2024 (2) TMI 37 - AT - Income Tax

Validity of orders with non-mentioning of DIN - whether a procedural violation? - subsequent generation of the DIN - scope of Circular of the Board - as per revenue principles of purposeful or functional interpretation should be applied - HELD THAT - As decided in Abhinav Chaturvedi and others 2023 (8) TMI 378 - ITAT DELHI forwarding of the intimation of generation of the DIN in ITBA is only a subsequent action and that is not part of assessment order. The manner in which the word 'communication' is defined shows every notice, order, summons, letter and any correspondence from Tax authorities should have a DIN quoted and it is for this reason that the Intimation issued about the DIN of assessment order itself has a DIN quoted on it Board s circular application - Argument raised is against now crystallized proposition of law that as far as the Circulars of the Board are concerned, they are binding upon the officers of the Revenue Department without any exceptions whatsoever - Once it is concluded that the Circular of the Board is binding upon the Revenue Authorities, then, its non-compliance brings the consequences which the Board Circular itself manifests and it is that the communication , which in the present case is assessment order will be deemed to have been never issued. Thus, when Board lays down what shall be the format of any such communication and also provides that if the communication is not in that format the same will be considered as not issued at all, then it is not a mere technical flaw liable to be corrected but it vitiates the communication, i.e the assessment order in the present form. Once assessee has a statuary right to be conveyed such communication , as far as the immediate consequences of the communication not bearing DIN is concerned, as the same is presumed to have never been issued, such communication has no legal foundation left and becomes a voidable communication at the instance of the assessee, irrespective of assessee establishing the plea of prejudice. The difference pointed out in the passing of an order and issuing communication of order is very much clarified by the Circular as the word communication has been primarily used in the sense of a Noun , specifying what all sorts of orders, notices etc. will require DIN on the body. It is not used in the form of a verb indicating the mode of transmission of information or delivery or transmitting a copy thereof as service of the notice referred u/s 282 of the Act. Thus to say that there is merely an improper manner of service and such rigour is mitigated by Section 292BB is quite misconceived. See BRANDIX MAURITIUS HOLDINGS LTD. 2023 (4) TMI 579 - DELHI HIGH COURT This ground is allowed as the assessment order in question is invalid and is deemed to have never been issued as per the CBDT Circular dated 14/08/2019 for non-mentioning of DIN on the body of the order. Decided against revenue.

Summary

Issues Involved:
1. Illegality of assessment orders due to absence of Document Identification Number (DIN).
2. Compliance with CBDT Circular No. 19/2019.
3. Binding nature of CBDT Circulars on Revenue Authorities.

Summary:

Illegality of Assessment Orders Due to Absence of DIN:
The Tribunal examined whether the absence of DIN on the body of assessment orders rendered them illegal. The appellant argued that the orders did not contain DIN, making them non est and without consequential effect. The Tribunal noted that the law regarding the necessity of DIN on departmental communications is settled by the Hon'ble Jurisdictional High Court in the case of Brandix Mauritius Holdings Ltd. (149 taxmann.com 238 (Delhi) 2023), which supports the appellant's contention.

Compliance with CBDT Circular No. 19/2019:
The Tribunal reviewed CBDT Circular No. 19/2019, which mandates that no communication shall be issued by any income tax authority without a computer-generated DIN. The Circular also specifies that any communication issued manually must state the reason for not quoting DIN and must be approved by the Chief Commissioner/Director General of Income Tax. The Circular further states that any communication not in conformity with these requirements shall be treated as invalid and deemed to have never been issued.

The Tribunal found that the assessment orders in question did not comply with the Circular as they did not mention DIN on their body. The Tribunal emphasized that the Circular is binding on Revenue Authorities, and non-compliance results in the communication being void ab initio.

Binding Nature of CBDT Circulars on Revenue Authorities:
The Tribunal held that CBDT Circulars issued under Section 119 of the Income-tax Act are binding on all officers and persons employed in the execution of the Act. The Tribunal referred to the Hon'ble Delhi High Court's judgment in Brandix Mauritius Holdings Ltd., which confirmed that circulars are legally binding on the Revenue, even if they deviate from the provisions of the Act.

The Tribunal dismissed the Revenue's argument that the Circular is merely a procedural guideline and not a statutory requirement. The Tribunal reiterated that the Circular is binding and non-compliance results in the assessment order being deemed as never issued.

Conclusion:
The Tribunal concluded that the absence of DIN on the body of the assessment orders rendered them invalid. The appeals of the Revenue were dismissed, and the Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) in favor of the assessee. The Tribunal emphasized that the CBDT Circular No. 19/2019 is binding on Revenue Authorities and non-compliance with its provisions results in the communication being void ab initio.