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Income Tax Order Without DIN Invalid and Considered not Served [ITAT]
The assessee has filed revised returns of income for A.Y. 2020-21 and A.Y. 2021-22, claiming refunds of Rs. 53,57,317 and Rs. 45,76,848, respectively.
A.Y. 2020-21: The CPC processed the return and later issued a rectification order under Section 154, disallowing depreciation of Rs. 2,20,85,844 and employee’s PF contribution of Rs. 2,38,540, assessing income at Rs. 2,25,24,390.
The CIT(A) allowed depreciation but confirmed the disallowance of late PF payment.
A.Y. 2021-22: A rectification order u/s 154 was passed reducing the refund to Rs. 11,07,620 by:
- Adding business income u/s 41: Rs. 1,07,54,026
- Disallowing PF payment u/s 36(1)(va): Rs. 33,25,771
CIT(A) deleted the Section 41 addition but upheld the disallowance of PF contribution.
The assessee argued that the intimation under Section 143(1) was never served for A.Y. 2021-22 and that the rectification was invalid without such service.
Issues Framed
- Whether the disallowance of the employee’s contribution to the Provident Fund under Section 36(1)(va), confirmed by CIT(A), is sustainable?
- Whether a rectification order u/s 154 is valid in the absence of a properly served Section 143(1) intimation?
Arguments
Petitioner for A.Y. 2020-21 admitted that disallowance of late PF payment is covered by Checkmate Services Pvt. Ltd. v. CIT [(2022) 143 taxmann.com 178 (SC)].
However, for A.Y. 2021-22 Petitioner claimed that the Section 143(1) intimation dated 26-07-2022 was never served and lacked a Document Identification Number (DIN). Therefore, he argued that without a valid service of 143(1) order, subsequent rectification under Section 154 was void ab initio.
Revenue Relied on CPC records but admitted through correspondence that due to system migration (CPC 1.0 to CPC 2.0), the intimation could not be produced. However, no counter-evidence of proper service of the 143(1) intimation was provided by Revenue.
Tribunal Order
The Tribunal dismissed the appeal for A.Y. 2020-21, agreeing with the CIT(A) and applying the binding precedent from Checkmate Services Pvt. Ltd.
A.Y. 2021-22:
- The Tribunal emphasised that rectification u/s 154 requires a valid order to be rectified.
- Since the intimation u/s 143(1) lacked a DIN and was not served, it was deemed non-existent in law.
- Citing the procedural mandate under Section 143(1) and CBDT’s requirements for DIN in communications, the Tribunal held the rectification as invalid.
Accordingly, the additions made were deleted, and the assessee’s refund claim was restored.