IT Dept May Appeal in the SC Against Delhi HC Ruling on Validity of Orders Without DIN

The Income Tax (IT) Department is considering filing an appeal in the Supreme Court (SC) against a decision given by the Delhi High Court, which declared that any IT assessment order passed without a Document Identification Number (DIN) holds no legal validity.

In April, the Delhi HC upheld the provisions of a 2019 notification released by the Central Board of Direct Taxes (CBDT), which made the use of DIN compulsory for all issued documents.

According to a CBDT circular dated August 14, 2019, any communication by an Income Tax Authority (ITA) not having a DIN is deemed invalid and is considered as if it was never issued.

Government sources state that the absence of a DIN in an IT order is merely a technical error at most. There have been instances where the DIN was inadvertently excluded from orders due to technical glitches. However, the Delhi HC decision has rendered several previously issued orders legally invalid.

The sources further added that the IT Department is contemplating filing an appeal in the Supreme Court. The process for filing the appeal is currently being finalized, and seeking experts’ opinions.

During the Delhi High Court proceedings, the IT Department argued that the failure to issue and assign a DIN is a mistake or, to a certain degree, a flaw that can be mended under Section 292B of the IT Act and should not render the assessment proceedings null and void.

However, the HC noted that depending on Section 292B of the Act is “untenable” in light of the phraseology used in paragraph 4 of the CBDT 2019 circular.

Amit Maheshwari, Partner-Tax at AKM Global, explained that the Delhi HC ruling substantiates two significant legal positions. Firstly, the CBDT-issued circulars carry a binding and obligatory nature, leaving no room for the tax department to stray from the prescribed procedure. Secondly, the High Court ruled that non-compliance with the CBDT circular is a jurisdictional mistake and cannot be rectified by invoking Section 292B.

Saurrav Sood, Practice Leader-International Tax and Transfer Pricing at SW India, noted that following the Delhi HC judgment, taxpayers have filed numerous writs in courts where the DIN is missing. The Department might challenge the High Court ruling, especially since it impacts time-barring notices/orders, later applying the DIN to validate such orders is not allowed.