TMI Blog2023 (8) TMI 1403X X X X Extracts X X X X X X X X Extracts X X X X ..... der passed by the AO u/s 154 of the Act is invalid and the same is quashed. Appeal filed by the assesse is allowed. - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER For the Assessee : Shri Milind Wadhwani, AR For the Revenue : Shri Ashish Porwal, Sr. DR ORDER PER VIJAY PAL RAO, JM: This appeal by the assessee is directed against the order dated 22.11.2022 of Commissioner of Income Tax (Appeals), National Appeal Centre, Delhi arising from order passed by the AO u/s 154 of the Act for Assessment Year 2011-12. The assesse has raised following grounds of appeal: 1. On the facts and in The circumstances of the case and in law, the Ld. CIT (A) erred in upholding, the action of the Ld. AO in making an addition to the income of assessee to the tune of Rs. 1,25,00,000/-. 2. On the facts and in The circumstances of the case and in law, the Ld. CIT (A) erred in upholding, the order passed by the Assessing Officer. 3. On the facts and in The circumstances of the case and in law, the Ld. CIT (A) erred in upholding, the action of the Assessing Officer. 2. Ld. AR of the assesse has submitted that the assesse is an individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Act. The AO has mentioned in the order passed u/s 154 that it is a case of no PAN and therefore, this case falls in the exceptions as provided in circular No.19 of 2019 and thereafter the AO has generated the DIN on 14th October 2019. He has further submitted that once the AO has generated the DIN and case of the assesse falls in the exception as provided in para 3(iv) of the circular then the conditions provided in the circular are satisfied. He has relied upon the orders of the authorities below. 5. We have considered the rival submissions as well as relevant material on record. The AO has passed the order u/s 154 on 10.10.2019 the scan copy of the same is as under: 6. It is clear from the order passed u/s 154 that this order does not bear DIN no. which was subsequently generated by the AO on 14.10.2019. At the time of passing the impugned order there was no DIN. Vide circular no.19/20019 dated 14.08.2019 the CBDT decided that no communication shall be issued by any income tax authorities relating to assessment, penalty, statutory or otherwise etc. unless the computer generated documents identification no. (DIN) has been allotted and is duly quoted in the body ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computer- generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of such communication. 3. In exceptional circumstances such as, (i) when there are technical difficulties in generating / allotting / quoting the DIN and issuance of communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties: or (iii) when due to delay in PAN migration. PAN is lying with non- jurisdictional Assessing Officer; or (iv) when PAN of assessee is not available and where a proceeding under the Act (other than verification under section 131 or section 133 of the Act) is sought to be initiated; or (v) When the functionality to issue communication is not available in the system, the communication may be issued manually but only after recording reasons in writing in the file and with prior written approval of the Chief Commissioner/Director General of income-tax. In cases where manual communication is required to be issued due to delay in PAN migration, the proposal seeking approval for issuance of manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of manual communication in a specific format. Para 4 of the circular states that the communication issued manually not in conformity with Para-2 and Para-3 of the circular, shall be treated as invalid and shall be deemed to have never been issued. 9. We also notice that the Calcutta Bench of the ITAT in the case of Tata Medical Centre Trust (supra) has considered a similar issue and held that 13. From the above submissions and arguments, we note that it is an undisputed fact that the impugned order u/s. 263 of the Act has been issued manually which does not bear the signature of the authority passing the order. Further, from the perusal of the entire order, in its body, there is no reference to the fact of this order issued manually without a DIN for which the written approval of Chief Commissioner/Director General of Income-tax was required to be obtained in the prescribed format in terms of the CBDT circular. We also note that in terms of para 4 of the CBDT circular, such a lapse renders this impugned order as invalid and deemed to have never been issued. 13.1 It is also important to note about the binding nature of CBDT circular on the Income-tax Authorities for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction No. 9/2004 issued by the Central Board of Direct Taxes is binding on administrative officer in view of the statutory provision contained in section 143(2), which provides for limitation of 12 months for issuance of notice under section 143(2). While giving its finding, the Hon ble High Court of Chhattisgarh placed reliance on the decisions in the case of UCO Bank (supra) and Nayana P. Dedhia (supra). 13.5 Hon ble jurisdictional High Court of Calcutta in the case of Amal Kumar Ghosh v. Asstt. CIT [2014] 45 taxmann.com 482/225 Taxman 229 (Mag.)/361 ITR 458 dealt with the issue relating to CBDT circular which according to the Department cannot defeat the provisions of law. While giving its observations and finding on the issue, the Hon ble Court referred to the decision of Hon ble Chhattisgarh High Court in the case of Sunita Finlease Ltd. (supra), which are as under: 7. We have considered the rival submissions advanced by the learned Advocates. Even assuming that the intention of CBDT was to restrict the time for selection of the cases for scrutiny within a period of three months, it cannot be said that the selection in this case was made within the aforesaid period. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her notice that a similar view is being taken by the Delhi Bench of the ITAT in the case M/s. Brandix Mauritius Holdings Ltd., vs DCIT (ITA No.1542/Del/2020 dated 19.09.2022). 11. In assessee s case there is no dispute about the fact that the order dated 31.10.2019 has been issued manually. The circular is very clear that generating the DIN by separate intimation is allowed to be done to regularise the manual order (Para 5 of the circular) provided the manual order is issued in accordance with the procedure as contained in Para 3. On perusal of the order u/s.92CA, it is noted that the order neither contains the DIN in the body of the order, nor contains the fact in the specific format as stated in Para 3 that the communication is issued manually without a DIN after obtaining the necessary approvals. Therefore we are of considered view that the order dated 31.10.2019 is not in conformity with Para 2 and Para 3 of the CBDT circular. In view of these discussions and respectfully following the decision of the Kolkata and Delhi Benches of the Tribunal, we hold that the orders passed u/s.92CA dated 31.10.2019 is invalid and shall be deemed to have never been issued as per Para 4 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the approval of the Chief Commissioner / Director General of Income Tax vide number .... dated .. .. 5. It is relevant to note that insofar as the exceptions given in paragraph 3 (i), (ii) and (iii) are concerned, the specified authority is required to take steps to regularise the failure to quote DIN within fifteen (15) working days. The manner in which regularisation is to take place is set out in paragraph 5. Once again, for the sake of convenience, the relevant part of paragraph 5 of the 2019 Circular is extracted hereafter: 5. The communication issued manually in the three situations specified in para 3- (i), (ii) or (iii) above shall have to be regularized 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. Furthermore, the 2019 circular, in paragraph 6, states that the intimation of issuance of manual communication, for the reasons mentioned in paragraph 3(v), shall be sent to the Principal Director General of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al circumstances which are set forth in paragraph 3 of the 2019 Circular. It is, however, the case of the appellant/revenue, both before this court and before the Tribunal, that failure to allocate DIN was a mere mistake. Using this as the foundation, the argument put forth before us is that the mistake can be corrected by taking recourse to Section 292B of the Income Tax Act, 1961 [in short, the Act ]. 10. Mr Puneet Rai, learned senior standing counsel who appears on behalf of the appellant/revenue, says that the circular only applies to the communications emanating from the revenue, and not vis- -vis the substantive orders passed qua the assessee. 10.1 It is Mr Rai s contention that the failure to generate and allocate DIN in this case is a mistake or at best, a defect and/or an omission, which ought not to invalidate the assessment proceedings. 10.2 In support of this plea, Mr Rai has referred to the judgment of the coordinate bench in CIT v. Jagat Novel Executives Pvt. Ltd., [2013] 356 ITR 562. 11. Mr Ajay Vohra, learned senior counsel who appears on behalf of the respondent/assessee, contends to the contrary. It is his contention that the 2019 Circular is binding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 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. 17.2 The aforementioned principle stands enunciated in a long line of judgements, including the Supreme Court s judgment rendered in K.P. Varghese v. Income Tax Officer, Ernakulam and Anr., (1981) 4 SCC 173. The relevant extracts are set forth hereafter: 12. But the construction which is commending itself to us does not rest merely on the principle of contemporanea expositio. The two circulars of 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 : ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sections 2(6-A)(e) and 12(1-B) did not suffer from the vice of unconstitutionality. This decision was followed in Ellerman Lines case [(1972) 4 SCC 474 : 1974 SCC (Tax) 304 : 82 ITR 913] where referring to another circular issued by the Central Board of Revenue under Section 5(8) of the Indian Income Tax Act, 1922 on which reliance was placed on behalf of the assessee, this Court observed: Now, coming to the question as to the effect of instructions issued under Section 5(8) of the Act, this Court observed in Navnitlal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner, Bombay [AIR 1965 SC 1375 : (1965) 1 SCR 909 : 56 ITR 198] : It is clear that a circular of the kind which was issued by the Board would be binding on all officers and persons 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here any leeway for an alternate view. 21.1 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. 8. The Hon ble High Court held that the assessment order without DIN can have no standing in law. Further an identical issue has been considered by the Hon ble Supreme Court in case of Pradeep Goyal vs. UOI and others (supra) and held in para 4 to 7 as under: 4. We have heard Ms. Charu Mathur, learned counsel appearing on behalf of the petitioner and Shri Balbir Singh, learned ASG appearing on behalf of Union of India. 5. By way of this writ petition under Article 32 of the Constitution of India, the petitioner has prayed for the following reliefs:- a. Issue a writ of mandamus or any other appropriate writ, order or direction to the respondents to take all necessary steps to implement a system for electronic (digital) generation of a Document Identification Number(DIN) for all communications sent by the state tax officers to taxpayers and other concerned persons; b. Issue a writ of mandamus or any other appropriate writ, order or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the indirect tax administration at the earliest. With this, the present writ petition stands disposed of. Registry is directed to send copy of this order to the Chief Secretary of all the Respondent States in the Country to take note of the present order and take further steps in the matter. 9. Accordingly when the AO has not followed the procedure as provided in the circular no.19 of 2019 in para 2 then even if the present case falls in the exceptions under para 3(v) being no PAN case the order passed by the AO u/s 154 is invalid. The subsequent generation of DIN by the AO on 14th October 2019 would not change the illegality of the order when the procedure provided under para 2 of the circular is not followed by the AO. Hence following the earlier decision of this tribunal as well as the decision of the Hon ble Delhi High Court in case of CIT vs. Brandix Mauritius Holdings Ltd.,(supra) the impugned order passed by the AO u/s 154 of the Act is invalid and the same is quashed. The assesse has stated that the order passed by the AO u/s 147 r.w. section 144 dated 24.12.2018 has not been received by the assesse and therefore, he could not avail the remedy under the law. We di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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