The Kolkata Bench of the ITAT has quashed the revisionary order passed by the Income Tax Authority without quoting the Document Identification No. (DIN) in the said order, as required by the CBDT Circular No.19/2019, dated 14.08.2019.
The Bench, consisting of Mr. Sanjay Garg (Judicial Member) and Mr. Girish Agrawal (Accountant Member), held that since the order passed by the Income Tax Authority failed to mention the DIN in its body, therefore, the said order was "invalid and deemed to have never been issued", as provided under the said CBDT Circular.
The assessee- Tata Medical Centre Trust, is a charitable trust registered under Section 12AA of the Income Tax Act, 1961. The case of the assessee was selected for scrutiny and an assessment order was passed, determining the total income of the assessee as Nil. The Commissioner of Income Tax (Exemptions) (CIT(E)) initiated revisionary proceedings under Section 263 of the Income Tax Act proposing to revise the assessment order, and passed an order. Against the order passed by the CIT(E) under Section 263, the assessee filed an appeal before the ITAT.
The assessee Tata Medical Centre Trust submitted before the ITAT that the order passed by the CIT(E) under Section 263 did not contain any Document Identification No. (DIN), nor was any reason furnished for non-issuance of the DIN along with the said order. Thus, the assessee averred that the said order violated the CBDT Circular No.19/2019, dated 14.08.2019, which requires the revenue department to mandatorily quote DIN in all its communications. The assessee added that the objective of the said CBDT Circular is to maintain the audit trail which otherwise gets lost and that as per the said CBDT Circular, orders without a DIN are invalid and are deemed to have never been issued.
The revenue department averred that non-quoting of the DIN is a mere procedural irregularity which cannot render the order passed by the CIT(E) under Section 263 as invalid.
The revenue department added that there are certain exceptional circumstances mention in the said CBDT Circular No.19/2019 with respect to quoting of the DIN; and that there were certain technological and other difficulties faced by the revenue department in generating, allotting and quoting the DIN, which cannot make the lawful proceedings conducted and completed by the Income Tax Authorities as invalid.
The ITAT observed that the CBDT Circle No. 19/2009, dated 14.08.2019, provides that no communication shall be issued by any Income Tax Authority relating to assessment, appeals, orders, exemptions, penalty, prosecution, etc. to the assessee or any other person, on or after 01.10.2019, unless a computer-generated DIN has been allotted and is duly quoted in the body of such communication.
"From the perusal of above circular, we note that CBDT came out with this circular to mitigate the issues/instances where certain notices, orders, summons, letters and other correspondences which have been issued manually do not have proper audit trail of their communication despite various e-governance initiatives and computerization of its work. Therefore, in order to prevent such instances and to maintain proper audit trail of all the communications, CBDT directed that no communication shall be issued by any Income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person, on or after the 01.10.2019 unless a computer generated DIN has been allotted and is duly quoted in the body of such communication."
The ITAT further noted that certain exceptional circumstances were mentioned in the said Circular regarding non-quoting of the DIN as per which the communication may be issued by the revenue department manually without a DIN; however, the said fact, along with a written approval from the specified authorities, has to be stated in the body of the said communication.
Thus, the ITAT ruled that as per the said Circular, all the communications mentioned therein have to be either generated and issued electronically with a DIN, or in certain exceptional circumstances the communication may be issued manually without a DIN, provided the requisite conditions are satisfied. The ITAT added that failing this, such communication shall be treated as "invalid and shall be deemed to have never been issued", as mentioned in the said Circular.
The ITAT observed that the order passed under Section 263 of the Income Tax Act was issued manually and that it did not bear the signature of the authority that passed the order.
The ITAT further noted that there was no reference in the said order to the fact that the order was issued manually without a DIN, for which the written approval of the Chief Commissioner or the Director General of Income Tax was required to be obtained in terms of the said CBDT Circular.
Hence, the ITAT held that in view of the said CBDT Circular, such a lapse rendered the order as invalid and deemed to have never been issued.
The ITAT observed that the Calcutta High Court in the case of Amal Kumar Ghosh versus Assistant Commissioner of Income Tax (2014), ruling that the CBDT circulars are binding upon the revenue department under Section 119 of the Income Tax Act, had held that the revenue department, which is State, cannot be permitted to selectively apply the standards set by themselves for their own conduct. The Calcutta High Court had ruled that when the revenue department has set down a standard for itself, it is bound by that standard and that it cannot act with discrimination; and in case it violates the said standards, the act of the department is bound to be struck down under Article 14 of the Constitution.
Hence, the ITAT held that since the said order passed by the CIT(E) failed to mention the DIN in its body, and thereby failed to adhere to the CBDT Circular No. 19/2019, the said order passed by the CIT(E) was invalid and deemed to have never been issued.
The ITAT, thus allowed the appeal of the assessee.
Case Title: Tata Medical Centre Trust versus Commissioner of Income Tax, (Exemption)
Dated: 18.07.2022 (ITAT Kolkata)
Representative for the Appellant/Assessee: Mr. Akshay Ringasia, CA and Tarak Nath Jaiswal, Advocate
Representative for the Respondent/Revenue Department: Mr. Deb Kr. Sonowal, CIT, DR