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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI SATBEER SINGH GODARA & SHRI G. D. PADMAHSHALI
आदेश / ORDER PER BENCH; This bunch of nineteen appeals comparing first five instituted by different assessee’s u/s 253(1) of the Income-tax Act, 1961 [‘the Act’ hereinafter] and remaining fifteen filed by Revenue u/s 253(2) of the Act are directed against separate orders of first appellate authority [‘FAA’ hereinafter] passed u/s 250 of the Act involving various assessment years [‘AY’ hereinafter].
A common threadbare issue of non-quoting computer-generated Document Identification Number [‘DIN’ hereinafter] in the body of these impugned orders is brought to the attention of the bench, for the reason and on request of aggrieved parties; these matters are taken up together for the sake of brevity and for a common & consolidated order.
At virtual hearing, without touching merits of these cases, the learned counsels at the outset submitted that, the impugned orders in Sr No. 1 to 11 are communicated without mentioning DIN in the body. Whereas in remaining appeals i.e., in Sr No 12 to 19 neither the assessments orders nor the appellate order bear computer-generated DIN in the body thereof. Since these orders were issued without complying with Circular No.19/2019 dt. 14/08/2019 issued by the Central Board of Direct Taxes [‘CBDT or Board’ hereinafter], with the leave of this Tribunal u/r 11 of ITAT-Rules, 1963 an oral legal ground challenging validity of these impugned orders is raised and prayed for admission for adjudication in the light of settled legal position.
ITAT-Nagpur Page 2 of 10
ITA No. 61, 64 to 67, 70 to 72 & 75, 77 to 78/NAG/2022 and to 87/NAG/2022 CBDT DIN Circular 19/2019 dt.14/08/2019
Per contra, Ld. DRs without objecting admission of legal ground have submitted that, the impugned orders though initially were issued without quoting DIN therein, however in compliance with CBDT Circular (supra) separate communication intimating computer-generated DIN in each of these cases were issued to the respective assessee. It is also submitted that, invariably in all these cases DIN is intimated separately either immediately on same day or next working day or within 15 days of their manual issuance. The Ld. DRs also have appealed 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 ground and subject to the provision of rule 18 of ITAT-Rules, 1963 perused material placed on records.
We shall first 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 but the subject matter of impugned orders assailed against. In this context, it shall suffice to quote that, the legal ground raised by these assessee’s is ascended out of the impugned orders and goes to challenge validity thereof. Admittedly no new facts are required to be investigated or verified for this purpose, therefore such being a bald legal ground requiring no examination of facts a fresh, in our considered view deserves admission in the light of ratio laid down by the Hon’ble Apex Court in ‘CIT Vs National Thermal Power Company Ltd.’ ITAT-Nagpur Page 3 of 10
ITA No. 61, 64 to 67, 70 to 72 & 75, 77 to 78/NAG/2022 and to 87/NAG/2022 CBDT DIN Circular 19/2019 dt.14/08/2019 reported in 229 ITR 383 (SC), and Hon’ble Delhi High Court in ‘Gedore Tools Pvt Ltd. Vs CIT’ reported in 238 ITR 268. After due consideration of assessee’s plea and submission, we are satisfied that, omission to raise legal ground while filing present appeals were neither wilful nor unreasonable, for the reason we deem it fit to admit the same in the light of judicial precedents laid in ‘Jaora Sugar Mills Pvt. Ltd v CIT’ reported in 124 ITR 482 (MP), and ‘CIT v Western Rolling Mills Pvt. Ltd.’ reported at 156 ITR 54 (Bom) and ‘Jute Corporation of India Ltd. v CIT’ find placed in 187 ITR 688(SC) and ‘Ahmedabad Electricity Co. Ltd. v CIT’ reported in 199 ITR 351(Bom), ergo same stands admitted.
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 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 ITAT-Nagpur Page 4 of 10
ITA No. 61, 64 to 67, 70 to 72 & 75, 77 to 78/NAG/2022 and to 87/NAG/2022 CBDT DIN Circular 19/2019 dt.14/08/2019 issuance of manual communication mandates the tax authorities to record reasons therefore and to obtain 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, renders the communication as invalid and shall be deemed to have never been issued.
Not well, leave granted by para 3 comes with an obligated rider that, communication must state 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. That is to say, the DIN less communication if issued without incorporating therein (1) applicable reasons from clause (i) to (v) and (2) number & date of approval sought from CCT/DGIT and (3) in specified format [as laid in para 3], then such DIN less communication ispo-facto renders non-est in the eyes of law for outstepping the binding circulars irrespective of the fact of post regularisation of DIN compliance made intimating the DIN to the assessee by separate letters within 15 days in terms of para 5 of the CBDT Circular (supra).
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 ITAT-Nagpur Page 5 of 10
ITA No. 61, 64 to 67, 70 to 72 & 75, 77 to 78/NAG/2022 and to 87/NAG/2022 CBDT DIN Circular 19/2019 dt.14/08/2019 issued by the CBDT binds the Revenue in their administration or implementation, and such circulars cannot be side-stepped causing prejudice to assessee by bringing to naught object for which such circulars are issued. A similar view finds fortified ‘CIT Vs Hero Cycles’ reported in 228 ITR 463 and reiterated in ‘UCO Bank Vs CIT’ 237 ITR 889 (SC) wherein it was held that circulars binds the tax authorities strictly. Further in the case of ‘CIT Vs Nayana P. Dedhia’ reported in 270 ITR 572 the Hon’ble Andhra Pradesh High Court held that guidelines issued by Board in exercise of powers in terms of section 119 of the Act relaxing rigours of law are binding on all the officers responsible for implementation of the Act and, therefore, bound to follow & observe all circulars, orders, instructions etc.
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 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 : ITAT-Nagpur Page 6 of 10
ITA No. 61, 64 to 67, 70 to 72 & 75, 77 to 78/NAG/2022 and to 87/NAG/2022 CBDT DIN Circular 19/2019 dt.14/08/2019
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 ITAT-Nagpur Page 7 of 10
ITA No. 61, 64 to 67, 70 to 72 & 75, 77 to 78/NAG/2022 and to 87/NAG/2022 CBDT DIN Circular 19/2019 dt.14/08/2019 communication, which includes communication of assessment order, in the category of communication which are non-est in law. 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)
ITAT-Nagpur Page 8 of 10
ITA No. 61, 64 to 67, 70 to 72 & 75, 77 to 78/NAG/2022 and to 87/NAG/2022 CBDT DIN Circular 19/2019 dt.14/08/2019
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 (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 ITAT-Nagpur Page 9 of 10
ITA No. 61, 64 to 67, 70 to 72 & 75, 77 to 78/NAG/2022 and to 87/NAG/2022 CBDT DIN Circular 19/2019 dt.14/08/2019 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 unnecessary to devolve deeper into the merits of these cases.
In result first five appeals i.e., Sr. No. 1 to 5 of different assessees are allowed and remaining appeals of the Revenue are DISMISSED. U/r 34 of ITAT Rules, these orders are pronounced in open court on this Tuesday 31st day of October, 2023.