or omission.

Regarding the demand notice, the Bench observed that any computational mismatch between assessed income and tax demand was a rectifiable mistake under Section 154, and not a ground to nullify the assessment itself.

Accordingly, the ITAT upheld the validity of the assessment orders.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates