ERIEZ MAGNETICS INDIA PRIVATE LIMITED,CHENNAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI

आदेश / O R D E R

PER MANJUNATHA.G, AM:

This bunch of ‘13’ appeals filed by different assessee’s are

directed against final assessment order passed by the Assessing

Officer u/s.143(3) r.w.s.144C(13) of the Income Tax Act, 1961, in

pursuant to directions issued by the Dispute Resolution Panel-2,

Bangalore, u/s.144C(5) of the Income Tax Act, 1961, and pertains

to AYs 2013-14, 2011-12, 2016-17, 2017-18, 2015-16, 2013-14,

2014-15, 2015-16, 2016-17, 2018-19, 2017-18, 2013-14 & 2014-15.

Ld.Counsel for the assessee has submitted that there is ‘one day’

delay in filing the appeal and prayed for condoning the delay, against

which, the Ld.DR, was not objected. Since, the assessee was

prevented by reasonable cause, we hereby condone the delay in filing

of the appeal and admitted the appeal for adjudication.

In this batch of 13 appeals, initially appeals have been filed 3.

against orders of ld. Assessing Officer /CIT(A) on merits by raising

various grounds. But, subsequently the assessee’s have filed a

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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, additional grounds of appeal filed for the AY 2013-14

in IT (TP)A No.23/Chny/2021, are re-produced as under:

A. The Appellant (Same Italia) is of a non-resident company. It is the holding company of Same Deutz Fahr India Private Limited (SAME India). Same Italia purchases Semi Knock Down tractors (SKD) from its subsidiary company SAME India. The Appellant assembles and completes the SKD by independently purchasing remaining parts.

The Appellant craves leave to raise the following additional grounds of appeal:

1.1 The Assessing Officer erred in passing the Final Assessment Order dated 26.02.2021 without quoting DIN in the said order.

1.2 The AO ought to have appreciated that impugned Final Assessment order issued without DIN is contrary to the CBDT circular No. 19 of 2019 and as such it is null and void.

The brief facts giving rise to the aforesaid ground of appeal are stated hereunder:

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3.1 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.

3.2 The ld.DR present for the Revenue did not oppose, and fairly

agreed that the additional grounds of appeal filed by the assessee’s

may be admitted for hearing.

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filed by the assessee’s for admission of addition ground, we find that

all assessee’s have taken legal ground challenging the validity of

order passed by the DRP or the AO, without a valid DIN generated

and quoted in the body of the order in view of Circular No.19/2019 of

CBDT dated 14.08.2019 is purely a question of law based on material

which is already on record before the AO and thus, can be taken at

any time of proceedings, including proceedings before the Tribunal.

Further, the Hon’ble Supreme Court in the case of NTPC Ltd, supra,

has inter-alia held that the view that the Tribunal is confined only to

issues arising out of the appeal before the CIT(A) is too narrow a view

of the powers of the Appellate Tribunal. It has been held that the

Tribunal will have discretion to allow or not to allow new ground to be

raised. However, where the Tribunal is only required to consider a

question of law arising from the facts which are on record in the

assessment proceedings, there is no reason, why such a question

should not be allowed to be raised. Therefore, considering the

petition filed by the assessee’s for admission of additional ground and

also following the decision of Hon’ble Supreme Court in the case of

NTPC Ltd., supra, we admit the addition ground filed by the

assessee’s.

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different assessee’s goes back to circular issued by the CBDT in

Circular No.19/2019 dated 14.08.2019. The core issue raised in 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 choose to argue the issue and

thus, we proceed to record arguments advanced by various counsels

appeared for respective assessee’s.

heard on 13.12.2023. This bunch of ‘13’ appeals have been heard at

length from the respective Counsels and because of paucity of time,

kept as part-heard matters and posted for hearing on 19.12.2023.

Therefore, the arguments advanced by the Counsels for the assessee

have been take in continuation of arguments advanced by the

Counsels appearing for the first bunch of cases. 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,

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Chartered Accountant appearing for assessee, M/s Sutherland Global

Services Inc., has begun 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, in exceptional circumstances, the

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. In case, where

manual communication is required to be issued for any exceptional

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circumstances as referred to in said circular, prior approval from the

Chief Commissioner / Director General of Income-tax should be

obtained in a specific format given in said circular. Further, as per

para 4 of said circular any communication which is not in conformity

with para 2 & 3 of said circular shall be treated as invalid and shall be

deemed to have never been issued. He further submitted that in case

any communication which has been issued manually not in conformity

with para 2 & 3 of said circular, then said communication shall have

to be regularized within 15 working days and its issuance in a manner

prescribed in the said circular. He further explained the term

communication which has been explained in para 1 of said circular

which includes a notice, order, summons, letter and any

correspondence. Therefore, he submitted that any communication

including an order of DRP/AO issued without a valid computer-

generated DIN and quoted in the body of the order shall be treated

as invalid and shall be deemed to have never been issued. In the

present appeals, the order passed by the DRP is without a valid

computer-generated DIN and is duly quoted in the body of the order

and thus, invalid and non-est in the eyes of law.

6.1 The Ld.Counsel for the assessee explained the background and

significance of the Document Identification Number and circular

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issued by the CBDT dated 14.08.2019, in 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 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

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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 Department.

6.2 The Ld.Counsel for the assessee further submitted that as per

Circular No.19/2019 issued by the CBDT, the requirement of the

impugned circular needs to be examined before considering the

arguments of the Department. It is crucial to ascertain the exact

requirement of the impugned circular, because Department has taken

shelter by creation of DIN either on the same day or subsequently or

communication of DIN separately. For this purpose, one has to look

into the language of the circular. The impugned circular mandatorily

requires an income-tax authority to allot and quote DIN on the body

of every communication. Therefore, to comply with the provisions of

the impugned circular, every income-tax authority is required to

satisfy twin conditions i.e., a) allot DIN and b) quote such DIN in the

body of the communication. The Department has contended that in

case where DIN has been separately generated and are

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communicated, it would be sufficient compliance of the impugned

circular. But fact remains that, the requirement of impugned circular

is to allot and quote DIN in the body of its communication. The

requirement is not generation and communication of DIN. In case,

the DIN is not generated and quoted in the body of the order then it

does not satisfy the conditions of circular and consequently, any

communication issued by an authority is invalid and non-est in law

and also deemed to have never been issued.

6.3 The Ld.Counsel for the assessee further submitted that this

issue is no longer a res-integra. The Hon’ble High Court of Calcutta

in the case of PCIT vs. Tata Medical Centre Trust, reported in 154

taxmann.com 600, has considered an identical issue and after

considering relevant 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

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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.

6.4 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 said Rules provides that after the issue of

directions by the DRP, if any mistake or error is apparent in such

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direction, the DRP may, suo-motu or on an application from the

eligible assessee or the AO rectify such mistake or error and also

direct the AO to modify the assessment order. Therefore, he

submitted that the arguments of the ld.DR that directions issued by

the DRP is an internal communication is fallacious and not in

accordance with law.

6.5 The Ld.Counsel for the assessee further submitted that DRP is

an income-tax authority under the Act. Although the Department

contended that DRP is not an income-tax authority, but fact remains

that 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 Board. Thus, the

DRP is nothing but collegium of three Commissioners, all of which are

income-tax authorities as per the provisions of section 116 of the Act.

Further, the term ‘collegium’ was not defined under the Act and

consequently a dictionary meaning has to be referred to understand

the meaning of collegium. 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 the term ‘collegium’ and as per which

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‘a group of ruling officials each with equal rank and power, esp. that

formerly administered a Soviet commissariat’. On perusal of

aforesaid dictionary meaning, it is clear that DRP is clearly an

association/group of three ruling officials. Therefore, the arguments

of the ld.DR for the assessee that DRP is not an income-tax authority

is fallacious and not in accordance with law.

6.6 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

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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 to the assessee irrespective of whether the

impugned order was generated online on the AST/ITD applications or

manually. Therefore, he submitted that the arguments of the ld. DR

that the DRP system and ITBA portal has not been integrated it is

impossible to generate DIN in DRP order is fallacious and not in

accordance with the scheme implemented by the Board.

6.7 The Ld.Counsel for the assessee further submitted that the ld.

DR claimed that the order of DRP cannot be challenged before the

Tribunal. There is no dispute on this proposition canvassed by the ld.

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DR, because what is challenged before the Tribunal is not the DRP

order but the final assessment order passed by the AO in pursuant to

the directions issued by the DRP. Further, the ld.AO gets extended

time u/s.144C(13) of the Act, for passing the final assessment order

and if, no valid DRP order for want of valid DIN, then extend time for

passing order for the Assessing Officer would not be applicable and

thus, the final assessment order passed by the AO is barred by

limitation.

6.8 The Ld.Counsel for the assessee further submitted that the

objection of the Department during the course of hearing on

17.10.2023, regarding maintainability of the present appeal by the

appellant is equally unsustainable. The ld. DR argued that if the order

of the DRP is non-est, the final assessment order cannot be said to

be the one passed pursuant to the order of the DRP. Since the direct

appeal to the Tribunal can be filed u/s. 253(1)(d) of the Act only

against the assessment order passed pursuant to the order of the

DRP, the present appeal is not maintainable. In this regard, the

Ld.Counsel for the assessee submitted that unless 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

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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.

6.9 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 DRP/AO is

invalid and should be declared as null and void.

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

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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 Department claims that DIN has been generated and

intimated to the assessee either on same day or next day, but it is

not sufficient compliance of circular issued by the CBDT because as

per Circular No.19/2019 dated 14.08.2019, it is mandatory to

generate a valid computer-generated DIN before issuing any order

and quoting such DIN in the body of the order. Therefore, he

submitted that the argument of the ld. DR that subsequent

communication sent to the assessee does contain DIN is no longer a

valid argument in light of various decisions of High Courts and

Tribunals. He further submitted that any communication issued

without a valid DIN is invalid and deemed to have never been issued

and thus, order passed by the DRP / AO is non-est in law and ought

to be declared as null and void. The Ld.Counsel for the assessee took

us to Circular No.19/2019 dated 14.08.2019 and explained the

purpose and significance of introduction of computer-based

Document Identification Number in all communications issued by the

Income-tax Authority on or after 1st day of October, 2019. The

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Ld.Counsel for the assessee had also took us through various case

laws including the decision of Hon’ble Delhi High Court in the case of

CIT vs. Brandix Mauritius Holdings Ltd., reported in 456 ITR 34 and

submitted that whenever communications are issued in the

circumstances alluded to in paragraph 3(i) to (v), they require to be

backed by the approval of the Chief Commissioner / Director General

of Income-tax. Further, such communication should contain the

formatted endorsement which is required to be engrossed on such a

manual communication. In present appeals, the orders passed by

the DRP/AO does not contain 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.

7.1 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

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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 never been issued. Therefore, he further

submitted that the order passed by the DRP should be declared as

null and void.

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Watanmal Boolchand & Company Ltd., has filed a detailed submission

on the issue, in light of certain judicial precedents and argued that

any communication issued by income-tax authority without a valid

computer-generated DIN and quoted in the body of the order is non-

est and deemed to have never been issued and consequently, the

order passed by the authority should be declared as null and void.

The Ld.Counsel for the assessee further submitted that the circular

issued by the CBDT are binding in nature to income-tax authorities

and this legal position has been upheld by the Jurisdictional High

Court of Madras in the case of Jain Metal Rolling Mills vs. Union of

India in Writ Petition No.13455 of 2021. Further, the Hon’ble

Supreme Court had also upheld the view that circulars issued by the

Board are binding in nature for the income-tax authorities. The

Ld.Counsel for the assessee had also explained the intention of

circular issued by the Board dated 14.08.2019 in light of FAQ issued

by the Income-tax Department regarding authentication / verification

of DIN. The Ld.Counsel for the assessee had also argued that DRP

directions not merely internal communication within the Department

but a communication for the assessee which is evident from Rule 11

& 13 of Income-tax (Dispute Resolution Panel) Rules, 2009. He

further submitted that the DRP order is not appealable before Tribunal

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is also incorrect, because what is challenged before Tribunal is not

DRP directions but final assessment 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.

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

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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 issued by an authority is not in

conformity with para 3(i) to 3(v), then as per para 4 of said circular,

said communication is invalid, non-est in law and deemed to have

never been issued. Therefore, he submitted that in these cases, there

is no valid DIN in order passed by the DRP/AO and thus, the order

passed by the authority should be declared as null and void and ab-

initio.

Advocate appearing for the assessee M/s Kostal India Pvt. Ltd., fully

endorsed arguments advanced by various counsels appearing for

assessee’s and further, submitted that the circular issued by the CBDT

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vide Circular No.19/2019 dated 14.08.2019 is binding on the Revenue

authorities and thus, non-compliance of said circular has vitiated the

order / communication issued by such authority. In all these cases,

it is undisputed fact that there is no valid computer-generated DIN in

orders passed by the authorities and consequently, said order is

invalid, non-est in law and deemed to have never been issued.

Therefore, the order passed by the authority should be declared as

null and void.

Rakesh Gupta, CA, Shri Ajay Rotti, CA, Shri Sharath Rao, CA and

Ms.Vaidehi Govindarajan, CA, appearing for respective assessee’s

made their submission in light of CBDT vide Circular No.19/2019

dated 14.08.2019 and argued that any communication issued by an

income tax authority, on or after 1-10-2019 without a computer

generated DIN and is duly quoted in the body of the order is treated

as invalid and shall be never have been issued. Since, orders passed

by the DRP in all these cases is not having DIN, such orders are invalid

and null and void.

L.Sundaresan, appearing for the Revenue submitted that before

deciding preliminary ground raised by the assessee’s, purpose and

IT (TP) A No.23/Chny/2021 & 12 Others. :: 26 ::

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 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.

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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 27 ::

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’.

12.12.2023, the ld.ASG has filed a chart of 60 cases generated from

the ITBA portal which contains name and PAN number of the

assessee’s, assessment year, date of DRP order, issue date and DIN

number, etc. He further submitted that in all cases a valid DIN has

been generated for the orders and the same has been communicated

to the assessee’s through electronically. He further submitted that in

some cases, DIN has been handwritten on the first page of the order

which is not the DIN of the impugned order but DIN of the

communication which has been sent to the assessee’s intimating

generation of DIN for the orders. But such writing of an incorrect DIN

in the body of the order is a human error for which, the assessment

order or any communication issued by the authority cannot be

vitiated or treated as null and void. The ld.ASG had also took us

through the Circular No.19/2019 dated 14.08.2019 and explained the

purpose and intention of introducing system-based DIN in all

communications issued by income-tax authority. He, further

explained the manner in which such intimation has been

IT (TP) A No.23/Chny/2021 & 12 Others. :: 28 ::

communicated to the assessee’s. Therefore, he submitted that the

Department has fully complied with the circular issued by the Board

and hence, the additional ground filed by the assessee’s challenging

the validity of order passed by DRP/AO is devoid of merit and needs

to be dismissed.

by the ld.ASG for the Revenue submitted that Circular No.19/2019

issued by the CBDT is not applicable to DRP, because DRP directions

are internal communication within the Department and for the

guidance of the AO to enable him to complete the assessment.

Therefore, non-generating or 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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 29 ::

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 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.

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 116 of the Act, DRP is not included in the definition of

‘income-tax authority’. The DRP is like settlement commission, is in

IT (TP) A No.23/Chny/2021 & 12 Others. :: 30 ::

the nature of a body of alternate dispute resolution mechanism.

Therefore, once DRP is not an income-tax authority as per section

116 of the Act, then circular issued by the CBDT is not applicable

because it applies only to communications issued by the income-tax

authority. Since, DRP is not an income-tax authority and its directions

are issued only to the AO and its directions are per se not appealable,

contents of Circular No.19/2019 are not binding on DRP and its

directions.

communication of orders, notices, etc. According to ld.DR, in the

Income-tax Department there are two modes or mechanism of

communication to the assessee and other person. One is electronic

mode in ITBA platform and another one is manual mode. Circular

No.19/2019 is not applicable to all the communications but only to

manual communications. Therefore, he submitted that said circular

is not applicable to communications which are generated through

ITBA or which are uploaded to ITBA or which are communicated to

the assessee by ITBA. He further submitted that intend and purpose

of circular as mentioned is, to prevent the issue of manual

correspondence without any audit trial. Since, there is audit trial for

each and every communication sent to the assessee, merely for non-

IT (TP) A No.23/Chny/2021 & 12 Others. :: 31 ::

recording DIN in the body of the order cannot vitiate the orders

passed by an authority. The ld.DR took us to Circular No.19/2019

issued by the CBDT and submitted that communication which fulfill

the twin conditions of non-generating / 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.

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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 32 ::

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 18.07.2023.

and gone through the orders of the authorities below. We have also

carefully considered the circular issued by the CBDT vide Circular

No.19/2019 dated 14.08.2019 along with certain judicial precedents

which have dealt the issue. The core issue arises for our consideration

from this batch of appeals is validity of order passed by the income-

tax authorities without generating computer-based ‘Document

Identification Number’ and quoted in the body of the order as required

by Circular No.19/2019 dated 14.08.2019. To resolve the issue, it is

necessary to read the circular issued by the CBDT in true letter and

spirit. The CBDT has through Circular No.19/2019 made it compulsory

IT (TP) A No.23/Chny/2021 & 12 Others. :: 33 ::

that on and from 01.10.2019, a DIN has to be duly allotted and

quoted in the body of all communication. The significance of

generation of Document Identification Number has been explained in

paragraph-1 of said circular, as per which, in light of various instances

of communication being issued without a proper audit trial and also

in order to move towards total computerization of its work, the CBDT

introduced the concept of mandatory quoting of DIN on all

communications issued by income-tax authority to the assessee or to

any other person. Para 2 of said circular states that no communication

shall be issued by 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 1st day of October, 2019 unless a computer 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,

IT (TP) A No.23/Chny/2021 & 12 Others. :: 34 ::

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 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.

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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 35 ::

needs to be understand. As explained by the CBDT itself, with the

launch of various e-governance initiatives, Income-tax Department is

moving toward total computerization of its work and this has led to a

significant improvement in delivery of services and has also brought

greater transparency in the functioning of the tax administration.

However, it has been brought to the notice of the CBDT that there

have been some instances in which the notice, order, summons, etc.,

were found to have been issued manually without maintaining a

proper audit trial of such communication. In order to prevent such

instances and to maintain proper audit trail of all communication, the

Board in exercise of power u/s.119 of the Act, had decided that no

communication shall be issued by any income-tax authority to the

assessee or any other person on or after the 1st day of October, 2019

unless a computer-generated Document Identical Number has been

allotted and is duly quoted in the body of such communication.

Further, introduction of DIN system in tax administration was

pursuant to the directions of the Hon’ble Prime Minister of India which

is evident from press release dated 01.10.2019 issued by the Ministry

of Finance. Further, the FAQ issued by the Income-tax Department

on authentication of notice, inter-alia, provides that in a case where

the ITD notice / order does not bear a DIN, said notice/order received

by the taxpayer shall be treated as invalid and non-est in law or

IT (TP) A No.23/Chny/2021 & 12 Others. :: 36 ::

deemed to be as if it has never been issued. This fact is further

strengthened by the press release dated 14.08.2019 issued by the

Ministry of Finance which categorically states that every

communication from the Income-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.

to fact that none of the communications issued by the income-tax

IT (TP) A No.23/Chny/2021 & 12 Others. :: 37 ::

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 find that, in all these cases DIN has been separately

generated either on the same day or next day or after few days and

communicated to the assessee by way of separate intimation which

is also having a valid DIN number. But fact remains that, whether

this satisfies the requirement of Circular No.19/2019 or not has to be

seen. To answer this question, it is crucial to ascertain the exact

requirement of the circular, because if you go by the wording of

circular, especially para 3, it is very clear that in exceptional

circumstances as specified therein, the communication may be issued

manually but only after recording reasons in writing in the file and

IT (TP) A No.23/Chny/2021 & 12 Others. :: 38 ::

with prior written approval of the Chief Commissioner / Director

General of Income-tax. The communication issued under aforesaid

circumstances shall state the fact that the communication is issued

manually without a DIN and the date of obtaining of the written

approval of the competent authority for issue of manual

communication in a specified format in the body of said

communication. Therefore, to comply with the provisions of circular,

every income-tax authority is required to satisfy the twin conditions

i.e., a) allot DIN and b) quote such DIN in the body of the

communication. If DIN is not generated and quoted in the body of

the communication, then reasons for non-generating and quoting DIN

should be specified in a particular format in the communication itself.

In all these cases, computer-generated DIN has not been quoted in

the body of the order. Although in few cases, a handwritten DIN is

quoted in the body of the order, but it was explained by the counsels

of the assessee’s 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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 39 ::

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.

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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 40 ::

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 that generation of DIN subsequent to

passing the assessment order and communication thereafter by a

separate intimation letter is of no consequence and that the

requirements of the circular are not satisfied. A similar view has been

expressed by various Benches of this Tribunal and held that the

requirement of circular is to generate a computer-based Document

Identification Number and duly quote in the body of such

communication. The ITAT, Delhi Benches in the case of Toyota

Micromatic Machinery Pvt. Ltd., vs. DCIT, in ITA No.849/DEL/2022

held that simultaneous issue of DIN is an insignificant exercise, in the

absence of mentioning DIN number on the body of the

order/directions. Similar view has been taken by ITAT, Delhi Benches

in the case of Harish Gupta vs. DCIT in ITA No.1229/DEL/2023, where

it has been held that absence of a DIN on the body of the assessment

order rendered it invalid. If that condition is not satisfied, then

subsequent generation of DIN either on same day or next day or

communicated to assessee by way of separate communication does

not satisfy the requirement of circular. Therefore, we are of the

considered view that any communication issued by the income-tax

authority without a valid computer-generated DIN and is duly quoted

IT (TP) A No.23/Chny/2021 & 12 Others. :: 41 ::

in the body of such communication is treated as invalid and shall be

deemed to have never been issued. In this batch of appeals, there is

no dispute with regard to fact that in all orders issued by the AO/DRP,

there is no valid computer-generated DIN has been allotted and is

duly quoted in the body of the order and thus, in our considered view,

the requirement of para 3 of Circular 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.

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.

revenue relied upon the decision of Hon’ble High Court of Madras in

IT (TP) A No.23/Chny/2021 & 12 Others. :: 42 ::

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

present case. The Hon’ble Madras High Court has merely considered

para 5 & 7 of the impugned circular, whereas in all other cases, the

issue has been thoroughly examined in light of para 2 & 4 of said

circular which is very important to understand the issuance of manual

communication without a valid DIN and circumstances under which

such communications can be issued with certain conditions. Anyway,

subsequent decision of Hon’ble High Court of Madras in the case of

Ericsson India P. Ltd., vs. DCIT in Writ Petition No.14776/2020 and

IT (TP) A No.23/Chny/2021 & 12 Others. :: 43 ::

WMP No.18358/2020 dealing with similar circular issued under the

indirect tax laws, has clearly held that non-generation/non-allotment

of DIN is fatal to the communication itself, which invalidates the

communication issued by the authority. Since, the subsequent

decision of Jurisdictional High Court has considered the issue and held

that any communication issued without a valid computer-generated

DIN and is duly quoted in the body of the order is invalid and shall be

deemed to have never been issued, in our considered view,

subsequent decision of Jurisdictional High Court needs to be followed

and accordingly, the decision in the case of Texmo Precision Castings

UK Ltd., is considered to be not applicable to the facts of the present

case and ignored. The Revenue has also relied upon the decision of

Hon’ble High Court of Jharkhand in the case of Prakash Lal

Khandenwal vs. CIT, supra and Hon’ble High Court of Allahabad in the

case of Chandra Bhan vs. Union of India. We find that the issue

before the Hon’ble High Court of Jharkhand is notice issued without a

valid DIN for which the assessee has 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.

IT (TP) A No.23/Chny/2021 & 12 Others. :: 44 ::

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.

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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 45 ::

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-section,

it has been contended by the Department that the purpose of the DRP

direction is only for the guidance of the AO. In our considered view,

said understanding of law is incorrect because sub-section (5) of

section 144 indicates one of the purposes of the DRP direction, but it

does not indicate that such directions are internal communication. In

this regard, it is relevant to consider the provisions of section

144C(14) of the Act, which empowers CBDT to make rules for the

purposes of efficient functioning of the DRP. The CBDT has framed

rules called the Income-tax (Dispute Resolution Panel) Rules, 2009.

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 the Income-tax (Dispute Resolution Panel) Rules,

2009 provides that after the issue of directions of the DRP, if any

mistake or error is apparent in such direction, the DRP may, suo

motu, or on an application from the eligible assessee or the AO, rectify

such mistake or error and also direct the AO to modify the assessment

IT (TP) A No.23/Chny/2021 & 12 Others. :: 46 ::

order accordingly. On a conjoint reading of section 144C(5)of the Act

with Rule 11 & 13 of the Income-tax (Dispute Resolution Panel) Rules,

2009, it is crystal clear that the directions issued by the DRP to the

AO are not merely ‘internal communication’ but is an

order/communication which is issued to the eligible assessee.

Assuming for a moment, the directions issued by the DRP are internal

document within the Income-tax Department, the impugned circular

would still be applicable and DIN must be allotted and quoted on the

body of the directions as held 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.

IT (TP) A No.23/Chny/2021 & 12 Others. :: 47 ::

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 group of ruling officials each with equal rank and

power, especially that formerly administered a Soviet commissariat’.

From the dictionary meaning of ‘collegium’, it is clear that Dispute

Resolution Panel is merely an association/group of three Principal

Commissioner or Commissioner of Income-tax, all of which are

defined as income-tax authority u/s.116 of the Act. Therefore, in our

IT (TP) A No.23/Chny/2021 & 12 Others. :: 48 ::

considered view, the argument of the Revenue that DRP is not an

income-tax authority does not hold water. Further, section 116 of

the Act, merely prescribes ‘class’ of the income-tax authority and

does not provide exhaustive list of income-tax authority. There are

various income-tax authorities functioning under the Act, such as

High Pitch Assessment Committee, Interim Board for Settlement,

Panel for General Anti-Avoidance Rules, Transfer Pricing Officer, etc,

which are not listed u/s.116 of the Act. Nevertheless, they are

income-tax authorities for the purpose of administering the provisions

of the Act. These authorities discharge their duties in terms of

respective CBDT circular issued u/s.119 of the Act. Therefore, we are

of the considered view that DRP is an income-tax authority for the

purpose of administering the provisions of the Act and consequently,

the DRP would be bound to follow the circular issued by the CBDT.

Further, the fact that DRP is an ‘income-tax authority’ for the purpose

of administering the provisions of the Act is corroborated from section

117 & 119 of the Act. Section 117 of the Act, inter alia, provides that

the Central Government may appoint such ‘persons; as it thinks fit to

be income-tax 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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 49 ::

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

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.

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.

IT (TP) A No.23/Chny/2021 & 12 Others. :: 50 ::

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 functionality inter-alia ensured that whenever

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 cases where orders have been

passed manually and not through ITD application, similar instructions

have been issued by the Directorate of Income-tax (Systems) vide its

instruction No.Sytem/ITBA/ Instruction/Common Function/180/

2019-20 dated 25.10.2019 and by virtue of the aforesaid instruction,

a new functionality was developed for automatic generation of DIN in

cases where the orders were issued manually outside the ITBA

system. From the above, it is clear that the field officers of the

Income-tax Department were equipped to allot and quote DIN on the

body of any communication issued to the assessee’s irrespective of

whether the impugned order was generated online on the AST/ITD

applications or manually. This fact is further strengthened by the fact

that the Ld.Counsel for the assessee Shri M.P. Lohia appearing for the

assessee, M/s. Lakshmi Machine Works, has filed few sample copies

IT (TP) A No.23/Chny/2021 & 12 Others. :: 51 ::

of order passed by the DRP, Mumbai which contains a bar coded

computer generated DIN allotted and is duly quoted in the body of

the order. From the above it is undoubtedly clear that the systems

provide for generation of computer based DIN. Therefore, we are of

the considered view that there is no merit in the argument of the

Revenue that there is no integration between ITBA portal and DRP

module and because of this, DRP is unable to generate DIN numbers

when the order was passed. Accordingly, we reject the argument of

the Revenue.

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

IT (TP) A No.23/Chny/2021 & 12 Others. :: 52 ::

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.

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. CIT, reported in [1958] 33

ITR 760. 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., vs. CIT, reported in [1961] 42

IT (TP) A No.23/Chny/2021 & 12 Others. :: 53 ::

ITR 123(SC). 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.

of these cases and also by following ratios of various decision cited

herein above, we are of the considered view that orders passed by

the DRP/AO without a valid computer-generated Document

Identification Number has been allotted and duly quoted in the body

of such order is invalid, non-est and shall be deemed to have never

been issued. However, as per section 144C(13) of the Act, the AO has

to pass the final assessment order in conformity with the directions

issued by the DRP within one month from the end of the month in

which such direction is received. In all these cases, the DRP directions

are held as invalid and deemed to have never been issued, being in

violation of Circular No.19/2019. Once the DRP directions are

deemed to have never been issued, the ld.AO could not have passed

the final assessment orders u/s.144C of the Act, in pursuance to such

non-est directions. Thus, final assessment orders passed

u/s.144C(13) r.w.s. 143(3) of the Act, in pursuant to invalid, non-est

DRP directions is bad in law, void ab-initio and accordingly liable to

IT (TP) A No.23/Chny/2021 & 12 Others. :: 54 :: be quashed. 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.

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.

allowed.

Order pronounced on the 22nd day of December, 2023, in Chennai. Sd/- Sd/- (महावीर िसंह) (मंजूनाथा.जी) (MANJUNATHA.G) (MAHAVIR SINGH) उपा�� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER चे�ई/Chennai, �दनांक/Dated: 22nd December, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ� / Appellant 3. आयकर आयु� / CIT 5. गाड� फाईल / GF 2. ��यथ� / Respondent 4. िवभागीय �ितिनिध / DR