Introduction

In the case of Pratap Singh Yadav vs. DCIT, Central Circle-7 Delhi, Delhi, adjudicated by the Income Tax Appellate Tribunal (ITAT) on May 30, 2023, a significant legal principle was reaffirmed concerning the procedural compliance required for issuing assessment orders. This case revolves around the mandatory inclusion of a Document Identification Number (DIN) in assessment orders as stipulated by the Central Board of Direct Taxes (CBDT) Circular No.19/2019. Pratap Singh Yadav, a resident individual and the appellant, contested the validity of an assessment order issued by the Deputy Commissioner of Income Tax (DCIT) that lacked the requisite DIN, thereby challenging its legality under the specified CBDT circular.

Summary of the Judgment

The appellant, Pratap Singh Yadav, filed an appeal against the assessment order dated June 21, 2022, for the assessment year 2016-17. The crux of the appeal was the absence of a DIN in the assessment order, which, as per CBDT Circular No.19/2019, is mandatory for any communication issued post-October 1, 2019. The Tribunal, after thorough examination, held that the assessment order was null and void due to non-compliance with the circular's provisions. Consequently, the ITAT quashed the impugned assessment order, thereby upholding the appellant’s contention.

Analysis

Precedents Cited

The appellant’s counsel referenced several precedents to substantiate the argument that the absence of DIN renders the assessment order invalid:

• M/s. Brandix Mauritius Holdings Ovs. v. DCIT, 2022(11)TMI 34 (ITAT Delhi)
• CIT v. Brandix Mauritius Holdings Ltd., 2023(4)TMI 579 (Delhi High Court)
• Dilip Kothari v. PCIT, 2022(11) TMI 33 (ITAT Bangalore)
• Sh. H.K. Suresh v. PCIT, 2022(12) TMI 744 (ITAT Bangalore)
• Tata Medical Centre Trust v. CIT, 2022(7) TMI 1334 (ITAT Kolkata)

These cases collectively emphasized the binding nature of CBDT circulars and the necessity of adhering to procedural mandates such as the inclusion of DIN. The Tribunal's reliance on these precedents underscored the judiciary’s stance on maintaining procedural rigor in tax assessments.

Legal Reasoning

The Tribunal meticulously analyzed CBDT Circular No.19/2019, which mandates:

• All tax-related communications issued post-October 1, 2019, must contain a computer-generated DIN.
• Exceptional circumstances may allow manual issuance without DIN, provided reasons are documented and prior approval is obtained from higher authorities.

In this case, the assessment order was issued manually on December 24, 2021, without a DIN and lacked any recorded reasons or approvals as required under the circular. The subsequent issuance of DIN on February 3, 2022, was deemed insufficient to rectify the initial non-compliance. The Tribunal concluded that the absence of DIN and the failure to document and approve the manual issuance rendered the assessment order invalid.

Impact

This judgment reinforces the imperative for income-tax authorities to comply strictly with procedural directives issued by the CBDT. Future assessment orders will necessitate meticulous adherence to DIN protocols, ensuring transparency and accountability. Non-compliance can lead to the nullification of assessment orders, thereby safeguarding taxpayers against arbitrary or procedurally flawed assessments.

Complex Concepts Simplified

Document Identification Number (DIN)

A DIN is a unique identifier assigned to each communication issued by the income-tax department. It facilitates an audit trail, ensuring that all notices, orders, and correspondences are traceable and verifiable within the tax administration system.

CBDT Circular No.19/2019

Issued on August 14, 2019, this circular mandates that all communications related to tax assessments, appeals, orders, and other procedural matters must include a DIN if issued post-October 1, 2019. It outlines exceptions where manual issuance without DIN is permissible, provided certain conditions are met, such as documenting reasons and obtaining necessary approvals.

Section 119 of the Income Tax Act, 1961

This section grants the CBDT the authority to issue circulars that provide guidelines and clarifications on the implementation of the Income Tax Act. Such circulars are binding on all subordinate officers and are instrumental in ensuring uniformity in tax administration.

Conclusion

The decision in Pratap Singh Yadav v. DCIT underscores the judiciary's commitment to enforcing procedural compliance within the tax administration framework. By invalidating an assessment order lacking the mandatory DIN, the Tribunal has reinforced the sanctity of CBDT directives, ensuring that tax assessments are conducted with transparency and accountability. This judgment serves as a pivotal reference for both taxpayers and tax authorities, emphasizing the non-negotiable nature of procedural mandates and the judiciary’s role in upholding statutory and administrative protocols.