2023 (4) TMI 579 - HC - Income Tax

Validity of Notices / orders without DIN - Communications emanating from the revenue - CBDT by Circular no. 19/2019 dated 14.08.2019 sets out the manner in which Document Identification Number DIN is required to be generated while communicating a notice, order, summon, letter and any correspondence issued by the Income Tax Department, i.e., the Revenue - substantial question of law - as mandated no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etcetera, to the assessee or any other person, on or after 01.10.2019 unless it is allotted a computer-generated DIN - whenever communications are issued in the circumstances alluded to in paragraph 3(i) to (v), i.e., are issued manually without a DIN, they require to be backed by the approval of the Chief Commissioner/Director General - As per revenue failure to allocate DIN was a mere mistake as corrected by taking recourse to Section 292B of the Income Tax Act HELD THAT - The argument advanced on behalf the appellant/revenue, that recourse can be taken to Section 292B of the Act, is untenable, having regard to the phraseology used in paragraph 4 of the 2019 Circular. The object and purpose of the issuance of the 2019 Circular, as indicated hereinabove, inter alia, was to create an audit trail. Therefore, the communication relating to assessments, appeals, orders, etcetera which find mention in paragraph 2 of the 2019 Circular, albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 Circular. The logical sequitur of the aforesaid reasoning can only be that the Tribunal s decision to not sustain the final assessment order dated 15.10.2019, is a view that cannot call for our interference. As noted above, in the instant appeal all that we are required to consider is whether any substantial question of law arises for consideration, which, inter alia, would require the Court to examine whether the issue is debatable or if there is an alternate view possible. Given the language employed in the 2019 Circular, there is neither any scope for debate not is there any leeway for an alternate view. We find no error in the view adopted by the Tribunal. The Tribunal has simply applied the provisions of the 2019 Circular and thus, reached a conclusion in favour of the respondent/assessee. Accordingly, the appeal filed by the appellant/revenue is closed.

Summary

Issues Involved:
1. Validity of communications issued without Document Identification Number (DIN).
2. Applicability of Section 292B of the Income Tax Act, 1961.
3. Binding nature of CBDT Circulars on the Revenue.

Summary:

1. Validity of Communications Issued Without DIN:
The appeal concerns an order dated 16.09.2022 by the Income Tax Appellate Tribunal for AY 2011-12, which allowed the respondent/assessee's appeal based on CBDT Circular No. 19/2019. This Circular mandates that no communication from the Income Tax Department shall be issued without a computer-generated DIN from 01.10.2019 onwards. The Tribunal found that the final assessment order dated 15.10.2019 did not bear a DIN and was not justified under any exceptional circumstances outlined in paragraph 3 of the Circular. Consequently, per paragraph 4 of the Circular, such a communication is deemed invalid and non-est in law.

2. Applicability of Section 292B of the Income Tax Act, 1961:
The appellant/revenue argued that the failure to allocate DIN was a mere mistake and could be rectified under Section 292B of the Act, which addresses mistakes, defects, or omissions in documents. However, the Tribunal and the High Court found this argument untenable due to the explicit language in paragraph 4 of the 2019 Circular, which invalidates any communication not conforming to its provisions. Hence, Section 292B could not be invoked to validate the assessment order.

3. Binding Nature of CBDT Circulars on the Revenue:
The respondent/assessee contended, supported by several judgments, that the 2019 Circular is binding on the revenue. The High Court reaffirmed that circulars issued by the CBDT under Section 119 of the Act are binding on all officers and persons employed in the execution of the Act. The Court cited the Supreme Court's decision in K.P. Varghese v. Income Tax Officer and other precedents to underline that even if a circular deviates from the statutory provisions, it remains binding on the revenue.

Conclusion:
The High Court concluded that the Tribunal correctly applied the provisions of the 2019 Circular, leading to the invalidation of the final assessment order dated 15.10.2019. The appeal was dismissed, and the Tribunal's decision was upheld, emphasizing that there was no substantial question of law requiring further consideration. The Court also noted that any further steps by the Assessing Officer must comply with the law.