TaxTMI 
TaxTMI 
2023 (8) TMI 1403
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the assesse has submitted that the assesse is an individual and senior citizen of 81 years. The assesse is a farmer and sold his agricultural land for total consideration of Rs. 1.25 crore. The AO passed assessment order u/s 147 r.w.section 144 on 24.12.2018 determining the income at Rs. 1.25 crore and demand of Rs. 51,34,800/- was raised. The ld. AR has pointed out that the assesse was never served with the assessment order dated 24.12.2018 passed by the AO and assessee came to know about the said order only when the AO has passed rectification order u/s 154 on 10.10.2019. He has further contended that the assesse requested the AO to supply the assessment order passed on 24.11.2018 but till date the assesse have not been given the assesemnt order passed by the AO. Further he has submitted that the impugned rectification order passed u/s 154 of the Act is invalid for want of Documents Identification No. (DIN). He has referred to the order passed u/s 154 and submitted that there is no DIN mentioned on the rectification order and the AO subsequently generated the DIN on 14.10.2019 which is placed at page no.9 of the paper book. Thus, the Ld. AR has submitted when the impugned ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otted and is duly quoted in the body of such communication. Any communication which is not inconformity with DIN shall be treated as invalid and shall be deemed to have never been issued. It is pertinent to note that this issue has been considered by this Tribunal in a series of decisions by the Hon'ble High Court of Delhi as well as Hon'ble Supreme Court as relied upon by the assesse. Delhi Benches of the Tribunal in case of Brandix Mauritius Holdings Ltd., vs DCIT (ITA No. 1542/Del/2020 dated 19.09.2022 has considered this issue in para 7 to 11 as under: "7. We have heard the rival submissions and perused the material on record. 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: Generation/Allotment/Quoting of Document Identification Number in Notice/Order/Summons/letter/ correspondence issued by the Income Tax Department - reg . With the launch of various e-governance initiatives, Income-tax Department is moving toward to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 para 3(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) or (iii) above shall have to be regularised within 15 working days of its issuance, by - i. uploading the manual communication on the System. ii. compulsorily generating the DIN on the System; iii. communicating the DIN so generated to the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ities for which gainful guidance is taken from the decision of Hon'ble Supreme Court in the case of CIT v. Hero Cycles (P.) Ltd. [1997] 94 Taxman 271/228 ITR 463 wherein it was held that circulars bind the ITO but will not bind the appellate authority or the Tribunal or the Court or even the assessee. 13.2 In the case of UCO Bank v. CIT [1999] 104 Taxman 547/237 ITR 889 (SC), Hon'ble Supreme Court while dealing with the legal status of such circulars, observed thus (page 896): "Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under section 119 of the Income-tax Act, which are binding on the authorities in the administration of the Act. Under section 119(2)(a) , however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forgo the advantage when required to wield it in a manner it considers just by relaxing the rigo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. Admittedly, the return was filed on 29th October, 2004 and the case was selected for scrutiny on 6th July, 2005. It may be pointed out that Mrs. Gutgutia was, in fact, reiterating the views taken by the learned Tribunal which we also quoted above. By any process of reasoning, it was not open for the learned Tribunal to come to a finding that the department acted within the four corners of Circulars No. 9 and 10 issued by CBDT. The circulars were evidently violated. The circulars are binding upon the department under section 119 of the I.T. Act. 8. Mrs. Gutgutia, learned Advocate submitted that the circulars are not meant for the purpose of permitting the unscrupulous assessees from evading tax. Even assuming, that to be so, it cannot be said that the department, which is State, can be permitted to selectively apply the standards set by themselves for their own conduct. If this type of deviation is permitted, the consequences will be that floodgate of corruption will be opened which it is not desirable to encourage. When the department has set down a standard for itself, the department is bound by that standard and cannot act with discrimination. In case, it does that, the act ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e CBDT circular as the order is not conformity with Para 2 and Para 3. Accordingly the TP adjustment made through an invalid order is also rendered invalid and deleted . 7. Thus, the Delhi Tribunal while deciding this issue has considered the CBDT Circular no.19 of 2019 along with exceptions provided in para 3 of the said circular. The said decision of the Tribunal has been upheld by the Hon'ble Delhi High Court reported in 293 taxmann 385 in para 4 to 21.11 as under: "4. The 2019 Circular also sets out certain circumstances in which exceptions can be made. These circumstances are categorically referred to in paragraph 3 of the 2019 Circular. For the sake of convenience, paragraph 3, in its entirety, is extracted hereafter: "3. In exceptional circumstances such as, - (i) when there are technical difficulties in generating/allotting/quoting the DIN and issuance 0f communication electronically; or (ii) when communication regarding enquiry, verification etc. is required to be issued by an income-tax authority, who is outside the office, for discharging his official duties; or (iii) when due to delay in PAN migration, PAN is lying with nonjurisdictional Assessing Officer; or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ithin seven (7) days from the date of its issuance. 7. As a matter of fact, paragraph 7 of 2019 Circular mandates alignment of all pending assessment proceedings, where notices were issued manually, prior to the issuance of the said circular, by having them uploaded in the system by the date given therein, i.e., 31.10.2019. 8. Therefore, any communication which is not in conformity with the provisions of paragraph 2 and 3 of the 2019 Circular is to be treated as invalid, as if it was never issued [See paragraph 4 of the 2019 Circular1 ]. 8.1 In a nutshell, communications referred to in the 2019 Circular would fall in the following slots: i. Those which do not fall in the exceptions carved out in paragraph 3(i) to (v) ii. Those which fall in the exceptions embedded in paragraph 3(i) to (v), but do not adhere to the regime set forth in the 2019 Circular. 8.2 Therefore, whenever communications are issued in the circumstances alluded to in paragraph 3(i) to (v), i.e., are issued manually without a DIN, they require to be backed by the approval of the Chief Commissioner/Director General. The manual communication is required to furnish the reference number and the date when t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 Mr Vohra also submits that the error is jurisdictional in nature and therefore, cannot be corrected by taking recourse to Section 292B of the Act. 11.2 In support of his plea that the 2019 Circular is binding on the revenue, Mr Vohra has relied on the following judgments: i. UCO Bank v. CIT, [1999] 237 ITR 889 (SC); ii. Ellerman Lines Ltd. v. CIT, [1971] 182 ITR 913 (SC); and iii. DCIT v. Sunita Finlease Ltd., [2011] 330 ITR 491 11.3 Furthermore, to back his contention that recourse cannot be taken to the provisions of Section 292B of the Act, reliance is placed on the following judgments: i. PCIT v. Maruti Suzuki India Ltd. v. CIT, ITA No. 475 of 2011 (Del); and ii. Spice Entertainment Ltd. v. CIT, ITA No. 475 of 2011 (Del). 12. We have heard learned counsel for the parties. The present appeal is preferred under Section 260A of the Act. The Court's mandate, thus, is to consider whether or not a substantial question of law arises for consideration. 12.1 As noted above, the impugned order has not been passed on merits. 13. The Tribunal has applied the plain provisions of the 2019 Circular, based on which, it has allowed the appeal preferred by the respondent/as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r in Ellerman Lines Ltd. v. CIT [(1979) 4 SCC 565] that circulars issued by the Central Board of Direct Taxes under Section 119 of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act. The question which arose in Navnitlal C. Javeri case [AIR 1965 SC 1375 : (1965) 1 SCR 909 : 56 ITR 198] was in regard to the constitutional validity of Sections 2(6-A)(e) and 12(1-B) which were introduced in the Indian Income Tax Act, 1922 by the Finance Act, 1955 with effect from April 1, 1955. These two sections provided that any payment made by a closely held company to its shareholders by way of advance or loan to the extent to which the company possesses accumulated profits shall be treated as dividend taxable under the Act and this would include any loan or advance made in any previous year relevant to any assessment year prior to Assessment Year 195556, if such loan or advance remained outstanding on the first day of the previous year relevant to Assessment Year 1955-56. The constitutional validity of these two sections was assailed on the ground that they imposed unreasonable restrictions on the fundamental ri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eld that the circular was binding on the Income Tax Officer." The two circulars of the Central Board of Direct Taxes referred to above must therefore be held to be binding on the Revenue in the administration or implementation of sub-section (2) and this sub-section must be read as applicable only to cases where there is understatement of the consideration in respect of the transfer." [Emphasis is ours] 17.3 Also see the following observations of a coordinate bench in Back Office IT Solutions Pvt. Ltd. v. Union of India, 2021 SCC OnLine Del 2742, in the context of the impact of circulars issued by the revenue: "24....In this context, tax administrators have to bear in mind the wellestablished dicta that circulars issued by the statutory authorities are binding on them, although, they cannot dictate the manner in which assessment has to be carried out in a particular case. A Circular cannot be side-stepped causing prejudice to the assessee by bringing to naught the object for which it is issued. [See: K.P.Varghese vs. Income-tax Officer1, [1981] 7 Taxman 13 (SC); Also see: UCO Bank, Calcutta v. Commissioner of Income Tax, W.B., (1999) 4 SCC 599]." 18. The argument advanced....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion in respect of implementation of DIN system by all the states; c. Issue a writ of mandamus or any other appropriate writ, order or direction to the Central Government/CBIC to introduce centralised DIN for the entire country; d. pass such further order(s) as may be deemed fit and proper in facts and circumstances of the present case, in the interest of justice." 6. It cannot be disputed that implementing the system for electronic (digital) generation of a Document Identification Number (DIN) for all communications sent by the State Tax Officers to taxpayers and other concerned persons would be in the larger public interest and enhance good governance. It will bring in transparency and accountability in the indirect tax administration, which are so vital to efficient governance. Even the Central Government has also taken a decision and as such implemented the DIN system of Central Board of Direct Taxes and on and from 01.10.2019, as every CBDT communication will have to have a Document Identification Number (DIN). But, as on today, only two States, namely, the States of Karnataka and Kerala have implemented the system for electronic (digital) generation of a DIN in the indi....