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2025 Supreme(Online)(ITAT) 23136
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
Satbeer Singh Godara, Judicial Member, Naveen Chandra, Accountant Member
R C Jewellers Pvt. Ltd. – Appellant
Versus
DCIT – Respondent
ITA No. 1971/Del/2025
For the Appellants/Petitioners: Anil Jain, Aslam
For the Respondents: Mahesh Kumar
The CBDT Circular No. 19/2019 requiring a Document Identification Number (DIN) on communications does not apply to internal administrative approvals issued under Section 153D of the Income Tax Act, as such approvals are not communications to the 'assessee' or 'any other person' defined under Section 2(31).
Headnote:(A) Income Tax Act, 1961 - Section 143(3), 153A, 153C, 153D, 270A, 234A, 234B, 234C - Assessment proceedings - Validity of approval u/s 153D - Requirement of Document Identification Number (DIN) on approval order - The Circular of CBDT dated 14.08.2019 regarding mandatory DIN is applicable only to communications issued to the assessee or any other person as per Section 2(31) of the Act and does not extend to internal administrative approvals like the one required under section 153D for the Assessing Officer. (Paras 11, 12)
(B) Assessment - Estimation of Income - Re-estimation of profits - Where unaccounted sales are established during survey, estimation of undisclosed income based on past GP ratio is permissible and reasonable, even if books of account are not formally rejected, provided the estimate is fair and based on material on record. (Paras 10.2, 11.2)
Facts of the case:
The appellant company challenged the order of the Commissioner of Income Tax (Appeals) which partially sustained additions regarding undisclosed income from unaccounted jewellery sales detected during a survey. The appellant contested the validity of the assessment and the application of Gross Profit (GP) rates, arguing that the assessment order lacked procedural compliance (Section 153D approval DIN) and proper rejection of books of accounts.
Findings of Court:
The Tribunal upheld the order of the CIT(A), ruling that the assessment was legally framed, the 153D approval was valid without needing a DIN, and that the estimation of undisclosed income using a consistent GP ratio of 6.56% (based on the average of preceding and current year) was fair and reasonable.
Issues: Whether the absence of a DIN on a Section 153D approval voids the assessment, and whether the estimation of undisclosed income without formal rejection of books is permissible.
Ratio Decidendi: An income tax authority’s internal approval under Section 153D is not a communication to the assessee or a 'person' under Section 2(31), thus the CBDT circular requiring DIN for such communications is not applicable. Furthermore, a reasonable estimation of income based on established past GP ratios is valid when dealing with unaccounted sales identified during surveys.
Result: Appeal dismissed.
| Table of Content |
|---|
| 1. overview of appeal grounds regarding assessment validity and addition methodology. (Para 2 , 3) |
| 2. summary of cit(a) findings regarding gp ratio estimation and rejection of arguments on book rejection. (Para 4) |
| 3. validity of assessment framing under section 143(3) and 153c. (Para 5 , 6 , 7) |
| 4. applicability of din requirement on internal section 153d approvals. (Para 8 , 9 , 10 , 11 , 12) |
| 5. sustainability of profit estimation without formal book rejection. (Para 13 , 14) |
ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2018-19, arises against the CIT(A)-30, New Delhi’s order dated 14.02.2025 in case No. 30/10250/2017-18, in proceedings u/s 143(3) of the Income Tax Act, 1961.
2. Heard both the parties at length. Case file perused.
3. The assessee pleads the following substantive grounds in the instant appeal:
“1. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has failed to appreciate the facts that the impugned assessment order passed u/s 143(3) of the Income Tax Act is illegal, bad in law and without jurisdiction and time barred.
2. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has failed to appreciate the fact that the impugned assessment order passed is illegal and bad in law as no valid approval under section 153D has been obtained before passing the assessment order and thus assessment made requires to be quashed.
3. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has failed to appreciate the facts that the impugned assessment order passed u/s 143(3) in pursuance of satisfaction note recorded on 26.12.2019 on the basis of information received from the ACIT Central Circle (2) Rajkot is illegal and bad in law as in the assessment order no addition has been made on the issues on the basis of which proceeding u/s 153C has been initiated.
4. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has failed to appreciate the facts that the Ld AO has erred in making the additions on the basis of the documents impounded during the course of the survey proceeding at the premises of the assesse disregarding the fact that the present assessment proceeding has been initiated in pursuance of satisfaction note recorded by the then DCIT circle 20(2) on 26.12.2019 on the basis of information received from the ACIT Central Circle (2) Rajkot.
5. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has failed to appreciate the facts that the impugned assessment order passed is in violation of the principle of natural justice and without giving adequate time and opportunity to the assessee to represent his case, and even no effective show cause notice has been issued before passing the assessment order and thus, the assessment order passed is bad in the eyes of law and liable to be quashed.
6. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has erred in sustaining the addition of Rs. 1,13,10,447/- by arbitrarily adopting the GP @ 6.56% on the alleged unaccounted sales of Rs. 17,24,15,347/- of gold and diamond jewellery.
7. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has erred in sustaining the addition of Rs. 26,53,327/- by arbitrarily adopting the GP @ 6.56% on the alleged unaccounted sales/unaccounted receipts found in digital data impounded.
8. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has erred in sustaining the addition of Rs. 59,040/- on the alleged unaccounted cash sales of Rs 9,00,000/- by adopting GP @ 6.56%.
9. That on the facts and circumstances of the case and the provision of law, that the Ld. CIT(A) has erred in sustaining the addition of Rs. 14,432/- by arbitrarily adopting the GP @ 6.56% on the alleged cash
