The Income Tax (IT) Department is considering filing an appeal in the Supreme Court against a Delhi High Court ruling that rendered any IT assessment order without a Document Identification Number (DIN) legally invalid. The Delhi HC, in April, upheld the 2019 Central Board of Direct Taxes (CBDT) circular, mandating DIN for issued documents. The circular stated that any communication lacking DIN would be considered invalid. The IT Department argued that the absence of DIN is a technical glitch, not an oversight affecting the validity of assessment proceedings. However, the HC deemed this argument “untenable,” citing the CBDT circular’s explicit language.

Legal Implications and Potential Appeal

The Delhi HC ruling has legal implications, rendering numerous previously issued orders legally invalid due to the absence of DIN. The IT Department is in the process of finalizing its appeal to the Supreme Court, seeking expert opinions before proceeding.

CBDT Circular Binding and Jurisdictional Error

Legal experts note that the Delhi HC ruling establishes two key positions: CBDT circulars are binding and mandatory, and non-compliance with CBDT circulars constitutes a jurisdictional error. The court rejected the notion that such errors could be rectified under Section 292B of the IT Act.

Potential Ramifications on Time-Bound Notices

The ruling has led to an influx of writs from taxpayers challenging assessments where DIN was missing. The IT Department may contest the High Court’s decision, particularly concerning time-barred notices/orders, where applying DIN retroactively could pose challenges.