TMI Blog2023 (11) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... x Mauritius Holdings Ltd [ 2023 (4) TMI 579 - DELHI HIGH COURT] . Assessee appeal allowed. - Shri Shamim Yahya, Accountant Member And Shri Kul Bharat, Judicial Member For the Assessee : Shri Ravi Sharma, Advocate For the Revenue : Shri Vijay B. Vasanta, CIT DR ORDER PER BENCH : These appeals by the assessee are directed against the respective orders of the Assessing Officer pursuant to the directions issued by the DRP for the respective assessment years. 2. Since the issues are common and the appeals were heard together, these are being disposed off by this common order. 3. Although the assessee has raised many grounds, ld. Counsel for the assessee has pressed for Ground No.4, which is similar in both the assessment years and goes to the root of the validity of jurisdiction in this case. The said ground reads as under:- On the facts and circumstances of the case in law, the Ld. DRP erred in issuing the directions under section 144C(5) of the Act dated 29 April 2022 without quoting the mandatory document identification number (DIN) in conformity with Para 2 and Para 3 of Circular No.19/2019 dated 14 August 2019 and thus, the said directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties and perused the records. First, we consider the contents of CBDT Circular No.19/2019 dated 14.08.2019, which reads as under:- Circular No. 19 /2019 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, dated the 14th of August, 2019 Subject: Generation/Allotment/Quoting of Document Identification Number in Notice/Order/Summons/letter/correspondence issued by the Income-tax Department - reg. With the launch of various e-governance initiatives, income-tax Department is moving toward total computerization of its work. This has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax- administration. Presently, almost all notices and orders are being generated electronically on the Income fax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (the Board) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as communication ) were found to have been issued manually, without maintaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proval of the Chief Commissioner / Director General of Income Tax vide number .... dated .... 4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued. 5. The communication issued manually in the three situations specified in para 3- (i), (ii) or (iii) above shall have to be regularised within 15 working days of its issuance, by i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; iii. communicating the DIN so generated to the assessee/any other person as per electronically generated pro-forma available on the System. 6. An intimation of issuance of manual communication for the reasons mentioned in para 3(v) shall be sent to the Principal Director General of Income-tax (Systems) within seven days from the date of its issuance. 7. Further, in all pending assessment proceedings, where notices were issued manually, prior to issuance of this Circular, the income-tax authorities shall identify such cases and shall upload the notices in these cases on the Systems by 31st October, 2019. 8. Hindi version to follow. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st also mention the date and number of written approval of the Chief Commissioner/Director General of Income-tax for issuing manual communication. In fact, in paragraph 3 of the aforesaid circular, the format for recording such reasons has been specified. Paragraph 4 of the circular makes it clear that any communication issued which, is not in conformity with paragraph 2 and paragraph 3 of the circular, shall be treated as invalid and shall be deemed to have never been issued. It is fairly well settled, a circular issued u/s. 119 of the Act has statutory force and binding on subordinate authorities working under the Central Board of Direct Taxes. 8. A perusal of the DRP order shows that it is clear in the body of DRP order, no DIN number is mentioned nor there is any reason of not mentioning the DIN number in order of the DRP. Is such a situation, the DRP order will lose its validity. Subsequent separate communication of DIN is a superfluous exercise. In this regard, we are referring to the decision of the Hon ble jurisdictional High Court in the case of CIT vs Brandix Mauritius Holdings Ltd. (2023)(4) TMI 579 (Delhi High Court). The Hon ble Delhi High Court has held as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Board of Direct Taxes to which we have just referred are legally binding on the Revenue and this binding character attaches to the two circulars even if they be found not in accordance with the correct interpretation of sub-section (2) and they depart or deviate from such construction. It is now well settled as a result of two decisions of this Court, one in Navnitlal C. Javeri v. K.K. Sen [AIR 1965 SC 1375 : (1965) 1 SCR 909 : 56 ITR 198] and the other in Ellerman Lines Ltd. v. CIT[(1979) 4 SCC 565] that circulars issued by the Central Board of Direct Taxes under Section 119 of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act. The question which arose in Navnitlal C. Javeri case [AIR 1965 SC 1375 : (1965) 1 SCR 909 : 56 ITR 198] was in regard to the constitutional validity of Sections 2(6- A)(e) and 12(1-B) which were introduced in the Indian Income Tax Act, 1922 by the Finance Act, 1955 with effect from April 1, 1955. These two sections provided that any payment made by a closely held company to its shareholders by way of advance or loan to the extent to which the company possess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons employed in the execution of the Act under Section 5(8) of the Act. This circular pointed out to all the officers that it was likely that some of the companies might have advanced loans to their shareholders as a result of genuine transactions of loans, and the idea was not to affect such transactions and not to bring them within the mischief of the new provision. The directions given in that circular clearly deviated from the provisions of the Act, yet this Court held that the circular was binding on the Income Tax Officer. The two circulars of the Central Board of Direct Taxes referred to above must therefore be held to be binding on the Revenue in the administration or implementation of subsection (2) and this sub-section must be read as applicable only to cases where there is understatement of the consideration in respect of the transfer. [Emphasis is ours] 17.3 Also see the following observations of a coordinate bench in Back Office IT Solutions Pvt. Ltd. v. Union of India , 2021 SCC OnLine Del 2742, in the context of the impact of circulars issued by the revenue: 24....In this context, tax administrators have to bear in mind the well- estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2488/Del/2022. The relevant paragraph of this order is reproduced hereunder:- 15.1 In this context from the aforesaid Circular no. 19/2019 it can be noted that it mandates that if the communication is issued under aforesaid three exceptions the communication shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner / Director General of Income-Tax for issue of manual communication in the following format- This communication issues manually without a DIN on account of reason/reasons given in para 3 (i)/3(ii)/3 (iii)/3 (iv)/3 (v) of the CBDT Circular No ... dated .... (strike off those which are not applicable) and with the approval of the Chief Commissioner / Director General of Income Tax vide number ....dated .. .. 15.2 To make it crystal clear here the words Communication is not used to define merely the mode of transmission of the information but the circular No 19 of 2019 makes it clear by defining it in following words However, it has been brought to the notice of the Central Boa rd of Direct Taxes (the Board) that there have been some instances in which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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