ITAT Mumbai Deletes Final Scrutiny Assessment U/S 143(3) Due to Lack of DIN

The Income Tax Appellate Tribunal (ITAT), the Mumbai bench has argued the Income Tax Scrutiny Assessment under section 143(3) on account of this issuance of a manual assessment directive lacking a Documentation Identification Number (DIN). The assessee, Teleperformance Global Services Pvt. Ltd. was in the business of offering IT-enabled services.

The return of income was filed by the assessee for AY 2017-18 stating NIL income following the general regulations of the act and account profits of Rs. 1,38,16,45,117 under Section 115JB of the Income Tax Act, 1961.

The return was basically processed under Section 143(1) where the income under the normal proviso was estimated at Rs. 77,37,83,380 and the income under Section 115JB was held at the same as in the return of income.

Later, the return was chosen for inspection under CASS and the statutory notifications are properly issued to the assessee.

A referral to the Transfer Pricing Officer was made as the assessee had overseas transactions with its Associated Enterprise (AE), in order to decide the arm’s length pricing of the international transactions. A TP adjustment of Rs. 7,90,77,518 was made by the TPO.

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The assessing officer approved a draft assessment in which he or she kept the repudiations made under Section 143(1) of Rs. 6,05,18,177 and, apart from the TP adjustment, the assessing officer made disapprovals of Rs. 70,87,66,411 for goodwill depreciation and Rs. 1,45,93,19,199 for unabsorbed depreciation.

The estimated income according to the draft assessment order was Rs. 2,30,76,81,305. The discontented assessee brought up the issues before the Dispute Resolution Panel (DRP).

Partial aid was given to the assessee by the DRP. It was towards the adjustment made in the declaration under Section 143(1) and upheld the TP adjustment and other disapprovals made by the assessing officer. The assessing officer approved the manual ultimate assessment directive in which the income was estimated at Rs. 2,25,88,39,614 according to the DRP regulations.

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The advocate for the assessee submitted that the final directive approved under Section 143(3) read with Section 144C(13) is in breach of the CBDT Circular No. 19 of 2019 and the stated directive is a manual order without any DIN mentioned therein.

The assessing officer had additionally stated in a separate statement that a DIN had been generated for the abovementioned manual directive. He contended that the assessee is unaware of such circumstances under which the manual order is mandated.

The revenue’s legal counsellor submitted that the assessing officer’s regularisation of the order issued without a Director Identification Number (DIN) under Section 143(3) read with Section 144C (13) by separate communication, should be regarded as an element of the directive.

He also stated in the submission that according to the Circular, DIN was instructed for maintaining an appropriate audit trail of all communications, so the assessing officer issuing DIN in a distinct statement is valid and has to be regarded along with the directive under Section 143(3) read with Section 144(13).

He also contended that the procedural failure of issuing a directive lacking DIN cannot furnish the complete assessment proceedings invalid.

The tribunal bench of two members, Amit Shukla and Accountant Member, Padmavathy, noted that the directives approved under Section 143(3) read with Section 144C(13) for the assessment years 2017-18 and 2018-19 were void and considered to have never been issued, following the Para 4 of the CBDT circular, because of non-conformity with Para 2 and Para 3.

The appeal filed by the assessee was approved and the appeal of the revenue was rejected.