Bombay High Court Invalidates Income Tax Reassessment for Want of DIN in Sanction Order
Background of the Case
In the matter of Hardik Deepak Salot Vs ACIT, the Bombay High Court examined writ petitions that questioned the validity of income-tax reassessment proceedings. The primary challenge raised by the assessee centered on the absence of proper statutory sanction by the Revenue authorities.
The dispute arose when the assessee filed writ petitions before the High Court challenging the reassessment proceedings initiated by the income-tax department. The fundamental objection raised was that the Revenue had relied upon a sanction that did not comply with mandatory statutory requirements.
Contentions by the Assessee
The petitioner before the Court raised a specific grievance regarding the non-provision of the sanction copy. The assessee's representative, Mr. Jain, brought to the Court's attention a critical deficiency in the sanction letter that formed the basis of the reassessment proceedings.
Absence of Document Identification Number
The counsel for the assessee pointed out that the sanction letter dated 9 June 2023, which had been issued by the Principal Commissioner of Income Tax (Central)-3, Mumbai, conspicuously lacked a Document Identification Number (DIN). This omission, according to the petitioner, rendered the entire sanction invalid and consequently vitiated all subsequent proceedings based on such sanction.
Reliance on Judicial Precedent
The assessee's counsel placed significant reliance on an earlier decision of the same Court in the case of Ashok Commercial Enterprises V/s. Assistant Commissioner of Income Taxation Central Circle 2(4). This judgment had categorically held that any communication or document issued by the income-tax authorities that does not bear a DIN would be considered invalid and treated as if it was never issued at all.
The petitioner further submitted that Circular No.19/2019 (F.No.225/95/2019-ITA.II) dated 14th August 2019 mandates the inclusion of DIN in all official communications. Any deviation from this requirement would result in the document being deemed non-existent in the eyes of law.
Revenue's Response and Admission
Ms. Gokhale, appearing for the Revenue department, made candid submissions before the Court. She acknowledged that the judgment cited by the assessee's counsel in Ashok Commercial Enterprises (Supra) indeed established the legal position as contended by Mr. Jain.
Uncertainty Regarding Appeal Status
The Revenue's counsel honestly admitted that she was not aware whether the department had filed or intended to file any appeal before the Supreme Court challenging the ratio laid down in Ashok Commercial Enterprises (Supra). This admission was significant as it indicated that the binding precedent stood unchallenged at that point in time.