9911796707
TMI Blog2024 (7) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/CHNY/2021, IT(TP)A No.54/CHNY/2021, IT(TP)A No.5/CHNY/2022, IT(TP)A No.22/CHNY/2022 ,IT(TP)A No.68/CHNY/2022, IT(TP)A No.24/CHNY/2022, IT(TP)A No.28/CHNY/2022, IT(TP)A No.29/CHNY/2022, IT(TP)A No.30/CHNY/2022, IT(TP)A No.31/CHNY/2022, IT(TP)A No.32/CHNY/2022, IT(TP)A No.33/CHNY/2022, IT(TP)A No.34/CHNY/2022, IT(TP)A No.44/CHNY/2022, IT(TP)A No.76/CHNY/2022, IT(TP)A No.58/CHNY/2022, IT(TP)A No.69/CHNY/2022, IT(TP)A No.67/CHNY/2022, IT(TP)A No.1/CHNY/2023, IT(TP)A No.24/CHNY/2023 M/s. Sutherland Gobal Services Inc Versus The ACIT / DCIT, International Taxation Circle 2(2),Chennai And Mobis India Limited Versus The DCIT, Non- Corporate Circle - 8(1), Chennai. And Polaris Consulting & Services Pte Ltd Versus The DCIT, International Taxation Circle 2(1) Chennai. And SPI Technologies India Pvt. Ltd. Versus The DCIT, Corporate Circle 1, Puducherry And M/s. Siemens Gamesa Renewable Energy Sociedad Anonima Versus The DCIT, International Taxation 1(1), Chennai And M/s. Siemens Gamesa Renewable Power Pvt Versus The DCIT, Central Circle 1(4), Chennai And M/s. Siemens Gamesa Renewable Energy Lanka Pvt. Ltd Versus The ACIT, International Taxation 2(2), Chennai And M/s. Siemens Gamesa Renewabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice of the ld.counsel for the assessee's present, it was submitted that delay in filing of these appeals are mainly due to lockdown imposed by the Govt. on account of spread of Covid-19 infections and in view of the Hon'ble Supreme Court suomotu Writ Petition No.3 of 2020, if the period of delay is covered within the period specified in the order of the Apex Court, then same needs to be condoned in view of specific problem faced by the public on account of Covid-19 pandemic. The learned DR, on the other hand, fairly agreed that delay may be condoned in the interest of justice. 2.1 Having heard both sides and considered reasons given by the ld.counsel for the assessee's, we find that the Hon'ble Supreme Court in suomotu Writ Petition No.3 of 2020, has extended limitation applicable to all proceedings in respect of Courts and Tribunals across the country on account of spread of Covid-19 infections w.e.f. 15.03.2020. The Hon'ble Supreme Court in Miscellaneous Application No.665 of 2021 vide order dated 23.03.2020 has given directions that the delay is to be condoned during this period 15.03.2020 to 14.03.2021 and they have condoned the delay up to 28.02.2022 in Miscellaneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been filed against orders of ld. Assessing Officer /CIT(A) on merits by raising various grounds. But, subsequently the assessee's have filed a petition for admission of additional ground in light of the circular issued by the Central Board of Direct Taxes vide Circular No.19/2019 dated 14.08.2019 and raised a ground that the order passed by the AO/DRP without a valid computer-generated Document Identification Number ('DIN') and quoted in the body of the order is illegal and non-est and deemed to have never been issued. The assessee's have raised this additional ground for all assessment years. Therefore, for the sake of brevity, the additional grounds of appeal filed for assessment year 2013-14 in the case of M/s Sutherland Global Services Inc are reproduced as under: "The appellant craves leave to prefer the following additional ground which is mutually exclusive and without prejudice to other grounds of appeal. a) Assessment order is bad in law in as much as that the directions were issued by the learned Dispute Resolution Panel-2, without mentioning the Document Identification Number (DIN) therein and consequentially the assessment order ought to be quashed." The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this batch of appeals being identical, these appeals were heard altogether and are being disposed off, by this common order. Different assessee's have been represented by different counsels. Therefore, the Bench has requested all those counsels who present for the assessee's to choose any one or two persons to make arguments on the issue and others may supplement the argument, in case they wish to do so. Accordingly, few counsels chooses to argue the issue and thus, we proceed to record arguments advanced by various counsels appeared for respective assessee's. 7. We have heard M/s Sutherland Global Services Inc., as the lead matter to decide the preliminary issue raised by various assessee's. Shri. Vijay Mehta, Chartered Accountant appearing for assessee, M/s Sutherland Global Services Inc., has begin his arguments in light of Circular No.19/2019 dated 14.08.2019 issued by CBDT. The ld.counsel for the assessee referring to Circular No.19/2019 dated 14.08.2019, submitted that the CBDT has explained in paragraph 1, the purpose of introduction of computer- generated Document Identification Number in all communications issued by an income-tax authority on or after 1st day of October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of certain judicial precedents including decision of Hon'ble Supreme Court in the case of Pradeep Goyal vs. Union of India, Writ Petition (Civil) No.32 of 2022. He, further submitted that the Board has issued circular as per the directions of the Supreme Court in the above case. In the said case, the Hon'ble Supreme Court explained the necessity of implementing the system of electronic generation of a Document Identification Number (DIN) for all communications sent by the State Tax Officers. The ld.counsel for the assessee further referring to various instructions and FAQs issued by the Income-tax Department on authentication of notices inter-alia the circular issued by the CBDT submitted that as per FAQ of the Department, any notice or order issued without a valid DIN is treated as invalid and shall be non-est in law or deemed to be as if as it has never been issued. The ld.counsel for the assessee further submitted that the circular itself has provides for consequences of not allotting and quoting a DIN in the communications issued by an income-tax authority. In the event said requirement is not met, the impugned circular provides that said communication shall be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant circular issued by the CBDT held that if DIN was generated separately and communicated to the assessee along with the order then the requirement of the circular has not been satisfied. He further submitted that the Hon'ble High court of Bombay in the case of Ashok Commercial Enterprises, reported in 154 taxmann.com 144 had also considered an identical issue and held that even a satisfaction recorded by the AO in light of provisions of section 153C of the Act, should contain a computer- generated DIN number. He further submitted that the issue has been considered by various Benches of Tribunal and consistently held that any communication issued by an income-tax authority whether it is a DRP or AO, without a valid computer-generated DIN and quoted in the body of the order is invalid, non-est in law and deemed to have never been issued. 7.4 The ld.counsel for the assessee further submitted that the ld.CIT-DR Shri A. Sasikumar, in the previous hearing has submitted that directions issued by the DRP is an internal communication and thus, non-generation of DIN on said communication will not invalidate the assessment order passed by the Assessing Officer. In this regard, he submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arguments of the ld.DR for the assessee that DRP is not an income-tax authority is fallacious and not in accordance with law. 7.6 The ld.counsel for the assessee further submitted that the Department contended that impugned circular does not apply to the orders communicated electronically. But, fact remains that the impugned circular does not say so. No such exception has been made out nor is any rationale available to make such distinction. Further, any order communicated through e-mail does not become electronically communicated order automatically. Therefore, he submitted that in this regard it is necessary to refer to instructions issued by the CBDT on 30.12.2016, as per which, the DRP order prepared outside ITBA system should be uploaded on the system. The ld.counsel further submitted that the Directorate of Income-tax (Systems) vide Instruction No. System/ITD/Instruction/AST- DIN/2019-20 dated 25.10.2019 had issued instructions for the guidance and appraisal all the field officers regarding the new functionality for auto generation of DIN in respect of orders passed on ITD/AST. The new functionality inter-alia ensured that wherever the orders are passed on the ITD/AST app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss any order which has been declared as illegal by any court of competent in appeal cannot be treated as illegal order so long as it is not set aside in appeal. Therefore, the argument of the ld. DR that present appeal filed by the assessee is not maintainable is incorrect. In this regard, he relied upon the decision of Hon'ble Supreme Court in the case of CIT vs. Bhikajee Dadabhai & Co., reported in [1961] 42 ITR 123. 7.9 To sum up, the ld.counsel for the assessee Shri Vijay Mehta submitted that the order passed by the DRP without a valid computer-generated DIN and quoted in the body of the order is invalid, non-est in law and deemed to have never been issued as per circular issued by the CBDT vide Circular No.19/2019 dated 14.08.2019. In present appeals, there is no dispute with regard to the fact that the order issued by the DRP / AO does not contain a computer-generated DIN. Although, the 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, but said action of the revenue does not satisfy the conditions of circular. Therefore, the order passed by the DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontain a valid computer generated DIN and further, there is no reference to any of the exceptional circumstances referred to in para 3(i) to (v) of said circular and also approval if any, obtained from the competent authority. Therefore, the communications issued by the authority without a valid DIN is invalid, non-est and deemed to have never been issued. 8.1 The ld.counsel for the assessee has explained the issue in light of various judicial precedents and also countered the arguments of the ld. DR made during earlier hearings in light of provisions of section 116 of the Act, to define an 'income-tax authority'. He further submitted that the arguments advanced by the ld. DR are fallacious, because the DRP is consisting of three Commissioner of Income-tax which is an income-tax authority defined u/s.116 of the Act. The ld.counsel of the assessee had also negated the arguments of the Department that the orders of DRP was not appealable before Tribunal and submitted that what is challenged before the Tribunal is not the DRP order but final assessment order passed by the AO in pursuant to directions of the DRP. Therefore, the argument of ld. DR that DRP order is not appealable is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order passed by the AO in pursuant to DRP directions and thus, DRP directions are subsumed and part of final assessment order which is appealable. The ld.counsel for the assessee had also explained the concept of income-tax authority as defined u/s.116 of the Act and submitted that the DRP is an income-tax authority consisting of collegium of Commissioner of income-tax and further, such Commissioner of income-tax are Income-tax Authority as per section 116 of the Act. Therefore, he submitted that any order issued by an authority whether it is DRP or AO, without any valid DIN and quoted in the body of the order is invalid and non-est in law and also deemed to have never been issued. In the present appeals, it is undoubtedly proved that order passed by the DRP/AO is not having valid DIN and consequently, order passed by the authority should be declared as null and void. 10. The ld.counsel for the assessee Shri M.P. Lohia, Chartered Accountant appearing for the assessee, M/s Lakshmi Machine Works Limited, fully endorsed the arguments advanced by various counsels. He further submitted that the arguments of the Department that it is impossible to generate a valid DIN in the DRP orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are invalid and null and void. 13. The ld. Additional Solicitor General of India (ASG), Shri L.Sundaresan, appearing for the Revenue submitted that before deciding preliminary ground raised by the assessee's, purpose and intention of circular issued by CBDT vide Circular No.19/2019 dated 14.08.2019 needs to be carefully read. The circular clearly explained in paragraph-1 that to maintain a proper audit trial of communication, a system of generating and quoting DIN has been introduced. In all these cases, the Revenue has complied with conditions prescribed in Circular No.19/2019 dated 14.08.2019. He further submitted that in all communications issued by the income- tax authority computer-based DIN has been generated and intimated to the assessee's either on the same day or on subsequent days. The communication sent to the assessee's by an authority contains a valid DIN for the orders passed by the authority and also communication sent to the assessee's and further, such communication has been sent through electronically. Therefore, it is incorrect on the part of the counsels for the assessee's to argue that the Department / Revenue have not complied with circular issued by the CBD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-quoting of DIN in said communication does not invalidate the assessment order passed by the AO in pursuant to the DRP directions. Therefore, he submitted that when the directions are not intended to the assessee, but for the AO, the nature of communication becomes an internal communication within the Department and said communication is not the subject matter covered by the CBDT Circular No.19/2019 dated 14.08.2019. He further submitted that, initially allotment of Document Identification Number (DIN) was introduced in the statute by insertion of section 282B of the Act and as per said provision, every income-tax authority shall on or after 1st day of July, 2011 allot a computer-generated DIN in respect of every notices, order, letter or any correspondences. The comparison of omitted section 282B(1) and the Circular No.19/2019 issued by the CBDT clearly establish the fact that the circular covers only the communication issued by the income-tax authority to the assessee or any other person. Further, any other person mentioned in the circular does not include communication to any other income-tax authority. Since, the DRP directions are communication to the AO, it does not come u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng / allotting / quoting of DIN and not issuing order electronically then the communication becomes manual communication. This is due to the reason that issuance of electronic communication even without DIN is having audit trial about issuing authority, date, time, etc. Therefore, any manual communication which does not have DIN and not communicated electronically and if it is sent physically means without prior approval of the Chief Commissioner / Director General, it becomes invalid and treated as deemed to have never been issued. In other words, the communication issued electronically without DIN and manually with DIN are valid communications as per the Circular. 19. The ld.DR further submitted that since all DRP directions are communicated electronically, it satisfies the conditions of Circular No.19/2019 and thus, the arguments of the counsel for the assessee that subsequent generation of DIN separately and communicated to the assessee does not satisfy the contents of circular is incorrect. The ld.DR further submitted that the DRP directions are issued with proper audit trial establishing the authority which issues directions, date and time etc. In substance and in letter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputer generated DIN has been allotted and is duly quoted in the body of such communication. The consequences of non-generating computer based DIN number and also exception under which a manual communication may be issued is also provided in para 3 of said circular. As per para 3 of said circular, in exceptional circumstances as mentioned therein, communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner / Director General of income-tax. Further, whenever any such manual communication has been issued, it would be necessarily required to specify reason for issuing such communication without DIN along with the date of obtaining written approval from the competent authority in a particular format which shall be mentioned in the body of communication itself. Para 4 explains the consequences of communications issued which is not in conformity with para 2 and 3 and as per said para 4 of circular, any communication which is not in conformity with para 2 & 3 above, shall be treated as invalid and shall be deemed to have never been issued. The circular goes on to explain in para 5, the process of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Department must contain a DIN. Therefore, if you understand the background and significance of issuing a circular mandating generating DIN in all communications from certain date, one has to go by the letter and spirit of circular issued by the CBDT without any second thought. This fact is also further strengthened by the decision of Hon'ble Supreme Court in the case of Pradeep Goyal vs. Union of India reported in [2022] 141 taxmann.com 64(SC), where the Hon'ble Supreme Court has issued suggestion to the Government, for the necessity of implementing the system for electronic generation of Document Identification Number in all communications sent by the tax authorities. Therefore, we are of the considered view that going by the law on the issue of mandatory nature of circular issued by the CBDT and its significance, there is no doubt of whatsoever with regard to present circular issued by the CBDT dated 14.08.2019 on generation of computer-based DIN and quoting such DIN in the body of the order. 22. In the present batch of appeals, there is no dispute with regard to fact that none of the communications issued by the income-tax authority is having computer-generated DIN numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if you authenticate the document by using said DIN number, the income- tax database shows an error 'no record found for the given document number'. Although, the Department has contended that in a case where DIN has been separately generated and/or communicated, it would be sufficient compliance of the impugned circular, in our considered view, the requirement of impugned circular is to allot and quote DIN in the body of the communication but not generation and communication of DIN by separate intimation. Therefore, we are of the considered view that the Department has not complied with the conditions of Circular No.19/2019. We, further are of the opinion that when a statute describes or requires a thing to be done in a particular manner, it should be done in that manner or not at all. 23. At this stage, it is relevant to consider various decisions on this issue. The Hon'ble Delhi High Court in the case of CIT vs. Brandix Mauritius Holdings Ltd., supra, has considered an identical issue in light of circular issued by the CBDT and held that whenever communications are issued in the circumstances alluded to in paragraph 3(i) to 3(v) without a DIN, they require to be backed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.19/2019 is not satisfied and consequently, the orders issued by the AO/DRP are invalid, non-est and shall be deemed to have never been issued. 24. Insofar as the arguments of ld.ASG on handwritten DIN in the body of the orders, although the ld.ASG argued that quoting wrong DIN number in the body of the order is only a human error for which the entire proceedings cannot be treated as void and ab-initio, but we find that what is required as per Circular No.19/2019 is generation of computer-based Document Identification Number and quoting in the body of the order. In our considered view, such requirement is not satisfied and consequent generation of DIN number, subsequently and handwritten in the body of the order whether the DIN number of impugned order or the communication does not satisfy the conditions and accordingly, the arguments of the ld.ASG is rejected. 25. Coming back to the case law relied upon by the Revenue. The revenue relied upon the decision of Hon'ble High Court of Madras in the case of Texmo Precision Castings UK Ltd., vs. CIT, reported in 288 Taxman 251. We find that said decision has not dealt the issue in light of paragraph 3 & 4 of Circular No.19/2019 and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responded during the course of assessment proceedings. Similarly, the facts of case before the Hon'ble High Court of Allahabad are different and are not applicable to the facts of this case. Therefore, we reject the case laws relied upon by the Revenue. 26. In the present case, there is no dispute with regard to fact that mandatory requirement of generating a computer-based DIN has not been allotted and is duly quoted in the body of the order issued by the AO/DRP. Subsequent generation of DIN either on the same day or next day and intimated to the assessee or other person by way of separate communication does not satisfy the conditions of para 3 & 4 of said circular. Therefore, we are of the considered view that any communication issued by the income-tax authority, in the present case, the AO/DRP without a valid computer-generated DIN and is duly quoted in the body of the order is invalid, non-est and shall be deemed to have never been issued. 27. Having said so, let us come back to various averment made by the Revenue on the issue. First and foremost argument taken by the Revenue is that directions issued by the DRP is an internal communication and non-generation of DIN and is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be allotted and quoted on the body of the directions as held by the Hon'ble Bombay High Court in the case of Ashok Commercial Enterprises vs. ACIT, reported in 154 taxmann.com 144, wherein the Hon'ble Bombay High Court 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 ITAT, Pune Benches in the case of B.V.G. India Ltd., vs. DCIT in IT(SS)A Nos.11 to 16/PUN/2023, 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. 28. The Department has taken another argument in light of provisions of section 116 of the Act. The 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. We do not find any merit in the arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities. Similarly, section 118 of the Act, provides that CBDT may direct that any income-tax authority or authorities specified in the notification shall be subordinate to such other income-tax authority or authorities specified in such notification. In exercise of the powers conferred u/s.118 of the Act, the CBDT through notification have directed the Commissioner of Income-tax being members of Dispute Resolution Panel to be the sub-ordinate of another income-tax authority namely Chief Commissioner of Income-tax (International Taxation), Bangalore. Therefore, we are of the considered view that from the above it is clear that 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 emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument of the Revenue. 30. The Revenue had also taken another argument that 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. In this regard, we find that the proposition canvassed by the ld.DR is correct to the extent that the DRP order cannot be challenged before ITAT. But, 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. 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, we quash the final assessment orders passed by the AO for all these assessment years and in all assessee's cases. Accordingly, we allow the additional ground of appeal filed by the assessee's.
33. Since, we have allowed the appeals filed by the assessee's on additional ground and held that orders passed by the DRP/AO is invalid, non-est and shall be deemed to have never been issued, other grounds raised by the assessee's on merits becomes academic in nature and thus, not adjudicated at this stage.
34. In the result this batch of appeals filed by different assessee's as per cause title are allowed.
35. Coming to stay petitions filed by the assessee M/s Mobis India Limited in SP Nos.34 to 39/CHNY/2023 for the assessment years 2011-12 to 2014-15, 2017-18 & 2018-19. Since, we have disposed off the appeals filed by the assessee, the stay petitions filed by the assessee becomes infructuous and thus, dismissed.
36. In the result, the stay petitions filed by the assessee in SP Nos.34 to 39/CHNY/2023 are dismissed and the appeals filed by the assessees are allowed.
Order pronounced in the open court on 22nd December, 2023 at Chennai. X X X X Extracts X X X X X X X X Extracts X X X X
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