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Income Tax assessment order issued with DIN has no standing in law

Delhi High Court has upheld that Income Tax assessment order issued with DIN (Document Identification Number) has no standing in law. In 2019, Central Board of Direct Taxes (CBDT) made DIN mandatory for documents issued.

This order came following the appeal filed by the Income Tax Department against a ruling by Income Tax Appellate Tribunal (ITAT). “We find no error in the view adopted by the tribunal. The tribunal has simply applied the provisions of the 2019 Circular and thus, reached a conclusion in favour of the respondent/assessee,” a division bench of Justices Rajiv Shakdher and Tara Vitasta Ganju said in a recent ruling.

Further, the bench said that the appeal filed by the tax department is closed. “If the AO is in a position to take next steps in law, it would embark upon the same only in accordance with the law,” added the bench.

CBDT, in its order dated August 14, 2019, said that no communication shall be issued by any Income Tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of in formation, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 1 st day of October, 2019 unless a computer-generated DIN has been allotted and is duly quoted in the body of such communication.

The circular also gave exceptional situation in which communication can be issued manually. These include technical problem, absence of official, delay in PAN migration beside others. Even after issuing the communication manually, these need to be regularized within 15 days.

The circular made it clear, the communication not in conformity with this circular “shall be treated as invalid and shall be deemed to have never been issued.”

Taking cue from the circular, the bench noted that the final assessment order was passed by the Assessing Officer (AO). The final assessment order does not bear a DIN. There is nothing on record to show that the revenue department took steps to demonstrate before the tribunal that there were exceptional circumstances, as referred in the circular, which would sustain the communication of the final assessment order manually, albeit, without DIN. Given this situation, clearly paragraph four of the 2019 Circular would apply meaning that the order has no legal status.

Commenting on the ruling, Amit Maheshwari, Tax Partner, AKM Global says there are several tribunal rulings on the similar lines where the notice/ order/ letter from the tax department is treated as invalid in the absence of DIN.

However, this ruling will set a significant precedent for future communication and existing tax assessments/appeals as DIN was mandated by CBDT on all communication to ensure transparency in tax administration, and of late, significant number of letters/ notices/ orders from the tax department relating to assessments, appeals etc were made without DIN. Interestingly, “the court categorically held that failure to generate and allocate DIN in this case is not a mistake curable under Section 292B and stated that circular no. 19/2019 is binding on the revenue, which gives a clear conclusion that communication without DIN shall be treated as invalid and as not issued,” he said.

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