9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 333 - AT - Income TaxOrder passed by the DRP without a valid computer-generated DIN - considering DRP directions as internal communication - Applicability of CBDT Circular No.19/2019 to DRP orders - Revenue filed certain evidences to argue that subsequently on same day or next day, a valid DIN has been generated and communicated to the assessee along with separate intimation Directions issued by the DRP is an internal communication and non-generation of DIN and is duly quoted in the body of said order would not invalidate the assessment order passed by the AO - HELD THAT - Assuming for a moment, the directions issued by the DRP are internal document within the Income-tax Department, the impugned circular would still be applicable and DIN must be allotted and quoted on the body of the directions as held in the case of Ashok Commercial Enterprises 2023 (9) TMI 335 - BOMBAY HIGH COURT wherein held that the circular issued by the CBDT is applicable even to a satisfaction note prepared by the AO for invoking the provisions of section 153C of the Act. In this regard, it is relevant to consider the decision of B.V.G. India Ltd 2024 (1) TMI 17 - ITAT PUNE where it has been held that approval granted by the Addl.CIT u/s.153D of the Act, cannot be said to be an internal document and hence, the requirement of DIN has to be complied with in respect of such approval. Therefore, we are of the considered view that the arguments of ld.DR that DRP communication is an internal communication is devoid of merit and thus, rejected. Revenue claimed that DRP is not an income-tax authority defined under the Act and circular issued by the CBDT is not applicable to DRP proceedings - DRP is an income-tax authority and consequently, the panel would be bound to follow the circular issued by the CBDT. Assuming for a moment, the DRP is not an income-tax authority, still it is bound to follow the circular issued by the CBDT u/s.119 of the Act for the simple reason that instructions and directions issued by the CBDT are required to be observed and followed by every income-tax authority and all other persons employed in the execution of this Act. In our considered view, DRP would certainly fall within the purview of all other persons employed in the execution of this Act as envisaged u/s.119 of the Act and consequently, the impugned circular would also be required to be followed by the DRP. Circular issued by the CBDT does not apply to the orders communicated electronically - The field officers of the Income-tax Department were equipped to allot and quote DIN on the body of any communication issued to the assessee s irrespective of whether the impugned order was generated online on the AST/ITD applications or manually. This fact is further strengthened by the fact that the ld.counsel for the assessee Shri M.P. Lohia appearing for the assessee, M/s. Lakshmi Machine Works, has filed few sample copies of order passed by the DRP, Mumbai which contains a bar coded computer generated DIN allotted and is duly quoted in the body of the order. From the above it is undoubtedly clear that the systems provide for generation of computer based DIN. Therefore, we are of the considered view that there is no merit in the argument of the Revenue that there is no integration between ITBA portal and DRP module and because of this, DRP is unable to generate DIN numbers when the order was passed. Accordingly, we reject the argument of the Revenue. DRP order cannot be challenged before ITAT and consequently non- generation/quoting of DIN in the body of the order does not in any way invalidate such order - What is challenged before ITAT is final assessment order, which is passed in pursuant to the directions of the DRP. If there is no valid DRP direction, the assessment order passed by the AO becomes time barred once the order of DRP has been held to be non-est. The AO gets extended time u/s.144C(13) of the Act, for passing final assessment order pursuant to the direction of the DRP. But for want of DIN, there is no valid DRP order, the extended time limit u/s.144C(13) of the Act for passing the final assessment order under the first proviso to section 153(2) of the Act, would not be applicable and consequently, the final assessment order passed by the AO is barred by limitation. Thus, in our considered view the argument of the revenue that DRP order is not appealable is incorrect and devoid of merit. Present appeal filed before the Tribunal is not maintainable, because when the assessee argued that order of the DRP is non-est, the final assessment order cannot be said to be the one passed pursuant to the direction of the DRP - We do not find any merit in the arguments of the Revenue for the simple reason that, it is a well settled principle of law that an illegal order would be in operation till it is vacated or set aside by the competent court in appeal. Such an illegal order can be corrected in appeal, but so long as it is not set aside in appeal, it remains an order having its own statutory force. This principle is supported by the decision of Bhikajee Dadabhai Co. 1956 (10) TMI 41 - HYDERABAD HIGH COURT Further, the Hon ble supreme court has upheld the legal position canvassed by the Hon ble High Court of Andhra Pradesh in the case of Bhikajee Dadabhai Co. 1956 (10) TMI 41 - HYDERABAD HIGH COURT Therefore, we are of the considered view that impugned orders passed by the AO/DRP would be in operation having its own statutory force till it is vacated or set aside in appeal. Thus, we reject the arguments of the Revenue. Thus we are of the considered view that orders passed by the DRP/AO without a valid computer-generated Document Identification Number has been allotted and duly quoted in the body of such order is invalid, non-est and shall be deemed to have never been issued. However, as per section 144C(13) of the Act, the AO has to pass the final assessment order in conformity with the directions issued by the DRP within one month from the end of the month in which such direction is received. In all these cases, the DRP directions are held as invalid and deemed to have never been issued, being in violation of Circular No.19/2019. Once the DRP directions are deemed to have never been issued, the ld.AO could not have passed the final assessment orders u/s.144C of the Act, in pursuance to such non-est directions. Thus, final assessment orders passed u/s.144C(13) r.w.s. 143(3) of the Act in pursuant to invalid, non-est DRP directions is bad in law, void ab-initio and accordingly liable to be quashed.
Issues Involved:
1. Delay in filing appeals. 2. Admission of additional grounds based on CBDT Circular No.19/2019. 3. Validity of orders without a valid Document Identification Number (DIN). 4. Whether DRP directions are considered internal communications. 5. Whether DRP is an income-tax authority under section 116 of the Act. 6. Applicability of the CBDT Circular to electronically communicated orders. 7. Maintainability of appeals before the ITAT. Detailed Analysis: 1. Delay in Filing Appeals: The Tribunal acknowledged delays in filing certain appeals due to the COVID-19 pandemic and the consequent lockdowns. It referred to the Hon'ble Supreme Court's suo motu Writ Petition No.3 of 2020, which extended the limitation period for various proceedings. The Tribunal condoned the delays, considering the reasons provided by the appellants and in the interest of natural justice. 2. Admission of Additional Grounds Based on CBDT Circular No.19/2019: The appellants raised additional grounds challenging the validity of orders passed by the DRP/AO without a valid computer-generated DIN, as mandated by CBDT Circular No.19/2019 dated 14.08.2019. The Tribunal admitted these additional grounds, referencing the Supreme Court decision in NTPC Ltd. vs. CIT, which allows new legal grounds based on existing records. 3. Validity of Orders Without a Valid Document Identification Number (DIN): The Tribunal examined the core issue of whether orders issued without a valid DIN are invalid. It emphasized that the CBDT Circular No.19/2019 mandates that all communications from income-tax authorities must have a computer-generated DIN. The Tribunal found that the orders in question did not comply with this requirement, rendering them invalid, non-est, and deemed to have never been issued. The Tribunal referenced multiple judicial precedents, including decisions from the Delhi High Court and Calcutta High Court, which supported this interpretation. 4. Whether DRP Directions Are Considered Internal Communications: The Tribunal rejected the argument that DRP directions are internal communications. It noted that DRP directions are communicated to the assessee and are intended to guide the AO in completing assessments. The Tribunal referenced Rule 11 and Rule 13 of the Income-tax (Dispute Resolution Panel) Rules, 2009, which mandate communication of DRP directions to the assessee, thus invalidating the claim of internal communication. 5. Whether DRP is an Income-Tax Authority Under Section 116 of the Act: The Tribunal held that the DRP is indeed an income-tax authority as defined under Section 116 of the Act. It noted that the DRP comprises Principal Commissioners or Commissioners of Income-tax, who are classified as income-tax authorities. The Tribunal dismissed the argument that the DRP is not bound by the CBDT circulars, stating that all persons employed in the execution of the Act must follow such directions. 6. Applicability of the CBDT Circular to Electronically Communicated Orders: The Tribunal found no merit in the argument that the CBDT Circular does not apply to electronically communicated orders. It highlighted that the circular does not provide any such exception and mandates a DIN for all communications, whether electronic or manual. The Tribunal referenced instructions from the Directorate of Income-tax (Systems), which facilitate the generation of DIN for both electronically and manually issued orders. 7. Maintainability of Appeals Before the ITAT: The Tribunal addressed the argument regarding the maintainability of appeals, stating that while DRP orders themselves are not appealable, the final assessment orders passed by the AO pursuant to DRP directions are. The Tribunal held that invalid DRP directions render the subsequent assessment orders invalid and time-barred. It referenced the Supreme Court decision in Bhikajee Dadabhai & Co. vs. CIT, which supports the principle that an illegal order remains in force until set aside in appeal. Conclusion: The Tribunal quashed the final assessment orders passed by the AO for all assessment years and in all assessee cases due to the invalidity of DRP directions issued without a valid DIN. Consequently, the appeals filed by the assessees were allowed, and the stay petitions became infructuous and were dismissed. The order was pronounced in open court on 22nd December 2023 at Chennai.
|
