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of <h1>Special audit approval u/s 142(2A) lacking required DIN held invalid, resulting special-audit order void for assessee</h1> Dominant issue: whether the approval for a special audit under s.142(2A) was valid despite lacking a Document Identification Number (DIN) as required by ... Validity of the special audit u/s 142(2A) - one of the primary submissions of the Petitioner is that the entire proceeding for a special audit is void ab initio as the jurisdictional pre-condition of obtaining a valid approval from the Principal Commissioner of Income Tax (Central)-3, Mumbai, has not been met - Petitioner contends that the copy of the approval does not bear a Document Identification Number (DIN). HELD THAT:- In the present case, the approval dated 06.02.2025, which forms the very basis of the impugned Order directing a special audit, does not have a DIN quoted on its face. It also does not contain any reference to exceptional circumstances or the prior approval required for manual issuance as mandated by Paragraph 3 of the Circular. As a result, the approval is clearly in violation of Circular No. 19 of 2019. The binding nature of this Circular has been repeatedly affirmed by this Court. In Ashok Commercial Enterprises [2023 (9) TMI 335 - BOMBAY HIGH COURT] this Court held that even a satisfaction note, which is an internal document, falls within the scope of the Circular and is invalid if issued without a DIN. An “approval” under Section 142(2A) is a formal jurisdictional document and stands on a much higher footing, more so when Circular No. 19/2019 itself specifies “approval” as one of the specified communications. Similarly, in Hardik Deepak Salot [2024 (2) TMI 1537 - BOMBAY HIGH COURT] this Court quashed an order because the underlying sanction letter lacked a DIN, holding that if the sanction is not valid, the consequential order cannot survive. The “approval” in the present case is analogous to a “sanction” as it is a jurisdictional prerequisite. Applying the clear mandate of the Circular and the settled judicial position, the approval dated 06.02.2025 is invalid and non-est in law. Since, a valid prior approval is a mandatory condition for directing a special audit under Section 142(2A), the impugned Order dated 10.02.2025, which is based on this invalid approval, is without jurisdiction. Decided in favour of assessee. Issues: Whether the approval dated 06.02.2025 (preceding the Order dated 10.02.2025) issued without a computer-generated Document Identification Number (DIN) in contravention of CBDT Circular No.19/2019 renders the approval invalid and consequently vitiates the Order directing a special audit under Section 142(2A) of the Income-tax Act, 1961, and the consequential special audit report dated 06.06.2025.Analysis: The Court examined Circular No.19/2019 issued under Section 119 which mandates that specified communications, including an 'approval', shall not be issued on or after 01.10.2019 unless a computer-generated DIN is allotted and quoted in the body of the communication; paragraph 3 provides narrowly defined exceptional circumstances for manual communications with recorded reasons and prior approvals; paragraph 4 prescribes that non-compliant communications shall be treated as invalid and deemed never to have been issued. The Court applied its earlier decisions which treat internal communications and approvals as falling within the scope of the Circular and held that failure to quote a DIN is not a mere procedural irregularity but a fatal defect. The approval dated 06.02.2025 lacked a DIN and gave no indication of compliance with paragraph 3, thereby contravening the Circular. A valid prior approval is a mandatory jurisdictional precondition for directing a special audit under Section 142(2A); absence of such valid approval removes jurisdiction for the subsequent Order. The Court considered and distinguished contrary authority and noted that the Department had not carried the matter to the Supreme Court.Conclusion: The approval dated 06.02.2025 is invalid and deemed never to have been issued; consequently, the Order dated 10.02.2025 directing a special audit under Section 142(2A) and the consequential special audit report dated 06.06.2025 are quashed and set aside.
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