TaxTMI 
TaxTMI 
2023 (4) TMI 1235
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....n 26.03.2018 declaring NIL income as per the normal provisions of the Act and book profits of Rs.1,38,16,45,117 under section 115JB of the Act. The return was originally processed u/s.143(1) where the income under the normal provisions were assessed at Rs.77,37,83,380 and the income u/s.115JB was retained at the same as in the return of income. Subsequently the return was selected for scrutiny under CASS and the statutory notices are duly served on the assessee. Since the assessee had international transactions with its Associated Enterprise (AE) a reference was made to the Transfer Pricing Officer in order to determine the arm's length price of the international transactions. The TPO made a TP adjustment of Rs.7,90,77,518. The AO passed a draft assessment order date 30.09.2021 in which the AO retained the disallowances made u/s. 143(1) Rs.6,05,18,177 and besides the TP adjustment the AO further made a disallowance of Rs.70,87,66,411 towards depreciation on goodwill and also disallowed the unabsorbed depreciation of Rs.1,45,93,19,199. The assessed income as per the draft assessment order was Rs.2,30,76,81,305. Aggrieved the assessee filed its objections before the DRP. The DRP gave....
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....h is one of the requirements as per para 3 of the circular. It is the submission of the ld. AR therefore that as per para 4 of the Circular, any communication which is not in conformity with para 2 & 3 of the said Circular shall be treated as invalid. The ld. AR prayed that the order u/s. 143(3) r.w.s.144C(13) be quashed on this legal ground. 5. The ld. DR submitted that the AO has regularised the order u/s. 143(3) r.w.s.144C (13) issued without a DIN with a separate communication and the same should be considered as part of the order. The ld DR also submitted that as per Circular, DIN was mandated for maintaining proper audit trail of all communications and therefore the AO generating DIN in a separate intimation on is valid and need to be considered along with the order u/s. 143(3) r.w.s.144C(13). The ld DR further argued that the procedural lapse should of issuing an order without DIN cannot render the entire assessment proceedings invalid. 6. In rebuttal, the ld. AR submitted that as per para 2 of the Circular, the DIN allotted should be duly quoted in the body of such communication and not through a separate intimation. The ld AR also brought to our attention that the AO sen....
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.... the 2019 Circular, as extracted hereinabove, decidedly provides that any communication which is not in conformity with paragraph 2 and 3 shall be treated as invalid and shall be deemed to have 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 andAnr., (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....
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....rovisions by making it clear to all the companies and their shareholders that if the past loans were genuinely refunded to the companies they would not be taken into account under Section 12(1-B), " 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 absented: "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....
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.... required to consider is whether any substantial question of law arises for consideration, which, inter alia, would require the Court to examine whether the issue is debatable or if there is an alternate view possible. Given the language employed in the 2019 Circular, there is neither any scope for debate not is there 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. 22. Accordingly, the appeal filed by the appellant/revenue is closed." 8. We also notice that a similar view has been taken by the Bangalore Bench of the Tribunal in the case of Dilip Kothari (supra) and also by the Calcutta Bench of the Tribunal in the case of Tata Medical Centre Trust v. CIT(E) [2022] 140 taxmann.com 431. 9. Before proceeding further we will look at the contents of the CBDT circular No.19/2019 dated 14.08.2019 which is reproduced below - "CIRCULAR NO. 19/ 2019 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, dated the 14th August, 2019. Subject: Generati....
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....ng 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 manual communication shall include the reason for delay in PAN migration. The communication issued under aforesaid circumstances shall state the fact that the communication is issued manually without a DIN and the date of obtaining of the written approval of the Chief Commissioner/ Director General of Income-tax for issue of manual communication in the following format- " .. This communication issues manually without a DIN on account of reason/reasons given in para3(i)/3(ii)/3(iii)/3(iv)/3(v) of the CBDT Circular No ...dated (strike off those which are not applicable) and with the approval of the Chief Commissioner/Director General of Income Tax vide number .... dated .... 4. Any communication which is not in conformity with Para-2 and Para-3 above, shall be treated as invalid and shall be deemed to have never been issued. 5. The communication issued manually in the three situations specified in para 3- (i), (ii)....