ITAT Quashes Section 201Order for Non-Compliance with Mandatory DIN Requirement:

Godrej Consumer Products Limited filed an appeal before the Tribunal against the order dated March 19, 2025, passed by the CIT(A), Kolkata, arising from an order under Section 201(1) and 201(1A) of the Income Tax Act, 1961.

The proceedings originated from a survey conducted at the assessee’s premises on January 16, 2024. The AO alleged that the company had failed to deduct tax at source under Section 194C on freight payments made to various transporters and had not established their eligibility for exemption under Section 194C(6). The AO determined a total demand of Rs. 1,16,01,620, comprising the alleged TDS default on transporter payments, interest under Section 201(1A), and a further liability relating to non-deduction of TDS reported in Clause 21(b)(ii)(A) of the Tax Audit Report.

Before the CIT(A), the assessee challenged the validity of the order, arguing that it had been issued without a validly quoted DIN in violation of CBDT Circular No. 19/2019 dated August 14, 2019. The CIT(A) rejected this objection as hyper-technical and dismissed the assessee’s challenge on the issue.

Aggrieved, the assessee approached the Tribunal, primarily contesting the validity of the order on the ground of non-compliance with the mandatory DIN requirement. The Tribunal noted that CBDT Circular No. 19/2019 mandates that communications issued by Income Tax authorities on or after October 1, 2019, must carry a computer-generated DIN, subject to the specified exceptional circumstances and procedural safeguards. The Tribunal also observed that the statutory scheme distinguishes an order under Section 201 from an assessment order. Consequently, the applicability of Section 292BA had to be determined by reference to its own language and statutory framework rather than by importing judicial observations made in a different context.

The Tribunal held that Section 292BA could not be invoked to validate the order passed under Section 201(1)/(1A) despite the non-compliance with the DIN requirement. Since the order had been issued without quoting a DIN and the requirements of CBDT Circular No. 19/2019 had not been complied with, the Tribunal held that the order was invalid under the consequences prescribed by the Circular. Accordingly, the Tribunal set aside the order passed by the CIT(A) and quashed the AO’s order under Section 201 on the jurisdictional ground of non-compliance with the mandatory DIN requirement.