Absence of DIN in granting statutory approval u/s 153D amounts to no approval – ITAT

In a recent judgment, ITAT has held that in the absence of Document Identification Number (DIN) mentioned in the approval memo, such statutory approval under section 153D is rendered a nonest approval in law.

Absence of DIN while granting statutory approval under section 153D would tantamount to no approval – ITAT

ABCAUS Case Law Citation:
ABCAUS 3851 (2024) (01) ITAT

Important Case Laws relied upon by parties:
Finesse International Design Pvt. Ltd. vs. DCIT [2023] 157 taxmann.com 271
NTPC vs. CIT 229 ITR 33 (SC)

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming passed by the Assessing Officer (AO) under Section 153A r.w.s 143(3) of the Income Tax Act, 1961 (the Act).

As per the grounds of appeal, the assessee has raised legal ground towards assumption of jurisdiction under section 153A of the Act. The assessee had also challenged the addition under section 69C r.w.s. 115BBE of the Act on merits.

The assessee had moved an application for admission of additional ground under Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963 contending that the approval u/s 153D of the Act was null, void and without jurisdiction as the same is in violation of CBDT Circular No.19/2019 requiring DIN therefore order of assessment u/s 153A of the Act read with section 143(3) of the Act deserved to be quashed as such.

The assessee adverted to additional ground raised with reference to CBDT Circular 19/2019 dated 14.08.209 casting mandatory obligations on the revenue authorities to place Document Identification Number (DIN) on all communication by way of orders (statutory or otherwise), approval etc. and submitted that in the light of plethora of judgments delivered on the controversy, the impugned assessment order passed in violation of CBDT circular are rendered non-est and invalid by operation of law.

The assessee contended that neither the communication by AO to Addl. CIT nor the approval by the Addl. CIT under s. 153D in response to requisition made by the AO had any reference to DIN number which is mandatory requirement of law in the light of sweeping landscape of CBDT circular.

The revenue has also not demonstrated as to whether the draft assessment order sent by AO for approval under section 153D bears any DIN either. In the absence of DIN mentioned in the approval memo, such statutory approval under section 153D is rendered a nonest approval in law. It goes without saying that assessment framed on the basis of such nonest approval is a nullity in the eyes of law.

Referring to the phraseology used in the CBDT Circular and placing reliance on catena of judicial pronouncements it was submitted that such statutory approval under section 153D without bearing the DIN is non-est in the eyes of law in view of strict interpretation of CBDT Circular provided by large numbers of judgments delivered by various High Courts and Co-ordinate Bench of Tribunal.

The assessee in particular relied upon the judgment of Co-ordinate Bench which addresses the identical issue. The Bench referring to several judgments of the different High Courts and Co-ordinate Benches held that absence of DIN while granting statutory approval under section 153D would tantamount to no approval in the eyes of law and the approval under section 153D is rendered non-est. The consequent assessment order passed under section 153A based on such non-est approval would be a nullity.

On the contrary, the Income Tax Department submitted that such lapse is only a procedure irregularity, if any which had caused no prejudice to the assessee requires to be viewed in a benign manner and such technical lapse would not vitiate the assessment order irreversibly.

The Tribunal observed that the issue is no longer res integra and has been examined in length by the Co-ordinate Bench which has referred to several judgments which underscores the mandatory nature of generation and mentioning of DIN in the body of communication. In consonance with view expressed by the Co-ordinate Bench the Tribunal opined that there was merit in the case made out by the assessee in the additional ground.

Accordingly, the additional ground was allowed and the assessment order framed under section 153A was set aside and cancelled in view of the legal infirmity of absence of DIN on the body of statutory approval granted under section 153D of the Act by the competent authority i.e. Addl. Commissioner of Income Tax.

In the result, appeal of the assessee is allowed.

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