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The Supreme Court on Wednesday stayed an order prescribing an assessment without DIN (Document Identification Number) as invalid. Earlier, Delhi High Court has ruled that DIN-less assessment has no standing in the law. Experts feel that SC ruling will have far-reaching consequence.
In an appeal filed by the Income Tax Department against ruling by the High Court in the matter of Brandix Mauritius Holdings, a division bench of Justices BV Nagarathna and Augustine George Masih remarked that not mentioning DIN in assessment orders may be an ‘irregularity’ but that does not make it an ‘illegality’. The matter will now be taken up on February 19.
Delhi HC’s order
Last year, the Delhi High Court upheld that Income Tax assessment order issued without DIN has no standing in law. In 2019, Central Board of Direct Taxes (CBDT) made DIN mandatory for documents issued. This order was given following the appeal filed by the Income Tax Department against a ruling by Income Tax Appellate Tribunal (ITAT). “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,” a division bench of Justices Rajiv Shakdher and Tara Vitasta Ganju had said.
CBDT, in its order dated August 14, 2019, said 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 1st day of October, 2019 unless a computer-generated DIN has been allotted and is duly quoted in the body of such communication.
The circular also gave exceptional situation in which communication can be issued manually. These include technical problem, absence of official, delay in PAN migration beside others. Even after issuing the communication manually, these need to be regularised within 15 days. The circular made it clear, the communication not in conformity with this circular “shall be treated as invalid and shall be deemed to have never been issued.”
Pragmatic view
Commenting on the Apex Court order, Amit Maheshwari, Tax Partner with AKM Global, said that top court has taken a pragmatic view of the issue that at most, not mentioning DIN can be a procedural irregularity, but it cannot be a basis for quashing the assessment order in itself. The moot question is whether once the CBDT by a binding circular has prescribed a set procedure and has also clarified that non-adherence of said procedure would lead to serious repercussions viz. assessment order being invalidated, to enhance the administrative efficiency and disregarding or diluting the said circular will create uncertainty not only for the taxpayers but also for the tax department itself.
“This might also give another chance to the tax department to make assessment to already closed matters adding more hassles to the taxpayers. It is important to note that it’s a stay by the apex court and the copy of judgment is still awaited, and it will be more interesting to see the fine print and the exact ruling in relation to such cases and the CBDT circular,” he said.
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