Income Tax: Supreme Court Stays Delhi High Court's Stance On DIN-Less Assessments

In what could be a significant development pertaining to income tax assessments, the Supreme Court has granted a stay on a Delhi High Court judgement, which said that any assessment without a Document Identification Number will be non-existent in law.

If an assessment is issued without a DIN and if it is held non-existent because of this fact, the top court said that a vacuum will build up, which might have serious consequences.

The court said that such an assessment could be an ‘irregularity’ but not an ‘illegality’.

This observation by the court may spark debate. However, considering that this is an interim order and not a final order, one should not read too much in between the lines, Amit Singhania, partner at Shardul Amarchand Mangaldas, told NDTV Profit.

According to S. Vasudevan, partner at Lakshmikumaran & Sridharan, the Delhi high court judgement stood on sound footing, as the circular issued by the CBDT was binding on the income-tax authorities, and non-compliance thereof renders the proceedings invalid.

The stay does not affect the precedence value of the high court judgement and can still be relied upon by the taxpayers, Vasudevan said.

The entire controversy behind a DIN-less communication by the revenue department dates back to a 2019 circular.

The circular, in clear terms, mandated that no communication shall be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigations, etc. to any person on or after Oct. 1, 2019, unless a computer-generated DIN is allotted.

The purpose of allocating a DIN to such communications was to maintain a proper audit trail.

The circular also issued certain circumstances under which exceptions could be made. These include technical difficulties in generating a DIN, issues pertaining to PAN migration, and the like.

Even then, it was clearly stated that any irregularity in issuing a DIN must be dealt with by the authorities within a stipulated time.

In essence, the circular said that any communication without a DIN will be held non-est in law.

In 2023, the Delhi High Court was faced with a case pertaining to an assessment order passed without a DIN. It was contested by the revenue department that the failure to allocate DIN was a mere mistake.

Since it was a mistake, the department contended that the assessment proceedings should not be invalidated and that this omission can be cured under the Income Tax Act.

However, the high court was not inclined to accept this line of reasoning. The circular’s phraseology makes it clear that any communication without DIN can have no standing in law, it said.