Validity of Orders issued without DIN: Income Tax Dept set to move SC against HC Rulings

In a significant legal development, the Income Tax Department is gearing up to appeal a recent Delhi High Court ruling that deemed Income Tax assessment orders without a Document Identification Number (DIN) as invalid. This move comes after the Delhi High Court upheld the provisions outlined in a crucial 2019 Central Board of Direct Taxes (CBDT) circular, making DIN mandatory for all issued documents. The CBDT circular, dated August 14, 2019, clearly states that any communication lacking a DIN is considered invalid and is presumed to have never been issued.

While the Income Tax Department contends that the absence of DIN is a technical glitch often caused by technological issues, the High Court’s ruling renders numerous past orders legally void. Read More: Delhi HC Set Aside Income Tax Transfer Orders Passed for Mere Administrative Convenience & Coordinated Investigation: Mandates Speaking Order with Proper Reasons & DIN The Income Tax Department is actively considering filing an appeal with the Supreme Court, and the appeal process is currently in its final stages, with expert opinions being sought.

The Department argued in the Delhi High Court that failing to generate and issue a DIN should be viewed as a mistake or, at most, a correctable fault under Section 292B of the IT Act, which should not nullify the assessment processes. Read also: Assessment Order for Addition on account of unexplained money u/s 69A of Income Tax Act not followed by mandate DIN is invalid: ITAT However, the High Court rejected this argument, emphasizing that the reliance on Section 292B is “untenable” in light of the language used in the CBDT 2019 circular.

It is pertinent to note that CBDT circulars are binding and mandatory, and any deviation from their methodology is impermissible. Additionally, the court asserted that non-compliance with the CBDT circular constitutes a jurisdictional error, not rectifiable under Section 292B of the Income Tax Act. This ruling has led taxpayers to flood the courts with writs challenging assessments lacking a DIN. In response, the Income Tax Department is contemplating challenging the High Court’s order, particularly concerning time-barring notices or orders where applying a DIN retroactively to validate such an order may pose a challenge.

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