Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: HON’BLE SHRI PARTHA SARATHI CHOUDHURY, JUDICIAL & SHRI G. D. PADMAHSHALI
द्वधरध / Appearances Assessee by : Mr Mahavir Atal [‘Ld. AR’] Revenue by : Mr Abhay Marathe [‘Ld. DR’] सुनवाई की तारीख / Date of conclusive Hearing : 20/11/2023 घोषणा की तारीख / Date of Pronouncement : 20/11/2023 आदेश / ORDER PER G. D. Padmahshali, AM; This appeal instituted by the Revenue u/s 253(2) of the of the Income-tax Act, 1961 [‘the Act’ hereinafter] against the order of Commissioner of Income Tax Appeals-2, Nagpur [‘CIT(A)’ hereinafter] passed u/s 250 of the Act involving assessment year 2014-15 [‘AY’ hereinafter].
At the outset of virtual hearing, the Ld. AR submitted that, the impugned order assailed by the Revenue did neither bear computer-generated DIN in the body thereof nor does it specify reasons of issuance of communication without DIN. Since this impugned order issued/communicated was without complying ITAT-Nagpur Page 1 of 6
Wardha Nagri Sahakari Adhikosh (Bank) Maryadit CBDT DIN Circular 19/2019 dt.14/08/2019 with Central Board of Direct Taxes [‘CBDT or Board’ hereinafter] Circular No.19/2019 dt. 14/08/2019, loose its validity as non-est in the eyes of law, therefore no cause of action to the Revenue.
Solidifying the fact, the Ld. DR on the other hand submitted that, the impugned order though initially was issued without quoting DIN therein, however in compliance with CBDT Circular (supra) separate communication intimating computer-generated DIN in this case was issued to the assessee. It is also submitted that, DIN is separately intimated either immediately on same day or next working day or within 15 days of their manual issuance. The Ld. DR also pleaded that, since effective compliance with aforestated circular (supra) is made by issue of separate letter of intimation communicating the DIN, the legal ground stands meritless for adjudication.
We have heard rival contention on this legal issue and subject to the provision of rule 18 of ITAT-Rules, 1963 perused material placed on records. We note that similar issue came before the co-ordinate bench in ‘ACIT Vs Gupta Coal India Pvt Ltd. wherein the issue of communication of order without quoting DIN therein was considered and after an elaborate discussion the bench adjudicated this issue in favour of assessee and against the Revenue as placed at para 11 onwards; 11. Insofar as the validity of orders issued without DIN is concerned, we find this issue is no-more res-integra by the ratio of Hon’ble Jurisdictional High Court of Bombay in WP 2595/2021 dt. 26/09/2023 ‘Ashok Commercial Enterprises Vs ACIT’, wherein their lordships vide para 18 have categorically held that, the communication ITAT-Nagpur Page 2 of 6
Wardha Nagri Sahakari Adhikosh (Bank) Maryadit CBDT DIN Circular 19/2019 dt.14/08/2019 of orders without quoting DIN therein are to be treated as invalid and deemed never to have been issued. The relevant para is reproduced hereunder; “18 Whether the impugned assessment order dated 28th September 2021 is invalid on account of it being issued without a DIN? (a) The CBDT, in exercise of powers under Section 119(1) of the Act, has issued a Circular No.19/2019 dated 14th August 2019 providing that no communication shall be issued by any Income Tax Authority inter alia relating to assessment orders, statutory or otherwise, inquiries, approvals, etc. to an assessee or any other person on or after 1st October 2019 unless a computer generated DIN has been allotted and is quoted in the body of such communication. The Circular reads as under: CIRCULAR NO.19/2019 (F. NO.225/95/2019-ITA.II], DATED 14-8-2019 . . . . . . . . Paragraph 3 of the Circular sets out five exceptional circumstances where the aforementioned mandatory requirement may not be adhered to, but requires that if an order/communication is to be issued without a DIN, it can be done only after recording reasons in writing in the file and with the prior written approval of the Chief Commissioner/Director General of Income Tax. Further, paragraph 3 requires that if such exceptional circumstances are claimed, the orders/communication issued without a DIN must state this fact in a specific format set out in paragraph 3 of the Circular. Paragraph 4 of the Circular provides that any order/ communication which is not in conformity with paragraphs 2 and 3 of the Circular shall be treated as invalid and shall be deemed to have never been issued. The contents of the Circular have been re-iterated in a Press Release dated 14th August 2019; (b) It is indisputable that the impugned assessment order dated 28th September 2021 does not bear a DIN and further that the said order issued without a DIN does not bear the required format set out in paragraph 3 of the Circular and, therefore, the impugned assessment orders for Assessment Year 2011-2012 to 2019- 2020 ought to be treated as invalid and deemed never to have been issued. We find support for this view in Brandix Mauritius Holdings Ltd. (Supra) where the Hon’ble Delhi High Court has held that an order passed in contravention of the said Circular is void, bad in law and of no legal effect. Paragraphs 16 to 17.1, 18 and 19 read as under: 16. The final assessment order was passed by the Assessing Officer (AO) on 15.10.2019, under Section 147/144(C) (13/143(3) of the Act. Concededly, the final assessment order does not bear a DIN. There is nothing on record to show that the appellant/revenue took steps to demonstrate before the Tribunal that there were exceptional circumstances, as referred to in paragraph 3 of the 2019 Circular, which would sustain the communication of the final assessment order manually, albeit, without DIN. 16.1. Given this situation, clearly paragraph 4 of the 2019 Circular would apply.
Paragraph 4 of the 2019 Circular, as extracted hereinabove, decidedly provides that any communication which is not in conformity with paragraph 2 and 3 shall be treated as invalid and shall be deemed to have never been issued. The phraseology of paragraph 4 of the 2019 Circular fairly puts such communication, which includes communication of assessment order, in the category of communication which are non-est in law.
ITAT-Nagpur Page 3 of 6
Wardha Nagri Sahakari Adhikosh (Bank) Maryadit CBDT DIN Circular 19/2019 dt.14/08/2019 17.1. It is also well established that circulars issued by the CBDT in exercise of its powers under Section 119 of the Act are binding on the revenue. xxxxxxxxxxx 18. The argument advanced on behalf the appellant/revenue, that recourse can be taken to Section 292B of the Act, is untenable, having regard to the phraseology used in paragraph 4 of the 2019 Circular.
The object and purpose of the issuance of the 2019 Circular, as indicated hereinabove, inter alia, was to create an audit trail. Therefore, the communication relating to assessments, appeals, orders, etcetera which find 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. (c) During the course of hearing, Mr. Suresh Kumar produced an intimation letter dated 13th October 2021 stating that the order dated 28th September 2021 under Section 153C of the Act has a DIN, which is set out therein. Even if this is held to be in compliance with paragraph 5 of the Circular, which deals with regularization of communications without DIN, this can only seek to regularize the failure to generate a DIN, but yet the requirements of paragraph 3 of the Circular will still remain contravened and consequently, the order dated 28th September 2021 ought to be treated as invalid and never issued; (d) The said Circular also applies to the satisfaction note dated 13th July 2021 issued by respondent no.1. The satisfaction note will fall within the scope of paragraph 2 of the Circular as a communication of the specified type issued to any person. In the case of the satisfaction note no regularization dated 13th October 2021 has been issued;” (e) In view of the binding nature of Circular issued under Section 119 of the Act, and the peculiar facts and circumstances of the case, the consequences of contravention of the Circular set out above, therefore, ought to be given full effect to. The object of the said Circular is clear and laudatory and intended to ensure that proper trail of all assessment and other orders are maintained and further that any deviation therefrom can only be undertaken after prior written approval of the higher authorities under the Act. Therefore, the satisfaction note dated 13th July 2021 and the impugned order of assessment dated 28th September 2021 ought to be treated as invalid and deemed never to have been issued; (Emphasis supplied) 12. Without disputing the application of aforestated ratio, the Ld. DR tried to displace the legal ground of the assessee arguing that, in relation to impugned orders under challenge, the tax authorities have duly communicated the DIN by a separate letter of intimation either alongwith DIN less communication on the very same day or immediately thereafter but within the prescribed period of 15 days therefrom in terms of para-5 of Circular (supra). This vehement argument of the Revenue however failed to evoke our concurrence for the reason of ratio laid by Hon’ble Calcutta High Court in ‘PCIT Vs Tata Medical Centre Trust’ decided in ITAT/202/2023-IA No. GA/1/2023, wherein their lordship after considering the factual position of intimating the computer-generated DIN post issuance of DIN less order, has laid that, once the order is communicated to assessee in violation of para 2 and 3 of CBDT Circular ITAT-Nagpur Page 4 of 6
Wardha Nagri Sahakari Adhikosh (Bank) Maryadit CBDT DIN Circular 19/2019 dt.14/08/2019
(supra), post intimation of DIN in terms of para 5 would not cure the former DIN less communication.
Thus in our considered view, intimation of DIN by separate letters communicated within 15 days of issuance of former DIN less communication would be valid only if, former DIN less communication is issued incorporating therein the reason for issue of such DIN less communication in terms of para 3(i) to 3(v) [as applicable] alongwith the Number & date of obtaining written approval of the Chief Commissioner / Director General of Income-Tax in a specified format, and not otherwise. In the present bunch of appeals we note that, the impugned orders were subject matter of DIN compliance; however same are found communicated without mentioning or quoting therein (1) computer-generated DIN and (2) reasons and approval therefor. Thus impugned orders were communicated in violation of Para-2 & Para-3 of CBDT Circular (supra), hence rendered invalid as if it has never been issued, therefore ceases to have any effect in the eyes of law as non-est.
In the light of aforestated discussion and judicial precedents, we adjudicate the legal additional ground in favour of the assessee by holding that the impugned order passed by the Ld. FAA and assessment order passed in Sr. No. 6 to 19 are invalid and deemed to have never been issued as they failed to state the reason for issue of DIN less communication alongwith the Number & date of obtaining written approval of the CCIT/DGIT in a specified format. Therefore the Bench deem it (Emphasis Supplied) unnecessary to devolve deeper into the merits of these cases.
We found that, a similar view also been followed by the co-ordinate benches in ‘JCIT Vs Colorcon Asia Pvt Ltd ‘JCIT Vs Chowgule & Company Pvt Ltd ITA No. 27/PAN/2020’, ‘DCIT Vs Dempo Industries ITA No. 51/PAN/2020’, , ‘DCIT Vs Bharat Traders ITA No. ITAT-Nagpur Page 5 of 6
Wardha Nagri Sahakari Adhikosh (Bank) Maryadit CBDT DIN Circular 19/2019 dt.14/08/2019 66/NAG/2022’, ‘Prabhakar Amruta Shillak in and ‘Kimberly Clark India Pvt Ltd Vs DCIT in ITA No. 1950/PUN/2019’.
Adopting aforestated reasoning and ratio [as laid in para 11 to 14 in Gupta Coal India Pvt Ltd.(Supra)], we hold that the impugned order passed by the Ld. CIT(A) as invalid and deemed to have never been issued as it failed to state the reason for issue of DIN less communication alongwith the Number & date of obtaining written approval of the CCIT/DGIT in a specified format. Therefore there remains no order to be appealed against and no cause of action to the Revenue. Consequently devolving deeper into the merits of the case deemed unwarranted.
In result the appeal of the Revenue is DISMISSED. U/r 34 of ITAT Rules, the order pronounced in open court on this Monday 20th day of November, 2023.
-S/d- -S/d- PARTHA SARATHI CHOUDHURY G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/ PUNE ; दिन ांक / Dated : 20th day of November, 2023. आदेश की प्रधिधलधपअग्रेधिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT, Concerned. 6.ग र्डफ़ इल / Guard File. 4. The CIT-Concerned (MH-India) 5. DR, ITAT, Nagpur Bench आदेशानुसार / By Order वररष्ठ ननजी सनिव / Sr. Private Secretary आयकर अपीलीय न्यायानिकरण, पुणे / ITAT, Pune.
ITAT-Nagpur Page 6 of 6