The Hon’ble Bombay High Court, in the case of Sanjay Nathalal Shah v. Assistant Commissioner of Income Tax, Central Circle 5(2) & Ors. (Writ Petition (L) No. 19240 of 2025, decided on 8 January 2026), has once again reinforced the mandatory nature of CBDT Circular No. 19/2019 by holding that an approval for special audit issued without a Document Identification Number (DIN) is invalid and non-est in law.
The petitioner challenged an order passed under Section 142(2A) of the Income-tax Act, 1961, whereby the Assessing Officer directed a special audit of the petitioner’s accounts for Assessment Year 2023–24, along with the consequential special audit report.
While multiple grounds were raised, the principal contention was jurisdictional in nature, namely that the mandatory prior approval of the Principal Commissioner of Income Tax, which formed the very foundation of the special audit order, did not bear a DIN as required under CBDT Circular No. 19/2019 dated 14 August 2019.
It was argued on behalf of the petitioner that the Circular expressly mandates that no communication, including approvals, shall be issued without a computer-generated DIN on or after 1 October 2019.
It was further contended that paragraph 4 of the Circular unequivocally provides that any communication issued in violation of this requirement shall be treated as invalid and deemed never to have been issued. Since the approval dated 6 February 2025 lacked a DIN and did not fall within any of the exceptional circumstances carved out under the Circular, the entire special audit proceedings were asserted to be void ab initio.
Reliance was placed on a consistent line of judicial precedents, including Ashok Commercial Enterprises v. ACIT, Hardik Deepak Salot v. ACIT, Siemens Limited v. DCIT, and CIT v. Sutherland Global Services Inc.
On the other hand, the Income Tax Department contended that the approval was merely an internal document and did not amount to a “communication” requiring a DIN. It was further submitted that the special audit order itself carried a valid DIN, which constituted sufficient compliance with the Circular.
The Revenue also relied on the decision of the Gujarat HC in Rameshkumar Tulsidas Kaneriya v. ACIT, wherein it was held that internal satisfaction notes do not require DIN.
The Bombay High Court decisively rejected the contentions of the Revenue. The Court held that an approval under Section 142(2A) is not a mere internal note but a formal jurisdictional prerequisite, and CBDT Circular No. 19/2019 specifically includes “approval” within its scope.
The absence of a DIN on such approval was held not to be a procedural irregularity curable under Section 292B of the Act, but a fatal defect rendering the approval invalid.
The Court further held that since the very basis for directing the special audit was invalid, the special audit order and the consequential audit report could not survive.
The Gujarat High Court ruling relied upon by the Revenue was distinguished on the ground that the Bombay High Court was bound by its own earlier decisions, which clearly hold that even internal communications fall within the ambit of the Circular. The Court also reiterated that a stay granted by the Supreme Court does not obliterate the precedential value of a High Court judgment.
In conclusion, the Bombay High Court quashed and set aside the order directing a special audit under Section 142(2A) of the Act, as well as the consequential special audit report.
This ruling reaffirms that strict compliance with CBDT Circular No. 19/2019 is non-negotiable, and that the DIN requirement is not a mere technicality but goes to the root of jurisdiction. The judgment strengthens procedural safeguards for taxpayers and underscores that transparency and accountability mechanisms introduced by the CBDT cannot be diluted under the guise of internal administrative processes.
To download official order, click here.
To download CBDT Circular No. 19/2019, click here.
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