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TMI Blog2024 (7) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... isfaction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcle 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 Renewable Energy Innovation Technology SL, C/o. Siemens Gamesa Renewable Power Pvt. Ltd Versus The DCIT, International Taxation 1(1), Chennai. And M/s. Siemens Gamesa Renewable Eolica SL, C/o. Siemens Gamesa Renewable Power Pvt. Ltd Versus The DCIT, International Taxation 1(1), Chennai. And Kostal India Pvt. Ltd Versus The DCIT, Circle-1, Vellore And Madura Coals Pvt. Ltd Versus The DCIT, Corporate Circle-2, Madurai And Laserwords US Inc, C/o. SPI Technologies India Pvt. Ltd Versus The DCIT, International Taxation, Circle 1(2), Chennai And SMRC Automotive Holdings Netherlands Versus The DCIT, International Tax 2(1), Chennai And GE Power Conversion In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Application No.21 of 2022 vide order dated 10.01.2022. We further noted that delay noticed by the Registry pertains to the period of general exemption provided by the Hon'ble Supreme Court extending limitation period applicable for all proceedings before Courts and Tribunals and thus, considering facts and circumstances of these cases and also in the interest of natural justice, we condone delay in filing of appeals by the assessee s and admit for adjudication. 3. We also find that there is a delay of 242 days in appeal filed by the assessee in IT(TP)A No.76/CHNY/2022. The ld.counsel for the assessee, at the time of hearing submitted that there is a delay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal 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 appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at the time of appeal, so as to enable the Hon ble Tribunal to decide the appeal in accordance with the law. 4.1 The ld.counsel for the assessee s submitted that additional ground raised by the assessee s in light of CBDT Circular No.19/2019 dated 14.08.2019 is purely a question of law which is based on the material which is already on record and therefore, in light of the decision of Hon ble Supreme Court in the case of NTPC Ltd., vs. CIT, reported in [1998] 229 ITR 383 (SC), the additional ground filed by the assessee s may be admitted for hearing. 4.2 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious 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, 2019. He took us to para 2 of the Circular dated 14.08.2019 and submitted that the Board in exercise of power u/s.119 of 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, inspection, 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 has been allotted and is duly quoted in the body of such communication. The ld.counsel for the assessee further explained that, as per para-3 of said circular, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DT 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 considered as invalid and deemed to have never been issued. He further submitted that Courts often undertake the exercise of ascertaining the nature of particular legal requirement whether directory or mandatory. For this purpose, the Court would look into several criteria like nature of requirement, legislative background, and prejudice caused to the party, etc. Based on such criteria, the Courts come to a conclusion about the consequences of not following the legal requirement. However, such exercise is uncalled for in the present case because the consequences of not following DIN requirement have been prescribed in the impugned circular itself, which is undoubtedly binding on the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 submitted that directions issued by the DRP u/s.144C(55) of the Act is not an internal communication because said communication is served on the assessee to make the assessee to file rectification if any as per the provisions of the Act. He further submitted that section 144C(14) of the Act, empowers the CBDT to make rules for the purpose of efficient function of the DRP. In view of section 144C(14) of the Act, the Income-tax (Dispute Resolution Panel) Rules, 2009 came to be notified. Rule 11 of the Income-tax (Dispute Resolution Panel) Rules, 2009 provides that the DRP shall, after the directions are issued, communicate the same to the eligible assessee and to the AO. Further, Rule 13 of sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 application, the corresponding DIN for such orders was generated automatically on the ITD/AST application screen. However, in case where the orders were passed manually and not through ITBA application, similar instructions were issued by the Directorate of Income-tax (Systems) vide Instruction No.System/ITBA/Instruction/Common Function/180 /2019-20 dated 25.10.2019 and as per said instruction, a new functionality was developed for automatic generation of DIN in cases, where the orders were issued manually outside the ITBA system. Therefore, in view of aforesaid instructions, the field officers of the Income-tax Department were equipped to allot and quote DIN on the body of any communication issued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular 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 DRP/AO is invalid and should be declared as null and void. 8. Shri Ashik, Shah, Chartered Accountant appearing for the assessee M/s. Siemens Gamesa Renewable Energy group of companies, to supplement the arguments of Shri Vijay Mehta submitted that, he is fully endorsing the arguments made by Shri Vijay Mehta and also submitted that same arguments equally applicable for all cases. He further submitted that in all these appeals, the requirements of Circular No.19/2019 dated 14.08.2019 is not satisfied, because the order issued to the assessee s through e-mail does not contain a DIN at all, leave it alone quoting a handwritten DIN in the order copy available in the file of the Department. Although, the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 incorrect. The ld.counsel for the assessee had also filed certain screenshots downloaded from ITBA portal for authentication of notices/orders issued by the ITD with reference to handwritten DIN quoted on body of the order available in the Department file and submitted that if you try to authenticate the DIN quoted in the order, the authentication fails and a message shows that no record found for the given document number . Therefore, he submitted that subsequent generation of DIN either on same day or next day or subsequent day does not satisfy the conditions of Circular No.19/2019 dated 14.08.2019 and thus, the order passed by the DRP in all these cases without a valid DIN is invalid and deemed to have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 order is incorrect because the order passed by the DRP, Mumbai is having a bar coded DIN generated and quoted in the body of the order. From the above, it is very clear that there is an integration of DRP module and ITBA portal and thus, the arguments of the ld. DR is invalid and fails. The ld.counsel for the assessee further submitted that if you understand the purpose of Circular No.19/2019 dated 14.08.2019 issued by the CBDT, it is very clear that on and from 1st October, 2019, no communication shall be issued by any income-tax authority without a valid computer- generated DIN. Any communication issued manually without a DIN should be in accordance with para 3 (i) to (v) of said circular. In case, the order issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 CBDT. Therefore, he submitted that if sufficient time is given to the Revenue, the Department is ready to furnish necessary records to the assessee s or their counsels to verify the records and ascertain the fact. 14. The above submission of ld. ASG has been put forth to the counsels for the assessee s, for which, all have agreed and therefore, on 09.11.2023, the cases have been adjourned to 05.12.2023 in order to provide sufficient time to the Revenue as well as the assessee s to verify the records of the Department and to ascertain is there any valid DIN in the communications sent to the assessee s . 15. Further, when these appeals were taken up for hearing on 12.12.2023, the ld.ASG has filed a chart of 60 cases gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices, 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 under the circular issued by the CBDT and consequently, non- mentioning of DIN in said communication does not invalidate the assessment order passed by the AO. 17. The ld.CIT-DR further submitted that DRP directions are not an appealable order before Tribunal, because as per provisions of section 253(1)(d) of the Act, an appeal can be preferred by the appellant only against the assessment order passed by the AO and not against the DRP order. Therefore, when the DRP order in itself is not appealable order, it is not legally correct to admit that DRP order issued without DIN is not a valid order. The ld.CIT-DR further submitted that DRP is not an income-tax authority u/s.116 of the Act. As per the provisions of section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 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 sprit followed the true intend and purpose of directions issued by the CBDT. The appellant has not brought out any case of grievance or in what way it put into disadvantage position by the directions issued by the DRP without quoting DIN in the body of the order. In this regard, he relied on the following judicial precedents:- i. Hon ble High Court of Madras in the case of Texmo Precision Castings UK Ltd vs. CIT in W.P.No.12310 of 2021 and WMP No.13097 of 2021 dated 22.04.2022. ii. Hon ble High Court of Jharkhand in the case of Prakash Lal Khandelwal vs. CIT in W.P.(T) No.1901 of 2022 dated 19/21.02.2023. iii. Hon ble High Court of Allahabad in the case of Chandra Bhan vs. Union of India in Writ Tax No.829 of 2023 dated 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 regularization of manual communication issued without a valid DIN. Therefore, from the circular issued by the CBDT, it is undoubtedly clear that on and from 01.10.2019, any communication issued without a valid DIN and quoted in the body of the order is invalid and shall be deemed to have never been issued. 21. It is an undisputed fact that circulars issued by the CBDT are binding in nature for all income-tax authorities and this fact has been time and again emphasized by the Hon ble Supreme Court in the case of UCO Bank vs. CIT, reported in 237 ITR 889 and K.P. Varghese vs. ITO, reported in 131 ITR 597. Further, the significance and background of issuing Circular No.19/2019 dated 14.08.2019 also needs to be understand. As explained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 number and quoted in the body of the order. Although, the Revenue claims that in all communications issued by the Department, a valid DIN has been generated and communicated to the assessee either on the same day or next day, but fact remains that in the body of the order DIN in quoted. The ld.ASG has filed a chart explaining the manner in which DIN has been generated in each and every communication issued by the income-tax authority in all these cases and explained that a communication has been sent to the assessee intimating generation of DIN for the impugned orders. Therefore, he submitted that the Department has complied with the mandatory conditions of Circular No.19/2019. We have gone through the chart submitted by the ld.ASG and we f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the approval of the competent authority. The manual communication is required to furnish the reference number and the date when the approval was granted by the concerned officer. The formatted endorsement which is required to be engrossed on such a manual communication should be in a specified format provided in para 3 of said circular itself. The Hon ble Calcutta High Court in the case of PCIT vs. Tata Medical Centre Trust, reported in 154 taxmann.com 600 held that DIN was generated separately and communicated to the assessee along with the order passed u/s.263 of the Act, is not a sufficient compliance of requirement of the circular. The ITAT, Delhi Benches in the case of Abhimanyu Chaturvedi vs. DCIT in ITA No.2486/Del/2022, also held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 has directly dealt with paragraph 5 of the impugned circular, which deals with regularization of orders which are issued without quoting DIN thereon, due to exceptional circumstances mentioned in paragraph 3 of said circular. In our considered view, the Hon ble Madras High Court did not consider paragraph 3 4, which is very crucial where it has specified the exceptional circumstances under which a manual communication can be issued but subject to certain conditions. In the facts of present case, no exceptional circumstances as described in para 3 of the impugned circular are mentioned in the directions issued by the DRP/AO. Therefore, in our considered view, the ratio laid by the Hon ble Madras High Court is not applicable to the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-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 duly quoted in the body of said order would not invalidate the assessment order passed by the AO. In our considered view, the argument of Revenue that DRP direction is an internal communication is wholly erroneous and devoid of merits. Further, as per section 144C(15) of the Act, directions issued by the DRP is not an internal communication, because said communication is served on the assessee to enable the assessee to file rectification if any, as per the provisions of the Act. Section 144C(5) of the Act, inter-alia, provides that the DRP shall, in a case where any objection is received by the eligible assessee, issue such directions, as it thinks fit, for the guidance of the AO to enable him to complete the assessment. On the basis of above sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 of the Revenue that DRP is not an income-tax authority. Section 144C(15) of the Act defines Dispute Resolution Panel to mean a collegium comprising of three Principal Commissioners or Commissioner of Income-tax constituted by the CBDT and thus, DRP is a collegium of three Commissioners, all of which are income-tax authorities as per section 116 of the Act. The term collegium has not been defined under the Act and consequently, it should be understood by a dictionary meaning. Black s Law Dictionary has defined the term collegium , which means an association of at least three people having the right to assemble and enact rules concerning membership, organization and the rights and duties of members . Webster s Unabridged Dictionary defines, collegium means a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 29. The next argument taken by the Revenue is that circular issued by the CBDT does not apply to the orders communicated electronically. In our considered view, no such exception has been made out nor is any rationale available to make such distinction. Further, any order communicated through e-mail cannot become electronically communicated order automatically. In this regard, it is necessary to refer instruction issued by the Directorate of Income-tax (Systems) for the guidance/appraisal of all the field officers regarding the new functionality of auto generation of DIN for the order passed in ITD-AST. The new functional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The Revenue had also taken one more argument that 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 Hon ble High Court of Andhra Pradesh in the case of Bhikajee Dadabhai Co., vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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