2022 (11) TMI 1348 - AT - Income Tax

Tribunal quashes revision order for lack of DIN, emphasizing transparency and audit trail

The Tribunal allowed the appeal of the assessee, quashing the revision order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 ... Validity of Revision order u/s 263 - issuance of manual communication - no Document Identification Number (DIN) has been mentioned in the body of the impugned order which was in violation of Circular No.19 of 2019 of CBDT - DR has submitted that mere non mentioning of DIN does not invalidate the order and further that the Circular of the CBDT is directory in nature and not binding on this Tribunal - HELD THAT:- We find that the issue is squarely covered by the decision of the Coordinate Bench of the Tribunal in the case of Tata Medical Centre Trust vs. CIT [2022 (7) TMI 1334 - ITAT KOLKATA] adjudicate on the additional ground in favour of the assessee by holding that the order passed by the Ld. CIT(E) is invalid and deemed to have never been issued as it fails to mention DIN in its body by adhering to the CBDT circular no. 19 of 2019. Accordingly, additional ground taken by the assessee is allowed. In its recent judgment in the case of “Pradeep Goyel vs. UOI” [2022 (8) TMI 216 - SUPREME COURT] taking note of the aforesaid CBDT Circular of 2019 to implement the DIN system and also in view of the larger interest and to bring transparency and accountability in the indirect tax administration also, has directed Union of India and GST council to issue advisory/instruction/recommendations regarding implementation of digital generation of DIN for all communications sent by SGST officers to taxpayers and further directed that concerned States to consider implementing system of e-generation of DIN - impugned order of the ld. PCIT is hereby quashed - Decided in favour of assessee. Issues Involved:1. Validity of the revision order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act due to the absence of a Document Identification Number (DIN).Issue-wise Detailed Analysis:1. Validity of the Revision Order Passed by the PCIT Under Section 263 of the Income Tax Act Due to the Absence of a DIN:The appeal was filed by the assessee against the order dated 22.06.2020 of the PCIT, Kolkata, who exercised revision jurisdiction under section 263 of the Income Tax Act. The primary contention raised by the assessee was the invalidity of the revision order due to the absence of a Document Identification Number (DIN) in the body of the order, which was argued to be in violation of Circular No. 19 of 2019 issued by the Central Board of Direct Taxes (CBDT).The assessee's counsel referenced the CBDT Circular No. 19 of 2019, dated 14.08.2019, which mandates that all communications by the Income Tax Department must include a DIN. The absence of a DIN renders the communication invalid and deemed never to have been issued. This argument was supported by a previous decision of the Coordinate Bench of the Tribunal in the case of Tata Medical Centre Trust vs. CIT, which held similarly.The Department Representative argued that the non-mentioning of DIN does not invalidate the order and that the CBDT Circular is directory rather than mandatory.The Tribunal considered the rival submissions and found the issue to be covered by the Tata Medical Centre Trust case. The Tribunal reproduced relevant parts of the CBDT Circular, which emphasized the importance of DIN in maintaining transparency and a proper audit trail of communications. The circular specifies that any communication without a DIN, unless issued under exceptional circumstances with proper approval, is invalid.The Tribunal noted that the impugned order under section 263 was issued manually without a DIN and without the required approval from the Chief Commissioner/Director General of Income Tax. This non-compliance with the CBDT Circular rendered the order invalid and deemed never to have been issued.The Tribunal also referenced several judicial precedents, including decisions from the Supreme Court and various High Courts, which affirmed the binding nature of CBDT circulars on Income Tax Authorities. These precedents reinforced that non-compliance with such circulars results in the invalidity of the concerned orders or communications.Finally, the Tribunal cited a recent Supreme Court judgment in the case of 'Pradeep Goyel vs. UOI,' which supported the implementation of the DIN system for transparency and accountability in tax administration. The Supreme Court directed the Union of India and the GST Council to issue advisories for the implementation of DIN in indirect tax administration.Based on the above considerations, the Tribunal quashed the impugned order passed by the PCIT due to the absence of a DIN, rendering it invalid. Consequently, the Tribunal did not find it necessary to address the merits of the case, as the primary legal issue had already been decided in favor of the assessee.Conclusion:The Tribunal allowed the appeal of the assessee, quashing the revision order passed by the PCIT under section 263 of the Income Tax Act due to the absence of a DIN, in violation of CBDT Circular No. 19 of 2019.