DRP order without DIN number invalid and loses validity, subsequent DIN communication cannot cure defect

The ITAT Delhi held that a DRP order issued without a DIN number is invalid and loses its validity. The tribunal found that subsequent separate communication of the DIN number is a superfluous exercise and does not cure the defect. Relying on Brandix Mauritius Holdings Ltd. and Circular No. 19/2019, the tribunal quashed the impugned DRP/AO order, holding it shall be deemed to have never been passed. The case was decided in favor of the assessee.

---

---

Issues Involved:
1. Validity of DRP directions and assessment proceedings due to non-compliance with CBDT Circular No. 19/2019.

Summary:

Issue 1: Validity of DRP Directions and Assessment Proceedings

The primary issue in these appeals concerns the validity of the directions issued by the Dispute Resolution Panel (DRP) and the subsequent assessment proceedings, due to non-compliance with the CBDT Circular No. 19/2019 dated 14th August 2019. The assessee argued that the DRP orders did not mention a Document Identification Number (DIN), which is mandatory according to the CBDT Circular, rendering the DRP's directions invalid and the assessment proceedings null and void.

The DRP orders dated 25.11.2022 lacked a DIN, and there was no recorded reason for the absence of the DIN as required by the Circular. The Circular mandates that all communications by the Income-tax Department must include a computer-generated DIN unless issued manually under exceptional circumstances with prior written approval, which must be stated in the communication. The failure to comply with these requirements results in the communication being treated as invalid and deemed to have never been issued.

The Tribunal referred to the CBDT Circular No. 19/2019 and emphasized its binding nature on subordinate authorities. The Tribunal also cited the Delhi High Court decision in CIT vs Brandix Mauritius Holdings Ltd., which upheld the invalidity of communications lacking a DIN. The Tribunal concluded that the DRP orders in question were invalid due to non-compliance with the Circular, and any subsequent communication of the DIN was deemed superfluous.

As a result, the Tribunal quashed the DRP/AO orders for all the assessment years under appeal, rendering the remaining grounds raised by the assessee academic and not requiring adjudication.

Conclusion: All appeals filed by the assessee were allowed, and the DRP/AO orders were quashed due to non-compliance with the CBDT Circular No. 19/2019.

Order pronounced in the open court on this 9th day of November, 2023.

---