Tax dept to move SC against HC ruling on validity of orders issued without DIN

The Income Tax Department is expected to file an appeal in the Supreme Court (SC) against a Delhi High Court (HC) ruling declaring that any Income Tax assessment order issued without a Document Identification Number (DIN) is invalid.

In April, the Delhi High Court upheld the provisions of a 2019 Central Board of Direct Taxes (CBDT) circular that made the Document Identification Number (DIN) essential for documents issued.

According to a CBDT circular dated August 14, 2019, any communication by any Income Tax Authority (ITA) without a DIN is invalid and is presumed to never have been issued.

According to a government source, at most, the absence of a DIN in the IT order is a technical glitch. There have been various cases where the DIN was not specified in the order due to technological issues. However, as a result of the Delhi High Court ruling, various orders issued in the past are no longer valid under law.

The Income Tax Department is considering filing an appeal with the Supreme Court. The appeal process is being finalised, and some expert opinions are being sought.

The IT Department argued before the Delhi High Court that failing to generate and issue DIN is a mistake or, at best, a fault (that can be remedied under Section 292B of the IT Act) that should not invalidate the assessment processes.

The High Court, however, noted that the claim that reliance on Section 292B of the Act is “untenable” in light of the phrasing adopted in paragraph 4 of the CBDT 2019 circular.

Amit Maheshwari, Partner-Tax, AKM Global, stated that the Delhi High Court ruling confirms two essential legal positions: first, that CBDT circulars are totally binding/ mandatory in nature, and the tax department cannot deviate from the methodology given by CBDT in the name of claiming an error or omission. Second, the High Court ruled that failure to comply with the CBDT circular is a jurisdictional error that cannot be remedied by using Section 292B.

Taking advantage of this Delhi HC judgement, taxpayers have bombarded the courts with different writs in cases where such a DIN is missing. It is to address such interpretation that the Department may consider challenging the High Court’s order, because in the event of time-barring notices/ orders, DIN cannot be applied subsequently to validate such an order.