JCIT, SPECIAL RANGE, PANAJI vs. CHOWGULE & COMPANY PRIVATE LIMITED, MORMUGAO

During the course of hearing, a common threadbare issue in all these appeals came to the attention of the bench, for the reason, these are taken up together for the sake of brevity and for a common & consolidated order. We have taken ‘Good Luck Developers’ as lead case, resultantly adjudication laid in succeeding paragraphs shall mutatis-mutandis apply to remaining thirty seven appeals/Cos. as placed at Sr No. 2 to 38.

At the outset of virtual hearing, learned counsels for respective assessee’s [‘ARs’ hereinafter], without going into merits, have raised an oral legal ground challenging very validity of the impugned orders in the light of Circular No.19/2019 dt. 14/08/2019 issued by the Central Board of Direct Taxes [‘CBDT’ hereinafter].

Per contra, Ld. Departmental Representatives Mr N. Shrikanth & Mr. Chavan [‘DR’ hereinafter] objecting the admission submitted that, the impugned orders indeed bears a manual Appeal Register Number alongwith thereto, therefore corresponding Document Identification Number [‘DIN’ hereinafter] in compliance with the CBDT Circular (supra) must have been generated, which however remained to be quoted in the body thereof while communicating to the respective assessee. The Ld. DR also capitulated that, aforestated circular (supra) came into force w.e.f. 01/10/2019 whereas the impugned appellate orders were passed in initial transition period wherefore department was instructed for maintaining parallel manual records in addition to DIN records. Therefore the Ld. CIT(A) as an abundant precaution has invariably quoted these control numbers which can be vouched with corresponding DIN (if any) and compliance of CBDT Circular (supra).

Heard common rival contentions; and subject to rule 18 of Income Tax Appellate Tribunal, Rules 1963, perused material placed on record, case laws relied by both the parties and duly considered the facts of the case in the light of settled legal position which are also forewarned to respective rival parties.

Before setting clock for adjudication, first to deal with the question as to ‘whether such legal ground raised first time before the Tribunal can be admitted?’ more specifically when it was not raised before the first appellate authority and not the subject matter of impugned orders assailed against. In this context, it shall suffice to quote that, the legal ground raised by the ITAT-Panaji Page 7 of 10

We observed that, in order to prevent manual practice of issuance of notice, order, summons, letter or any other correspondence [defined as ‘Communication’] and to maintain proper audit trail of all communication the CBDT in exercise of its power u/s 119 of the Act, vide circular No. 19/2019 dt. 14/08/2019 mandated the income tax authorities w.e.f. 01/10/2019 for generation, allotment and communication of computer generated DIN in relation to any assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc.

Albeit para 2 of aforestated circular mandates for DIN compliance, para 3 thereof provides five exceptional circumstances wherefore manual communication is permitted without initially complying with DIN requirement. However such issuance of manual communication requires recording of reasons therefore and prior approval from CCIT/DGIT. In terms of para-5 it is also subjected for regularisation of DIN compliance within a period of 15 working days of such manual issuance. Here it is worthy to note that, any communication made not in conformity with or in violation of Para-2 save otherwise provided in Para 3 & 5 thereof, invariably renders the communication as invalid and shall be deemed to have never been issued.

While vouching the effect of non-generation vis-à-vis non-quoting of DIN, we note that, the Hon’ble Delhi High Court while dealing with similar issue in ‘CIT Vs Brandix Mauritius Holdings Ltd.’ (163/2023 dt. 20/03/2023), has held that the communication in relation to assessments, appeals, orders etc., which finds mention in paragraph 2 of the 2019 circular, albeit without DIN, can have no standing in law, having regard to the provisions of paragraph 4 of the 2019 circular. It is further observed by the Hon’ble High Court that in view of the decision of Hon’ble Supreme Court in the case of ‘K.P. Varghese Vs ITO, Ernakulum (1981) 4 SCC 173 and in the case of ‘Back Office IT Solutions Pvt. Ltd. Vs UOI’ (2021) SCC online Del 2742, circulars issued by the CBDT binds the Revenue in their administration or implementation, and such circulars cannot be side-stepped causing prejudice to the assessee by bringing to naught the object for which such circulars are issued.

In light of aforestated legal position & our discussion, in the present case we note that, the impugned appellate order was subject matter of DIN compliance; however same remained to be complied by generating & quoting the DIN in the body thereof. Thus admittedly impugned appeal order was communicated in violation of Para-2 of CBDT Circular (supra). Further, the Revenue also failed to place on record any evidence showcasing effectively that the case of the assessee fell within any of the five exceptional circumstances as envisaged in Para-3 and accompanying therewith evidentiary documents in terms Para-5 thereof in establishing regularisation of earlier manual communication. Therefore, this communication of impugned order suffered from compliance and rendered invalid as if it has never been issued. In our considered view, for the aforestated reasons, the impugned order ceases to have any effect in the eyes of law as non-est. In view of this categorical finding, delving deeper into merits is unwarranted.