Consequent Generation Of DIN Subsequently & Handwritten In Body Of Order, Will Not Satisfy Conditions Of CBDT Circular No.19/2019: Chennai ITAT

The Chennai ITAT held that the orders passed by the DRP in violation of CBDT Circular No.19/2019 dated Aug 14, 2019, and without allotment of a valid computer-generated Document Identification Number (DIN) in the body of such order is invalid, non-est and shall be deemed to have never been issued.

The ITAT Coram comprising of Mahavir Singh (Vice President) and Manjunatha G (Accountant Member) observed that “there is no dispute with regard to fact that mandatory requirement of generating a computer-based DIN has not been allotted and is duly quoted in the body of the order issued by the AO/DRP. Subsequent generation of DIN either on the same day or next day and intimated to the assessee or other person by way of separate communication does not satisfy the conditions of para 3 & 4 of said circular. Therefore, we are of the considered view that any communication issued by the income-tax authority, in the present case, the AO/DRP without a valid computer-generated DIN and is duly quoted in the body of the order is invalid, non-est and shall be deemed to have never been issued”. (Para 26)

Such observation came pursuant to appeals preferred by the assessee companies challenging the validity of order passed by the DRP or the AO, without a valid DIN generated and quoted in the body of the order in view of Circular No.19/2019 of CBDT dated Aug 14, 2019.

The Bench observed that Circular No.19/2019 made it compulsory that on and from 01.10.2019, a DIN has to be duly allotted and quoted in the body of all communication.

“As per para 3 of said circular, in exceptional circumstances as mentioned therein, 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. Further, whenever any such manual communication has been issued, it would be necessarily required to specify reason for issuing such communication without DIN along with the date of obtaining written approval from the competent authority in a particular format which shall be mentioned in the body of communication itself”, added the Coram.

The Bench went on to explain that circulars issued by the CBDT are binding in nature for all income-tax authorities and this fact has been time and again emphasized by the Supreme Court in the case of UCO Bank vs. CIT [237 ITR 889] and K.P. Varghese vs. ITO [131 ITR 597].

The Bench elucidated that with the launch of various e-governance initiatives, Income-tax Department is moving toward total computerization of its work and this has led to a significant improvement in delivery of services and has also brought greater transparency in the functioning of the tax administration.

However, it has been brought to the notice of the CBDT that there have been some instances in which the notice, order, summons, etc., were found to have been issued manually without maintaining a proper audit trial of such communication, added the Bench.

Therefore, the ITAT remarked that in order to prevent such instances and to maintain proper audit trail of all communication, the Board in exercise of power u/s.119 of the Act, had decided that no communication shall be issued by any income-tax authority to the assessee or any other person on or after the 1st day of October, 2019 unless a computer-generated DIN has been allotted and is duly quoted in the body of such communication.

The Bench referred to the submission of the ASG that DIN has been generated in each and every communication issued by the income-tax authority in all these cases and explained that a communication has been sent to the assessee intimating generation of DIN for the impugned orders. Therefore, he submitted that the Department has complied with the mandatory conditions of Circular No.19/2019.

The ITAT however found that in all these cases DIN has been separately generated either on the same day or next day or after few days and communicated to the assessee by way of separate intimation which is also having a valid DIN number.

Therefore, although, the Department has contended that in a case where DIN has been separately generated and/or communicated, it would be sufficient compliance of the impugned circular, the ITAT allowed the title appeals of assessee and concluded that the requirement of impugned circular is to allot and quote DIN in the body of the communication but not generation and communication of DIN by separate intimation.

Counsel for Appellant/ Taxpayer: CAs Vijay Mehta, Sandeep Bhalla, Asmita D'souza & Harsh Bafna

Counsel for Respondent/ Department: ASG L. Sundaresan & Advocate A.P. Srinivas

Case Title: Sutherland Global Services Inc verses ACIT

Case Number: IT(TP)A No.27/CHNY/2023

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