DCIT, CIRCLE - 1(1), PANAJI vs. DEMPO INDUSTRIES PRIVATE LTD, PANAJI

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.

ITAT-Panaji Page 1 of 5

At the outset of virtual hearing, learned counsel for the assessee Ms Vaidya [‘AR’ 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. 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 rival contentions; and subject to rule 18 of Income Tax Appellate Tribunal, Rules 1963, perused material placed on record, and we note that, similar legal issue came for consideration before Co-ordinate bench in ‘JCIT Vs Zuari Agro Chemicals Ltd’ vide and in ‘JCIT Vs Chowgule Steamships Limited’ vide ITA No 28/PAN/2020, whereby appeals of the Revenue were dismissed for outstepping the CBDT Circular (supra).

We first deal with the question as to ‘whether such legal ground raised

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 ITAT-Panaji Page 3 of 5

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. ITAT-Panaji Page 4 of 5

In result, this bunch of three appeals of the Revenue are DISMISSED and Four appeals of the Assessee are ALLOWED U/r 34 of ITAT Rules, these orders are pronounced in the open court on this Monday 21st day of August, 2023.