WATANMAL BOOCHAND & COMPANY LTD,CHENNAI vs. DICT, INTERNATIONAL TAXATION CIRCLE-2(2), CHENNAI

Facts

The assessee, Watanmal Boolchand & Company Ltd, filed appeals for Assessment Years (AYs) 2013-14, 2014-15, and 2015-16 against orders passed by the Deputy Commissioner of Income Tax, International Taxation, Circle-2(2), Chennai. The appeals challenged the final assessment orders dated June 22, 2023, and July 7, 2023, which were passed under Section 143(3) read with Sections 144C(13) and 147 of the Income Tax Act, 1961. The assessee contended that these assessment orders were infructuous and bad in law because the preceding draft assessment order dated December 31, 2019, and the Dispute Resolution Panel (DRP) directions dated May 29, 2023, lacked the mandatory Document Identification Number (DIN). The revenue argued that the assessee was raising hyper-technical issues and relied on various court decisions.

Held

The Tribunal held that the absence of a mandatory DIN on the draft assessment order and the DRP directions rendered them invalid. The Tribunal noted that while the covering letters accompanying these documents had DIN numbers, the draft assessment order and DRP directions themselves, being 'orders' under Section 144C(1) and 144C(5) read with 144C(10) of the Act, were required to have separate DIN numbers as per Circular No. 19/2019. The Tribunal found no force in the revenue's argument that the stay granted by the Hon'ble Apex Court in Brandix Mauritius Holdings could be applied, as the revenue had not provided evidence of a stay on the jurisdictional High Court's decision in Sutherland Globe Services Inc. The Tribunal emphasized that decisions of the jurisdictional High Court have binding precedence. Consequently, the Tribunal quashed the assessment order dated June 22, 2023 (and July 7, 2023), allowing grounds of appeal 2 and 3. All other grounds, including those on merits, became academic. The appeals for AYs 2013-14, 2014-15, and 2015-16 were allowed.

Key Issues

1. Whether the assessment order dated June 22, 2023 (and July 7, 2023), passed under Section 143(3) r.w.s. 144C(13) r.w.s. 147 of the Income Tax Act, 1961, is invalid and liable to be quashed due to the absence of a mandatory Document Identification Number (DIN) on the preceding draft assessment order dated December 31, 2019, and the DRP directions dated May 29, 2023. Assessee's Contention: The assessee argued that the absence of DIN on the draft assessment order and DRP directions renders them invalid. Since the final assessment order is based on these invalid orders, it too should be quashed. The assessee relied on Circular No. 19/2019 and judicial precedents, including a decision of the Hon'ble Madras High Court in Sutherland Globe Services Inc. Revenue's Contention: The revenue contended that the draft assessment order and DRP directions were followed by covering letters which bore DIN numbers, implying compliance. They argued that the assessee was raising hyper-technical issues and cited decisions from the Hon'ble Allahabad High Court in Chandrabhan Vs Union of India and Hon'ble Jharkhand High Court in Prakashlal Kandelval. The revenue also mentioned a stay by the Hon'ble Apex Court in Brandix Mauritius Holdings on similar facts.