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TMI Blog2024 (1) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... s which are not in compliance with the aforesaid CBDT Circular no 19/2019 are non-est in eyes of law. As we have seen and discussed above, some of these matters have reached the respective Hon ble High Courts and the findings of the Tribunal have been upheld in case of Brandix Mauritius Holding Ltd. and Tata Medical Centre Trust. On this account as well, we respectfully follow the collective wisdom as expounded in various decisions rendered by the Coordinate Benches across the Country and do not see any justifiable basis to deviate from the same. We are of the considered view that the impugned order passed u/s 147 r/w 143(3) cannot be upheld and deserve to be set-aside as the same has been passed in violation of CBDT Circular no 19/2019 r/w CBDT Circular No 27/2019 and the same is hereby treated as non-est in eyes of law. Decided in favour of assessee. - Shri. Aakash Deep Jain, VP And Shri. Vikram Singh Yadav, AM For the Assessee : Shri Ashwani Kumar, C.A, Shri Aditya Kumar and Ms. Muskan Garg, C.A s For the Revenue : Shri Sarabjeet Singh, CIT DR ORDER PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-3, Gurgaon dt. 27/02/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(2) was issued to the assessee on 28/11/2019 for necessary compliance on 05/12/2019. Thereafter notice under section 142(1) was issued on 29/11/2019 alongwith detailed questionnaire and the matter was fixed for hearing on 09/12/2019. In response to the said notice, the assessee furnished its reply on 16/12/2019 and thereafter considering the submissions so filed by the assessee but not accepting the same, the assessment order was passed on 17/12/2019 under section 143(3) read with section 147 of the Act wherein the AO has held that the sub contractor firms are bogus parties which are not involved in any actual activities and they were merely created to book bogus expenses and merely filing of confirmation is not adequate to discharge the heavy onus cast on the assessee and since assessee has failed to produce the sub contractors for examination to prove identity and genuineness of the transactions, the onus cast on the assessee has not been discharged, therefore the amount of Rs. 10,30,66,089/- was brought to tax under section 69C of the Act. 4. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) wherein the order of the AO was challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . During the course of hearing, it has been contended by the Ld. AR that the Ld. CIT(A) has gravely erred in upholding the validity of the assessment order despite the fact that the proceedings had not been conducted in the manner prescribed by the Department instructions issued from time to time which were mandatory for compliance by the AO, as the assessment order was not uploaded on the e-filing portal of the assessee company and was served only through courier and also the same was passed without mentioning DIN on the assessment order. 7.1 In this regard, it was submitted that the proceedings were required to be conducted digitally as mandated by Circular No. 27/2019 dated 26.09.2019 wherein if the AO were to conduct proceedings manually, approval of the higher authorities was to be taken. Since there is no such circumstances where the proceedings were required to be carried out on conventional mode and there is no such approval from the higher authorities, it is submitted the order so passed is void and therefore to be stuck down. In fact, it is prudent to note that the requirements put down in the said circular were subsequently enacted in the statute through Section 144B of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly held that non-mentioning of DIN on the body of the order is not a defect curable u/s 292B and in the absence of a DIN on the body of the order, the said order is deemed to never have been issued: M/s Tata Medical Centre Trust vs. C1T (Exemption), Kolkata ITA No. 238/Kol/2021 reported in 196 ITD 302 M/s Brandix Mauritius Holdings Ltd. Vs. DCIT in ITA No. 1542/DEL/2020 (Delhi ITAT) CIT, International Taxation vs Brandix Mauritius Holdings Ltd in ITA No. 163/2023 (Delhi High Court) Teleperformance Global Services Private Limited vs ACIT, Mumbai in ITA No. 2814 and 2815/Mum/2022 (Mumbai ITAT) Dilip Kothari v Principal Commissioner of Income Tax (Central) 146 taxmann.com 442 (Bangalore Trib) Sidda Venkata Surya Prakasa Rao vs ACIT , Circle -1, Ongole - Hyderabad ITAT (ITA No. 423/Hyd/2020) Pratap Singh Yadav vs DCIT, Central Circle - 7, Delhi - Delhi ITAT (ITA No 1898/Del/2022) 7.6 It was submitted that all the above cases have stood to the fact that in the absence of the DIN being quoted in the body of the order, the said communication is deemed to have never been issued. In the instant case, it is not in dispute that the order does not bear a DIN and therefore, on this ground alone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay make a scheme, by notification in the Official Gazette, for the purposes of making assessment of total income or loss of the assessee under sub-section (3A) so as to impart greater efficiency, transparency and accountability by (a)eliminating the interface between the Assessing Officer and assessee in course of proceedings to the extent technologically feasible; (b)optimizing utilization of the resources through economies of scale and functional specialization; (c)introducing a team-based assessment with dynamic jurisdiction. The above series of legislative changes represents an effort by the Income Tax Department to shift, gradually, the conduct of assessment proceedings to the electronic mode. The said changes were motivated by a desire to improve taxpayer services, impart enhanced efficiency, transparency and accountability in a paperless environment. The manner in which proceedings were to be conducted electronically has been laid out in circulars issued by the CBDT from time to time. In this regard, the CBDT has issued Circular No. 27/2019 dated 26.09.2019 with regard to the conduct of assessment proceedings through e-proceedings facility during Financial Year 2019-20 i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that all assessment proceedings, subject to the exceptions provided therein, during Financial Year 2019-20 shall be conducted electronically. In all fairness, the said circular provides that the jurisdictional Pr. CIT/CIT, in extraordinary circumstances such as complexities of the case or administrative difficulties in the conduct of assessment through e-proceedings can permit conduct of assessment proceedings through the conventional mode. It is also provided in the said circular that for assessment to be framed u/s 147, relaxation from e-proceedings can be provided only after prior permission from the jurisdictional Pr CIT/CIT. In the instant case as well, since the assessment proceedings were to be framed u/s 147, they were normally to be conducted under the e-proceedings mode unless an approval of the jurisdictional Pr. CIT/CIT was obtained. It is humbly submitted that, in the given case, as per the information available with the Appellant, no approval has been obtained from the jurisdictional Pr. CIT to deviate from the proceedings prescribed in Circular No. 27/2019 issued by the CBDT and no such fact has been brought to the attention of the Appellant vide the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch should be duly quoted in the body of such communication. Relevant excerpt from the CBDT Circular is reproduced hereunder: With the launch of various e-governance initiatives, Income-tax Department is moving towards total computerization of its work. This has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax administration. Presently, almost all notices and orders are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as communication ) were found to have been issued manually, without maintaining a proper audit trail of such communication. 2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under Section 119 of the Incometax Act, 1961 (hereinafter referred to as the Act ), has decided that no communication shall be issued by any income tax authority relating to assessment, appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin 15 working days of its issuance, by i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; iii. communicating the DIN so generated to the assessee/any other person as per electronically generated pro-forma available on the System. 6. An intimation of issuance of manual communication for the reasons mentioned in para 3(v) shall be sent to the Principal Director General of Income-tax (Systems) within seven days from the date of its issuance. Thus, the above circular mandates a computer-generated DIN which should be duly quoted in the body of such communication. In exceptional situations for example when there are technical difficulties in generating/ allotting/ quoting the DIN and issuance of communication electronically, the communication may be issued manually but only after recording reasons in writing and with the prior written approval of CCIT/ DGIT. Further, the communication issued manually shall have to be regularised within 15 working days of its issuance by following the procedure prescribed. Further, the circular also states that in an event there is non-compliance with the above, it will be deemed that the order/ docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nator and the addressee, the dispatch of an electronic record (assessment order in the case under consideration) occurs when it enters in a computer, resources outside the control of the originator ( the Assessing Officer in the instant case). It is implicit in the said provisions that for an assessment order to be validly passed, the same should be uploaded on the efiling portal which is a computer resource outside the control of the Ld. AO. With a view to further amplifying and clarifying the issue, it may be noted that the purpose behind the introduction of the facility of conducting proceedings electronically, among other, was to embed the entire process with a complete degree of transparency and fair-play. Accordingly, it was in the spirit of the said intention that in order for a logical culmination of the proceedings, the requisite order should be uploaded on the e-filing portal within the requisite time-frame in order to comply with both the spirit and letter of the law behind the reformatory process. The Appellant would here also like to quote the instance that during the finalisation of the assessment proceedings, the Appellant was required to submit certain information h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner in which assessment proceedings have to be conducted and completed. 7.10 Further our reference was drawn to the remand report called for by Ld. CIT(A) and submitted by the AO during the course of appellate proceedings and the contents thereof read as under: Point 1: It has been alleged in the written submission (Page 3-7) that the assessment order dated 17/12/2019 is bad in law as the same has not been uploaded on the E-filing portal of the appellant, in contravention of provision of section 143(3A) of the Act and Departmental circular/instruction in this respect. Reply to Point 1: Appellant has wrongly challenged that assessment order dated 17/12/2019 has not been uploaded on the E-filing portal of the appellant. In this regard, it is submitted that the assessment order was duly uploaded on E-filing portal on 18/12/2019. Screen shot of income tax portal showing date of dispatch is attached herewith for reference as Annexure-1. Therefore, submissions of assessee on this issue is factually incorrect and deserves to be rejected. Point 2: It has been alleged (page 8) by the appellant that assessment order in this case has been passed without DIN. Reply to Point 2: In this regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if DIN was generated subsequently, still this fact should have been mentioned in the assessment order and a copy of the permission of the concerned authority should also have been found mentioned in the body of the assessment order. Relevant Extract of the Circular which provides for this exception is as follows: 3. In exceptional circumstance such as: . (i) when there are technical difficulties in generating/allotting/quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties; or (iii) when due to delay in PAN migration. PAN is lying with non-jurisdictional Assessing Officer; or (iv) when PAN of assessee is not available and where a proceeding under die Act (other than verification under section 131 or section 133 of die Act) is sought to be initiated; or (v) When the functionality to issue communication is not available in the system, the communication may he issued manually but only after recording reasons in writing in. the file and with prior written approval of the Chief Commissioner / Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioning the DIN number which is fatal to the assessment proceedings and is not a curable defect under section 292B of the Act and in this regard our reference was drawn to the decision of Hon ble Delhi High Court in case of CIT( International Taxation)-1 Vs. Brandix Mauritius Holding Ltd. (supra) wherein it was held by the Hon ble High Court that the Circular issued by CBDT is binding on the AO and non mentioning of DIN on the body of the order is not a curable defect covered u/s 292B of the Act. 8. Per contra the Ld. CIT/DR strongly contested the submissions so made by the Ld. AR. It was submitted that the matter has been extensively discussed by the Ld. CIT(A) in para 8.1 to 8.5 of the impugned order and our reference was drawn to the findings of the Ld. CIT(A) and the contents thereof read as under: 8.1 In this ground of appeal the appellant has stated that the assessment order was passed by the AO dated 17.12.2019 is non-est and bad in law as the assessment proceeding have not been conducted in the manner prescribed by the Department from time to time; which are mandatory for compliance by the AO. It was stated that the assessment order has not been uploaded on the efiling po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITBA (electronic portal of the Department) on 17.12.2019 within the limitation period, screen shot of the same is reproduced as under:- Therefore from the above facts and discussion, it is evident that the AO has signed the assessment order alongwith demand notice on 17.12.2019 within the limitation period, uploaded the same on portal and has also communicated the same to the appellant on 19.12.2019 through speed post [ alternate mode of service] in accordance with section 282 of the Act whereas the DIN No. has been generated on 17.12.2021 and duly mentioned in the demand notice. Thus the DIN no. has been generated prior to communication of the order to the appellant on 17.12.2019/19.12.2019. Merely because separate DIN no has not been generated for the assessment order would not make the assessment order invalid. As discussed above the demand notice and the assessment order cannot be seen in isolation. 8.3 Further there is no merit in the argument of the Ld. AR that as the DIN no. has been generated on 18.12.2019 whereas assessment order has been passed on 17.12.2019, the assessment order was bad in law. The objective behind mandatory requirement of generation and quoting of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronically, reproduced as above. The AO has served the order along with demand notice through alternate mode of speed post on 19.12.2019. 8.5 Therefore keeping in view the above facts and discussion it is found that there is no merit in such ground of appeal no 2 taken by the appellant and the same is hereby dismissed. Ground of appeal no 1 is general in nature. 8.1 It was submitted that the AO has passed the assessment order alongwith demand notice on 17/12/2019 within the limitation period, uploaded the same on portal and has also communicated the same to the assessee on 19/12/2019 through speed post in accordance with the Section 282 of the Act. 8.2 It was submitted that the DIN number has been duly generated on 17/12/2019 and duly mentioned in the demand notice. It was submitted that both the assessment order and the demand notice have to be read together and cannot be seen in isolation and merely because no separate DIN number has been mentioned on the body of the assessment order, the same would not make the assessment order invalid. 8.3 It was further submitted that even if it is held that the AO was required to mention the DIN on the body of the assessment order, such omissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as communication ) were found to have been issued manually, without maintaining a proper audit trail of such communication. 2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Incometax Act, 1961 (hereinafter referred to as the Act ), has decided that 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 etc. to the assessee or any other person, on or after the 1st day of October, 20 19 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of' such communication. 3. In exceptional circumstances such as, - (i) when there are technical difficulties in generating/allotting/quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Circular, the income-tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31th October, 2019. 11. In paragraph 2 of the aforesaid circular, the CBDT has provided that no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise to the assessee on or after 1/10/2019 unless computer generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. Therefore, before any communication is issued, there are certain laid down steps and procedure which has been prescribed by the CBDT, in terms of generating the DIN through the computerization process and specifying the DIN so generated on the body of the communication, which has to be necessarily followed by the income tax authority and no relaxation therein has been envisaged and thus, has to be strictly followed by the income tax authority as part of standard operating standards and procedures. 12. In paragraph 3 of the aforesaid circular, the CBDT has envisaged and provided for certain exceptional circumstances where the communication may be issued manually by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequence of non-compliance with laid down steps and procedure as part of standard operating standards by the income tax authority will be and has stated that any such communication which is issued in violation of paragraph 2 and 3 will be treated as invalid and shall be deemed to never been issued. 14. In paragraph 5 of the aforesaid circular, the CBDT has talked about the steps to be taken by the income tax authority to regularize the manual communication within a period of 15 days by way of uploading the manual communication on the system, generating the DIN on the system and communicating the DIN so generated to the assessee. 15. In the instant case, on perusal of the reassessment order passed u/s 143(3) r/w 147 of the Act by the Deputy Commissioner of Income Tax, Central Circle 1, Chandigarh dated 17/12/2019, it is noted that there is no mention of any computer generated DIN which is allotted for the said communication and no DIN has thus been quoted in the body of reassessment order so issued. The communication so issued is thus not in compliance with paragraph 2 of the aforesaid circular issued by the CBDT. 16. Further, the reassessment order passed u/s 143(3) r/w 147 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax, Central Circle-1, Chandigarh and each of these communications it has been stated by Ld. AR that they have been issued simultaneously and on the same date i.e, 23/06/2021 pertaining to Assessment Year 2019-20. 20. We have carefully given a thought to the aforesaid findings of the ld CIT(A) and the contentions advanced by Ld. CIT/DR and the ld AR as well as gone through the documentation so brought to our notice which are available at pages 954- 962 of the APB. In our considered view that the determination of tax demand and consequent interest liability is no doubt a result of assessment proceedings and the findings given in the assessment order and thus are closely connected and cannot be read in isolation. The same is the case with any reassessment proceedings. The demand is the outcome of the additions or disallowance so made by the Assessing officer to the returned income and determination of assessed income during the course of assessment proceedings and is thus dependent on the assessment proceedings. At the same time, assessment order quantifies the assessed income and the basis thereof and passed under relevant provisions, in the instant case u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abide by the it and cannot seek any immunity by way of not following the same. Therefore, in the instant case, we find that assessment order and notice of demand are two separate communications qua the assessee and carry separate physical existence and identity, even though issued on the same date by the same Assessing officer pertaining to same assessment year and therefore, necessarily have to carry separate DIN on the body of the said communications. In view of the admitted position that there is no DIN on body of the assessment order (even though there is DIN on body of the notice of demand), the same will continue to be non-compliant with paragraph 2 of the CBDT Circular no. 19/2019 and carry the same consequences in terms of paragraph 4 of the CBDT Circular and will be held as invalid and never been issued. 22. Now, coming to Circular no. 27/2019 dated 26/09/2019 which has been issued by the Central Board of Direct Taxes in exercise of its powers u/s 119 and in accordance with provisions of section 2(23C) of the Act on the subject of conduct of assessment proceedings through E-proceeding facility during the financial year 2019-20, which is relevant to impugned assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinary circumstances after examining the necessity for such relaxation and recording the reasons for providing such relaxations. (iii) However, it is clarified that issue of notices and departmental communications in such cases shall be strictly governed by the guidelines issued by CBDT vide its Circular No. 19/2019 dated 14.08.2019 regarding generation/ allotment/ quoting of Document Identification Number (DIN). (iv) In cases where assessment proceedings are being carried out through the E-Proceeding as per para 1 (i) above, personal hearing/ attendance may take place in following situation(s): a. Where books of accounts have to be examined; b. Where Assessing Officer invokes provisions of section 131 of the Act; c. Where examination of witness is required to be made by the assessee or the Department; d. Where a show-cause notice contemplating any adverse view is issued by the Assessing Officer and assessee requests through their E-filing account for personal hearing to explain the matter. However, the details pertaining to above shall be uploaded on ITBA subsequently. 2. This may be brought to the notice of all concerned for immediate compliance. 23. In paragraph (i) of the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: Provided that no such orders, instructions or directions shall be issued (a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of [the Joint Commissioner (Appeals) or] the Commissioner (Appeals) in the exercise of his appellate functions. (2) Without prejudice to the generality of the foregoing power, (a) the Board may, if it considers it necessary or expedient so to do, for the purpose of proper and efficient management of the work of assessment and collection of revenue, issue, from time to time (whether by way of relaxation of any of the provisions of sections 3 [115P, 115S, 115WD, 115WE, 115WF, 115WG, 115WH, 115WJ, 115WK,] 4 [139,] 143, 144, 147, 148, 154, 155 5 [, 158BFA], 6 [sub-section (1A) of section 201, sections 210, 211, 234A, 234B, 234C 7 [, 234E]], 8 [270A,] 271 9 [, 271C, 271CA] and 273 or otherwise), general or special orders in respect of 10[any clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CBDT whether by way of relaxation of any the provisions so specified or otherwise, by general or special orders, can issue directions or instructions as to the guidelines, principles, or procedure to be followed by other income tax authorities in work relating to assessment or collection of taxes, etc. It has been provided that the CBDT can issue such instructions and directions where in its opinion, it is necessary in public interest and such instructions and directions are published and circulated for general information. It has also been provided that such instructions and directions cannot require any income tax authority to make a particular assessment or dispose off a particular case in a particular manner and thus, cannot interfere in the judicial discharge of functions by any of the sub-ordinate authorities. It has also been provided that such instructions and directions shall not be prejudicial to the interest of the assessee. We therefore find that the doctrine of prejudice has been duly considered by the legislation while enshrining the powers to the CBDT to issue instructions and directions u/s 119 of the Act. Therefore, at the very threshold, the powers to the CBDT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrying on an activity in the nature of trade, commerce or business is a question of fact which will be decided based on the nature, scope, extent and frequency of the activity. 3.1. There are industry and trade associations who claim exemption from tax u/s 11 on the ground that their objects are for charitable purpose as these are covered under any other object of general public utility . Under the principle of mutuality, if trading takes place between persons who are associated together and contribute to a common fund for the financing of some venture or object and in this respect have no dealings or relations with any outside body, then any surplus returned to the persons forming such association is not chargeable to tax. In such cases, there must be complete identity between the contributors and the participants. Therefore, where industry or trade associations claim both to be charitable institutions as well as mutual organizations and their activities are restricted to contributions from and participation of only their members, these would not fall under the purview of the proviso to section 2(15) owing to the principle of mutuality. However, if such organizations have dealings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1955 (w.e.f. 01.04.1955). As a result of these amendments, the combined effect of the two provisions was that three kinds of payments made to shareholders companies to which those applied, were treated as taxable dividend to the extent of the accumulated profits held by the company. The provision was challenged. It was noticed that while introducing the amendment, the Finance Minister assured that outstanding loans and advances otherwise liable to taxation as dividends in AY 1955-56, would not be subjected to tax if it were shown that they had been genuinely refunded to the respective companies before 30.06.1955. The government felt that unless such a step was taken, the operation of Section 12(1B) would lead to extreme hardship, as it would cover the aggregate of all outstanding loans of past years and could have led to unreasonably high liability on shareholders to whom the loans might have been advanced. A circular [No. 20(XXI-6) /55] was issued by the Central Board of Revenue on 10.05.1955. The court, in that context, observed that: It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under Section 119 of the Income-tax Act which are binding on the authorities in the administration of the Act. Under Section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forego the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law or in other permissible manners as laid down in Section 119. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. 119. The view expressed in Navnit Lal Jhaveri (supra), and later elaborated in UCO Bank (supra) appears to have found resonance in other decisions 111 of this court. A recent instance where this court took aid of explanatory circulars is in CIT v. Vatika Township112 when after holding that the amendment in question applied prospectively, the court also supported that holding by citing the revenue s understanding about such prospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculated the position with some degree of clarity. Commenting on Navnit Lal Jhaveri (supra) and other decisions, it was observed that: 30. No proposition was laid down in that case that even if the circular was clearly contrary to the provisions of the Act it should prevail, On the other hand, the learned Judges were inclined to view the circular as granting the benefit of exemption from the operation of the impugned provisions subject to fulfilment of certain conditions. Navnit Lal's case was referred to and construed in two cases decided by Benches of two learned Judges. The first one was the case of Ellerman Lines Ltd. v. Commissioner of Income Tax, West Bengal [1971]82ITR913(SC) and the other is K.P. Varghese v. I.T. Officer, Ernakulam [1981]131ITR597(SC) . In both these cases it was assumed that Navnit Lal's case was an authority for the proposition that even if the directions given in the circular clearly deviate from the provisions of the Act, yet, the Revenue is bound by it. These three decisions were repeatedly referred to and relied on in the subsequent decisions in which the issue arose as regards the binding nature of the circulars either under the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain words of a statute, they are not binding. Furthermore, they cannot bind the courts, which have to independently interpret the statute, in their own terms. At best, in such a task, they may be considered as departmental understanding on the subject and have limited persuasive value. At the highest, they are binding on tax administrators and authorities, if they accord with and are not at odds with the statute; at the worst, if they cut down the plain meaning of a statute, or fly on the face of their express terms, they are to be ignored. 28. In the instant case, we find that the concept of DIN was introduced in the statue by the Finance (No. 2) Act of 2009 whereby Section 282B was inserted with effect from 1/10/2010 and the same has been explained in CBDT Circular no. 5/20210 dated 3/06/2010. Thereafter, by the Finance Act of 2011, Section 282B got omitted with effect from 1/04/2011 and the reasons for such omission can be seen from the CBDT Circular no. 2/2012 dated 22/05/2012. Thereafter, the CBDT came out with the Circular no. 19/2019 dated 14/08/2019 which is under consideration before us. We therefore find that at the time of issue of the aforesaid Circular, there was cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions and furthering the objective as so stated in terms of strengthening the transparency in the tax administration by way of establishing the digital foot prints which are difficult to erase and can be verified where so challenged, should the need for the same arise in future. We find that it is even not the case of the Revenue as set out before us that said Circular is contrary to any express provisions in the statue and thus, not binding on the Assessing Officer. Therefore, we have no hesitation to hold that the said CBDT Circular binds the Assessing officer by all intents and purposes it seek to achieve and where the Assessing officer fails in his duty to adhere and comply with the same, the said action cannot be ignored and the necessary consequences have to follow. 30. Now, coming to the contention advanced by the Ld. CIT/ DR that non-mentioning of DIN in the body of the assessment order is merely a mistake or at best a defect and/or omission which ought not to invalidate the assessment proceedings and substantive order and reference was drawn to Section 292B of the Act. We find that similar contentions were raised by the Ld Standing Counsel for the Revenue before the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong line of judgements, including the Supreme Court s judgment rendered in K.P. Varghese v. Income Tax Officer, Ernakulam and Anr., (1981) 4 SCC 173. The relevant extracts are set forth hereafter: 12. But the construction which is commending itself to us does not rest merely on the principle of contemporanea expositio. The two circulars of the Central Board of Direct Taxes to which we have just referred are legally binding on the Revenue and this binding character attaches to the two circulars even if they be found not in accordance with the correct interpretation of sub-section (2) and they depart or deviate from such construction. It is now well settled as a result of two decisions of this Court, one in Navnitlal C. Javeri v. K.K. Sen [AIR 1965 SC 1375 : (1965) 1 SCR 909 : 56 ITR 198] and the other in Ellerman Lines Ltd. v. CIT [(1979) 4 SCC 565] that circulars issued by the Central Board of Direct Taxes under Section 119 of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act. The question which arose in Navnitlal C. Javeri case [AIR 1965 SC 1375 : (1965) 1 SCR 909 : 56 ITR 198] was in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of instructions issued under Section 5(8) of the Act, this Court observed in Navnitlal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner, Bombay [AIR 1965 SC 1375 : (1965) 1 SCR 909 : 56 ITR 198] : It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under Section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision. The directions given in that circular clearly deviated from the provisions of the Act, yet this Court held that the circular was binding on the Income Tax Officer. The two circulars of the Central Board of Direct Taxes referred to above must therefore be held to be binding on the Revenue in the administration or implementation of sub-section (2) and this sub-section must be read as applicable only to cases where there is understatement of the consideration in respect of the transfer. [Emphasis is ours] 17.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the matter were that the final assessment order passed by the Assessing officer u/s 147/144C(13)/143(3) was without quoting DIN on the body of the order and the Coordinate Delhi Benches held that the order so issued is hit by mandate of the Board and is invalid and deemed to have never been issued as it fails to mention DIN in the body adhering to CBDT Circular no. 19/2009 dated 14/08/2019. The matter was thereafter carried in appeal by the Revenue before the Hon ble Delhi High Court and it was contended on behalf of the Revenue that failure to allocate and mention DIN was a mere mistake and such a mistake can be corrected by taking recourse to section 292B of the Act which was however not found acceptable to the Hon ble High Court. The Hon ble High Court referred to the CBDT Circular and held that there is nothing on record that there were any exceptional circumstances as referred in paragraph 3 of 2019 circular which would sustain the communication issued manually without DIN. The Hon ble High Court held that circulars issued by the CBDT in exercise of its powers under section 119 are binding on the Revenue and referred to the Hon ble Supreme Court decision in case of K.P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice. order, summons, letter and any correspondence (hereinafter referred to as communication were found to have been issued manually, without maintaining a proper audit trail of such communication. 2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the income-tax Act, 1961 (hereinafter referred to as the Act ), has decided that 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 etc. to the assessee or any other person, on or after the 1st day of October, 2019 unless a computer- generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. 3. In exceptional circumstances such as,- (i) when there are technical difficulties in generating/allotting/ quoting the DIN and issuance of communication electronically; or (ii) when communication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issuance of this Circular, the Income-tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31th October, 2019. Paragraph 3 of the Circular sets out five exceptional circumstances where the aforementioned mandatory requirement may not be adhered to, but requires that if an order/communication is to be issued without a DIN, it can be done only after recording reasons in writing in the file and with the prior written approval of the Chief Commissioner/Director General of Income Tax. Further, paragraph 3 requires that if such exceptional circumstances are claimed, the orders/communication issued without a DIN must state this fact in a specific format set out in paragraph 3 of the Circular. Paragraph 4 of the Circular provides that any order/ communication which is not in conformity with paragraphs 2 and 3 of the Circular shall be treated as invalid and shall be deemed to have never been issued. The contents of the Circular have been re-iterated in a Press Release dated 14th August 2019; (b) It is indisputable that the impugned assessment order dated 28th September 2021 does not bear a DIN and further that the said order issued with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28th September 2021 under Section 153C of the Act has a DIN, which is set out therein. Even if this is held to be in compliance with paragraph 5 of the Circular, which deals with regularization of communications without DIN, this can only seek to regularize the failure to generate a DIN, but yet the requirements of paragraph 3 of the Circular will still remain contravened and consequently, the order dated 28th September 2021 ought to be treated as invalid and never issued; (d) The said Circular also applies to the satisfaction note dated 13th July 2021 issued by respondent no.1. The satisfaction note will fall within the scope of paragraph 2 of the Circular as a communication of the specified type issued to any person. In the case of the satisfaction note no regularization dated 13th October 2021 has been issued; (e) In view of the binding nature of Circular issued under Section 119 of the Act, and the peculiar facts and circumstances of the case, the consequences of contravention of the Circular set out above, therefore, ought to be given full effect to. The object of the said Circular is clear and laudatory and intended to ensure that proper trail of all assessment and other orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said decision support our view, as we have discussed in paragraph 18-20 supra, that assessment order and notice of demand are two separate communications qua the assessee and carry separate physical existence and identity, even though issued on the same date by the same Assessing officer pertaining to same assessment year and therefore, necessarily have to carry separate DIN on the body of the said communications. 34. Again, in the context of CBDT Circular no. 19/2019 dated 14/08/2019, we find that the matter came up for consideration before the Hon ble Calcutta High Court in case of Principal Commissioner of Income tax, Exemption vs M/s Tata Medical Centre Trust, Kolkata (ITAT/2023/2023, IA No. GA/1/2023) wherein the Hon ble High Court vide its order dated 26/09/2023 has held as under: This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated 18th July, 2022 and 5th April, 2023, passed by the Income Tax Appellate Tribunal, 'B' Bench, Kolkata, in I.T.A. No. 238/Kol/2021 and M.A. No. 38/Kol/2022, for the assessment year 2016-17. The revenue has raised the following substantial questions of law for consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as part and parcel of the substantive order. However, in the intimation letter there is nothing mentioned as to why in the substantive order the Document Identification Number was not mentioned as mandated in the Circular. The revenue filed miscellaneous application seeking for rectification of the said order. Once again the Tribunal has undertaken a factual exercise and in fact, raised a specific query to the revenue to point out how a DIN intimation letter along with the manual order as explained by the Commissioner of Income Tax (Exemption) in his reply fulfils the categorical requirement mandated by the CBDT Circular, more particularly, in paragraph 2 of the said Circular, that the body of the communication, the order under Section 263 of the Act, must contain the fact and that the communication issued referred to the DIN without justifying as to how the non compliance of the CBDT Circular dated 14th August, 2019, which was noted by the Tribunal when it passed the main order. The Tribunal notes that this specific query was unable to be answered by the revenue and therefore the learned Tribunal came to the conclusion that the order passed under Section 263 does not satisfy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that the department which is State can be permitted to selectively apply the standards set by themselves for their own conduct. It was held by the Hon ble High Court that where this type of deviation is permitted, the consequences will be that, floodgate of corruption will be opened which is not desirable to encourage. It was held by the Hon ble High Court that when the department has set down a standard for itself, the department is bound by that standard and cannot act with discrimination. In case it does that, the act of the department is bound to be struck down under Article 14 of the Constitution. We therefore find resonance of our thought process as we have discussed supra in paragraph 25 supra that the sub-ordinate authorities to whom the directions and instructions are issued by CBDT have to strictly observe and follow such directions and instructions as the same have become part of standards laid down by CBDT which have to be followed as part of standing operating procedure, which is so profoundly articulated by the Hon ble Calcutta High Court and therefore we are clearly guided by the said proposition so laid down by the Hon ble Calcutta High Court that where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Allahabad High Court, the Hon ble Kerela High Court and Hon ble Jharkhand High Court which have come to our notice and brought to the notice of both the parties during the course of hearing. 40. The Hon ble Allahabad High Court in case of Chandra Bhan vs Union of India (Writ petition no. 829 of 2023 dated 18/07/2023) reported in 2023:AHC:142867 has held as under: Heard learned counsel for the petitioner and Mr. Gopal Verma, learned counsel appearing for Union of India. This petition is directed against the order of re-assessment passed against the petitioner. A preliminary objection is taken to maintainability of the writ petition on the ground that petitioner has remedy of filing statutory appeal where all questions of fact and law can be adjudicated. Learned counsel for the petitioner states that proper opportunity was not given and that the notice U/s 148 of the Income Tax Act was issued manually instead of it being issued by applying the document identification number (DIN). Such notice is said to be in violation of the circular issued by the department. Learned counsel appearing for the revenue/ department states that petitioner has participated in the proceedings and only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no reference to the contents of the CBDT Circular apparently not brought to the notice of the Hon ble High Court and consequently, no reference to the intent and context of issuance of such circular and the fact that the said circular has been issued by the CBDT in exercise of its powers u/s 119 of the Act which at the very threshold debars issuance of any circular which is prejudicial to the assessee and at the same time, binding on the authorities entrusted with the task of execution of the Act as we have discussed in paragraph 25 (supra) that the doctrine of prejudice has been duly considered by the legislation while enshrining the powers to the CBDT to issue instructions and directions u/s 119 of the Act and at the very threshold, where such powers have been satisfied as not in dispute in the instant case, the sub-ordinate authorities to whom the directions and instructions are issued by CBDT have to strictly observe and follow such directions and instructions as the same have become part of standing operating procedure laid down by CBDT which have to be necessarily followed. The sub-ordinate authorities cannot decide to apply the same standard in one case and not apply the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as communication were found to have been issued manually, without maintaining a proper audit trail of such communication. 2. In order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power under section 119 of the Income- Tax Act, 1961 (hereinafter referred to as the Act ), has decided that 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 etc. to the assessee or any other person, on or after the 1st day of October, 2019 unless a computer- generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. 3. In exceptional circumstances such as, (i) when there are technical difficulties in generating/allotting/ quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all upload the notices in these cases on the Systems by 31st October 2019. 4.2 The satisfaction note is a document prepared by the Assessing Authority which is kept in the file, and unless an assessee demands the satisfaction note, it is not required to be provided to the assessee. Therefore, there is no requirement to have a DIN number in the satisfaction note recorded by the Assessing Authority. When the satisfaction notes have been provided to the petitioner, the communication in Ext.P18 bears DIN, and therefore, I find that the judgment cited by the learned Counsel for the petitioner has no application to the facts of the present case. 5. Considering the facts and circumstances of the case, it cannot be said that the impugned notices and assessment orders are without jurisdiction as submitted by the learned Counsel for the petitioner. Therefore, this Court would not like to entertain the writ petition in the exercise of the writ jurisdiction. The petitioner may avail the remedy of appeal against the impugned assessment orders if so advised. Thus, the writ petition, with the aforesaid observation, is hereby dismissed. 43. In the aforesaid case, a writ petition was moved by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner is that the said assessment order, dated 31.03.2022, passed in the case of the petitioner was not communicated to the assessee and also not uploaded on the web portal on or before 31.03.2022. Therefore, it has been argued by the petitioner that the said assessment order is barred by the limitation period prescribed under Section 153(3) of the Income Tax Act, 1961. It has also been contended that the DIN (Document Identification Number) for communication of the said assessment order was generated on 01.04.2022 and the said assessment order was uploaded on the web portal on 01.04.2022. Further, the said assessment order was communicated to the Petitioner on 03.04.2022. The Petitioner has relied on the CBDT circular, bearing no. 19/2019 and dated 14.08.2019, to argue that no communication in relation of the assessment order could have been made in the absence of DIN. As in the present case, the DIN was generated after 31.03.2022 i.e., on 01.04.2022, therefore the assessment order could not have been communicated to the petitioner prior to 31.03.2022. Accordingly, the assessment order is barred by limitation as the same was communicated after 31.03.2022. The Petitioner contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nine months from the end of the financial year in which the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner: Provided that where the order under section 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words nine months , the words twelve months had been substituted. 10. At this stage itself it is relevant to mention that making of order , issue of order , uploading of order on web portal or communication of order are all different acts or things. It is to be considered that section 153 (3) regulates only making of order. There is no restriction or limitation period prescribed under Section 153 (3) for issue of order , uploading of order on web portal or communication of order . Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case it will be violating the provision of Section 263(2) of the Act and to add something which is not there in the section. As observed hereinabove, the word used is made and not the receipt of the order . As per the cardinal principle of law the provision of the statute/Act is to be read as it is and nothing is to be added or taken away from the provision of the statute. Therefore, the High Court has erred in holding that the order under Section 263 of the Act passed by the learned Commissioner was barred by period of limitation, as provided under sub-section (2) of Section 263 of the Act. 6. In view of the above and for the reasons stated above the question of law framed is answered in favour of the Revenue appellant and against the assessee respondent herein and it is held that the order passed by the learned Commissioner under Section 263 of the Income Tax Act was within the period of limitation prescribed under sub section (2) of Section 263 of the Act. The present appeal is allowed accordingly. No costs. 11. In the case at hand, the order sheet at Annexure B to the supplementary affidavit of the revenue dated 07.12.2022, shows that the assessment order was made/generated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of that both Section 153 (1) and Section 153 (2) provide for the consequence that after the expiry of time line no assessment order shall be passed . However, Section 153 (3) does not provide for any such consequence. Accordingly, in the present case, the delay, if any, of just one day in uploading the assessment order or generating the DIN cannot make the assessment order unsustainable in law. 13. The Petitioner has also contended that the assessment order, dated 31.03.2022, was uploaded on the next day i.e. 01.04.2022 but the same was required in law to be uploaded on the same date and not later. However, the Petitioner has not shown any provision of law which provides that an assessment order has to be uploaded on the web portal on the same day when it is made and the assessment order will become invalid if the same is uploaded on the next day. In the absence of such legal provision, it cannot be held that the assessment order, dated 31.03.2022, which was uploaded on 01.04.2022, is invalid in law. At the cost of repetition, the different expression used by the legislature at different places has certainly a different objective. Making of the order and communication of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble High Court. 46. In the aforesaid factual background, it was contended before the Hon ble High Court that the order dt 31/03/2022 did not contain a DIN number and also does not state as to under what circumstances, the order is issued manually and it does not state whether any approval received from the Chief Commissioner on the DG and therefore, the said order should be treated as invalid and non-est in eyes of law in terms of the specific mandate of the CBDT in terms of Circular No. 19/2019 dt. 14/08/2019 and reference was drawn to the Coordinate Kolkata Bench decision in case of M/s Tata Medical Centre Trust as well as various other authorities stating that the circular issued by the CBDT is binding on the Assessing officer. It was further contended that the uploading of the order on web portal is directly in conflict with Section 282 of the Act read with Rule 127 of the Income Tax Rules and what is relevant is the date of communication which in the instant case is 03/04/2022 will after the cutoff date of 31/03/2022 and it was contended that what is relevant is issue as well as services of any communication within the prescribed limit so prescribed by the statute. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 153(2) and has given a liberal time line for section 153(3) gone by expression shall and may used in the respective provisions and further both sections 153(1) and 153(2) provide for the consequence that after the expiry of time line, no assessment order shall be passed. However Section 153(3) does not provide for any such consequence. Therefore it was held that the delay if any of just one day in uploading the assessment order or generating the DIN cannot make the assessment unsustainable in law. It was further held by the Hon ble High Court that making of the order and communication of the order are two different things. Even the 2019 Circular stipulates communication of the order and not making of the order as it says every communication relating to assessment etc shall have a DIN on the body of the order. Accordingly, the writ petition was dismissed and at the same time assessee was granted liberty to avail the alternate remedy to challenge the assessment order on merits of the case. 48. We therefore find that even though the contentions have been raised by the assessee regarding the binding nature of the CBDT Circular and non mentioning of DIN on the body of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ata Medical Centre Trust (supra), Delhi Benches in series of decisions starting from Brandix Mauritius Holding Ltd.(supra), to Pratap Singh Yadav (supra), to Abhimanyu Chaturvedi (ITA No. 2486 others dated 3/08/2023) to Sharda Devi Bajaj (ITA no. 3006/Del/2022 dated 15/11/2023), Mumbai Benches in case of Teleperformance Global Services Private Limited (supra), Bangalore Benches in case of Dilip Kothari (supra), Hyderabad Benches in case of Sidda Venkata Surya Prakasa Rao, Indore Benches in case of Shri Ishak Kasturbagram (ITA No. 13/Ind/2023 dated 24/08/2023), Nagpur Benches in case of Gupta Domestic Fuels and others (ITA no. 61/Nag/2022 and others dated 31/10/2023) that the communication issued by the Income tax authorities by way of notices and assessment orders which are not in compliance with the aforesaid CBDT Circular no 19/2019 are non-est in eyes of law. As we have seen and discussed above, some of these matters have reached the respective Hon ble High Courts and the findings of the Tribunal have been upheld in case of Brandix Mauritius Holding Ltd. and Tata Medical Centre Trust. On this account as well, we respectfully follow the collective wisdom as expounded in various d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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