2023 (12) TMI 975 - AT - Income Tax

DRP direction without quoting Mandatory DIN - whether the subsequent generation of DIN will suffice as the requirement of the CBDT Circular which mandates quoting of DIN in the body of communication/order? - HELD THAT - On perusal of the directions of the DRP it is very much clear that there is no mention of DIN generated for the said directions. In the letter dated 13.09.2023 the DRP stated that directions were up-loaded on system on 7.06.2022 for which a DIN was generated by the system but whereas no such DIN which was generated on 7.06.2022 was mentioned in the body of the directions. Generation of DIN for the directions of the DRP was separately communicated through letter dated 17.06.2022. Whether the subsequent generation of DIN will suffice as the requirement of the CBDT Circular which mandates quoting of DIN in the body of communication/order came up for consideration before the jurisdictional High Court in Brandix Mauritius Holdings Ltd. 2023 (4) TMI 579 - DELHI HIGH COURT Communication/order passed in violation of the Circular of the CBDT without mentioning the DIN in the body of the order or without taking prior approval from the Chief Commissioner/Director General of Income Tax when there are exceptional circumstances in not quoting the DIN in the body of the order such communication/order was held to be invalid and shall be deemed to have never been issued. See ASHOK COMMERCIAL ENTERPRISES VERSUS ASSISTANT COMMISSIONER OF INCOME TAXATION CENTRAL CIRCLE 2 (4) MUMBAI 2023 (9) TMI 335 - BOMBAY HIGH COURT As the Revenue could not show us any exceptional circumstances for not quoting the DIN number in the DRP order, we hold that the DRP order is invalid and consequently the final assessment order passed by the AO u/s 143(3) r.w.s.144C(13) of the Act pursuant to such invalid directions is deemed to have never been issued and thus bad in law.

Summary

Issues Involved:
1. Validity of the DRP Directions without Document Identification Number (DIN).
2. Validity of the final assessment order based on invalid DRP directions.

Summary:

Issue 1: Validity of the DRP Directions without Document Identification Number (DIN)
The assessee raised an additional ground challenging the validity of the DRP directions dated 07.06.2022, arguing that the directions were issued without a valid DIN, contrary to CBDT Circular No. 19 of 2019. The Tribunal admitted this additional ground as it was purely a legal issue. The assessee's counsel contended that the absence of a DIN in the body of the DRP directions rendered them invalid, referencing the jurisdictional High Court's decision in Brandix Mauritius Holdings Ltd. vs. DCIT, which held that communications without a DIN are non-est in law. The Department argued that the DIN was generated when the directions were uploaded on 07.06.2022 and communicated to the assessee via a separate letter on 17.06.2022. However, the Tribunal noted that the DRP directions did not mention the DIN, and subsequent generation of DIN did not comply with the CBDT Circular's requirements.

Issue 2: Validity of the Final Assessment Order Based on Invalid DRP Directions
The Tribunal examined whether the subsequent generation of DIN sufficed under the CBDT Circular, which mandates quoting DIN in the body of the communication/order. The Tribunal referred to multiple judicial precedents, including decisions from the Delhi High Court and Bombay High Court, which consistently held that communications/orders without a DIN in the body are invalid. The Tribunal concluded that the DRP directions were invalid due to the absence of a DIN, and consequently, the final assessment order based on these invalid directions was also deemed never to have been issued and thus bad in law.

Conclusion:
The Tribunal set aside the assessment order passed by the Assessing Officer under section 143(3) read with section 144C(13) of the Income Tax Act, 1961, pursuant to the invalid DRP directions. It held that the absence of a DIN in the DRP directions rendered them invalid, and the final assessment order based on such directions was also invalid. The appeal of the assessee was partly allowed on this preliminary issue, and the Tribunal did not address the merits of the additions.