IT Department Set to Challenge HC Ruling in Supreme Court Over Validity of Orders

Last updated: 05 December 2023

Income Tax Department Contemplates Supreme Court Appeal After Delhi HC Deems Assessments Without DIN Invalid

In a significant development, the Income Tax (IT) Department is poised to file an appeal in the Supreme Court against a ruling by the Delhi High Court, which declared that any IT assessment order issued without a Document Identification Number (DIN) holds no legal standing.

The Delhi High Court, in April, upheld the provisions outlined in a 2019 Circular by the Central Board of Direct Taxes (CBDT), making DIN mandatory for all issued documents. According to the CBDT circular dated August 14, 2019, any communication by an Income Tax Authority (ITA) lacking DIN shall be deemed invalid and treated as though it was never issued.


A government source noted, "At max, the non-generation of a DIN in the IT order is a technical glitch. However, with the Delhi HC ruling, several orders issued in the past are not legally valid."

The IT Department is currently in the process of finalizing the appeal, seeking expert opinions before filing. Prior to the Delhi High Court ruling, the IT Department argued that the failure to generate and allocate DIN is a mistake or a defect, covered under Section 292B of the IT Act, and should not invalidate assessment proceedings.

However, the High Court deemed this argument "untenable" in light of the language used in paragraph 4 of the CBDT 2019 circular. Legal experts affirm that the Delhi HC ruling emphasizes the binding nature of CBDT circulars and asserts that non-compliance with the circular constitutes a jurisdictional error that cannot be cured by resorting to Section 292B.

Amit Maheshwari, Partner-Tax at AKM Global, highlighted, "The Delhi HC ruling affirms two important legal positions, one that circulars issued by CBDT are absolutely binding and mandatory in nature, and secondly, the High Court has held that non-compliance of CBDT circular is a jurisdictional error and cannot be cured by resorting to Section 292B."

Saurrav Sood, Practice Leader - International Tax and Transfer Pricing at SW India, noted, "Taking advantage of this judgement, the courts have been flurried with various writs by the taxpayers, where such DIN is missing. The Department may be contemplating challenging the order of the High Court, as in the case of time-barring notices/orders, DIN cannot be applied later to validate such orders."

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