Madras High Court
Commissioner Of Income Tax vs M/S.Laserwords Us Inc on 10 June, 2025
T.C.A.Nos.46 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 10.06.2025
CORAM
THE HONOURABLE MR.K.R.SHRIRAM, CHIEF JUSTICE
AND
THE HONOURABLE MR.JUSTICE SUNDER MOHAN
T.C.A.No.46 of 2025
and CMP Nos.5208 and 5211 of 2025
Commissioner of Income Tax,
International Taxation,
Chennai-600034. … Appellant
Vs
M/s.Laserwords US Inc.,
C/o. SPI Techonologies India Pvt Ltd,
Gothi Industirial Estate,
RS No.415 and 416, Vazhuduvur Road,
Kurumbapet Revenue Village,
Puducherry - 605 009
[PAN: AABCL 8781F] … Respondent
Prayer: Appeal filed under Section 260A of the Income Tax Act, 1961
against the order of Income Tax Appellate Tribunal, “D” Bench, Chennai,
dated 22.12.2023 passed in IT (TP) A.No.44/CHNY/2021 for the AY 2015-
16.
For Appellant : Mr.Karthik Ranganathan
Sr. Standing Counsel
For Respondent : Mr.N.V.Balaji
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T.C.A.Nos.46 of 2025
JUDGMENT
(Delivered by SUNDER MOHAN, J)
By consent, the captioned Tax Case Appeal is taken up for final
hearing and disposed of at the admission stage itself.
2. Respondent/assessee aggrieved by the final assessment order
passed under Section 143 (3) r/w Section 144C (13) r/w Section 254 of the
Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], for the
assessment year 2015-16 filed an appeal in IT (TP) A.No.44/CHNY/2021,
before the Income Tax Appellate Tribunal [hereinafter referred to as
‘ITAT’].
3. ITAT by impugned order allowed the appeal holding that the
direction issued by the Dispute Resolution Panel [hereinafter referred to as
'DRP'] under Section 144C (5) of the Act did not contain a Document
Identification Number [hereinafter referred to as 'DIN'] as mandated by the
Central Board of Direct Taxes [hereinafter referred to as ‘CBDT’] by its
Circular No.19/2019 [F.No.225/95/2019-ITA II] dated 14.08.2019
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[hereinafter referred to as 'Circular']; that the subsequent communication
intimating the DIN for DRP proceedings did not satisfy the conditions
prescribed in paragraph No.3 of the circular; and that therefore, the
directions are invalid in law and as a sequitur, the assessment order which
was impugned before ITAT is liable to be quashed. In the instant case, the
assessment order also did not contain a DIN. Aggrieved by the said order
passed in common along with the challenges made by other assessees
raising the same points, appellant is before us.
4. Appellant in the grounds of appeal has proposed the following
substantial questions of law.
“1. Whether on the facts and circumstances of the
case the Income Tax Appellate Tribunal is correct in
holding that that department has not complied with the
CBDT Circular No.19/2019 dated 14.08.2019 even when
the manual order was communicated with DIN and in
addition to that order was also communicated by e-portal
and email with intimation letter and that also had DIN and
the information of the DIN of the assessment order, all
these were done within 15 days as mandated in the said
Circular.
2. Whether on the facts and circumstances of the
case, the Ld. Income Tax Appellate Tribunal had failed to
consider that electronic quoting of DIN is only a procedural
issue and the fact that DIN is issued only to keep track of
the proceedings for audit trial of the department and to
ensure genuineness of the orders passed and that non-
mentioning of the DIN in the DRP order electronically
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which was otherwise generated immediately and informed
to the assessee is sufficient compliance of the CBDT
Circular No.19/2019 dated 14.08.2019.
3. Whether the Ld. Income Tax Appellate Tribunal
is right in not appreciating the fact that the impugned final
assessment order had electronically generated valid DIN
which order alone is challengable before the ITAT and that
the directions of the DRP merged with the final assessment
orders serves only as a guidance to the Assessing Officers to
pass the final assessment orders.”
5. Mr.Karthik Ranganathan, learned counsel for appellant/revenue,
submitted that DRP proceedings had a valid DIN and was also subsequently
communicated to assessee by another communication and therefore, the
requirement under the circular has been complied with; and that in any
case, assessee had not challenged the directions issued by DRP and
therefore, the impugned assessment order ought not to have been quashed.
6. Mr. Balaji, learned counsel for respondent/assessee submitted that
apart from the fact that a DIN was not generated electronically for DRP
proceedings, the subsequent communication does not satisfy the
requirement in paragraph No.3 of the circular, i.e., to state the reasons in
the prescribed format for not generating the DIN; that in the instant case,
the assessment order also does not contain a DIN; and that therefore, the
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impugned order by ITAT does not call for any interference.
7. It is not in dispute that the assessment order which was challenged
before ITAT was passed pursuant to the directions of DRP. The circular
issued by the Director of CBDT reads as follows:
“CIRCULAR NO.19/2019 (F. NO.225/95/2019-ITA.II], DATED
14-8-2019
Subject: Generation / Allotment / quoting of Document
Identification Number in Notice / Order / Summons / letter /
correspondence issued by the Income-tax Department – reg.
With the launch of various e-governance Initiatives,
Income tax Department is moving toward total computerization
of its work. This has led to a significant improvement in delivery
of services and has also brought greater transparency in the
functioning of the tax-administration Presently, almost all notices
and orders are being generated electronically on the Income Tax
Business Application (ITBA) platform. However, it has been
brought to the notice of the Central Board of Direct Taxes (the
Board) that there have been some instances in which the notice.
order, summons, letter and any correspondence (hereinafter
referred to as "communication" were found to have been issued
manually, without maintaining a proper audit trail of such
communication.
2. In order to prevent such instances and to maintain
proper audit trail of all communication, the Board in exercise of
power under section 119 of the income-tax Act, 1961
(hereinafter referred to as "the Act"), has decided that no
communication shall be issued by any income-tax authority
relating to assessment, appeals, orders, statutory or otherwise,
exemptions, enquiry. investigation, verification of information,
penalty, prosecution, rectification, approval etc. to the assessee
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or any other person, on or after the 1st day of October, 2019
unless a computer- generated Document Identification Number
(DIN) has been allotted and is duly quoted in the body of such
communication.
3. In exceptional circumstances such as,-
(i) when there are technical difficulties in
generating/allotting/ quoting the DIN and issuance of
communication electronically; or
(ii) when communication regarding enquiry, verification
etc. is required to be issued by an income-tax authority, who is
outside the office, for discharging his official duties; or
(iii) when due to delay in PAN migration. PAN is lying
with non-jurisdictional Assessing Officer; or
(iv) when PAN of assessee is not available and where a
proceeding under the Act (other than verification under section
131 or section 133 of the Act) is sought to be initiated; or
(v) when the functionality to issue communication is not
available in the system,
the communication may be issued manually but only after
recording reasons in writing in the file and with prior written
approval of the Chief Commissioner/ Director General of income-
tax. In cases where manual communication is required to be
issued due to delay in PAN migration, the proposal seeking
approval for issuance of manual communication shall include the
reason for delay in PAN migration. The communication issued
under aforesaid circumstances shall state the fact that the
communication is issued manually without a DIN and the date of
obtaining of the written approval of the Chief Commissioner/
Director General of Income-tax for issue of manual
communication in the following format-
"....... This communication issues manually without a DIN
on account of reason/reasons given in
para3(i)/3(ii)/3(iii)/3(iv)/ 3(v) of the CBDT Circular No ....
dated (strike off those which are not applicable) and with the
approval of the Chief Commissioner/Director General of Income
Tax vide number .... dated ....”
4. Any communication which is not in conformity with
Para-2 and Para-3 above, shall be treated as invalid and shall be
deemed to have never been issued.
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5. The communication issued manually in the three
situations specified in para 3- (i), (ii) or (iii) above shall have to
be regularised within 15 working days of its issuance, by-
i. uploading the manual communication on the System.
ii. compulsorily generating the DIN on the System;
iii. communicating the DIN so generated to the
assessee/any other person as per electronically generated pro-
forma available on the System.
6. An intimation of issuance of manual communication
for the reasons mentioned in para 3(v) shall be sent to the
Principal Director General of Income-tax (Systems) within seven
days from the date of its issuance.
7. Further, in all pending assessment proceedings, where
notices were issued manually, prior to issuance of this Circular,
the Income-tax authorities shall identify such cases and shall
upload the notices in these cases on the Systems by 31th
October, 2019.”
8. It is well settled that circulars issued by CBDT in exercise of its
powers under Section 119 of the Act are binding on the revenue. The
consequences of not following the directions issued in the circular are also
provided in the circular.
9. Paragraph No.4 of the circular extracted above would make it clear
that any communication which is not in conformity with paragraph Nos.2
and 3 of the circular shall be treated as invalid and shall be deemed to have
never been issued.
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10. Paragraph No.3 of the circular provides for exceptional
circumstances where the mandatory requirement may not be adhered to but
requires that if an order/communication is issued without a DIN, it could be
done after recording reasons in writing in the file and with prior written
approval of the Chief Commissioner / Director General of Income Tax.
Paragraph No.3 also states that if DIN is not generated and quoted in the
body of the communication, then reasons for not generating and quoting
DIN should be mentioned in a specific format set out in paragraph No.3 of
the circular, which is extracted supra.
11. From the third question of law raised by appellant, it could be
seen that their stand is that even assuming that the proceedings of DRP did
not contain a valid DIN, it would not render the DRP directions invalid. It is
their case, that the proceedings of the DRP is not an order of an income tax
authority and therefore, the circular requiring the generation of DIN would
not be applicable to DRP proceedings. This submission cannot hold water.
12. Firstly, on facts, it is the case of appellant that there was a DIN
generated and it was written in hand in the proceedings of DRP and
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subsequently, communicated to assessee on the same day, i.e., on
12.02.2021. Therefore, appellant concedes that DIN has to be generated for
DRP proceedings.
13. Secondly, the issue is no longer res integra. A Division Bench of
Bombay High Court in Ashok Commercial Enterprises v. Assistant
Commissioner of Income Taxation1 in which one of us [the Hon'ble Chief
Justice] was a member, held as follows:
“18 (b)...
19. The object and purpose of the issuance of the 2019 Circular, as
indicated hereinabove, inter alia, was to create an audit trail. Therefore, the
communication relating to assessments, appeals, orders, etcetera which find
mention in paragraph 2 of the 2019 Circular, albeit without DIN, can have
no standing in law, having regard to the provisions of paragraph 4 of the
2019 Circular.
(c) During the course of hearing, Mr. Suresh Kumar produced an
intimation letter dated 13th October 2021 stating that the order dated 28th
September 2021 under Section 153C of the Act has a DIN, which is set out
therein. Even if this is held to be in compliance with paragraph 5 of the
Circular, which deals with regularization of communications without DIN,
this can only seek to regularize the failure to generate a DIN, but yet the
requirements of paragraph 3 of the Circular will still remain contravened and
consequently, the order dated 28th September 2021 ought to be treated as
invalid and never issued;
(d) The said Circular also applies to the satisfaction note dated 13th
July 2021 issued by respondent no.1. The satisfaction note will fall within
the scope of paragraph 2 of the Circular as a communication of the specified
1 [2023] 154 taxmann.com 144 (Bombay)
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type issued to any person. In the case of the satisfaction note no
regularization dated 13th October 2021 has been issued;
(e) In view of the binding nature of Circular issued under Section 119
of the Act, and the peculiar facts and circumstances of the case, the
consequences of contravention of the Circular set out above, therefore, ought
to be given full effect to. The object of the said Circular is clear and
laudatory and intended to ensure that proper trail of all assessment and
other orders are maintained and further that any deviation therefrom can
only be undertaken after prior written approval of the higher authorities
under the Act. Therefore, the satisfaction note dated 13 th July 2021 and the
impugned order of assessment dated 28th September 2021 ought to be
treated as invalid and deemed never to have been issued;
(f) On this ground, rule ought to be made absolute in the following
petitions :
A.Y. 2011-2012 - WP No.2593 of 2021
A.Y. 2012-2013 - WP No.2598 of 2021
A.Y. 2013-2014 - WP No.2847 of 2021
A.Y. 2014-2015 - WP No.2597 of 2021
A.Y. 2015-2016 - WP No.2594 of 2021
A.Y. 2016-2017 - WP No.2588 of 2021
A.Y. 2017-2018 - WP No.2595 of 2021
A.Y. 2018-2019 - WP No.2625 of 2021
A.Y. 2019-2020 - WP No.2696 of 2021”
14. Thus, even a satisfaction note according to the Division Bench
would fall within the scope of paragraph No.2 of the circular and therefore,
in our view, there cannot be any doubt that the directions of the DRP which
consists of a collegium of three Income Tax Commissioners also would fall
within the scope of paragraph No.2 of the circular.
15. Apart from the fact that DRP proceedings did not contain a valid
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DIN and is invalid for the reasons stated above, we find that the assessment
order also in this case does not contain a DIN. There is no explanation
offered by appellant for not generating the DIN in the assessment order.
Therefore, the assessment order is invalid for both the reasons and we find
no merit in the above appeal. The substantial questions of law are
answered accordingly.
16. As a result, the Tax Case Appeal is dismissed. There shall be no
order as to costs. Consequently, interim applications stand closed.
(K.R.SHRIRAM, C.J.) (SUNDER MOHAN, J.)
10.06.2025
Index: Yes
Neutral Citation : Yes
ars
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THE HON'BLE CHIEF JUSTICE
AND
SUNDER MOHAN, J.
ars
To
1. The Income Tax Appellate Tribunal,
“D” Bench, Chennai.
2. The Joint Commissioner of Income Tax (OSD) & Secretary,
Dispute Resolution Panel-2,
Bengaluru.
3. The Assistant Commissioner of Income Tax,
International Taxation Circle 1(2), Chennai.
10.06.2025
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