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Delhi High Court (“HC”) in a recent case of CIT v. Brandix Mauritius Holdings Ltd. (ITA 163/Del/2023) has held that any communication including communication of assessment order not bearing a Document Identification Number (“DIN”) is non est in law.

HC referred to the CBDT Circular 19 of 2019 (“the Circular”) and held that there is no scope of debate or leeway for an alternate view and, hence, no question of law arises in the revenue’s appeal against Delhi Tribunal’s (“Del ITAT”) decision.

Facts:

∞ Final Assessment order was passed without quoting DIN.

∞ There was nothing on record to show that the same was on account of exceptional circumstances stated in Para 3 of the Circular.

∞ On appeal by the Assessee, Del ITAT treated the order as null and void.

∞ Del ITAT held that communication can be issued without DIN only under exceptional circumstances provided in the Circular and, that too, after obtaining necessary approval, provided the communication so issued indicates the reasons. In absence of the same, the communication shall be treated as invalid as per Para 4 of the Circular. 

Department’s contentions:

∞ The matter then travelled to the HC wherein the Department argued that the Circular only applies to the communications issued by the revenue and not to orders passed qua Assessee.

∞ The Department further contended that failure to generate/allocate DIN is, at best, a mistake or omission which can be corrected by taking recourse to Section 292B.

Assessees’ contentions:

The Assesses, inter alia, contended as under:

∞ The error is jurisdictional in nature and hence cannot be corrected by taking recourse to Section 292B. In support, reliance was placed on:

1. PCIT v. Maruti Suzuki India Ltd., ITA No. 475 of 2011 (Del); and
2. Spice Entertainment Ltd. v. CIT, ITA No. 475 of 2011 (Del).

∞ The Circular, being issued u/s 119, is binding on Revenue, as held in K.P. Varghese vs. ITO (4 SCC 173) (SC). 

HC’s ruling:

The key observations of the HC are summarised below:

∞ There is nothing on record to show that failure to allocate DIN arose out of the “exceptional circumstances” set forth in Para 3 of the Circular

∞ The object and purpose of the issuance of the Circular was to create an audit trail.

∞ The language of Para 4 of the Circular clearly puts communication relating to assessments, appeals, orders etc. in absence of DIN as ‘non est’, non-curable u/s 292B.

∞ CBDT Circulars are binding on revenue.

∞ No substantial question of law arises for consideration. 

Our Views:

• It is interesting to note that the HC has given a detailed explanation as to how the order becomes non est. Such detailed explanation was absent in the case of decision of Madras HC in Texmo Precision Castings UK Ltd.[1] , in which the HC held that this defect can be regularized as per Para 5 of the Circular by communicating DIN to the Assessee within 15 days without discussing the requirement of taking necessary approval and recording of reasons as per Para 3 of the Circular. Interestingly, Revenue did not rely on the said Madras HC decision in Brandix Mauritius (supra).
• Going forward, it will be interesting to note what view other High Courts take on the issue of DIN. However, till that time, for Assessee who do not fall under the jurisdiction of either Delhi or Madras HC, it could be argued that in the absence of the jurisdictional HC on the issue, view favorable to them should be adopted.
• Significantly, Brandix Mauritius (supra), emphasizes on the importance of DIN in bringing out transparency and reinstates that it is not a mere formality and sends a strong message to the Department to this effect.

The above article is contributed by – Krupa Gandhi, Partner and Ayushi Modani, Senior Manager

[1] [2022] 138 taxmann.com 566 (Mad HC)

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