Improve Traders Pvt. Ltd., Bhubaneswar V. DCIT, Central Circle-2, Bhubaneswar

CO 17/CTK/2019

• Counselvise Citation: [2020] 108 COUNSELVISE.COM (IT) 9220 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-12-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 02-08-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Assessee Lawyers: M K AGARWALLA
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Business expenditure; Search and seizure; Opportunity of being heard; Principle of natural justice; Period of limitation; Retrospective amendment; Fair market value; Valuation report; Validity of assessment; Accommodation entries; Competent authority; Tax effect; Time period of passing order; Revenue expenditure; Capital expenditure; TDS; Set aside
• Section: 40A(3); 143(3); 50C; 153A; 40(a)(ia); 69B; 201; 69A; 191; 139(1); 64; 142(2A); 43; 48; 13; 153(2A); 153; 22; 147; 69; 56; 132; 144; 15; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM (THROUGH : VIDEO CONFERENCING) IT (SS) A NO S . 56 - 58 /CTK/20 1 8 ( / A SSESSMENT Y EAR : 2012 - 2013 - 20 14 - 2015 ) AND IT (SS) A NO S . 188 /CTK/20 19 ( / A SSESSMENT YEAR : 2015 - 2016 ) DCIT, CENTRAL CIRCLE - 2 , BHUBANESWAR VS. M/S IMPROVE TRADERS PVT. LTD., PLOT NO.348, OKILBAG, CUTTACK ROAD, BHUBANESWAR - 751014 PAN NO. : A A BCI 8070 N AND CROSS OBJECTIO N NO S . 15 17/ CTK/20 1 9 ( / A SSESSMENT YEAR : 201 2 - 201 3 2014 - 2015 ) M/S IMPROVE TRADERS PVT. LTD., PLOT NO.348, OKILBAG, CUTTACK ROAD, BHUBANESWAR - 751014 VS. DCIT, CENTRAL CIRCLE - 2, BHUBANESWAR PAN NO. : AA BCI 8070 N ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI M.K.GAUTAM, CIT DR /ASSESSEE BY : SHRI M.K.AGARWALLA, AR / DATE OF HEARING : 1 0 / 11 /20 20 / DATE OF PRONOUNCEMENT : 14 / 1 2 /20 20 / O R D E R PER L.P.SAHU, AM : TH E REVENUE HAS FILED FOUR APPEALS AGAINST THE SEPARATE ORDER DATED 23.03.2018 & 14.03.2019 , PASSED BY THE CIT(A) - 2 , BHUBANESWAR FOR THE ASSESSMENT YEAR S 2012 - 2013, 2013 - 2014, 20 14 - 20 15 & 2015 - IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 2 2016. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS FOR THE ASSESSMENT YEARS 2012 - 2013, 2013 - 2014, 2014 - 2015, RESPECTIVELY. 2 . AT THE OUTSET, WE FIND THAT ALL THE THREE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE BARRED BY LIMITATION OF 355 DAYS, WHICH HAS BEEN EXPLAINED BY THE ASSESSEE VI DE APPLICATION DATED 29.07.2019 AND THE SAME HAS BEEN FILED BEFORE US ON 30.08.2020 ALONG WITH AFFIDAVIT, TO WHICH LD. DR HAS NO OBJECTION. CONSIDERING THE ABOVE APPLICATION OF THE ASSESSEE, WE FIND THAT THE ASSESSEE HAS SUFFICIENT CAUSE FOR CONDONATION OF DELAY. ACCORDINGLY, WE CONDONE THE DELAY AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BEEN HEARD FINALLY ALONG WITH THE APPEALS OF THE REVENUE. 3 . ON PERUSAL OF THE RECORD OF THE ALL THE APPEALS OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSE E, WE FIND THAT IT(SS)A NO.58/CTK/2018 WAS DISPOSED OFF ON DATED 27.08.2018 DUE TO LOW TAX EFFECT AS PER THE CBDT CIRCULAR, HOWEVER, THIS APPEAL WAS WRONGLY POSTED FOR HEARING AGAIN ON THE SCHEDULE DATE, THEREFORE, NO ORDER SHALL BE PASSED AS THE SAME HAS ALREADY BEEN DISPOSED OFF. CONSEQUENTLY, THE CROSS OBJECTION FILED BY THE ASSESSEE IN CO NO. 17/CTK/2019 HAS ALSO BECOME INFRUCTUOUS. 4 . THE ISSUE INVOLVED IN IT(SS)A NO.56&57/CTK/2018 FOR THE ASSESSMENT YEARS 2012 - 2013 & 2013 - 2014 ARE SIMILAR, THEREFORE, F OR IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 3 THE SAKE OF CONVENIENCE AND BREVITY, FIRST WE DECIDE IT(SS)A NO.56/CTK/2018 FILED FOR THE ASSESSMENT YEAR 2012 - 2013 AND THE DECISION OF THE SAME SHALL APPLY MUTATIS MUTANDIS TO THE APPEAL FOR THE ASSESSMENT YEAR 2013 - 2014 ALSO. 5. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL FOR A.Y.2012 - 2013 READ AS UNDER : - (A) ON THE POINT OF LAW INVOLVED IN THE CASE, LD. CIT(APPEALS) ERRED IN ANNULLING THE ASSESSMENT ORDER PASSED U/S.L53A R.W.S. 143(3) OF THE INCOME TAX ACT, 1961, DATED 25.11.2016 WITHOUT DULY AP PLYING THE PROVISIONS OF THE INCOME TAX ACT, 1961. (B) ON THE POINT OF LAW, LD. CIT(APPEALS) ERRED IN OBSERVING THAT PROVISIONS OF SECTION 153B AND 142A OF THE INCOME TAX ACT, 1961 SHOULD BE READ TOGETHER AND THEY HAVE TO BE HARMONIOUSLY CONSTRUED, WITHO UT APPRECIATING THE FACT THAT BOTH THE SECTIONS ARE INDEPENDENT TO ONE ANOTHER AND LIMITATION IMPOSED IN ONE IS NOT BE READ IN CONJUNCTION WITH THE LIMITATION IMPOSED IN THE OTHER. (C) LD.CIT(APPEALS) ERRED IN NOT CONSIDERING THE FACT THAT TIME LIMIT F OR COMPLETION OF ASSESSMENT AVAILABLE TO HIM IS SOLELY GUIDED BY THE PROVISIONS OF SECTION 153B OF THE INCOME TAX ACT, 1961 AND THE LIMITATION IMPOSED AS PER SECTION 142A OF THE INCOME TAX ACT, 1961 IS FOR THE VALUATION OFFICER AND ASSESSING OFFICER IS NO WAY BE TO GUIDED BY SUCH LIMITATION. (D) ANY OTHER GROUNDS WITH THE PERMISSION OF THE HON'BLE TRIBUNAL. 6. BRIEF FACTS OF THE CASE ARE THAT THE A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE I. T. ACT, 1961 WAS CONDUCTED IN THE BUSINESS PREMISES O F THE A SSESSEE AND RESIDENTIAL PREMISES OF ITS PROMOTERS/DIRECTORS ON 24.10.2013. THEREAFTER N OTICE U/S. 153A OF THE IT ACT, 1961 DATED 09.03.2015 WAS ISSUED TO THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE PREVIOUS YEAR WITHIN 30 DAYS OF THE RECEIPT O F THE NOTICE. ACCORDINGLY, T HE ASSESSEE FILED THE R ETURN OF I NCOME ON 05.01.2016 IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 4 SHOWING A TOTAL INCOME OF RS.NIL. THE A SSESSEE HAD FILED R ETURN U/S. 139(1) OF THE ACT SHOWING A TOTAL LOSS OF RS.57,438/ - ON 31.03.2013. AFTER FILING OF THE RETURN OF INCOME , A REFERENCE WAS MADE TO VALUATION CELL BY THE ASSESSING OFFICER (HERE - IN - AFTER REFERRED TO AS AO) FOR DETERMINING THE COST OF INVESTMENT/ CONSTRUCTION IN THE PROPERTY AT SIDDHI VINAYAK ENCLAVE LAXMI NAGAR , NEAR YATRI NIWAS, CUTTACK ROAD, BHUBNESWAR ODI SHA U/S. 142A OF THE ACT VIDE LETTER F.NO.ACIT/CC - 1/BBSR/2015 - 16/2236 DATED 14.01.2016. IN THE LETTER FOR REFERENCE MADE U/S.142A OF THE ACT WHICH WAS SPECIFICALLY REQUESTED TO SUBMIT THE VALUATION REPORT ON OR BEFORE 05.03.2016 BECAUSE THE CASE WILL BE BARRED BY LIMITATION ON 31.03.2016. THE VALUATION REPORT WAS RECEIVED BY POST ON 03.10.2016 THOUGH ONLY THE FORWARDING LETTER OF THE REPORT WAS SENT BY THE VALUATION CELL THROUGH E - MAIL ON 27.09.2016 . THIS FACT WAS COMMUNICATED TO THE A SSESSEE BY THE ASSES SING OFFICER VIDE HIS LETTER DATED 30.09.2016 . THE OTHER STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE FOR COMPLIANCE OF THE CASE. IN THIS REGARD, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED C ERTAIN DETAILS, PARTICULA RS AND EXPLANATION WERE FILED, AND KEPT ON RECORD. AFTER EXAMINING THE DETAILS SUBMITTED BY THE ASSESSEE, THE AO OBSERVED AS UNDER : - IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 5 I) UNEXPLAINED CREDIT IN THE ACCOUNTS OF THE ASSESSEE AGAINST THE SALE OF SHARES; AND II) THE AO NOTICED THAT THE ASSESSEE COMPANY WAS INCORPORATED IN THE FINANCIAL YEAR 2007 - 2008 WITH THE AUTHORIZED CAPITAL OF RS.1 LAKHS BY SOME OTHER PERSONS ON PAPER ONLY TO PROVIDE ACCOMMODATION ENTRIES AND LATER ON IT WAS ACQUIRED BY SHRI BIJAY KUMAR CHOUDHURY, THE PRESENT DIRECTOR WITHOU T ANY REAL ESTATE BUSINESS ACTIVITY. THE COMPANY HAS GOT 9.28 CRORES ENTRIES FROM 13 S HELL COMPANIES TOWARDS SHARE APPLICATION MONEY. THE MAJOR AMOUNT OF RS.8,90,88,000/ - WAS TOWARDS SHARE PREMIUM AND ONLY RS.37,12,000/ - TOWARDS SHARE CAPITAL. THE FACE VAL UE OF RS.10/ - AND THE SHARE CAPITAL RECEIVED WERE INVESTED IN UNQUOTED EQUITY SHARES. OUT OF T HE ABOVE INVESTMENT OF RS.9.28 CRORES A SUM OF RS. 5.00 CRORES WAS BROUGHT BACK TO THE BOOKS OF THE COMPANY THROUGH SALES OF INVESTMENTS IN UNQUOTED EQUITY SHARES IN THE FINANCIAL YEAR 2011 - 2012 TO START THE REAL ESTATE BUSINESS AND THE REMAINING RS.4.28 CRORES WAS CLAIMED AS RECEIVED FROM SALE OF SHARES IN THE SUBSEQUENT YEARS. SINCE IT WAS NOTICED THAT RS.5 CRORES WAS CREDITED AGAINST SALE OF SUCH INVESTMENT IN S HELL COMPANIES, THE INTEREST OF THE ASSESS EE TO ESTABLISH THE IDENTITY OF THE PAYEES FROM WHOM MONEY WAS RECEIVED AGAINST SALE OF SHARES AND ALSO THEIR IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 6 CREDITWORTHINESS APART FROM ESTABLISHING THE GENUINENESS OF THE TRANSACTIONS CLAIMED AS UNDER : SL. NO. NAME OF THE PARTIES TO WHOM SHARES SOLD AMT. RECEIVED (IN RS.) 1 BASURI COMMOTRADE P LTD 10,00,000 2 DAIWIK MARKETING PVT LTD 25,00,000 3 DAREDEVIL SUPPLIERS P LTD 25,00,000 4 DEERGOLD SUPPLIERS P LTD 20,00,000 5 DOLPHIN EQUIPMENTS P LTD 10,00,000 6 FARISTA COMMODEAL P LTD 1,60,00,000 7 FARISTA DEALERS P LTD 30,00,000 8 INTELLECT DISTRIBUTORS P LTD 5,00,000 9 MAHAMANI VINIMAY P LTD 15,00,000 10 MATARANI TRACOM P LTD 15,00,000 11 RACOON MARKETING P LTD 35,00,000 12 RAJNI COMMOSALES P LTD 35,00,0 00 13 RISHIKA AGENCIES P LTD 15,00,000 14 SAKSHAM GOOD P LTD 20,00,000 15 SANHIT VINCOM P LTD 15,00,000 16 STARMARK TRADELINK P LTD 20,00,000 17 TIRUPATI WHOLESALE P LTD 5,00,000 18 UMAPATI TRACOM P LTD 30,00,000 19 UNITOUCH TRADELINK P LTD 35,00,00 0 TOTAL: 5,00,00,000 THE AO OBSERVED THAT THE ASSESSEE FAILED TO PROVE THE ONUS CAST UPON HIM AND AFTER POST SEARCH , IT WAS ALSO OBSERVED THAT THE S HELL COMPANIES FROM WHOM INVESTMENTS WERE LIQUIDATED AND IT WAS ALSO OBSERVED THAT THE COMPANIES ARE CLO SELY HELD COMPANIES AND THE SHARE TRANSACTIONS ARE OUTSIDE THE RECOGNIZED STOCK EXCHANGE. THE SHARES ALLEGEDLY SOLD AND ALL THE COMPANIES TO WHOM SUCH SHARES WERE SOLD ARE KOLKATA BASED SHELL COMPANIES ONLY WITHOUT HAVING ANY REAL SOURCE OF INCOME AND HAVI NG THE ONLY BUSINESS OF ACCOMMODATION ENTRIES THROUGH BOGUS IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 7 RECEIPTS OF SHARE PREMIUM AND BOGUS INVESTMENT IN SHARES AT PREMIUM IN OTHER SHELL COMPANIES. SUCH COMPANIES WERE FOUND BY THE INVESTIGATION WING OF THE DEPARTMENT TO HAVE BEEN FORMED BY ENTRY OPE RATORS WITH ONE OR TWO SUCH OPERATORS FORMING HUNDREDS OF COMPANIES FOR THIS PURPOSE. IT WAS ALSO OBSERVED BY THE AO THAT ALL THE COMPANIES INVOLVED IN THE TRANSACTIONS ARE CLOSELY HELD COMPANIES AND ALL THE SHARE TRANSACTIONS ARE OUTSIDE RECOGNIZED STOCK EXCHANGE. THE SHARES ALLEGEDLY SOLD WERE AT THE SAME VALUE AT WHICH THEY WERE PURCHASED BY THE ASSESSEE LONG BACK AT VERY HUGE PREMIUM. DURING THE PERIOD OF HOLDING SPANNING MORE THAN FOUR YEARS, THE INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE IN THESE SHARE S DID NOT FETCH ANY INCOME. THE COMPANIES IN WHICH INVESTMENT WAS MADE DID NOT HAVE ANY REAL WORTH AND BUSINESS ACTIVITY. ACCORDINGLY, THE AO CONCLUDED THAT THE COMPANY FAILED TO EXPLAIN THE NATURE AND SOURCE OF THE CREDIT FOR RS.5.00CR. SHOWN IN ITS BOOKS FOR WHICH REASON THE AO CONSIDERED THE AMOUNT AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT, AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 7. ON FURTHER SCRUTINY OF ACCOUNTS, IT WAS NOTICED BY THE AO THAT THE COMPANY HAS RECEIVED AN UNSECURED LOA N OF RS.4,75,36,214/ - FROM M/S. MATUSHREE STEEL INDUSTRIES PVT. LTD.(MSIPL). THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS IN SUPPORT OF RECEIPT OF LOAN. THE BANK IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 8 ACCOUNT STATEMENT REVEALED THE TRANSACTIONS OF THIS LOAN BUT THE CREDITWORTHINESS REMAINED D OUBTFUL. IT WAS ALSO NOTICED FORM THE FINANCIAL STATEMENT OF MSIPL THAT HE HAS RAISED RS.4.10 CRORES FROM SOME PRIVATE COMPANIES AS SHARE APPLICATION MONEY WITH VERY HUGE PREMIUM . THIS ASPECT OF RECEIPT OF SHARE APPLICATION MONEY BY THE MSIPL WAS EXAMINED IN COURSE OF ITS ASSESSMENT PROCEEDINGS FOR THE A.Y.2010 - 11 & A.Y.2011 - 12 AND CONSEQUENT UPON SUCH EXAMINATION, IT WAS FOUND THAT THE EXPLANATION OF THE ASSESSEE(MSIPL) REGARDING THE CREDIT ENTRIES IN RESPECT OF SHARE APPLICATION MONEY FROM VARIOUS INVESTO R COMPANIES I.E. SHELL CO MPANIES IS NOT SATISFACTORY AND, THEREFORE, THE AO DID NOT ACCEPT THE SAME AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 8. ON FURTHER SCRUTINY OF ACCOUNTS, IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAS DEPOSITED CASH I N A HUGE AMOUNT ON DIFFERENT DATES. THE EXPLANATION WAS SOUGHT FROM THE ASSESSEE AND THE ASSESSEE FURNISHED DETAILS ALONG WITH THE CASH BOOK. 6.1 THE ASSESSEE WAS REQUESTED TO EXPLAIN REGARDING THE SOURCE OF THESE DEPOSITS. THE DETAILS AS ASKED ARE PRODU CED HERE UNDER: - PLEASE REFER TO THE SEIZED DOCUMENT IDENTIFICATION MARKED MAR - 3 PAGE - 29 AND YOUR COMPANY'S BANK ACCOUNTS WITH BANK OF INDIA. EXAMINATION OF THE ACCOUNT WITH BANK OF INDIA SHOWS THE CASH DEPOSITS IN F. Y. 2011 - 12 AMOUNTING TO RS. 1,72,50,0 00/ - ON DIFFERENT DATES. THE ONLY SOURCE OF RECEIPT IN CASE OF THE COMPANY IS RECEIPT FROM THE CUSTOMERS WHO BOOK THE FLATS. SUCH RECEIPTS, IF ANY, HAVE BEEN DELIBERATELY KEPT OUT OF BOOKS. THEREFORE, THE POSSIBILITY OF CASH DEPOSIT IN BANK OUT OF SUCH REC EIPTS IS ABSENT. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 9 6.2 TO THIS THE ASSESSEE VIDE WRITTEN SUBMISSION DATED 12.02.2016 MADE ITS REPLY IN THE FOLLOWING MANNER: - THIS POINT RELATES TO CASH DEPOSITED IN THE BANK ACCOUNT WITH BANK OF INDIA BY THE ASSESSEE COMPANY. IN THIS POINT PAGE - 29 OFMAR - 0 3 HAS BEEN REFERRED TO WHICH SHOWS CASH DEPOSITED IN THE SAID BANK ACCOUNT OF THE ASSESSEE COMPANY. IN THIS REGARD, WE WOULD LIKE TO DRAW YOUR KIND ATTENTION ON THE SAME PAGE WHICH ALSO MENTIONS CASH WITHDRAWAL FROM THE SAME BANK ALONG WITH DATES. ALL CASH DEPOSITED ARE FROM THESE WITHDRAWALS ONLY WHICH CAN EASILY BE CORRELATED THROUGH THE BANK BOOK OF THE ASSESSEE. NO 'OUT OF BOOKS' CASH WAS REQUIRED SO AS TO MAKE CASH DEPOSITS IN THE BANK ACCOUNT AS THE ASSESSEE HAD SUFFICIENT AMOUNT OF CASH BALANCE WITH ITSELF ON THE DAY - OF DEPOSITS OF CASH. THE CASH BOOK OF THE ASSESSEE DOES NOT REVEAL ANY NEGATIVE CASH BALANCE WHICH SHOWS THAT THE ASSESSEE HAS ENOUGH LIQUID CASH TO MAKE SUCH DEPOSITS. HENCE, IT IS REQUESTED THAT NO UNFAVORABLE INFERENCE SHOULD BE DRAWN HERE. THE CASH BOOK FOR THE CONCERNED PERIOD ALONG WITH DAILY BALANCES IS ENCLOSED FOR YOUR KIND PERUSAL. ON EXAMINATION OF THE CASH BOOK, THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS WITHDRAWN HUGE AMOUNT IN A SINGLE DAY AND OTHER DATES ALSO AND HE HA S ALSO DEPOSITED CASH VICE - VERSA . IN THE OPINION OF AO, THE ASSESSEE COULD NOT EXPLAIN THE DEPOSIT OF CASH AND WITHDRAWALS TO THE SATISFACTION OF THE AO. THEREFORE, THE AO MADE ADDITION AS UNEXPLAINED CASH DEPOSIT IN THE ACCOUNTS OF THE ASSESSEE TO THE TU NE OF RS.1,72,50,000/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 9. FURTHER IT WAS ALSO OBSERVED THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF CASH DEPOSIT VIDE THE OFFICE LETTER DATED 23.09.2016 AND THESE DEPOSITS WERE APPEARED IN THE P AGE 35 OF THE SEIZED DOCUMENT MARKED AS MAR - 03 AS UNDER : - DATE AMOUNT (RS.IN LAKH) 23.09.2011 9.00 IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 10 24.09.2011 9.00 26.09.2011 9.00 27.09.2011 9.00 28.09.2011 8.00 29.09.2011 5.00 TOTAL 49.00 IN THIS REGARD, THE ASSESSEE EXPLAINED THAT THERE IS SUF FICIENT CASH BALANCE IN THE CASH BOOK. THE AO OBSERVED FROM THE CASH BOOK THAT BEFORE DEPOSITING THE CASH INTO THE BANK ACCOUNT, THERE WAS HUGE CASH WITHDRAWALS AND HE ALSO OBSERVED THAT THE EXPENSES WERE ALSO NOT FOUND IN THE BOOKS. THEREFORE, THE AO RAIS ED A DOUBT REGARDING CREDITWORTHINESS OF THE CASH BOOKS PRODUCED BY THE ASSESSEE. FROM THE OBSERVATIONS OF THE ABOVE, THE AO NOTICED THAT THERE IS A HUGE CASH BALANCE MAINTAINED BY THE ASSESSEE AND THE DEPOSITS AND WITHDRAWALS ARE NO CORRELATED TO ONE ANOT HER, THEREFORE, HE CONCLUDED THAT IN SUCH A SITUATION DEPOSITS CANNOT BE TREATED AS HAVING BEEN MADE OUT OF WITHDRAWALS FROM BANK. ACCORDINGLY, THE AO ADDED THE AMOUNT OF RS.49 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. 10. FEELING AGGRIEVED FROM THE ORDE R OF AO, THE ASSESSEE APPEALED BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE ALSO CHALLENGED THE VALIDITY OF ASSESSMENT ORDER PASSED BEYOND THE PRESCRIBED PERIOD OF TIME AND THE DETAILED WRITTEN SUBMISSIONS WERE ALSO MADE. THE CIT(A) CALLED FOR THE RE MAND REPORT AND ASSESSEE FILED REJOINDER AGAINST THE REMAND REPORT SUBMITTED BY THE AO. THE CIT(A) AFTER CONSIDERING THE LEGAL ISSUE RAISED BY THE ASSESSEE REGARDING VALIDITY OF THE ASSESSMENT IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 11 ORDER, ALLOWED THE APPEAL OF THE ASSESSEE ON LEGAL GROUNDS WITH OUT ADJUDICATING THE CASE ON MERITS AND ANNULLED THE ASSESSMENT ORDER PASSED BY THE AO. 11. FEELING FURTHER AGGRIEVED FROM THE ORDER OF CIT(A), THE REVENUE HAS FILED APPEALS BEFORE US AND THE ASSESSEE FILED CROSS OBJECTIONS AGAINST THE MERITS OF THE CASE NOT ADJUDICATED BY THE CIT(A) . 12. LD. CIT DR BEFORE US RELIED ON THE ORDER OF AO AND SUBMITTED THAT THE ORDER PASSED BY THE AO IS WELL WITHIN THE TIME ALLOWED AND THE ORDER HAS BEEN PASSED AFTER OBTAINING DUE APPROVAL U/S.153D OF THE ACT FROM THE JOINT CO MMISSIONER OF INCOME TAX. HAD THE ASSESSMENT ORDER BEEN TIME BARRED THEN CERTAINLY THE JCIT WOULD HAVE GUIDED TO THE AO. THE CIT(A) HAS WRONGLY INTERPRETED THE AMENDED PROVISIONS OF THE LAW AS MADE IN THE FINANCE ACT 2014 . THE ASSESSEE HAS ALSO FILED RETU RN BELATEDLY WHICH WAS OUGHT TO HAVE BEEN FILED BY THE ASSESSEE WITHIN THE 30 DAYS FROM THE DATE OF THE NOTICE U/S.153A OF THE ACT WHEREAS THE RETURN HAS BEEN FILED ON 05.01.2016, THEREFORE, THE AO HAD NO OPTION BUT TO COMPLETE THE ASSESSMENT WITHIN TWO YE ARS FROM THE DATE OF SEARCH CONDUCTED, WHICH IS EXPIRED ON 31.03.2016. 13. ON THE OTHER HAND, LD. AR OF THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE LOWER AUTHORITIES AND BEFORE US HAS ALSO FILED WRITTEN SUBMISSIONS WHICH READ AS UNDER : - IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 12 1. THE DEPARTMENTAL APPEALS FOR THE AYS 2012 - 13 AND 2013 - 14 ARE AGAINST THE APPELLATE ORDERS DATED 23.03.2018 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 2, BHUBNESHWAR ['CIT(A)']. IN THESE ORDERS, THE CIT(A) HELD THAT THE ASSESSMENT ORDERS FOR THE AYS 2012 - 13 AND 2013 - 14 BOTH DATED 25/11/2016 AS TIME BARRED IN VIEW OF THE LIMITATION PRESCRIBED IN SECTION 153B OF THE ACT. SINCE THE CIT(A) HELD THESE ORDERS WERE BARRED BY LIMITATION AND HE ANNULLED THE ASSESSMENT ORDERS FOR BOTH THE YEARS. AGGRIEVED BY T HE ORDERS OF THE CIT(A), THE REVENUE IS IN APPEAL. 2. THE BRIEF FACTS OF THE CASE AND CHRONOLOGY OF EVENTS GIVING RISE TO DISPUTE ARE AS FOLLOWS: A. RETURNS UNDER SECTION 139 WERE FILED ON 31.03.2013&22.02.2014 FOR THE AYS 2012 - 13 AND 2013 - 14 RES PECTIVELY B. SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON 24.10.2013 C. LAST DATE FOR COMPLETION OF ASSESSMENT UNDER SECTION 153A AS PROVIDED BY SECTION 153B, WAS TWENTY FOUR MONTHS FROM THE END OF THE FINANCIAL YEAR OF SEARCH AND THIS WAS TO E ND ON31.03.2016. D. REFERENCE TO VALUATION OFFICER UNDER SECTION 142A WAS MADE BY THE AO ONL4.01.2016. E. TIME ALLOWED BY THE AO TO SUBMIT THE VALUATION REPORT BY THE DVO WAS 05.03.2016. F. UNEXPIRED PERIOD AVAILABLE TO AO, FOR COMPLETING THE ASSES SMENT UNDER SECTION 153B AS ON 14.01.2016 WAS 77 DAYS I.E. 15.01.2016 TO 31.03.2016. G. PERIOD AVAILABLE WITH DVO FOR SENDING HIS VALUATION REPORT TO THE AO IN TERMS OF SECTION 142A(6) WAS SIX MONTHS FROM THE END OF THE MONTH IN WHICH REFERENCE WAS MADE AND THIS PERIOD WAS TO EXPIRE ON 31.07.2016. H. PERIOD AVAILABLE UNDER SECTION 153B READ WITH SECTION 142A FOR PASSING OF THE ORDER UNDER SECTION 153A OF THE ACT WAS 77 DAYS AFTER 31.07.2016 WHICH EXPIRED ON 18.10.2016 [01.08.2016 + 77 DAYS]. I. DATE ON WH ICH DVO'S REPORT WAS SUBMITTED TO THE AO WAS 03.10.2016. J. ASSESSMENT ORDERS FOR BOTH THE YEARS PASSED ON 25.11.2016. 3. IN THE COURSE OF ASSESSMENT ON 14/01/2016 THE AO MADE REFERENCE TO THE DVO FOR VALUATION OF THE PROPERTY WHICH WAS BEING DEV ELOPED BY THE ASSESSEE. THE REFERENCE WAS UNDER SECTION 142A OF THE ACT. AT THE TIME WHEN THE REFERENCE WAS MADE, THE SUB - SECTION (6) OF S 142A PROVIDED TIME LIMIT FOR COMPLETION OF VALUATION PROCEEDINGS AS FOLLOWS: '(6) THE VALUATION OFFICER SHALL SEND A COPY OF THE REPORT OF THE ESTIMATE MADE UNDER SUB - SECTION (4) OR SUB - SECTION (5), AS THE CASE MAY BE, TO THE ASSESSING OFFICER AND THE ASSESSEE, WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH A REFERENCE IS MADE UNDER SUB - SECTION (1).' 4. THE PROVISIONS OF SECTION 142A WERE AMENDED BY THE FINANCE (NO.2) ACT OF 2014 WITH EFFECT FROM 01.10.2014. THE PROVISIONS OF THE FINANCE BILL WERE EXPLAINED AT THE TIME OF ITS INTRODUCTION BY IT'S MEMORANDUM. RELEVANT EXPLANATION WITH REGARD TO AME NDMENT IN SECTION 142A WAS AS FOLLOWS : IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 13 'UNDER THE EXISTING PROVISIONS CONTAINED IN SECTION 142A, THE ASSESSING OFFICER MAY, FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT, REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF THE VALUE OF ANY INV ESTMENT, ANY BULLION, JEWELLERY OR FAIR MARKET VALUE OF ANY PROPERTY. ON RECEIPT OF THE REPORT OF THE VALUATION OFFICER, THE ASSESSING OFFICER MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD TAKE INTO ACCOUNT SUCH REPORT FOR THE PURPOSES OF ASS ESSMENT OR REASSESSMENT. SECTION 142 A DOES NOT ENVISAGE REJECTION OF BOOKS OF ACCOUNT AS A PRE - CONDITION FOR REFERENCE TO THE VALUATION OFFICER FOR ESTIMATION OF THE VALUE OF ANY INVESTMENT OR PROPERTY. FURTHER, SECTION 142A DOES NOT PROVIDE FOR ANY TIME LIMIT FOR FURNISHING OF THE REPORT BY THE VALUATION OFFICER. ACCORDINGLY, IT IS PROPOSED TO SUBSTITUTE THE SAID SECTION 142A SO AS TO PROVIDE THAT THE ASSESSING OFFICER MAY, FOR THE PURPOSES OF ASSESSMENT OR REASSESSMENT, REQUIRE THE ASSISTANCE OF A VALU ATION OFFICER TO ESTIMATE THE VALUE, INCLUDING FAIR MARKET VALUE, OF ANY ASSET, PROPERTY OR INVESTMENT AND SUBMIT THE REPORT TO HIM. THE ASSESSING OFFICER MAY MAKE A REFERENCE WHETHER OR NOT HE IS SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCO UNTS OF THE ASSESSEE. THE VALUATION OFFICER, SHALL, FOR THE PURPOSE OF ESTIMATING THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT, HAVE ALL THE POWERS OF SECTION 38A OF THE WEALTH - TAX ACT, 1957. THE VALUATION OFFICER IS REQUIRED TO ESTIMATE THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT AFTER TAKING INTO ACCOUNT THE EVIDENCE PRODUCED BY THE ASSESSEE AND ANY OTHER EVIDENCE IN HIS POSSESSION GATHERED, AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IF THE ASSESSEE DOES NOT CO - OPERATE OR COMPLU WIT H THE D IRECTIONS OF THE VALUATION OFFICER HE MAY, ESTIMATE THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT TO THE BEST OF HIS JUDGMENT . IT IS ALSO PROPOSED TO P ROVIDE THAT THE VALUATION OF FICER SHALL SEND A COPY OF HIS ESTIMATE TO THE ASSESSING O FFICER AN D THE ASSESSEE WITHIN A PERIOD OF SIX MONTHS FROM, THE END OF THE MONTH IN WHICH THE REFERENCE IS MADE. THE ASSESSING OFFICER ON RECEIPT OF THE REPORT FROM THE VALUATION OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, TAKE INTO ACCOUNT SUCH REPORT IN MAKING THE ASSESSMENT OR REASSESSMENT.' IT IS ALSO PROPOSED TO AMEND SECTIONS 153 AND 153B OF THE ACT SO AS TO PROVIDE THAT THE TIME PERIOD BEGINNING WITH THE DATE ON WHICH THE RE FERENCE IS MADE TO THE VALUATION OFFICER AND ENDING WITH THE DATE ON WHICH HIS REPORT IS RECEIVED BY THE ASSESSING OFFICER SHALL BE EXCLUDED FROM THE TIME LIMIT PROVIDED UNDER THE AFORESAID SECTION FOR COMPLETION O F ASSESSMENT OR REASSESSMENT. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST OCTOBER, 2014.' IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 14 5. THE FINAN CE (NO.2) BILL, 2014 HAD TAKEN NOTE OF THE FACT THAT SECTION 142A PRIOR TO AMENDMENT DID NOT PROVIDE ANY TIME LIMIT FOR FURNISHING OF THE REPORT BY THE VALUATION OFFICER. TO OVERCOME THIS OMISSION IN LAW, THE AMENDED PROVISIONS PROVIDED THAT THE VALUATION OFFICER SHALL SEND A COPY OF HIS ESTIMATE TO THE AO AND THE ASSESSEE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE REFERENCE IS MADE. THE USE OF THE WORD 'SHALL' IN SECTION 142A(6) CLEARLY INDICATED THE LEGISLATIVE INTENT THAT THE TI ME LIMIT PRESCRIBED WAS ABSOLUTE AND THE LEGISLATURE DID NOT INTEND TO PROVIDE UNLIMITED TIME EITHER TO THE DVO OR TO THE AO FOR OBTAINING VALUATION REPORT FOR THE PURPOSE OF ASSESSMENT. KEEPING IN MIND THAT THERE MAY BE INSTANCES WHERE ASSESSEE MAY NOT CO OPERATE WITH THE DVO, THE AMENDING ACT GRANTED POWER TO ESTIMATE THE VALUE OF THE ASSET TO THE BEST OF VALUATION OFFICER'S JUDGMENT. PURSUANT TO THE AMENDMENT IN SECTION 142A, CONSEQUENTIAL AMENDMENTS WERE ALSO CARRIED OUT IN SECTION 153 AND 153B OF THE AC T WHICH CLARIFIED THAT THE TIME PERIOD BEGINNING WITH THE DATE ON WHICH REFERENCE IS MADE TO THE DVO AND ENDING WITH THE DATE ON WHICH THE REPORT IS RECEIVED, SHALL BE EXCLUDED FROM THE TIME LIMIT PROVIDED FOR COMPLETION OF ASSESSMENT. 6. AS PER SE CTION 142A(6), SENDING OF THE VALUATION REPORT BY THE DVO TO THE AO, WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH.IN WHICH THE REFERENCE IS MADE, WAS MADE MANDATORY. WHILE CARRYING OUT AMENDMENTS IN SECTIONS 142A, 153 & 153B THE LEGISLATURE HAD ASSUMED THAT THE CONCERNED AUTHORITY I.E. DVO WOULD ALWAYS PERFORM HIS DUTY WITHIN PRESCRIBES STATUTORY PERIOD AND THEREFORE ASSUMED THAT EVEN THE AO SHALL THEREAFTER PROCEED TO COMPLETE THE ASSESSMENT WITHIN THE REMAINING UNEXPIRED PERIOD FROM THE DATE ON WHICH THE REPORT IS RECEIVED. 7. THE LEGISLATURE NEVER ENVISAGED A SCENARIO WHERE THE DVO WOULD SEND HIS REPORT MUCH AFTER THE EXPIRY OF THE STATUTORY PERIOD PRESCRIBED IN SECTION 142A(6) OF THE ACT AND THEREAFTER THE AO SHALL TAKE ADDITIONAL TIME FOR COMPLETING THE ASSESSMENT PROCEEDINGS. IF SUCH AN INTERPRETATION IS ALLOWED TO PREVAIL THEN THE ENTIRE LEGISLATIVE INTENT BEHIND PRESCRIBING LIMITATION PERIOD, SHALL STAND DEFEATED AND MAKE THE PROVISIONS OF SECTION 142A(6) OTIOSE. 8. IN THE FACTS OF THE PRESENT CASE, THE REFERENCE TO DVO WAS MADE ON 14.01.2016 AND THEREFORE THE LAST DATE BY WHICH THE DVO WAS STATUTORILY REQUIRED TO SEND HIS VALUATION REPORT EXPIRED ON 31.07.2016. ON 31/7/2016 THE DVO BECAME FUNCTUS OFFICIO AND ACCORDINGLY WIT H EFFECT FROM 01.08.2016 HE COULD NOT HAVE PERFORMED ANY FUNCTION PURSUANT TO THE REFERENCE MADE TO HIM ON 14.01.2016. ANYTHING THAT WAS DONE BY THE DVO AFTER THE EXPIRY OF LIMITATION PERIOD WAS NULLITY IN THE EYES OF LAW AND THEREFORE AB INITIO VOID. 9. AS SOON AS THE PERIOD PRESCRIBED IN SECTION 142A(6) EXPIRED ON 31.07.2016, THE EXCLUSION PERIODIN EXPLANATION (III) TO SECTION 153B IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 15 CAME TO AN END AND WITHIN 77 DAYS THEREAFTER, THE AO WAS LEGALLY TO COMPLETE AND PASS THE ASSESSMENT ORDERS U/S 153A OF THE ACT. SUCH PERIOD ENDED ON 18.10.2016 BY WHICH TIME THE ORDERS U/S 153A WERE ADMITTEDLY NOT PASSED FOR BOTH THE YEARS. THE CIT(A) THEREFORE RIGHTLY HELD THAT THE ASSESSMENT ORDERS DATED 25.11.2016 WERE PASSED BEYOND LIMITATION PERIOD AND THEREFORE AN NULLED THE SAME. 10. AT THE TIME OF HEARING OF APPEALS THE HON'BLE MEMBERS NOTED THAT THE ID. CIT(A) HELD THE ASSESSMENT ORDER AS TIME BARRED BY RELYING ON SECTION 142A(6) WHICH WAS INTRODUCED IN THE I.T.ACT BY THE FINANCE (NO.2) ACT OF 2014 WHEREAS THE ASSESSMENT YEARS IN QUESTION WERE AYS 2012 - 13 & 2013 - 14. A QUESTION WAS THEREFORE POSED BY THE HON'BLE MEMBERS WHETHER THE AMENDED SECTION 142A(6) COULD HAVE ANY APPLICATION IN DECIDING THE APPEALS FOR THE AYS 2012 - 13 & 2013 - 14 FOR WHICH THE RELEVANT P REVIOUS YEARS ENDED PRIOR TO 01.10.2014 I.E. THE DATE ON WHICH S 142A(6) CAME INTO EFFECT. 11. IN THIS REGARD IT IS RELEVANT TO BRING TO THE KIND ATTENTION OF THE HON'BLE BENCH THAT SECTIONS 142A, S 153 AND S 153B ARE PART OF CHAPTER XIV OF THE ACT W HICH CONTAIN MACHINERY PROVISIONS OUTLINING 'PROCEDURE FOR ASSESSMENT'. THE CHAPTER XIV ENCOMPASSES SECTION 139 TO 158 OF THE ACT. ADMITTEDLY THEREFORE SECTION 142A WHICH PRESCRIBES LIMITATION PERIOD FOR SENDING THE REPORT BY THE VALUATION OFFICER IS THAT PART OF OF THE INCOME TAX ACT WHICH PRESCRIBES PROCEDURE FOR COMPLETION OF ASSESSMENT. AS SUCH THESE PROVISIONS CONTAIN LAW RELATING TO PROCEDURES TO BE FOLLOWED AND THE PROVISIONS DO NOT AFFECT SUBSTANTIVE RIGHTS OF THE PARTIES. THE GENERAL RULE FOR APPLI CABILITY OF PROCEDURAL LAWS IS THAT IT IS APPLICABLE RETROSPECTIVELY WHEREAS SUBSTANTIVE PROVISIONS OF FISCAL STATUTES ARE APPLICABLE PROSPECTIVELY UNLESS OTHERWISE PROVIDED. ADJUDICATION OF PROCEEDINGS BEFORE OR BY A COURT OR FORUM IS NOT A MATTER OF SUBS TANTIVE RIGHT OF A LITIGANT. THE STATUTES ARE BIFURCATED BETWEEN PROVISIONS DEALING WITH SUBSTANTIVE RIGHTS AND PROCEDURES PRESCRIBED FOR COMPLETION THE PROCEEDINGS. MAXWELL ON INTERPRETATION OF STATUES (11 TH EDITION) PROVIDES THAT 'NO PERSON HAS A VESTED RIGHT IN ANY COURSE OF PROCEDURE. HE HAS ONLY THE RIGHT TO PROSECUTE OR DEFENSE IN THE MANNER PRESCRIBED FOR THE TIME BEING BY OR FOR THE COURT IN WHICH THE CASE IS PENDING, AND IF, BY AN ACT OF PARLIAMENT THE MODE OF PROSECUTION IS ALTERED, HE HAS NO OTHE R RIGHT THAN TO PROCEED ACCORDING TO THE ALTERED MODE.' IT FURTHER PROVIDES THAT 'THE GENERAL PRINCIPLE SEEMS TO BE THAT ALTERATION IN THE PROCEDURE IS RETROSPECTIVE UNLESS THERE MAY BE SOME GOOD REASON AGAINST IT.' ON THESE PRINCIPLES IT IS HELD BY THE CO URTS THAT THE STATUTES WHICH DEAL WITH MATTERS OF PROCEDURE ARE PRESUMED TO BE RETROSPECTIVE IN NATURE UNLESS SUCH CONSTRUCTION IS TEXTUALLY INADMISSIBLE. THE FIVE JUDGE BENCH OF THE HON'BLE SUPREME COURT IN THE CASE OF MEMON ABDUL KARIM HAJI TAYAB VS DEPU TY CUSTODIAN GENERAL(1964) 6 SCR 837HELD AS FOLLOWS: 'IT IS WELL SETTLED THAT PROCEDURAL AMENDMENTS TO A LAW, APPLY, IN ABSENCE OF ANYTHING TO THE CONTRARY, RETROSPECTIVELY, IN THE SENSE THAT IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 16 THEY APPLY TO ALL ACTIONS AFTER THE DATE THEY COME INTO FORCE E VEN THOUGH THE ACTION MAY HAVE BEGUN EARLIER OR THE CLAIM ON WHICH THE ACTION IS BASED MAY OF AN ANTERIOR DATE.' 12. REFERENCE MAY FURTHER BE MADE TO THE FOLLOWING OBSERVATIONS OF THE HON'BLE SUPREME COURT IN THE CASE OFT. KALIAMURTHI V. FIVE GORI TH AIKKALWAKF 2008 9 SCC 306, (SCC P. 322, PARA 40) WHEREIN IT OBSERVED AS UNDER: '40. IN THIS BACKGROUND, LET US NOW SEE WHETHER THIS SECTION HAS ANY RETROSPECTIVE EFFECT. IT IS WELL SETTLED THAT NO STATUTE SHALL BE CONSTRUED TO HAVE A RETROSPECTIVE OPERATI ON UNTIL ITS LANGUAGE IS SUCH THAT WOULD REQUIRE SUCH CONCLUSION. THE EXCEPTION TO THIS RULE IS ENACTMENTS DEALING WITH PROCEDURE. THIS WOULD MEAN THAT THE LAW OF LIMITATION, BEING A PROCEDURAL LAW, IS RETROSPECTIVE IN OPERATION IN THE SENSE THAT IT WILL A LSO APPLY TO PROCEEDINGS PENDING AT THE TIME OF THE ENACTMENT AS ALSO TO PROCEEDINGS COMMENCED THEREAFTER, NOTWITHSTANDING THAT THE CAUSE OF ACTION MAY HAVE ARISEN BEFORE THE NEW PROVISIONS CAME INTO FORCE .' 13. IT IS SUBMITTED THAT THE LAW OF LIMITA TION BEING PROCEDURAL LAW HAS TO BE APPLIED TO THE PENDING PROCEEDINGS WHEN SUCH PROCEDURAL LAW BECOMES OPERATIONAL. THIS IS ON THE PRINCIPLE THAT NO PERSON CAN HAVE A VESTED RIGHT IN THE PROCEDURE ANDTHEREFORE, THE PROCEDURAL LAW ON THE DATE WHEN IT WAS E NFORCED, IS APPLIED. REFERENCE IN THIS REGARD MAY BE MADE TO THE BENNION STATUTORY INTERPRETATION (1ST ADDITION PAGE 446 PARA 191)WHEREIN IT WAS ELUCIDATED AS FOLLOWS: - 'BECAUSE A CHANGE MADE BY THE LEGISLATOR IN PROCEDURAL PROVISIONS IS EXPECTED TO BE FO R THE GENERAL BENEFIT OF LITIGANTS AND OTHERS, IT IS PRESUMED THAT IT APPLIES TO PENDING AS WELL AS FUTURE PROCEEDINGS.' 14. IT HAS BEEN JUDICIALLY HELD THAT THE LAW OF LIMITATION DOES NOT CREATE ANY RIGHT IN FAVOUR OF A PERSON OR DEFINE OR CREATE AN Y NEW CAUSE OF ACTION, BUT SIMPLY PRESCRIBES THAT THE REMEDY CAN BE EXERCISED OR AVAILED OF BY OR WITHIN THE PERIOD STATED AND NOT THEREAFTER. UNLIKE THE LIABILITY TO TAX UNDER THE ACT WHICH IS CREATED BY THE CHARGING SECTION READ WITH THE COMPUTATION PROV ISIONS, THE ASSESSMENT PROCEEDINGS RESULT ONLY IN CRYSTALLIZATION OF THE SAID LIABILITY WHICH IS TO BE ENFORCED AND THE TAX IF SHORT PAID OR UNPAID CAN BE COLLECTED. ONE MUST KEEP IN MIND THE DIFFERENCE BETWEEN LIABILITY TO TAX AND THE PROCEDURE PRESCRIBED UNDER THE ACT FOR COMPUTATION OF THE LIABILITY (I.E. THE PROCEDURE OF ASSESSMENT). IT IS A SETTLED POSITION THAT THE LIABILITY TO TAX AS A LEVY IS DETERMINED AS PER STATUTE AS IT EXISTS ON THE FIRST DAY OF THE ASSESSMENT YEAR. ON THE OTHER HAND THE ISSUE REGARDING TIME LIMITATION FOR INITIATION OR COMPLETION OF ASSESSMENT PROCEEDINGS BEING THE LAW OF PROCEDURE SHALL BE GOVERNED BY THE PROCEDURE PRESCRIBED BY THE STATUTE WHEN THE PROCEDURE FOR ASSESSMENT IS SET IN MOTION. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 17 15. REFEREN CE IN THIS REGARD IS MADE TO THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CWT VS MAHARAJA DEVI SINGHI OF JODHPUR (20 TAXMAN 141). IN THE DECIDED CASE THE ASSESSEE HAD FAILED TO FILE WT RETURNS FOR AYS 1958 - 59 TO 1961 - 62 AND ASSESSMENTS W ERE COMPLETED IN THE YEARS 1967 & 1968. THE AO INITIATED PENALTY PROCEEDINGS FOR DELAY IN FILING OF WT RETURNS AND LEVIED THE PENALTY WITHOUT OBTAINING PRIOR APPROVAL OF IAC. IT WAS THE ASSESSEE'S CONTENTION THAT THE AMENDMENT IN THE PROCEDURAL LAW, DOING AWAY WITH THE REQUIREMENT TO OBTAIN PRIOR APPROVAL FROM IAC, HAD COME INTO FORCE WITH EFFECT FROM 01.04.1965 AND THEREFORE THE AMENDED PROCEDURE DID NOT APPLY TO AYS 1958 - 59 TO 1961 - 62. THIS CONTENTION WAS UPHELD BY THE TRIBUNAL BUT ON APPEAL BY THE REVENU E, THE HON'BLE HIGH COURT HELD AS FOLLOWS: 'SECTION 18(4) ONLY PROVIDED THE PROCEDURE TO BE ADOPTED REGARDING THE IMPOSITION OF PENALTY AND NOT THE RATE OF PENALTY. THE POSITION, IN FACT, IS THAT THE AMENDMENT IN THE PROCEDURAL LAW WOULD ORDINARILY OPERAT E RETROSPECTIVELY IN THE ABSENCE OF ANYTHING TO THE CONTRARY. IN THE INSTANT CASE, AT THE TIME OF THE AMENDMENT OF SECTION 18 THE MATTER WAS WITH THE WTO AND EVEN THE ASSESSMENT PROCEEDINGS WERE NOT COMPLETED. WITH THE ENLARGEMENT OF THE JURISDICTION OF TH E WTO, UNDER THE AMENDED SECTION 18(L)(A), HE WAS NO MORE REQUIRED TO REFER THE MATTER TO THE IAC FOR APPROVAL FOR IMPOSITION OF PENALTY. ACCORDINGLY, THE PROCEDURE PROVIDED IN THE AMENDED PROVISIONS OF SECTION 18(L)(A) HAD RETROSPECTIVE EFFECT, IN THE IN STANT CASE, AND WAS APPLICABLE TO THE PROCEEDINGS OF IMPOSITION OF PENALTY WHICH WERE INITIATED AFTER THE WEALTH - TAX (AMENDMENT) ACT CAME INTO FORCE.' 16. REFERENCE MAY ALSO BE MADE TO THE DECISION OF THE HON'BLE ITAT, CHENNAI IN THE CASE OF ITO VS O .N. SHAHUL HAMEED (106 ITD 342). IN THE DECIDED CASE THE ASSESSMENT OF THE ASSESSEE FOR AY 1996 - 97 WAS REOPENED ON 07.11.2000 AND AS THE PROVISIONS OF SECTION 153 AS WERE IN FORCE ON THAT DATE THE AO WAS PERMITTED TO PASS THE ORDER U/S 147 ANYTIME TILL 31. 03.2003. SUBSEQUENT THERETO WHILE THE ASSESSMENT WAS PENDING, THE FINANCE ACT, 2001 HAD AMENDED THE PROVISIONS OF SECTION 153 AND THE PERIOD OF LIMITATION WAS CURTAILED BY ONE YEAR PURSUANT TO WHICH THE PENDING ASSESSMENTS WERE REQUIRED TO BE COMPLETED ON OR BEFORE 31.03.2002. THE AO HOWEVER PASSED THE ORDER U/S 147 ON 13.02.2003 WHICH THE TRIBUNAL HELD TO BE TIME BARRED, BY OBSERVING AS UNDER: 'SECTION 153(2) DEALS WITH LAW OF LIMITATION. LAW OF LIMITATION HAS BEEN HELD TO BE PROCEDURAL LAW ALWAYS HAVING RETROSPECTIVE EFFECT, UNLESS THE AMENDED STATUTE PROVIDES OTHERWISE. HENCE, SECTION 153 CANNOT BE TERMED AS SUBSTANTIVE LAW, MUCH LESS A STATUTE OF REPOSE. WHEN IT IS NOT SO TERMED, THE EXPOSITION EMANATING FROM THAT IN CASES OF ADJECTIVE LAW OR PROCEDURAL STATUTE, AMENDED PROVISIONS WOULD APPLY. IT IS TRITE PROPOSITION THAT NEITHER THE REVENUE NOR THE ASSESSEE SHOULD BE GIVEN A IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 18 STEPMOTHERLY TREATMENT. HENCE, WHEN THE REVENUE CAN CLAIM BENEFIT OF EXTENSION OF TIME UNDER LIMITATION PROVISION S BY WAY OF AMENDMENT, IT IS BUT EQUITABLE THAT RESTRICTION OF TIME IN LIMITATION PROVISIONS SHOULD ALSO BE BINDING ON THE REVENUE. [PARA 16] CONSIDERING THE AFORESAID, THE AMENDED PROVISION OF SECTION 153(2) WOULD APPLY. AS SUCH, THE ORDER OF THE COMMISS IONER (APPEALS) WAS TO BE UPHELD. THE REVENUE'S APPEAL WAS TO BE DISMISSED.' 17. IN THE PRESENT CASE THE ASSESSMENTS FOR AYS 2012 - 13 & 2013 - 14 WERE ORDINARILY GETTING TIME BARRED UNDER SECTION 153B ON 31.03.2016. DURING THE PENDENCY OF THE ASSESSMENT THE AO MADE REFERENCE UNDER SECTION 142A TO THE VALUATION OFFICER ON 14.01.2016 CONSEQUENT TO WHICH THE AO COULD HAVE AVAILED BENEFIT OF EXTENDED PERIOD AS PROVIDED FOR BY THE EXPLANATION U/S 153B. PRIOR TO THE DATE ON WHICH THE REFERENCE WAS MADE UNDER SECTIO N 142A I.E. 14/01/2016 THE FINANCE (NO.2) ACT V 2014 HAD ALREADY AMENDED PROVISIONS OF SECTION 142A AND 153B IN WHICH LIMITATION PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH REFERENCE WAS MADE, WAS LEGISLATIVELY PROVIDED FOR. IN THE CIRCUMSTANCES BOTH THE AO AND THE DVO WERE BOUND BY THE LAW OF LIMITATION AS WAS IN FORCE AT THE TIME WHEN THE PROCEEDINGS U/S 142A WERE INITIATED BY THE AO ON 14.01.2016. EVEN THOUGH THE STATUTE HAD GIVEN PERIOD OF SIX MONTHS FOR SENDING THE VALUATION REPORT AND SUCH PERIOD WAS TO EXPIRE ON 31.07.2016; THE AO HIMSELF HAD GIVEN TIME ONLYUPTO 05.03.2016 TO ENABLE THE DVO TO FURNISH HIS VALUATION REPORT. HOWEVER GIVING BENEFIT OF STATUTORY LIMITATION PERIOD OF SIX MONTHS PRESCRIBED IN SECTION 142A(6), THE LAST DATE FOR SE NDING THE VALUATION REPORT EXPIRED ON 31.07.2016 AND THEREAFTER WITHIN 77 DAYS I.E. 18.10.2016, THE AO WAS LEGALLY BOUND TO PASS THE ORDER U/S 153A READ WITH 143(3) OF THE ACT. SINCE NO ORDERS OF ASSESSMENT WERE PASSED ON OR BEFORE 18.10.2016 BUT PASSED ON 25.11.2016, THE CIT(A) RIGHTLY CONCLUDED THAT THE ORDERS DATED 25.11.2016 WERE PASSED BEYOND THE LIMITATION PRESCRIBED IN SECTION 153B OF THE ACT AND THEREFORE CORRECTLY ANNULLED THE ORDERS OF THE AO. 14 . L D. AR HAS ALSO REITERATED THE SUBMISSION AS SUBM ITTED BEFORE THE CIT(A), WHICH READ AS UNDER : - 2.1 IN CONNECTION WITH THIS GROUND YOU APPELLANT IS TO BRING TO YOUR KIND NOTICE SOME OF THE EVENTS WHICH TOOK PLACE DURING THE COURSE OF ASSESSMENT PROCEEDINGS: 1. THE SEARCH OPERATION HAD TAKEN PLACE IN T HE PREMISE OF THE APPELLANT ON 24.10.2013 AND ON SUBSEQUENT DATES AND THE ASSESSMENT U/S.153A WAS GETTING TIME BARRED ON 31.03.2016 AS PER THE PROVISIONS OF SECTION 153B. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 19 2. THE THEN LD. A.O. HAD REFERRED THE MATTER TO THE VALUATION OFFICER ON 14.01.2016 (PB PAGE NO.1&2) TO DETERMINE THE ACTUAL COST OF CONSTRUCTION/INVESTMENT OF THE PROJECT 'SIDDHI VINAYAK', THE CONSTRUCTION OF WHICH WAS COMMENCED DURING THE F.Y. 2011 - 12. 3. THAT THE A.O. IN HIS LETTER TO THE VALUATION OFFICER HAD SPECIFIED THAT THE REPO RT SHOULD BE SUBMITTED ON OR BEFORE 05.03.2016 AS THE ASSESSMENTS WERE GETTING TIME BARRED ON 31.03.2016. 4. THE ASSESSMENTS FOR THE A.Y. 2008 - 09 TO A.Y. 2011 - 12 CORRESPONDING TO THE F.Y. 2007 - 08 TO 2010 - 11 WERE COMPLETED ON 04.03.2016 AND ASSESSMENT OR DERS WERE PASSED ACCORDINGLY[PB PAGE NO. 190 TO 193]. 5. ASSESSMENTS FOR A.Y. 2012 - 13 TO A.Y. 2014 - 15 WERE KEPT IN ABEYANCE FOR THE WANT OF THE REPORT OF THE VALUATION OFFICER. 6. NO EXTENSION WHATSOEVER WAS SOUGHT BY THE VALUATION OFFICER OR WAS SU OMOTO GRANTED BY THE A.O. AND THE VALUATION REPORT WAS NOT SUBMITTED ON OR BEFORE 05.03.2016 AND HENCE THE REPORT WAS TIME BARRED. 7. THUS THE DUE DATE FOR COMPLETION OF ASSESSMENT PROCEEDINGS IS CALCULATED AS BELOW: DATE OF REFERENCE TO DVO: - 14.01.2016 LAST DATE OF REPORT SPECIFIED IN THE LETTER OF A.O.: - 05.03.2016 NO. OF DAYS TO BE EXCLUDED: - 51 DAYS NEW DUE DATE: - 31.03.2016 + 51 DAYS = 21.05.2016 SINCE THERE ARE 76 DAYS (21.05.2016 - 06.03.2016) NOW LEFT, WHICH IS MORE THAN 60 DAYS) FOR THE A.O. TO COMPLETE THE ASSESSMENT PROCEEDINGS AS ON 06.03.2016 THE DUE DATE FOR COMPLETION OF ASSESSMENT PROCEEDINGS IS 21.05.2016 . THUS THE ORDERS FOR A.Y. 2012 - 13 TO 2014 - 15 ARE BARRED BY LIMITATION ON 21.05.2016 ITSELF. NOW EVEN WHEN THE BENEFIT OF THE DOUBT IS GIVEN TO THE DEPARTMENT, THAT THE TIME FIXED IN SECTION 142A, SUB SECTION 6 OF THE INCOME TAX ACT, 1961 IS SIX MONTHS FROM THE END OF THE MONTH IN WHICH REFERENCE IS MADE THE FOLLOWING STANDS OUT. 1. INSPECTION OF THE PROPERTY BY THE VALUATION OFFICER WAS DONE ON 13.05.2016. 2. TIME PRESCRIBED FOR THE SUBMISSION OF THE REPORT BY THE VALUATION OFFICER AS SPECIFIED IN SECTION 142A, SUB SECTION 6 OF THE INCOME TAX ACT, 1961 IS SIX MONTHS FROM THE END OF THE MONTH IN WHICH A REFERENCE WAS MADE EXPIRED ON 31.07.2016 I.E. SIX MONTHS FROM THE END OF JANUARY, 2016 (REFERENCE TO DVO WAS MADE ON 14.01.2016) IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 20 3. PERIOD OF LIMITATION AS STATED IN THE FIRST PROVISO BELOW THE EXPLANATION TO SECTION 153B SUB SECTION 3 EXPIRED ON 16.10.2016 AS SHOWN BELOW: DATE OF REFERENCE TO DVO: - 14.01.2016 LAST DATE OF REPORT SPECIFIED IN THE SECTION 142A(6).: - 31.07.2016 NO. OF DAYS TO BE EXCLUDED: - 199 DAYS NEW DUE DATE: - 31.03.2016+ 199 DAYS = 16.10.2016 SINCE THERE ARE 76 DAYS (16.10.2016 - 01.08.2016) NOW LEFT, WHICH IS MORE THAN 60 DAYS) FOR THE A.O. TO COMPLETE THE ASSESSMENT PROCEEDINGS AS ON 01.08.2016 THE DUE DATE FOR COMPLETION OF ASSESSMENT PROCEEDINGS IS 16.10.2016 . THUS THE ORDERS FOR A.Y. 2012 - 13 TO 2014 - 15 ARE BARRED BY LIMITATION ON 16.10.2016 EVEN IF BENEFIT OF DOUBT IS GIVEN TO THE A.O. IN THE INSTANT CASE. 4. THE ASSESSING OFFICER OBTAINED A LETTER DATED 27.09.2016 FROM THE APPELLANT COMPANY'S DIRECTOR ADDRESSED TO HIM REQUESTING HIM NOT TO COMPLETE ASSESSMENT IN SEPTEMBER 2016. 5. VALUATION REPORT BY THE VALUATION OFFICER WAS RECEIVED BY THE A.O. ONLY ON 03.10.2016 BY POST (COPY OF VALUATION REPORT IS PLACED IN PB PAGE NO. 12 TO 24). 6. HEARINGS THEREAFTER TOOK PLACE BEFORE THE ASSESSING OFFICER IN OCTOBER AND NOVEMBER 2016. THE ASSESSMENT ORDERS FOR T HE ASSESSMENT YEARS 2012 - 13 TO 2014 - 15 WERE PASSED ON 25.11.2016, POSTED ON 27.11.2016 AND WERE RECEIVED BY THE APPELLANT ON 29.11.2016. 7. AS PER THE ASSESSMENT ORDERS, THE SAME WERE PASSED WITH THE APPROVAL OF THE JOINT COMMISSIONER OF INCOME TAX UNDER SECTION 153D OF THE ACT GRANTED ON NOVEMBER 25,2016. 2.2 NOW, THE APPELLANT COMPANY WOULD LIKE TO DRAW YOUR KIND ATTENTION TO THE PROVISIONS OF A FEW IMPORTANT SECTIONS OF THE ACT WHICH ARE RELEVANT: ESTIMATION OF VALUE OF ASSETS BY VALUATION OFFICER. 142A. (1) THE ASSESSING OFFICER MAY, FOR THE PURPOSES OF ASSESSMENT OR REASSESSMENT, MAKE A REFERENCE TO A VALUATION OFFICER TO ESTIMATE THE VALUE, INCLUDING FAIR MARKET VALUE, OF ANY ASSET, PROPERTY OR INVESTMENT AND SUBMIT A COPY OF REPORT TO HIM. (2) THE ASSESSING OFFICER MAY MAKE A REFERENCE TO THE VALUATION OFFICER UNDER SUB - SECTION (1) WHETHER OR NOT HE IS SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 21 (3) THE VALUATION OFFICER, ON A REFERENCE MADE UNDER SUB - SECTIO N (1), SHALL, FOR THE PURPOSE OF ESTIMATING THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT, HAVE ALL THE POWERS THAT HE HAS UNDER SECTION 38A OF THE WEALTH - TAX ACT, 1957 (27 OF 1957). (4) THE VALUATION OFFICER SHALL, ESTIMATE THE VALUE OF THE ASSET, PROPE RTY OR INVESTMENT AFTER TAKING INTO ACCOUNT SUCH EVIDENCE AS THE ASSESSEE MAY PRODUCE AND ANY OTHER EVIDENCE IN HIS POSSESSION GATHERED, AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. (5) THE VALUATION OFFICER MAY ESTIMATE THE VALUE OF THE A SSET, PROPERTY OR INVESTMENT TO THE BEST OF HIS JUDGMENT, IF THE ASSESSEE DOES NOT CO - OPERATE OR COMPLY WITH HIS DIRECTIONS. (6) THE VALUATION OFFICERSHALL SEND A COPY OF THE REPORT OF THE ESTIMATE MADE UNDER SUB - SECTION (4) OR SUB - SECTION (5), AS THE CAS E MAY BE, TO THE ASSESSING OFFICER AND THE ASSESSEE, WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH A REFERENCE IS MADE UNDER SUB - SECTION (1). (7) THE ASSESSING OFFICER MAY, ON RECEIPT OF THE REPORT FROM THE VALUATION OFFICER, AND AFTER G IVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, TAKE INTO ACCOUNT SUCH REPORT IN MAKING THE ASSESSMENT OR REASSESSMENT. [TIME LIMIT FOR COMPLETION OF ASSESSMENT UNDER SECTION 153A. 153B. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 153, THE ASSESSI NG OFFICER SHALL MAKE AN ORDER OF ASSESSMENT OR REASSESSMENT, (A) IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B) OF SUB - SECTION (1) OF SECTION 153A, WITHIN A PERIOD OF TWENTY - ONE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132AWAS EXECUTED; (B)IN RESPECT OF THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQ UISITION IS MADE UNDER SECTION 132A, WITHIN A PERIOD OF TWENTY - ONE MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE LAST OF THE AUTHORISATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A WAS EXECUTED: (2),., (3)... EXPLANATION IN COMPUTING THE PERIOD OF LIMITATION UNDER THIS SECTION (I) AND (II) (HI) THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER MAKES A REFERENCE TO THE VALUATION OFFICER UNDER SUB - SECTION (1) OF SECTION 142A AND ENDING WITH THE DATE ON W HICH THE REPORT OF THE VALUATION OFFICER ISRECEIVED BY THE ASSESSING OFFICER; OR (IV) TO (X) SHALL BE EXCLUDED. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 22 PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN CLAUSE (A) OR CLAUSE (B) O F THIS SUB - SECTION AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT OR REASSESSMENT, AS THE CASE MAY BE, IS LESS THAN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEM ED TO BE EXTENDED ACCORDINGLY: 2.3 THE READING OF THE ABOVE SECTION DRAWS THE FOLLOWING IMPORTANT POINTS: 1. THE MAXIMUM TIME AVAILABLE WITH THE VALUATION OFFICER AS PER THE PROVISIONS OF SUB - SECTION (6) OF SECTION 142A TO SUBMIT HIS REPORT IS SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE MATTER IS REFERRED TO HIM. 2. THERE IS NO PROVISION IN THE ACT WHICH WARRANTS THE A.O. TO EXTEND THE PERIOD SPECIFIED IN SUB SECTION (6) OF SECTION 142A WHETHER SUOMOTO BY HIM OR ON THE REQUEST OF THE ASSESSEE OR O N THE REQUEST OF THE VALUATION OFFICER. 3. SECTION 142A, SUB - SECTION 5 EMPOWERS THE VALUATION OFFICER TO SUBMIT HIS REPORT TO THE BEST OF HIS JUDGMENT, IF THE ASSESSEE DOES NOT CO - OPERATE OR COMPLY WITH HIS DIRECTION. 4. THE POWER OF EXTENSION OF TIME HAS BEEN SPECIALLY MADE AVAILABLE IN SECTION 142(2A) I.E. IN CASES WHERE THE MATTER IS REFERRED FOR SPECIAL AUDIT BUT NOT IN CASE WHERE THE MATTER IS REFERRED TO VALUATION OFFICER. PROVISIONS OF SECTION 142(2C) ARE GIVEN BELOW: 142(2C)EVERY REPORT UNDER SUB - SECTION (2A) SHALL BE FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER WITHIN SUCH PERIOD AS MAY BE SPECIFIED BY THE ASSESSING OFFICER: PROVIDED THAT THE ASSESSING OFFICER MAY, SUO MOTU, OR ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE AND F OR ANY GOOD AND SUFFICIENT REASON, EXTEND THE SAID PERIOD BY SUCH FURTHER PERIOD OR PERIODS AS HE THINKS FIT; SO, HOWEVER, THAT THE AGGREGATE OF THE PERIOD ORIGINALLY FIXED AND THE PERIOD OR PERIODS SO EXTENDED SHALL NOT, IN ANY CASE, EXCEED ONE HUNDRED AN D EIGHTY DAYS FROM THE DATE ON WHICH THE DIRECTION UNDER SUB - SECTION (2A) IS RECEIVED BY THE ASSESSEE. IN THIS SECTION POWER OF EXTENSION OF TIME FOR FURNISHING THE REPORT IN THE PRESCRIBED FORM IS ALSO GIVEN TO A.O. BY THE FINANCE ACT, 2007 W.E.F. 01.04.2 008. EARLIER, THE SAME COULD BE EXTENDED ONLY ON THE APPLICATION MADE BY THE ASSESSEE SUBJECT TO OVERALL TIME LIMIT OF 180 DAYS INCLUDING THE EXTENDED PERIOD FROM THE DATE ON WHICH THE DIRECTION U/S 142(2A) IS RECEIVED BY THE ASSESSEE.NO SUCH POWER OF EXTE NSION IS GIVEN UNDER SECTION 142A. 5. AS PER EXPLANATION (III) TO SECTION 153B THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER MAKES A REFERENCE TO THE VALUATION OFFICER UNDER SUB - SECTION (1) OF SECTION 142A AND ENDING WITH THE DATE O N WHICH THE REPORT OF THE VALUATION OFFICER IS RECEIVED BY THE ASSESSING OFFICER SHALL BE EXCLUDED FROM THE CALCULATION OF PERIOD OF LIMITATION. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 23 6. THE ASSESSING OFFICER HAS A LEVERAGE OF SIXTY DAYS IN CASE THE PERIOD OF LIMITATION AVAILABLE WITH THE AS SESSING OFFICER, AFTER THE VALUATION OFFICER HAS SUBMITTED HIS REPORT, FOR MAKING AN ORDER OF ASSESSMENT IS LESS THAN SIXTY DAYS. 2.4 IN THE INSTANT CASE, THE ASSESSMENTS HAVE NO DOUBT BEEN COMPLETED ON NOVEMBER 25, 2016 WITHIN 60 DAYS OF RECEIPT OF THE VALUATION REPORT ON OCTOBER 3, 2016. 2.5 HOWEVER, THE MOOT QUESTION IS AS TO WHETHER THE PROVISION FOR EXCLUSION OF TIME [CLAUSE (III) OF THE EXPLANATION TO SECTION 153B] FROM THE DATE OF REFERENCE UPTO THE DATE OF RECEIPT OF THE REPORT OF THE VALUATION OFFICER CAN INCLUDE ANY PERIOD BEYOND THAT SPECIFIED IN SUB - SECTION (6) OF SECTION 142AIET ALONE THE PERIOD SPECIFIED IN THE LETTER OF THE A.O.? 2.6 CLAUSE (III) OF THE EXPLANATION TO SECTION 153B, WHEN IT REFERS TO THE DATE OF RECEIPT OF REPORT, MUST BE TAKEN TO REFER TO A REPORT SENT WITHIN THE PERIOD SPECIFIED IN THE LETTER OF THE A.O. EVEN IF THE BENEFIT IS TO BE GIVEN TO THE A.O. THEN SUCH DATE MUST BE MAXIMUM REFER TO THE PERIOD STIPULATED IN SUB - SECTION (6) OF SECTION 142A. IN OTHER WORDS, THE VALU ATION REPORT MUST BE SENT BY THE VALUATION OFFICER WITHIN THE TIME STIPULATED IN SUB - SECTION (6) OF SECTION 142A AND IT IS THE DATE OF SUCH A REPORT SENT WITHIN THE TIME AFORESAID WHICH IS RELEVANT FOR COMPUTING THE PERIOD TO BE EXCLUDED FOR THE PURPOSE OF LIMITATION. IF IT IS VIEWED THAT THE ACTUAL DATE OF RECEIPT OF THE VALUATION REPORT HAS TO BE CONSIDERED FOR THE PURPOSES OF CLAUSE (III) OF SECTION 153B EVEN IF THE REPORT IS SENT BEYOND THE PERIOD PRESCRIBED IN SUB - SECTION (6) OF SECTION 142A, THEN THE PROVISIONS OF SUB - SECTION (6) OF SECTION 142A WOULD BE RENDERED OTIOSE WHICH CANNOT BE POSSIBLE IN ANY CIRCUMSTANCES. 2.7 IN TERMS OF SUB - SECTION (6) OF SECTION 142A, THE VALUATION OFFICER WAS REQUIRED TO SEND HIS REPORT BY JULY 31, 2016 BEING THE DATE ON WHICH THE PERIOD OF SIX MONTHS FROM THE END OF THE MONTH OF REFERENCE I.E. JANUARY 2016 ENDED. HOWEVER, THE DEPARTMENTAL VALUATION OFFICER'S REPORT DATED 27.09.2016 WAS RECEIVED BY THE A.O. ON 03.10.2016 I.E. WELL AFTER THE EXPIRY OF SIX MONTHS. IF COGNIZ ANCE CAN BE TAKEN OF SUCH A REPORT FOR THE PURPOSES OF CLAUSE (III) OF SECTION 153B, IT WOULD MEAN THAT THE VALUATION OFFICER HAS UNLIMITED TIME TO SEND HIS REPORT AND THE ASSESSMENT CAN BE COMPLETED WITH REFERENCE TO SUCH A REPORT SENT AT ANY TIME. SUCH C ANNOT BE THE INTENTION OF LEGISLATURE. THE STATUTE CANNOT BE SO READ AS TO RENDER ANY OF ITS PROVISIONS OTIOSE OR AS PERMITTING VIOLATION OF ANY OF ITS PROVISIONS. 2.8 SECTIONS 142A AND 153B HAVE TO BE HARMONIOUSLY CONSTRUED. SUCH HARMONIOUS CONSTRUCTIO N WOULD REQUIRE THAT THE REFERENCE TO THE VALUATION REPORT IN CLAUSE (III) OF THE EXPLANATION TO SECTION 153B MUST IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 24 BE TO A REPORT WHICH HAS BEEN SENT WITHIN THE TIME PRESCRIBED IN SUB - SECTION (6) OF SECTION 142A. 2.9 IT IS WORTHWHILE TO MENTION THAT THE V ALUATION OFFICER CAN TAKE NO PLEA THAT THE ASSESSEE HAD NOT CO - OPERATED WITH THE INSPECTION AS THE INSPECTION HAD ALREADY BEEN OVER ON 13.05.2016 AND THE VALUATION OFFICER HAD MORE THAN TWO MONTHS TO SUBMIT HIS REPORT. IN ANY CASE, THE ACT PERMITS THE VALU ATION OFFICER TO SUBMIT THE REPORT TO THE BEST OF HIS JUDGEMENT IF HE THINKS THE ASSESSEE IS NOT CO - OPERATING WITH HIM SO THERE WAS NOTHING STOPPING HIM FROM SUBMITTING HIS REPORT ON TIME. 2.10 IT IS ALSO IMPORTANT TO NOTE THAT A VERY SIGNIFICANT AMENDME NT WAS BOUGHT IN BY THE FINANCE ACT, 2014 W.E.F. 01.10.2014. PRIOR TO ITS SUBSTITUTION, SECTION 142A, AS INSERTED BY THE FINANCE (NO. 2) ACT, 2004, W.R.E.F. 15 - 11 - 1972 AND AMENDED BY THE FINANCE ACT, 2010, W.E.F.1 - 7 - 2010, READ AS UNDER: '142A. ESTIMATE BY VALUATION OFFICER IN CERTAIN CASES. (1) FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECTION 69B OR THE VALUE OF ANY BULLION, JEWELLERY OR OTHER VALU ABLE ARTICLE REFERRED TO IN SECTION 69A OR SECTION 69B OR FAIR MARKET VALUE OF ANY PROPERTY REFERRED TO IN SUB - SECTION (2) OF SECTION 56 IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF SUCH VALUE AND R EPORT THE SAME TO HIM. (2) THE VALUATION OFFICER TO WHOM A REFERENCE IS MADE UNDER SUB - SECTION (1) SHALL, FOR THE PURPOSES OF DEALING WITH SUCH REFERENCE, HAVE ALL THE POWERS THAT HE HAS UNDER SECTION 38A OF THE WEALTH - TAX ACT, 1957 (27 OF 1957). (3) ON RECEIPT OF THE REPORT FROM THE VALUATION OFFICER, THE ASSESSING OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, TAKE INTO ACCOUNT SUCH REPORT IN MAKING SUCH ASSESSMENT OR REASSESSMENT: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION S HALL APPLY IN RESPECT OF AN ASSESSMENT MADE ON OR BEFORE THE 30TH DAY OF SEPTEMBER, 2004, AND WHERE SUCH ASSESSMENT HAS BECOME FINAL AND CONCLUSIVE ON OR BEFORE THAT DATE, EXCEPT IN CASES WHERE A REASSESSMENT IS REQUIRED TO BE MADE IN ACCORDANCE WITH THE P ROVISIONS OF SECTION 153A. 2.11 THIS SECTION WAS SUBSTITUTED WITH NEW PROVISIONS QUOTED EARLIER VIDE FINANCE (NO. 2) ACT, 2014. THE REASONS FOR ENACTING THE NEW SECTION AS GIVEN IN THE MEMORANDUM: EXPLAINING THE PROVISIONS IN THE FINANCE (NO. 2) BILL, 20 14 ((PB PAGE NO. 3) READS, 'SECTION 142A DOES NOT ENVISAGE REJECTION OF BOOKS OF ACCOUNT AS A PRE - CONDITION FOR REFERENCE TO THE VALUATION OFFICER FOR ESTIMATION OF THE VALUE OF ANY INVESTMENT OR PROPERTY. FURTHER, SECTION 142A DOES NOT PROVIDE FOR ANY TIM E LIMIT FOR FURNISHING OF REPORT BY THE VALUATION OFFICER. ' IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 25 2.12 IN THE NEW PROVISIONS OF SECTION 142A ISSUES OF TIME FACTOR AND REPORT BY THE DVO ON BEST JUDGMENT IN CASE OF NON - CO - OPERATION BY THE ASSESSEE WERE MAINLY BROUGHT IN. SUB SECTION (4), (5) A ND (6) OF SECTION 142A LAYS DOWN THE TIME AVAILABLE WITH THE VALUATION OFFICER TO SUBMIT HIS REPORT AND ALSO ENTITLES HIM TO FINALISE THE REPORT TO THE BEST OF HIS JUDGEMENT IF HE THINKS THE ASSESSEE IS NOT CO - OPERATING WITH HIM. THE EXTRACTS OF THE MEMORA NDUM: EXPLAINING THE PROVISIONS IN THE FINANCE (NO. 2) BILL, 2014 READ AS UNDER: 'IF THE ASSESSEE DOES NOT CO - OPERATE OR COMPLY WITH THE DIRECTIONS OF THE VALUATION OFFICER HE MAY, ESTIMATE THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT TO THE BEST OF HIS JUDGMENT. IT IS ALSO PROPOSED TO PROVIDE THAT THE VALUATION OFFICER SHALL SEND A COPY OF HIS ESTIMATE TO THE ASSESSING OFFICER AND THE ASSESSEE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE REFERENCE IS MADE. THE ASSESSING OFFICER O N RECEIPT OF THE REPORT FROM THE VALUATION OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, TAKE INTO ACCOUNT SUCH REPORT IN MAKING THE ASSESSMENT OR REASSESSMENT. IT IS ALSO PROPOSED TO AMEND SECTIONS 153 AND 153B OF THE ACT SO AS TO PROVIDE THAT THE TIME PERIOD BEGINNING WITH THE DATE ON WHICH THE REFERENCE IS MADE TO THE VALUATION OFFICER AND ENDING WITH THE DATE ON WHICH HIS REPORT IS RECEIVED BY THE ASSESSING OFFICER SHALL BE EXCLUDED FROM THE TIME LIMIT PROVIDED UNDER THE AFORESAI D SECTION FOR COMPLETION OF ASSESSMENT OR REASSESSMENT. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST OCTOBER, 2014' 2.13 THE ABOVE EXTRACT OF THE MEMORANDUM TO THE FINANCE ACT CLEARS ANY DOUBT IF SO REMAIN AS TO WHAT THE PERIOD OF LIMITATION SHOULD BE IN OU R CASE. THE WORDINGS USED BY THE LEGISLATURE ARE CLEAR, UNAMBIGUOUS AND UNEQUIVOCAL WHEN IT STATES THAT THE REPORT SHOULD BE SUBMITTED TO THE ASSESSING OFFICER WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE REFERENCE IS MADE AND THE T IME PERIOD BEGINNING WITH THE DATE ON WHICH THE REFERENCE IS MADE TO THE VALUATION OFFICER AND ENDING WITH THE DATE ON WHICH HIS REPORT IS RECEIVED BY THE ASSESSING OFFICER SHALL BE EXCLUDED FROM THE TIME LIMIT FOR COMPLETION OF ASSESSMENT OR REASSESSMENT ONLY WHEN THE REPORT IS SUBMITTED WITHIN THE ABOVE TIME FRAME. 2.14 THE REVENUE MAY ARGUE THAT THE PERIOD STIPULATED IN SUB - SECTION (6) OF SECTION 142A IS DIRECTORY AND NOT MANDATORY. SUB - SECTION (6) USES THE WORD 'SHALL' AND DOES NOT PROVIDE FOR EXTENSI ON OF THE PERIOD. BESIDES, IF THE PERIOD STIPULATED IN SUB - SECTION (6) IS TREATED AS DIRECTORY, THE PERIOD FOR COMPLETION OF ASSESSMENT MAY GET EXTENDED FOR ANY LENGTH OF TIME DEPENDING UPON WHEN THE VALUATION OFFICER SENDS HIS REPORT. SUCH CANNOT BE THE P OSITION IN LAW. THE VALUATION OFFICER MUST SEND HIS REPORT WITHIN THE PRESCRIBED PERIOD AND THE ASSESSMENT MUST BE COMPLETED ON THE BASIS OF SUCH A REPORT WITHIN THE PERIOD STIPULATED IN IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 26 SECTION 153B WHICH IS TO BE COMPUTED AFTER EXCLUSION OF THE TIME FROM THE DATE OF REFERENCE TO DATE OF RECEIPT OF THE VALUATION REPORT, SUCH REPORT HAVING BEEN SET WITHIN THE TIME PRESCRIBED IN SUB - SECTION (6) OF SECTION 142 A. IF THE VALUATION OFFICER DOES NOT SEN D HIS REPORT WITHIN THE PERIOD PRESCRIBED, THE ASSESSING OFF ICER IS REQUIRED TO PASS THE ORDER OF IS S ENT WITHIN 60 DAYS FROM THE DATE ON WHICH THE REPORT OF THE VALUATION OFFICER SENT WITHIN THE PRESCRIBED PERIOD BY SUB - SECTION (6) OF SECTION 142AOUGHT TO HAVE BEEN RECEIVED BY HIM. 2.15 ON THE BASIS OF ABOVE IT W ILL BE EXTREMELY SAFE TO CONCLUDE THAT IN THIS CASE THE VALUATION OFFICER SHOULD HAVE SUBMITTED HIS REPORT BY 05.03.2016 AND IN THAT CASE THE PERIOD OF LIMITATION EXPIRED ON 21.05.2016 (AS SHOWN IN PARA 2.1 POINT 7). EVEN IF IT IS TAKEN THAT THE VALUATION REPORT SHOULD HAVE BEEN SUBMITTED BY 31.07.2016 (I.E. SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE MATTER WAS REFERRED TO HIM) THE TIME ALLOWED FOR COMPLETING THE ASSESSMENT WOULD HAVE BEEN 16.10.2016 (AS SHOWN IN PARA 2.1 POINT 10). THUS THE PERIOD O F LIMITATION HAS IN ANY CASE EXPIRED ON 16.10.2016 IF NOT 21.05.2016. 2 16 AS SECTION 142A IS A NEW SECTION, RELEVANT DECISIONS OF THE COURT WERE NOT FOUND REPORTED. HOWEVER, THE ISSUE RELATED TO TIME BARRING OF AN ASSESSMENT UNDER BOTH THE - REVISIONS I.E . UNDER SPECIAL AUDIT AND ESTIMATION BY VALUATION OFFICER ARE SIMILAR AND IDENTICAL , THE DECISIONS GIVEN IN THE CASE OF SPECIAL AUDIT ARE BEING REFERRED HERE BELOW: 2.17 VARIOUS COURTS HAVE RULED IN THE FAVOUR OF THE ASSESSEE THAT ONCE THE TIME LIMIT P RES CRIBED IN SECTION 142(2C) IS OVER AND THE ASSESSMENT ORDER IS NOT PASSED ACCORDINGLY THE ,.;SE GET BARRED BY LIMITATION. 1) PR CIT VS. NILKANTHCONCAST (P) LTD. (2016) 387 ITR 568 (DEL)[PB PAGE NO. 60 TO 64] THE CASE PERTAINS TO A.Y. 2005 - 06. THE HON'BLE HIGH COURT DECLINED TO FRAME ANY QUESTION ADDRESSED BY ITAT, WHETHER ASSESSMENT ORDER PASSED BY AO U/S 153A WAS BARRED BY LIMITATION WITH OBSERVATION THAT IN TERMS OF SECTION 142(2A), SPECIAL AUDIT WAS CONDUCTED UNDER ORDER PASSED BY A.O., BY ACCOUNTAN T AS DEFINED IN EXPLANATION TO SECTION 288(2). IT WAS APPARENT THAT SAID AUDITOR WAS NOT EXPECTED TO BE IN RELATIONSHIP OF AGENT OF ASSESSEE - IT WAS PERHAPS FOR THIS REASON, PROVISO TO SECTION 142(2C) SPECIFICALLY STATED THAT EXTENSION OF TIME FOR SUBMITT ING AUDIT REPORT COULD BE MADE BY A.O. 'ON THE APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE' - IF LEGISLATIVE INTENT WAS TO PERMIT APPLICATION TO BE MADE BY AUDITOR, THAT COULD HAVE BEEN EXPRESSLY PROVIDED FOR IN PROVISO TO SECTION 142(2C). REVENUE'S AP PEAL WAS DISMISSED. IN PARA 6 OF THE ORDER, THE COURT OBSERVED THAT THE POWER TO AO WAS GIVEN TO EXTEND THE TIME SUO MOTO W.E.F. 01.4.2008 AND THE AMENDMENT IS PROSPECTIVE. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 27 THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS BISHEN SAROOP R AM KISHAN AGRO (P) LTD. (2011) 203 TAXMAN 326 [PB PAGE NO. 65 TO 74] WAS FOLLOWED WHILE DECIDING THE AFORESAID CASE. (NOTE - IN CASE OF ESTIMATION BY VALUATION OFFICER UNDER SECTION 142A, THERE IS NO PROVISION OF EXTENSION OF THE PERIOD OF SIX MONTHS FOR FURNISHING THE REPORT BY HIM) CIT VS BJN HOTELS LTD. (2016) 382ITR 110 (KAR) \ VB PAGE NO. 75 TO 77] IN THIS CASE ALSO DIRECTION WAS GIVEN FOR SPECIAL AUDIT U/S 142(2A). THE DUE DATE FOR SUBMISSION OF SPECIAL AUDIT REPORT BEING 28.2.2007, ASSESSMENT ORDERS HAVE TO BE ISSUED ON OR BEFORE 29.4.2007. COPIES OF ASSESSMENT ORDERS WERE SERVED ON ASSESSEE ON 30.4.2007. REVENUE WAS NEITHER ABLE TO POINT OUT FROM THE RECORDS THAT ASSESSMENT ORDERS WERE DISPATCHED ON 27.04.2007 NOR PRODUCED DISPATCH REGISTER TO ESTABL ISH THAT ORDERS WERE COMPLETE AND EFFECTIVE I.E. IT WAS ISSUED, SO AS TO BE BEYOND CONTROL OF AUTHORITY CONCERNED WITHIN PERIOD OF LIMITATION - HIGH COURT OPINED THAT THE ASSESSMENT ORDERS PASSED WERE BARRED BY LIMITATION. CIT VS. DHARIWAL SALES ENTERPRISE S (1996) 221 ITR 240 1PB PAGE NO. 78 TO 79] ITO REQUIRING THE ASSESSEE U/S 142(2A) TO FILE AUDIT REPORT ON 30.6.1985 BY ORDER DATED 30.03.1985. EXTENSION GRANTED BY ITO U/S 142(2C) FOR SUBMISSION OF AUDIT REPORT UPTO 31.08.1985 - ASSESSEE INFORMING ITO ABOU T HIS INABILITY TO FILE AUDIT REPORT BY 31.8.1985 BY LETTER DT. 21.8.1985, RECEIVED BY THE AO ON 22.8.85. THE ORDER WAS PASSED ON 3.9.85. THE SAME WAS BARRED BY LIMITATION U/S 153(2A) R.W.S. 153 EXPLANATION L(III) R.W.S. 142(2C) - WHEN THE INTIMATION WAS G IVEN BY THE ASSESSEE TO THE ITO THAT AUDIT REPORT WAS NOT LIKELY TO BE SUBMITTED WITHIN THE PERIOD ALLOWED U/S 142(2C), THE PERIOD FOR OBTAINING THE AUDIT REPORT U/S 142(2A) ALLOWABLE U/S 142(2C) STOPPED RUNNING FOR EXTENSION OF LIMITATION PROVIDED U/S 153 (2A) BY APPLICATION OF EXPLN. L(III) TO SECTION 153. THE COURT WAS SO HARSH IN THIS CASE THAT IT DECIDED THAT THE ASSESSMENT ORDER WAS TO BE PASSED ON 22.8.1985 ITSELF WHEN THE INTIMATION WAS RECEIVED BY THE AO THAT NO AUDIT REPORT SHALL BE FURNISHED. [NOT E - IN THE CASE OF YOUR APPELLANT ALSO, THE PROVISIONS OF EXPLANATION L(V) TO SECTION 153 HAVE TO BE READ WITH SECTION 142A(6)] 2.18ALTHOUGH THE CASE LAWS LISTED ABOVE ARE FOR SECTION 142(2A) THE BASIC POINT REMAINS THAT ONCE THE PRESCRIBED TIME IS OVER FOR THE REFERENCE MADE TO A THIRD PERSON AND THE ASSESSMENT IS NOT DONE WITHIN THE TIME PRESCRIBED THE ASSESSMENT WILL AUTOMATICALLY GET BARRED BY LIMITATION. THIS IS DONE SO THAT THE LEGISLATION WANTS THAT NEITHER THE ASSESSEE NOR THE ASSESSING OFFICER SHOUL D TAKE UNDUE ADVANTAGE OF SUCH REFERENCES BEING MADE AND EXTEND THE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 28 PERIOD OF LIMITATION. IT IS WORTH TO MENTION THAT BOTH THE SECTIONS, I.E. RELEVANT TO SPECIAL AUDIT AND ESTIMATION BY VALUATION OFFICER ARE UNDER THE SAME CHAPTER (XIV) - PROCEDURE FOR ASS ESSMENT. 2.19 THE LETTER OBTAINED BY THE ASSESSING OFFICER ON SEPTEMBER 27, 2016 FROM THE APPELLANT'S DIRECTOR NOT TO COMPLETE THE ASSESSMENT IN SEPTEMBER, 2016 DUE TO DELAYED RECEIPT OF THE VALUATION REPORT CANNOT CONFER ANY JURISDICTION UPON THE ASSESSIN G OFFICER TO COMPLETE THE ASSESSMENT AFTER THE EXPIRY OF THE PERIOD OF LIMITATION. NEITHER THE ASSESSEE NOR THE ASSESSING OFFICERS ARE ABOVE THE LAW AND NONE OF THEM CAN CREATE ANY ARTIFICIAL RIGHT TO THE ASSESSING OFFICER WHICH THE ACT DOES NOT PERMITS. 2.20 HENCE THE IMPUGNED ASSESSMENT ORDERS PASSED ARE VOID AS THE SAME ARE BARRED BY LIMITATION THUS UNENFORCEABLE AND LIABLE TO BE QUASHED. 15. LD. AR HAS FILED RE JOINDER TO REMAND REPORT SUBMITTED BY THE AO BEFORE THE CIT(A), COPY OF THE SAME HAS BEEN FI LED IN THE PAPER BOOK FROM PAGES 110 TO 117. THE CONTENTS OF THE REJOINDER OF THE REMAND REPORT READ AS UNDER : - WITH REFERENCE TO THE ABOVE WE WOULD LIKE TO SUBMIT OUR REPLY TO THE REMAND REPORT SUBMITTED BY THE LD. A.O., COPY OF WHICH WAS RECEIVED BY US ON 12.03.2018. THE A.O. HAS RELIED UPON THE PROVISION OF EXPLANATION TO SECTION 153B AND HAS COMPLETELY IGNORED THE TIME FACTOR LAID DOWN IN SECTION 142A(6) AND OTHER PROVISIONS OF THIS SECTION. AS PER HIS OBSERVATIONS IN THE REMAND REPORT, IT SEEMS THAT THERE IS NO EXISTENCE OF SECTION 142A(6)IN THE ACT. 1. THE A.O. IN HIS REPORT HAS REFERRED TO CLAUSE (IV) OF EXPLANATION 1 TO SECTION 153(4) AND CONTENDED THAT THE ORDER PASSED BY HIM WAS VALID. REPLY: - IN REPLY TO PARA 1 WE WOULD LIKE TO SUBMIT THAT THE A.O. HAD HIMSELF SET A DEADLINE FOR THE VALUATION OFFICER TO SUBMIT HIS REPORT OF 05.03.2016. THE A.O. HAS NOT UNDERSTOOD THE PROVISIONS OF EXPLANATION TO SECTION 153B AS TO HOW TO CALCULATE THE PERIOD OF EXCLUSION AND THE DUE DATE. ASSUMING THAT THE V ALUATION OFFICER HAD SUBMITTED HIS REPORT ON 05.03.2016 THE A.O. HAD TIME TILL 21.05.2016 TO COMPLETE HIS ASSESSMENT AND NOT 31.03.2016. THE A.O. HAS IGNORED THE DATE SET BY HIM FOR THE REPORT TO BE SUBMITTED. GOING FURTHER HE IS ALSO IGNORING THE PROVISIO NS OF SECTION 142A(6) WHEREIN IN HAS BEEN LAID DOWN IN EXPLICIT AND UNAMBIGUOUS WORDS THAT THE VALUATION OFFICER MUST SUBMIT HIS IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 29 REPORT WITHIN 6 MONTHS FROM THE END OF THE MONTH IN WHICH REFERENCE WAS MADE TO HIM. ALTHOUGH THE PROVISIONS OF SECTION 153 AN D 153B W.R. TO THE PERIOD OF EXCLUSION ARE VERY SIMILAR BUT IT MUST KINDLY BE NOTED THAT THE ASSESSMENTS OF THE CONCERNED ASSESSMENT YEARS WERE COMPLETED U/S 153 A, TIME LIMIT OF WHICH IS GOVERNED BY SECTION 153B AND NOT SECTION 153 AND HENCE THE ARGUMENT BY THE A.O. IS NOT VALID. WE HAVE IN OUR SUCCEEDING PARAS SHOWN THAT THE PERIOD OF EXCLUSION SHALL BE CALCULATED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153B READ WITH SECTION 142A. 2. THE A.O. HAS FURTHER REFERRED AND RELIED ON THE EXPLANATION OF SE CTION 153B AND HAS STATED THAT 'THE PERIOD OF EXCLUSION STRETCHES FROM THE DATE OF REFERENCE TO THE DATE OF RECEIPT OF REPORT'. REPLY: - THE EXTRACTS OF CLAUSE (III) OF EXPLANATION TO SECTION 153B IS AS UNDER: 'THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER MAKES A REFERENCE TO THE VALUATION OFFICER UNDER SUB - SECTION (1) OF SECTION 142A AND ENDING WITH THE DATE ON WHICH THE REPORT OF THE VALUATION OFFICER IS RECEIVED BY THE ASSESSING OFFICER' WE HAVE IN OUR EARLIER SUBMISSION (PARA 2.4 TO PARA 2.9) ALREADY STATED THE FOLLOWING: 2.4 IN THE INSTANT CASE, THE ASSESSMENTS HAVE NO DOUBT BEEN COMPLETED ON NOVEMBER 25, 2016 WITHIN 60 DAYS OF RECEIPT OF THE VALUATION REPORT ON OCTOBER 3, 2016. 2.5 HOWEVER, THE MOOT QUESTION IS AS TO WHETHER T HE PROVISION FOR EXCLUSION OF TIME [CLAUSE (III) OF THE EXPLANATION TO SECTION 153BJ FROM THE DATE OF REFERENCE UP TO THE DATE OF RECEIPT OF THE REPORT OF THE VALUATION OFFICER CAN INCLUDE ANY PERIOD BEYOND THAT SPECIFIED IN SUB - SECTION (6) OF SECTION 142A LET ALONE THE PERIOD SPECIFIED IN THE LETTER OF THE A.O. ? 2.6 CLAUSE (HI) OF THE EXPLANATION TO SECTION 153B, WHEN IT REFERS TO THE DATE OF RECEIPT OF REPORT, MUST BE TAKEN TO REFER TO A REPORT SENT WITHIN THE PERIOD SPECIFIED IN THE LETTER OF THE A.O. EVEN IF THE BENEFIT IS TO BE GIVEN TO THE A.O. THEN SUCH DATE MUST BE MAXIMUM REFER TO THE PERIOD STIPULATED IN SUB - SECTION (6) OF SECTION 142A. IN OTHER WORDS, THE VALUATION REPORT MUST BE SENT BY THE VALUATION OFFICER WITHIN THE TIME STIPULATED IN SUB - S ECTION (6) OF SECTION 142A AND IT IS THE DATE OF SUCH A REPORT SENT WITHIN THE TIME AFORESAID WHICH IS RELEVANT FOR COMPUTING THE PERIOD TO BE EXCLUDED FOR THE PURPOSE OF LIMITATION. IF IT IS VIEWED THAT THE ACTUAL DATE OF RECEIPT OF THE VALUATION REPORT H AS TO BE CONSIDERED FOR THE PURPOSES OF CLAUSE (HI) OF SECTION 153B EVEN IF THE REPORT IS SENT BEYOND THE PERIOD PRESCRIBED IN SUB - SECTION (6) OF SECTION IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 30 142A, THEN THE PROVISIONS OF SUB - SECTION (6) OF SECTION 142A WOULD BE RENDERED OTIOSE WHICH CANNOT BE POSSIBLE IN ANY CIRCUMSTANCES. 2.7 IN TERMS OF SUB - SECTION (6) OF SECTION 142A, THE VALUATION OFFICER WAS REQUIRED TO SEND HIS REPORT BY JULY 31, 2016 BEING THE DATE ON WHICH THE PERIOD OF SIX MONTHS FROM THE END OF THE MONTH OF REFERENCE I.E. JANUARY 201 6 ENDED. HOWEVER, THE DEPARTMENTAL VALUATION OFFICER'S REPORT DATED 27.09.2016 WAS RECEIVED BY THE A.O. ON 03.10.2016 I.E. WELL AFTER THE EXPIRY OF SIX MONTHS. IF COGNIZANCE CAN BE TAKEN OF SUCH A REPORT FOR THE PURPOSES OF CLAUSE (HI) OF SECTION 153B, IT WOULD MEAN THAT THE VALUATION OFFICER (WHO IS APPOINTED BY THE REVENUE AND THE ASSESSEE IS HAVING NO CONTROL OVER HIM) HAS UNLIMITED TIME TO SEND HIS REPORT AND THE ASSESSMENT CAN BE COMPLETED WITH REFERENCE TO SUCH A REPORT SENT AT ANY TIME. SUCH CANNOT B E THE INTENTION OF LEGISLATURE. THE STATUTE CANNOT BE SO READ AS TO RENDER ANY OF ITS PROVISIONS OTIOSE OR AS PERMITTING VIOLATION OF ANY OF ITS PROVISIONS. 2.8 SECTIONS 142A AND 153B HAVE TO BE HARMONIOUSLY CONSTRUED. SUCH HARMONIOUS CONSTRUCTION WOULD R EQUIRE THAT THE REFERENCE TO THE VALUATION REPORT IN CLAUSE (HI) OF THE EXPLANATION TO SECTION 153B MUST BE TO A REPORT WHICH HAS BEEN SENT WITHIN THE TIME PRESCRIBED IN SUB - SECTION (6) OF SECTION 142A. 2.9 IT IS WORTHWHILE TO MENTION THAT THE VALUATION O FFICER CAN TAKE NO PLEA THAT THE ASSESSEE HAD NOT CO - OPERATED WITH THE INSPECTION AS THE INSPECTION HAD ALREADY BEEN OVER ON 13.05.2016 AND THE VALUATION OFFICER HAD MORE THAN TWO MONTHS TO SUBMIT HIS REPORT. IN ANY CASE, THE ACT PERMITS THE VALUATION OFFI CER TO SUBMIT THE REPORT TO THE BEST OF HIS JUDGEMENT IF HE THINKS THE ASSESSEE IS NOT CO - OPERATING WITH HIM SO THERE WAS NOTHING STOPPING HIM FROM SUBMITTING HIS REPORT ON TIME. THE ABOVE SUBMISSION WAS AVAILABLE WITH THE ASSESSING OFFICER AS YOUR GOODSE LF HAD FORWARDED HIM THE SAME VIDE YOUR LETTER DATED 23.02.2018 AND HIS REPLY SHOWS THAT HE IS STILL MAKING THE SAME ERROR WHILE INTERPRETING THE PROVISIONS OF THE ACT. IF THE ASSESSING OFFICER'S VIEW IS CONSIDERED THEN THE REPORT EVEN IF IT IS SUBMITTED T ODAY I.E. 20.03.2018 SHALL CONTINUE TO BE VALID AND HE CAN COMPLETE THE ASSESSMENT TILL 16.06.2018 WHICH IS COMPLETELY ABSURD AND WE HAVE NO EXPLANATIONS ON SUCH WILDLY UNREASONABLE AND IMPLAUSIBLE VIEWS. THE LEGISLATION KNEW THAT THERE MAY BE SOME PEOPLE WHO CAN MAKE SUCH IRRATIONAL INFERENCE AND SO HAD SUBSTITUTED PREVIOUS SECTION 142A WITH NEW PROVISIONS VIDE FINANCE (NO. 2) ACT, 2014. THE REASONS FOR ENACTING THE NEW SECTION AS GIVEN IN THE MEMORANDUM: EXPLAINING THE PROVISIONS IN THE FINANCE (NO. 2) B ILL, 2014 (PB PAGE NO. 3) READS, 'SECTION 142A DOES NOT ENVISAGE REJECTION OF BOOKS OF ACCOUNT AS A PRE - CONDITION FOR REFERENCE TO THE VALUATION OFFICER FOR ESTIMATION OF THE VALUE OF ANY INVESTMENT OR PROPERTY. FURTHER, SECTION 142A DOES IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 31 NOT PROVIDE FOR A NY TIME LIMIT FOR FURNISHING OF REPORT BY THE VALUATION OFFICER. ' IN ORDER TO FURTHER PUT A CHECK THAT THESE TIME LIMITS ARE ADHERED TO, THE LEGISLATURE EVEN GAVE POWER TO THE VALUATION OFFICER TO 'ESTIMATE THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT TO THE BEST OF HIS JUDGMENT, IF THE ASSESSEE DOES NOT CO - OPERATE OR COMPLY WITH HIS DIRECTIONS '. ON ONE HAND THE LEGISLATURE WANTS THAT THE ASSESSMENT IS NOT DELAYED AND ON THE OTHER HAND THE ASSESSING OFFICER IS OF THE OPINION THAT THE ASSESSMENT CAN BE DELAYED SINE DIE FOR THE WANT OF REPORT OF THE VALUATION OFFICER. THERE IS LITTLE DOUBT AS TO WHICH OF THE TWO ASPECTS IS RESPECTABLE AND RATIONAL. IF IT IS VIEWED THAT THE ACTUAL DATE OF RECEIPT OF THE VALUATION REPORT HAS TO BE CONSIDERED FOR THE PURPOS ES OF CLAUSE (III) OF SECTION 153B EVEN IF THE REPORT IS SENT BEYOND THE PERIOD PRESCRIBED IN SUB - SECTION (6) OF SECTION 142A, THEN THE PROVISIONS OF SUB - SECTION (6) OF SECTION 142A WOULD BE RENDERED OTIOSE WHICH CANNOT BE POSSIBLE IN ANY CIRCUMSTANCES. WH EN THERE IS A CONFLICT BETWEEN TWO OR MORE PARTS OF A STATUTE, RULE OF HARMONIOUS CONSTRUCTION IS TO BE ADOPTED WHICH IS THE THUMB RULE TO INTERPRETATION OF ANY STATUTE. LOGIC BEHIND HARMONIOUS CONSTRUCTION: A STATUTE IS PASSED AS A WHOLE. IT HAS ONE GENE RAL PURPOSE AND INTENT. THEREFORE, IT HAS TO BE READ AS A WHOLE. THE INTERPRETATION CONSISTENT WITH ALL THE PROVISIONS OF THE ACT MUST BE ADOPTED. IT SHOULD NOT BE LIGHTLY ASSUMED THAT THE PARLIAMENT HAD GIVEN SOMETHING WITH ONE HAND WHICH IT TOOK AWAY WIT H ANOTHER. WHERE TWO PROVISIONS RELATE TO THE SAME SUBJECT MATTER, THESE SHOULD BE RECONCILED AND EFFECT MUST BE GIVEN TO BOTH OF THEM. ANY INCONSISTENCY EITHER WITHIN A SECTION OR BETWEEN TWO DIFFERENT SECTIONS OF A STATUTE MUST BE AVOIDED. NO PART OF A S TATUTE CAN BE CONSTRUED IN ISOLATION (RBI VS PEERLESS GENERAL FINANCE AIR 1987 SC 1023). THE SUPREME COURT DISCUSSED THE APPLICATION OF THE RULE OF HARMONIOUSLNTERPRETATION IN SULTANA BEGAM V PREM CHAND JAIN AIR 1997 SC 1006. THE COURT SUMMED UP THE RULE AS UNDER: A. IF THE TWO PROVISIONS APPEAL TO BE CONFLICTING WITH EACH OTHER, HARMONIOUS INTERPRETATION SHOULD BE ADOPTED. ANY HEAD - ON CLASH BETWEEN THEM SHOULD BE AVOIDED. B. IF IT IS NOT POSSIBLE TO HARMONISE THE TWO CONFLICTING PROVISIONS, THEY SH OULD BE SO INTERPRETED THAT EFFECT IS GIVEN TO ALL OF THEM. C. ONE SECTION SHALL NOT BE ALLOWED TO DEFEAT THE OTHER PROVISIONS OF THE ACT UNLESS IT IS IMPOSSIBLE TO HARMONISE THEM OR TO GIVE EFFECT TO ALL THE PROVISIONS. AN INTERPRETATION WHICH REDUCES ONE OF THE PROVISIONS TO A DEAD LETTER IS NOT HARMONIOUS INTERPRETATION. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 32 IT IS WELL SETTLED RULE THAT AN INTERPRETATION WHICH RESULTS IN HARDSHIP, INJUSTICE, INCONVENIENCE OR ANOMALY SHOULD BE AVOIDED AND THAT WHICH SUPPORTS THE SENSE OF JUSTICE SHOULD B E ADOPTED. THE COURT LEANS IN FAVOUR OF INTERPRETATION WHICH CONFORMS TO JUSTICE AND FAIR PLAY AND PREVENTS INJUSTICE (UNION OF INDIA V. B.S. AGGARWAL AIR 1998 SC 1537). ONE SHOULD IN EVERY CASE HARMONIZE THE CONTRADICTORY PROVISIONS BY INTERPRETING NOT O NLY THE PROVISIONS BUT ALSO THE ORIGINAL INTENTION OF THE LAW OR RULE MAKER IN ORDER TO GIVE EFFECT TO BOTH THE PROVISIONS AND ENSURE NOT TO MAKE ANY OF THE TWO PROVISIONS VOID OR TO DESTROY IT. THE ASSESSING OFFICER IN THIS CASE HAS EITHER FAILED TO OR I N ORDER TO SAVE HIS SKIN DELIBERATELY NOT TRYING TO UNDERSTAND THIS SIMPLE CONCEPT AND IS READING THE PROVISIONS OF SECTION 153B IN ISOLATION WHICH IS IRRATIONAL. ALSO THE ASSESSING OFFICER HAS BEEN UNABLE TO CITE (AS NONE EXISTS) EVEN A SINGLE CASE LAW WH ICH IS IN HIS FAVOUR WHEREAS THE APPELLANT HAS BOUGHT TO YOUR NOTICE VARIOUS JUDGMENTS SUPPORTING HIS CONTENTIONS. EVEN THE A.O. HAS NOT DISCUSSED ANYTHING IN THE REMAND REPORT ABOUT THE NON - APPLICABILITY OF THE PRINCIPLES LAID DOWN IN THE DECISIONS OF THE VARIOUS COURTS CITED IN THE WRITTEN SUBMISSION FILED BY THE APPELLANT WHICH EXPLICITLY MEANS THAT HE HAS NOTHING TO COUNTER THE ARGUMENT OF THE APPELLANT. 3. THE A.O. IN PARA 4 HAS CALCULATED THE PERIOD OF EXCLUSION AT 262 DAYS WHICH HE HAS CALCULATED FR OM 14.01.2016 I.E. THE DATE OF REFERENCE TO THE DVO TO 03.10.2016 I.E. THE DATE ON WHICH HE HAS RECEIVED THE VALUATION REPORT. REPLY: - THE A.O., AS EXPLAINED ABOVE, HAS MADE A GROSS ERROR WHILE CALCULATING THE PERIOD OF EXCLUSION. AS PER HIS CONCLUSION TH E VALUATION OFFICER HAS UNLIMITED TIME TO SUBMIT THE REPORT AND HE HAS THE LIBERTY TO WAIT BEFORE COMPLETING THE ASSESSMENT PROCEEDINGS. THE ACT HAS CLEARLY SPECIFIED THE TIME LIMIT FOR SUBMISSION OF SUCH REPORT WHICH IN OUR CASE HAS BEEN VIOLATED AND THE ASSESSING OFFICER CAN MAXIMUM WAIT TILL THE END OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH REFERENCE WAS MADE. IT IS ALSO TO BE NOTED THAT THE A.O. HAD HIMSELF SET A DEADLINE OF 05.03.2016 FOR THE VALUATION OFFICER TO SUBMIT HIS REPORT AND ANY REPOR T BEYOND THAT DATE ITSELF IS VOID. THUS THE ASSESSMENTS WERE BARRED BY LIMITATION ON 21.05.2016 WHICH IS ARRIVED AS BELOW: DATE OF REFERENCE TO DVO: - 14.01.2016 LAST DATE OF REPORT SPECIFIED IN THE LETTER OF A.O.: - 05.03.2016 NO. OF DAYS TO BE EXCLUDED: - 51 DAYS NEW DUE DATE: - 31.03.2016 + 51 DAYS = 21.05.2016 IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 33 SINCE THERE WERE 76 DAYS (06.03.2016 - 21.05.2016) IN HANDS, WHICH WERE MORE THAN 60 DAYS) FOR THE A.O. TO COMPLETE THE ASSESSMENT PROCEEDINGS AS ON 06.03.2016, THE DUE DATES FOR COMPLETION OF ASSESSMENT PROCEEDINGS WAS 21.05.2016. NOW EVEN WHEN THE BENEFIT OF THE DOUBT IS GIVEN TO THE DEPARTMENT, THAT THE TIME FIXED IN SECTION 142 A, SUB SECTION 6 OF THE INCOME TAX ACT, 1961 IS SIX MONTHS FROM THE END OF THE MONTH IN WHICH REFERE NCE, THE PERIOD OF LIMITATION AS STATED IN THE FIRST PROVISO BELOW THE EXPLANATION TO SECTION 153B SUB SECTION 3 EXPIRED ON 16.10.2016 AS SHOWN BELOW: DATE OF REFERENCE TO DVO: - 14.01.2016 LAST DATE OF REPORT SPECIFIED IN THE SECTION 142A(6): - 3 1.07.2016 NO. OF DAYS TO BE EXCLUDED: - 199 DAYS NEW DUE DATE: - 31.03.2016 + 199 DAYS = 16.10.2016 SINCE THERE WAS 76 DAYS (01.08.2016 - 16.10.2016) IN HAND, WHICH IS MORE THAN 60 DAYS) FOR THE A.O. TO COMPLETE THE ASSESSMENT PROCEEDINGS AS ON 01. 08.2016 THE DUE DATE FOR COMPLETION OF ASSESSMENT PROCEEDINGS WAS 16.10.2016 BUT THE ORDERS WERE PASSED ON 25.11.2016. (NOTE - THE COPIES OF THE EXAMPLES FOR THE PERIOD OF EXCLUSION AND DETERMINING THE TIME BARRING DATE GIVEN IN THE BOOK FOR CA FINAL STUD ENTS WRITTEN BY THE RENOWNED TEACHER CA VINOD KUMAR GUPTA OF DELHI ARE ATTACHED) THUS THE ORDERS FOR A.Y. 2012 - 13 TO 2014 - 15 ARE BARRED BY LIMITATION AND THUS ARE VOID, UNENFORCEABLE AND LIABLE TO BE QUASHED. 4. THE ASSESSING OFFICER HAS STATED THAT HE HAD NOT ASKED THE APPELLANT TO SUBMIT A LETTER ON 27.09.2016 SEEKING EXTENSION OF TIME TO COMPLETE THE ASSESSMENTS. REPLY: - IN REPLY TO THIS PARA, YOUR APPELLANT WOULD LIKE TO SUBMIT THAT THE LETTER WAS RECEIVED BY THE INSPECTOR IN THE PRESENCE OF THE A. O. IF THE A.O. IS TAKEN AS CORRECT THAT HE HAD NOT INSISTED FOR SUCH A LETTER, IT IS BEYOND THE UNDERSTANDING WHY SUCH TYPE OF LETTER WILL BE FURNISHED BY THE DIRECTOR OF THE APPELLANT COMPANY, WHEN IT IS WELL KNOWN TO HIM THAT THE TIME BARRING DATE AS PER THE LAW CANNOT BE EXTENDED UNDER ANY CIRCUMSTANCE EXCEPT AS PROVIDED IN THE ACT. THE ISSUE WAS FIRST BROUGHT ON RECORD TO HIGHLIGHT THE FACT THAT THE A.O. WAS ALSO DOUBTFUL ABOUT THE TIME BARRING DATE ON 27.09.2016 AND HE SHOULD TAKE THE UNDUE BENEFIT OF SUCH LETTER IN FURTHER PROCEEDINGS. HOWEVER, AS THE A.O. HAS ALSO ADMITTED THAT SUCH LETTER CANNOT EXTEND THE ACTUAL DATE OF LIMITATION, THE ISSUE OF FURNISHING/OBTAINING THE LETTER IS RESOLVED. SIR, TO CONCLUDE THE REPORT OF THE ASSESSING OFFICER HOLDS N O MERIT AT ALL AND HE IS ONLY ARGUING FOR THE SAKE OF IT. THE BOTTOM - LINE REMAINS THAT THE ASSESSING OFFICER HAS ERRED IN COMPREHENDING THE LAW AND THE ORDERS PASSED BY HIM ARE BARRED BY LIMITATION. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 34 16. IN ADDITION TO THE ABOVE SUBMISSIONS, LD. AR ALSO SUB MITTED THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE IN PURSUANCE TO NOTICE U/S.153A OF THE ACT ON 5.1.2016. THE SEARCH WAS CONDUCTED U/S.132 OF THE ACT ON 24.10.2013. THE LAST DATE OF COMPLETION OF ASSESSMENT U/S.153A OF THE ACT AS PROVIDED BY THE S ECTION 153B OF THE ACT WAS 24 MONTHS FROM THE END OF THE FINANCIAL YEAR OF SEARCH AND THIS WAS TO END ON 31.03.2016. A REFERENCE WAS MADE TO THE VALUATION OFFICER U/S.142A OF THE ACT ON 14 TH JANUARY , 2016, THEREFORE, THE UNEXPIRED PERIOD WAS AVAILABLE TO T HE AO FOR COMPLETING THE ASSESSMENT U/S.153B OF THE ACT AS ON 14.01.2016 TO 31.03.2016 I.E. 77 DAYS. THE PERIOD AVAILABLE WITH THE DVO FOR SENDING HIS VALUATION REPORT TO THE AO U/S.142A(6) WAS SIX MONTHS FROM THE END OF THE MONTH IN WHICH REFERENCE WAS MA DE AND THIS PERIOD WAS EXPIRED ON 31.07.2016. THE PERIOD AVAILABLE U/S.153B READ WITH SECTION 142A OF THE ACT FOR PASSING OF THE ORDER U/S.153A OF THE ACT WAS 77 DAYS AFTER 31.07.2016, WHICH EXPIRES ON 18.10.2016 (01.08.2016+77 DAYS) . THE DATE OF WHICH THE DVO SUBMITTED HIS REPORT TO THE AO WAS ON 03.10.2016 AND THE ASSESSMENT ORDER FOR BOTH THE YEARS PASSED ON 25.11.2016. HE ALSO STATED THAT THE FINANCE ACT WAS OF THE YEAR 2014 AND THE ASSESSMENT YEARS UNDER QUESTION ARE OF 2012 - 2013 & 2013 - 2014 WHICH WERE PENDING ON THE DATE OF AMENDMENTS DUE TO ASSESSMENT U/S 153A AND THE AMENDMENTS IS A ADMINISTRATIVE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 35 PROCEDURES . HE HAS ALSO RELIED ON THE JUDGMENTS QUOTED IN THE WRITTEN SYNOPSIS AS MENTIONED SUPRA BEFORE US AS WELL AS BEFORE THE CIT(A). 17. AFTER HEARIN G BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL S AVAILABLE ON THE RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON THE ASSESSEE AND RESIDENTIAL PREMISES OF ITS PROMOTERS/DIRECTORS ON 24.10.2013. THE ASSESSEE HAS FILED RETURN OF INCOME U/S.139(1) OF THE ACT DECLARING AT A LOSS OF RS.57,438/ - ON 31.03.2013. CONSEQUENT UPON THE SEARCH CONDUCTED U/S 132 THE AO ISSUED NOTICE U/S.153A OF THE ACT ON 09.03.2015 TO FILE THE RETURN OF INCOME. AGAINST THIS NOTICE THE ASSESSEE FILED RETURN OF INCOME ON 05.01.2016. THEREAFTER, T HE AO MADE REFERENCE TO THE VALUATION OFFICER FOR DETERMINING THE COST OF INVESTMENT/ CONSTRUCTION IN THE PROPERTY AT SIDDHI VINAYAK ENCLAVE LAXMI NAGAR , NEAR YATRI NIWAS, CUTTACK ROAD , BHUBNESWAR ODISHA AS PER THE LETTER QUOTED SUPRA U/S 142A (6) OF THE INCOME TAX ACT.1961 . THE AO HAS SPECIFICALLY ASKED TO THE VALUATION OFFICER THAT IT IS A TIME BARRING ASSESSMENT WHICH IS GOING TO EXPIRE ON 31.03.2016 AND THE VALUATION REPORT TO BE SU BMITTED UPTO 05.03.2016 BUT THE VALUATION OFFICER SUBMITTED HIS REPORT ON 03.10.2016 BY EMAIL SENT ON 2 7 .09.2016. THE VALUATION REPORT WAS RECEIVED ON 0 3 .10.2016 WHICH WAS COMMUNICATED TO THE ASSESSEE. THE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 36 AO COMPLETED THE ASSESSMENT ON 25.11.2016 AFTER OB TAINING THE APPROVAL U/S.153D OF THE ACT FROM THE JOINT COMMISSIONER OF THE INCOME TAX ON 25.11.2016. THE AO MADE CERTAIN ADDITIONS WHICH WERE CHALLENGED BY THE ASSESSEE BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAD ALSO CHALLENGED THE LEGAL ISSUE RAISED AGAINST THE ORDER PASSED BY THE AO WAS TIME BARRED AND HE HAS ALSO CHALLENGED THE MERITS OF THE CASE. THE CIT(A) AFTER CONSIDERING THE WRITTEN SUBMISSION S OF THE ASSESSEE AND THE REMAND REPORT RECEIVED FROM THE AO AND THE REJOINDER OF THE ASSESSEE AGAINST THE REMAND REPORT, ANNULLED THE ASSESSMENT ORDER PASSED BY THE AO HOLDING THAT THE ASSESSMENT ORDER IS TIME BARRED AND THE CIT(A) HAS NOT DECIDED THE MERITS OF THE CASE, AGAINST WHICH THE ASSESSEE HAS ALSO PREFERRED CROSS OBJECTIONS BEFORE THE TRIB UNAL. THE OBSERVATIONS OF THE CIT(A) IN THIS REGARD ARE AS UNDER : - 4.3 THE ASSESSING OFFICER HAS SUBMITTED THE REMAND REPORT VIDE HIS LETTER DATED 07.03.2018. THE RELEVANT PORTION OF THE SUBMISSION OF THE APPELLANT IS AS BELOW: - 'THE AO HAD MADE A RE FERENCE TO VALUATION CELL ON 14.01.2016 IN RESPECT OF PROPERTY REQUESTING THE VALUATION OFFICER TO SUBMIT THE VALUATION REPORT ON OR BEFORE 05.03.2016 SO AS TO COMPLETE THE ASSESSMENTS BY THE TIME BARRING DATE OF 31.03.2016. HOWEVER, THE VALUATION REPORT W AS NOT SUBMITTED BY THE VALUATION OFFICER ON 05.03.2016. THE ASSESSEE HAS STATED THAT PERIOD OF EXCLUSION (5LDAYS) FROM DATE OF REFERENCE I.E. 14.01.2016 TO THE LAST DATE PRESCRIBED BY THE AO I.E.05.03.2016 SHOULD BE ADDED TO THE NORMAL TIME BARRING DATE I .E. 31.03.2016. SUCH AN ARGUMENT BY THE ASSESSEE IS NOT ACCEPTABLE BECAUSE THE PERIOD OF EXCLUSION COVERS THE PERIOD FROM DATE OF REFERENCE AND DATE OF RECEIPT IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 37 OF THE REPORT. THE AO HAS PRESCRIBED THE DATE WITH AN INTENTION TO COMPLETE THE ASSESSMENTS BY THE NORMAL TIME BARRING DATE. IT IS AS PER THE PROVISIO OF EXPLANATION - L(IV) TO SECTION 153(4) WHICH WAS EFFECTIVE FROM 01.10.2014 TILL IT WAS AMENDED W.E.F 01.06.2016. AS THE REFERENCE RELATED TO THE EARLIER PERIOD, THE OBJECTION OF THE ASSESSEE IS NOT AC CEPTABLE. IT MAY, FURTHER, BE CLARIFIED THAT THE PROVISIONS OF SECTION 153B DEALING WITH TIME LIMIT FOR COMPLETION OF ASSESSMENT U/S.L53A, AS IT STOOD EFFECTIVE FROM 01.06.2016, STATE THAT THE PERIOD OF EXCLUSION STARTS FROM THE DATE OF REFERENCE TO THE V ALUATION OFFICER U/S.L42A(L) AND ENDS ON THE DATE OF RECEIPT OF THE VALUATION REPORT. SO, IT IS CLEAR THAT THERE HAS BEEN NO CHANGE IN REGARD TO THE PERIOD OF EXCLUSION BEFORE OR AFTER THE AMENDMENT. IN THE PRESENT CASE, THE ASSESSMENTS FOR THE A.YS. - 2012 - 13,2013 - 14 & 2014 - 15 HAVE BEEN COMPLETED U/S.L53A. THE TIME LIMIT FOR THIS PURPOSE IS GOVERNED BY THE PROVISIONS OF SECTION 153B. AS PER THE EXPLANATION (HI) TO PROVISO OF SECTION 153B(3), THE PERIOD OF EXCLUSION STRETCHES FROM THE DATE OF REFERENCE TO THE DATE OF RECEIPT OF THE REPORT. SO, IT IS CLEAR THAT ASSESSMENTS HAVE BEEN COMPLETED BEFORE THE EXTENDED TIME LIMIT BOTH AS PER THE PROVISIONS OF SECTION 153B AND 153(1). THEREFORE, THE OBJECTION OF THE ASSESSEE THAT THE ASSESSMENTS HAVE BECOME TIME BARRE D IS NOT ACCEPTABLE. 02. THE STATEMENT OF THE ASSESSEE THAT THE VALUATION OFFICER U/S.L42A(6) SHALL SUBMIT THE VALUATION REPORT WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH REFERENCE IS MADE TO HIM DOES NOT BIND THE AO TO CONSIDER THIS PERIOD OF SIX MONTHS AS THE PERIOD OF EXCLUSION. ON THE OTHER HAND, THE ACT HAS MADE IT CLEAR THAT THE PERIOD OF EXCLUSION STARTS FROM THE DATE OF REFERENCE TO THE DATE OF SUBMISSION OF REPORT. 03. IT MAY BE STATED THAT THE ASSESSEE HAS REFERRED TO THE P ERIOD OF LIMITATION OF SIXTY DAYS MEANING THEREBY THAT THE ASSESSMENT IS REQUIRED TO BE COMPLETED WITHIN SIXTY DAYS FROM THE RECEIPT OF VALUATION REPORT. SUCH AN ARGUMENT IS NOT CORRECT. IT IS BECAUSE THE - REFERENCE OF SIXTY DAYS APPEARING IN THE PROVISO T O THE EXPLANATION - ] TO SECTION 153(4) WHICH WAS IN FORCE FROM 01.10.2014 TILL ITS AMENDMENT WITH EFFECT FROM 01.06.2016 IS APPLICABLE TO A CASE WHERE VALUATION REPORT IS RECEIVED BEFORE THE NORMAL TIME BARRING DATE AND THE PERIOD AVAILABLE FOR COMPLETION O F ASSESSMENT IS LESS THAN SIXTY DAYS. 4. IN THE PRESENT CASE, THE SCENARIO IS DIFFERENT IN THE SENSE THAT THE VALUATION REPORT IS RECEIVED MUCH AFTER THE NORMAL TIME BARRING DATE. SO, THE ARGUMENT OF THE ASSESSEE IS NOT ACCEPTABLE. IN THE REPORT IS 03.10 .2016. THUS, THE PERIOD OF EXCLUSION IS 262DAYS. THE ASSESSMENTS IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 38 FOR THE RELEVANT YEARS HAVE BEEN COMPLETED ON 25.11.2016 I.E. WITHIN 52 DAYS OF RECEIPT OF THE VALUATION REPORT. IT IS THUS CLEAR THAT THE ASSESSMENTS HAVE BEEN MADE WITHIN THE TIME LIMIT. I T WAS HELD THAT ASSESSMENT ORDER PASSED U/S 153A WAS INTRINSICALLY LINKED TO THE QUESTION WHETHER THE AO COULD 'SUOMOTO' HAVE EXTENDED THE DATE FOR SUBMISSION OF THE AUDIT REPORT U/S 142(2C). SINCE THIS QUESTION WAS INCIDENTAL TO THE MAIN QUESTION URGED RE GARDING THE ASSESSMENT BEING BARRED BY LIMITATION, IT HAS TO BE NECESSARILY EXAMINED NOT ONLY BY THE CIT (A), BUT CONSEQUENTLY BY THE TRIBUNAL AS WELL. FROM THE DECISION OF THE COURT, IT IS EVIDENT THAT THE ASSESSMENTS WILL BE BARRED BY LIMITATIONS, IF TH E TIME LIMIT ADHERE TO THE FURNISHING OF AUDIT REPORT IS NOT COMPLIED WITH AND THE DATE FOR FURNISHING AUDIT REPORT FIXED U/S 142(2C) SHOULD BE LAWFULLY CORRECT. YOUR APPELLANT IS NOT CONCERNED WHETHER SEC. 142(2A) EMPOWERS THE AO 'SUOMOTO' TO EXTEND THE DATE WITHIN THE OVERALL LIMIT OF 180 DAYS BEFORE AMENDMENT MADE IN THIS SECTION W.E.FI 1/4/2008, BUT THIS DECISION IS SUPPORTING THE CASE OF YOUR APPELLANT THAT THE DATE OF AUDIT REPORT FURNISHED AS PER LAW U/S 142(2C) IS RELEVANT TO DECIDE WHETHER THE ASS ESSMENT MADE THEREAFTER IS BARRED BY LIMITATION OR NOT. MAHAKOSHAL ENGINEERS & CONTRACTORS CO. (P) LTD. VS. ACIT [2003] 85ITD 267 (NAGPUR TRIB.) HELD: THE TIME LIMIT FIXED BY THE AO U/S 142(2A) CANNOT BE SAID TO BE ONLY DIRECTORY. SEC 142(2A) IS IMPERAT IVE AND ITS LANGUAGE PERMITS NO RELAXATION OF THE RIGIDITY OF THE RULE OF TIME LIMIT LAID DOWN THEREIN EXCEPT TO THE EXTENT STATED IN SECTION 142(2C). THEREFORE SECTION 142(2A) SHOULD BE APPLIED IN ITS UNDILUTED FORM, DISREGARDING THE CONSEQUENCES. SECTION 142(2C) ALSO SUGGESTS THAT THE ASSESSEE SHALL OBTAIN THE AUDIT REPORT WITHIN THE PERIOD ORIGINALLY FIXED. EXTENSION OF TIME IS ALLOWED ONLY ON AN APPLICATION BY THE ASSESSEE IN THIS REGARD AND ONLY WHEN THE ASSESSEE SHOWS GOOD AND SUFFICIENT CAUSE. EVEN U NDER SUCH CIRCUMSTANCE, THE MAXIMUM PERIOD INCLUDING THE ORIGINALLY FIXED PERIOD AND THE EXTENDED PERIOD CANNOT EXTEND BEYOND 180 DAYS FROM THE DATE ON WHICH THE ASSESSEE RECEIVES DIRECTION IN THIS REGARDFI - OM THE ASSESSING OFFICER. ADMITTEDLY, IN THE INS TANT CASE, THE AUDIT REPORT WAS ORIGINALLY DIRECTED TO BE FILED ON OR BEFORE 20 - 2 - 1997 BUT NO EXTENSION OF TIME WAS EITHER SOUGHT BY THE ASSESSEE OR THE ASSESSING OFFICER HAD NOT EXTENDED THE PERIOD WITHIN WHICH THE AUDIT REPORT WAS TO BE FURNISHED. THE ST AND OF THE REVENUE THAT THE PERIOD FROM 11 - 10 - 1996 TILL 9 - 4 - 1997, VIZ., THE DATE ON WHICH THE AUDITOR ACTUALLY FURNISHED HIS REPORT HAD TO BE EXCLUDED, COULD NOT BE ACCEPTED. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 39 DCIT, CC - 10 VS. RAM KISHAN DASS [2010] 38 SOT 102 (DELHI TRIB.) IN THIS CASE, THE TIME WAS FIXED FOR FURNISHING THE AUDIT REPORT U/S 142(2C), WHICH WAS EXTENDED BY THE AO TIME TO TIME. IT WAS HELD THAT THE ASSESSMENT WAS BARRED BY LIMITATION AS THE REVENUE HAD EXCLUDED THE PERIOD F R OM THE DATE OF DIRECTION FOR SPECIAL AUDIT TILL TH E DATE OF FURNISHING THE AUDIT REPORT ON THE DATE FIXED AS PER EXTENSION BY THE AO SUO - MOTO. EXTRACTS OF THE ORDER: PARA 6: CHRONOLOGY OF EVENTS, AS FILED BEFORE US, ON BEHALF OF THE ASSESSEE IS AS FOLLOWS : 1. ORDER OF SPECIAL AUDIT... 12 - 12 - 2006 2. TIME GIVEN TO FILE REPORT... 90 DAYS, I.E., UPTO 12 - 3 - 2007 3. LIMITATION AS PER EXPLANATION 2(II) TO SECTION 153(B)(1) OF THE INCOME TAX ACT. 11 - 5 - 2007 4. ASSESSMENT ORDER UNDER SECTION 153A/143(3) OF THE ACT... 3 - 8 - 2007 EXTENSION GIVEN BY THE ASSES SING OFFICER SUOMOTO FOR FILING REPORT OF SPECIAL AUDIT: - VIDE ORDER DATED 17 - 4 - 2007 - UP TO 20 - 5 - 2007 - VIDE ORDER DATED 17 - 5 - 2007 - UP TO 5 - 6 - 2007 THE AUDIT REPORT OF 4 - 6 - 2007 HELD (PARA 11): THEREFORE, FOLLOWING THE AFORESAID TRIBUNAL ORDER DATED 18 - 9 - 2009 IN BISHAN SAROOP RAM'S CASE (SUPRA), WE HOLD THE ASSESSMENT ORDER HEREIN TO BE BARRED BY LIMITATION AND THE SAME IS, AS SUCH, CANCELLED CIT VS DHARIWAL SALES ENTERPRISES [1996] 221 TAXMAN 240 (MP) HELD: ACCORDING TO SECTION 142(2C) THE ITO IS O NLY ENTITLED TO GIVE EXTENSION UP TO THE TIME WHICH IS SPENT FOR OBTAINING THE COPY OF THE AUDIT REPORT. WHEN THE ITO HAD BEEN INFORMED ON 22 - 8 - 1985, THAT THE AUDIT REPORT WAS NOT LIKELY TO COME WITHIN THE TIME PRESCRIBED, I.E., 180 DAYS, THEN IN THAT CASE THERE WAS NO JUSTIFICATION TO HAVE DECIDED THE MATTER ON 3 - 9 - 1985. THE PROVISIONS OF THE ACT HAVE TO BE CONSTRUED SPECIFICALLY. BEING NEGLIGENT ON THE PART OF THE AUTHORITIES CANNOT BE COUNTENANCED FOR CONSTRUING THE PROVISIONS OF LIMITATION. IN THE INSTA NT CASE, THE ITO HAD A MAXIMUM PERIOD SPECIFIED FOR OBTAINING THE REPORT OF THE AUDIT UP TO 180 DAYS UNDER SECTION 142(2C) AS PROVIDED IN THE PROVISO TO THIS SECTION. THAT PERIOD AUTOMATICALLY STOOD CURTAILED WHEN THE ITO WAS INFORMED THAT THE REPORT WAS N OT LIKELY TO BE RECEIVED AND AS SUCH THE ITO COULD HAVE LEGITIMATELY TAKEN THE PERIOD SPENT FOR OBTAINING THE COPY OF THE AUDIT REPORT UP TO THE TIME WHEN THE INTIMATION WAS GIVEN BY THE ASSESSEE THAT THE REPORT WAS NOT LIKELY TO COME. IN THOSE CIRCUMSTANC ES, IN THAT VIEW OF THE MATTER, THE ASSESSMENT DECIDED ON 3 - 9 - 1985 WAS DEFINITELY BEYOND THE PERIOD OF LIMITATION AND, AS SUCH, THE VIEW TAKEN BY THE TRIBUNAL WAS JUSTIFIED IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 40 PCIT - 5 VS. JINDAL DYECHEM INDUSTRIES (P) LTD. [2017] 248 TAXMAN 123 (DELHI) IN THIS CASE ALSO, IT WAS HELD THAT THE ASSESSMENT ORDER PASSED ON 14.09.2006 IS BARRED BY LIMITATION CONSIDERING THE TIME LIMIT FOR OBTAINING AND FURNISHING FIXED BY THE AS SESSING OFFICER U/S 142(2C) R.W. THE PROVISO AND THE PROVISIONS OF CLAUSE (IV) OF EXPLANATION 1 TO SECTION 153 CIT VS. BISHAN SAROOP RAM KISHAN AGRO (P) LTD. [2011] 203 TAXMAN 326 (DELHI) FACTS OF THE CASE: AFTER A SEARCH WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE, A NOTICE UNDER SECTION 153A WAS ISSUED TO IT ON 16 - 5 - 2005. IN RESPONSE THERETO, THE ASSESSEE FILED ITS RETURN. ON 12 - 12 - 2006, THE ASSESSING OFFICER ORDERED FOR CONDUCTING SPECIAL AUDIT ON UNDER SECTION 142(2A) AND GAVE 90 DAYS TIME, I.E., UP TO 12 - 3 - 2007 TO SUBMIT REPORT. THE AUDITOR SOUGHT FOR EXTENSION OF TIME FOR COMPLETION OF AUDIT. CONSEQUENTLY, THE ASSESSING OFFICER EXTENDED THE TIME FROM 12 - 3 - 2007 TO 20 - 4 - 2007. THE ASSESSING OFFICER AGAIN EXTENDED THE TIME FOR COMPLETION OF THE SPECIAL AUDIT UP TO 5 - 6 - 2007. FINALLY, AUDIT REPORT WAS SUBMITTED BY THE AUDITOR ON 4 - 6 - 2007. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 153 ON 3 - 8 - 2007. ON APPEAL, THE COMMISSIONER (APPEALS) HELD THAT THE ASSESSMENT WAS BARRED BY LIMITATION. TH E TRIBUNAL UPHELD THE ORDER OF THE COMMISSIONER (APPEALS) HOLDING THAT THE ASSESSING OFFICER COULD NOT HAVE EXTENDED THE TIME FOR AUDITOR'S REPORT ON HIS OWN INASMUCH AS THIS POWER OF THE ASSESSING OFFICER TO EXTEND THE TIME OF AUDIT REPORT SUOMOTU UNDER S ECTION 142(2C) CAME TO BE INSERTED BY WAY OF AN AMENDMENT WITH EFFECT FROM 1 - 4 - 2008 AND, CONSEQUENTLY, THE ASSESSMENT MADE UNDER SECTION 153A WAS BARRED BY LIMITATION. HELD: IT IS A CARDINAL PRINCIPLE FOR INTERPRETING A FISCAL STATUTE THAT A TAXING STATUT E HAS TO BE CONSTRUED VERY STRICTLY AND HAS TO BE READ WITHOUT AMENDING OR ALTERING THE PROVISIONS. THE INTENTION OF THE LEGISLATURE IN A TAXATION STATUTE IS TO BE GATHERED FROM THE LANGUAGE OF THE PROVISIONS PARTICULARLY WHERE THE LANGUAGE IS PLAIN AND UN AMBIGUOUS. (PARA 12) IT WAS AN ADMITTED FACT THAT IN THE INSTANT CASE, THE _ ASSESSEE HAD NOT MADE ANY APPLICATION FOR EXTENSION OF PERIOD OF AUDIT REPORT. THEREFORE, THE EXTENSION, WHICH WAS GRANTED BY THE ASSESSING OFFICER ON THE REQUEST OF THE AUDITOR, COULD BE TAKEN TO BE A SUO MOTU ACTION OF THE ASSESSING OFFICER WHICH POWER WAS NOT AVAILABLE WITH THE ASSESSING OFFICER PRIOR TO THE AMENDMENT WITH EFFECT FROM 1 - 4 - 2008. NOT ONLY THAT, SAID POWER OF EXTENSION WAS ALSO FURTHER CONTROLLED IN THE WORDS, FOR ANY GOOD AND SUFFICIENT REASONS'. THIS WOULD MEAN THAT THE ASSESSING OFFICER WAS SUPPOSED TO RECORD REASONS FOR GRANTING EXTENSION ON HIS OWN. CLAUSE 27.4 OF THE CIRCULAR ALSO CLARIFIES THAT THIS AMENDMENT HAS BEEN MADE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 41 APPLICABLE WITH EFFECT FROM 1 - 4 - 200 8 AND IT IS FROM THIS DATE ONWARDS THAT THE ASSESSING OFFICER SHALL HAVE POWER TO EXTEND THE PERIOD OF FURNISHING OF SPECIAL AUDIT REPORT SUO MOTU. [PARA 19] IN VIEW OF THE ABOVE THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE ASSESSMENT ORDER WAS BARRED BY LIMITATION. [PARA 20] IN ALL THE CASES CITED ABOVE IT HAS BEEN EXPLICITLY DECIDED THAT ANY REPORT BEYOND THE DATE FIXED BY THE ASSESSING OFFICER IS VOID AND CANNOT BE TAKEN INTO CONSIDERATION WHEN THE PERIOD OF EXCLUSION IS CALCULATED AND HENCE THE TIME B ARRING DATE IS DECIDED ON THE BASIS OF THE DATE FIXED BY THE ASSESSING OFFICER AND NOT THE DATE OF AUDIT REPORT WHICH IS DATED BEYOND THE STIPULATED TIME. OUR CONTENTION IS EXACTLY SAME AND HENCE THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER ARE BA RRED BY LIMITATION. ' 4.6 THE APPELLANT HAS FURTHER EXPLAINED THAT SECTIONS 142A AND 153B OF I.T ACT, 1961 HAVE TO BE HARMONIOUSLY CONSTRUCTED AND THEY CAN NOT BE READ IN ISOLATION. THE SUBMISSION MADE BY THE APPELLANT IN THIS REGARD IS AS BELOW. - '2.8 S ECTIONS 142A AND 153B HAVE TO BE HARMONIOUSLY CONSTRUED. SUCH HARMONIOUS CONSTRUCTION WOULD REQUIRE THAT THE REFERENCE TO THE VALUATION REPORT IN CLAUSE (HI) OF THE EXPLANATION TO SECTION 153B MUST BE TO A REPORT WHICH HAS BEEN SENT WITHIN THE TIME PRESCRI BED IN SUB - SECTION (6) OF SECTION 2.9 IT IS WORTHWHILE TO MENTION THAT THE VALUATION OFFICER CAN TAKE NO PLEA THAT THE ASSESSEE HAD NOT CO - OPERATED WITH THE INSPECTION AS THE INSPECTION HAD ALREADY BEEN OVER ON 13.05.2016 AND THE VALUATION OFFICER HAD MOR E THAN TWO MONTHS TO SUBMIT HIS REPORT. IN ANY CASE, THE ACT PERMITS THE VALUATION OFFICER TO SUBMIT THE REPORT TO THE BEST OF HIS JUDGEMENT IF HE THINKS THE ASSESSEE IS NOT CO - OPERATING WITH HIM SO THERE WAS NOTHING STOPPING HIM FROM SUBMITTING HIS REPORT ON TIME. THE ABOVE SUBMISSION WAS AVAILABLE WITH THE ASSESSING OFFICER AS YOUR GOODSELF HAD FORWARDED HIM THE SAME VIDE YOUR LETTER DATED 23.02.2018 AND HIS REPLY SHOWS THAT HE IS STILL MAKING THE SAME ERROR WHILE INTERPRETING THE PROVISIONS OF THE ACT. IF THE ASSESSING OFFICER'S VIEW IS CONSIDERED THEN THE REPORT EVEN IF IT IS SUBMITTED TODAY I.E. 20.03.2018 SHALL CONTINUE TO BE VALID AND HE CAN COMPLETE THE ASSESSMENT TILL 16.06.2018 WHICH IS COMPLETELY ABSURD AND WE HAVE NO EXPLANATIONS ON SUCH WILDLY UNREASONABLE AND IMPLAUSIBLE VIEWS. THE LEGISLATION KNEW THAT THERE MAY BE SOME PEOPLE WHO CAN MAKE SUCH IRRATIONAL INFERENCE AND SO HAD SUBSTITUTED PREVIOUS SECTION 142A WITH NEW PROVISIONS VIDE FINANCE (NO. 2) ACT, 2014. THE REASONS FOR ENACTING THE NEW SECTION AS GIVEN IN THE MEMORANDUM: EXPLAINING THE PROVISIONS IN THE FINANCE (NO. 2) BILL, 2014 (PB PAGE NO. 3) READS, IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 42 'SECTION 142A DOES NOT ENVISAGE REJECTION OF BOOKS OF ACCOUNT AS A PRE - CONDITION FOR REFERENCE TO THE VALUATION OFFICER FOR ESTIMATION O F THE VALUE OF ANY INVESTMENT OR PROPERTY. FURTHER, SECTION 142A DOES NOT PROVIDE FOR ANY TIME LIMIT FOR FURNISHING OF REPORT BY THE VALUATION OFFICER. ' IN ORDER TO FURTHER PUT A CHECK THAT THESE TIME LIMITS ARE ADHERED TO, THE LEGISLATURE EVEN GAVE POWER TO THE VALUATION OFFICER TO 'ESTIMATE THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT TO THE BEST OF HIS JUDGMENT, IF THE ASSESSEE DOES NOT CO - OPERATE OR COMPLY WITH HIS DIRECTIONS'. ON ONE HAND THE LEGISLATURE WANTS THAT THE ASSESSMENT IS NOT DELAYED AND ON THE OTHER HAND THE ASSESSING OFFICER IS OF THE OPINION THAT THE ASSESSMENT CAN BE DELAYED SINE DIE FOR THE WANT OF REPORT OF THE VALUATION OFFICER. THERE IS LITTLE DOUBT AS TO WHICH OF THE TWO ASPECTS IS RESPECTABLE AND RATIONAL. IF IT IS VIEWED THAT T HE ACTUAL DATE OF RECEIPT OF THE VALUATION REPORT HAS TO HE CONSIDERED FOR THE PURPOSES OF CLAUSE (HI) OF SECTION 153B EVEN IF THE REPORT IS SENT BEYOND THE PERIOD PRESCRIBED IN SUB - SECTION (6) OF SECTION 142A, THEN THE PROVISIONS OF SUB - SECTION (6) OF SEC TION 142A WOULD BE RENDERED OTIOSE WHICH CANNOT BE POSSIBLE IN ANY CIRCUMSTANCES. WHEN THERE IS A CONFLICT BETWEEN TWO OR MORE PARTS OF A STATUTE, RULE OF HARMONIOUS CONSTRUCTION IS TO BE ADOPTED WHICH IS THE THUMB RULE TO INTERPRETATION OF ANY STATUTE. L OGIC BEHIND HARMONIOUS CONSTRUCTION: A STATUTE IS PASSED AS A WHOLE. IT HAS ONE GENERAL PURPOSE AND INTENT. THEREFORE, IT HAS TO BE READ AS A WHOLE. THE INTERPRETATION CONSISTENT WITH ALL THE PROVISIONS OF THE ACT MUST BE ADOPTED. IT SHOULD NOT BE LIGHTLY ASSUMED THAT THE PARLIAMENT HAD GIVEN SOMETHING WITH ONE HAND WHICH IT TOOK AWAY WITH ANOTHER. WHERE TWO PROVISIONS RELATE TO THE SAME SUBJECT MATTER, THESE SHOULD BE RECONCILED AND EFFECT MUST BE GIVEN TO BOTH OF THEM. ANY INCONSISTENCY EITHER WITHIN A SE CTION OR BETWEEN TWO DIFFERENT SECTIONS OF A STATUTE MUST BE AVOIDED. NO PART OF A STATUTE CAN BE CONSTRUED IN ISOLATION (RBI VS PEERLESS GENERAL FINANCE AIR. 1987 SC1023). THE SUPREME COURT DISCUSSED THE APPLICATION OF THE RULE OF HARMONIOUS INTERPRETATION IN SULTANA BEGAM V PREM CHAND JAIN AIR 1997 SC 1006. THE COURT SUMMED UP THE RULE AS UNDER: A. IF THE TWO PROVISIONS APPEAL TO BE CONFLICTING WITH EACH OTHER, HARMONIOUS INTERPRETATION SHOULD BE ADOPTED. ANY HEAD - ON CLASH BE TWEEN THEM SHOULD BE AVOIDED. B. IF IT IS NOT POSSIBLE TO HARMONISE THE TWO CONFLICTING PROVISIONS, THEY SHOULD BE SO INTERPRETED THAT EFFECT IS GIVEN TO ALL OF THEM. C. ONE SECTION SHALL NOT BE ALLOWED TO DEFEAT THE OTHER PROVISIONS OF THE ACT UNLES S IT IS IMPOSSIBLE TO HARMONISE THEM OR TO GIVE EFFECT TO ALL THE PROVISIONS. AN INTERPRETATION WHICH REDUCES ONE OF THE PROVISIONS TO A DEAD LETTER IS NOT HARMONIOUS INTERPRETATION. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 43 IT IS WELL SETTLED RULE THAT AN INTERPRETATION WHICH RESULTS IN HARDSHIP , INJUSTICE, INCONVENIENCE OR ANOMALY SHOULD BE AVOIDED AND THAT WHICH SUPPORTS THE SENSE OF JUSTICE SHOULD BE ADOPTED. THE COURT LEANS IN FAVOUR OF INTERPRETATION WHICH CONFORMS TO JUSTICE AND FAIR PLAY AND PREVENTS INJUSTICE (UNION OF INDIA V. B.S. AGGAR WAL AIR 1998 SC 1537). ONE SHOULD IN EVERY CASE HARMONIZE THE CONTRADICTORY PROVISIONS BY INTERPRETING NOT ONLY THE PROVISIONS BUT ALSO THE ORIGINAL INTENTION OF THE LAW OR RULE MAKER IN ORDER TO GIVE EFFECT TO BOTH THE PROVISIONS AND ENSURE NOT TO MAKE A NY OF THE TWO PROVISIONS VOID OR TO DESTROY IT. THE ASSESSING OFFICER IN THIS CASE HAS EITHER FAILED TO OR IN ORDER TO SAVE HIS SKIN DELIBERATELY NOT TRYING TO UNDERSTAND THIS SIMPLE CONCEPT AND IS READING THE PROVISIONS OF SECTION 153B IN ISOLATION WHICH IS IRRATIONAL. ALSO THE ASSESSING OFFICER HAS BEEN UNABLE TO CITE (AS NONE EXISTS) EVEN A SINGLE CASE LAW WHICH IS IN HIS FAVOUR WHEREAS THE APPELLANT HAS BOUGHT TO YOUR NOTICE VARIOUS JUDGMENTS SUPPORTING HIS CONTENTIONS. EVEN THE A.O. HAS NOT DISCUSSED ANYTHING IN THE REMAND REPORT ABOUT THE NON - APPLICABILITY OF THE PRINCIPLES LAID DOWN IN THE DECISIONS OF THE VARIOUS COURTS CITED IN THE WRITTEN SUBMISSION FILED BY THE APPELLANT WHICH EXPLICITLY MEANS THAT HE HAS NOTHING TO COUNTER THE ARGUMENT OF THE AP PELLANT. ' 4.1 I HAVE CAREFULLY ANALYZED THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT, REMAND REPORT AND REJOINDER. IT IS IMPORTANT TO NOTE HERE THAT PRIOR TO 01.10.2014 THERE WAS NO TIME LIMIT FOR THE VALUATION OFFICER FOR SUBMISSION OF THE VAL UATION REPORT. USUALLY, IN THE REFERENCE, THE ASSESSING OFFICER PRESCRIBED THE DATE BY WHICH THE VALUATION OFFICER WILL SUBMIT THE VALUATION REPORT. IF THE ASSESSEE DID NOT CO - :4% OPERATE WITH THE VALUATION OFFICER OR IF PROPERTY IN QUESTION WAS COMPLEX, THE VALUATION OFFICER USED TO ASK FOR EXTENSION OF TIME FOR SUBMISSION OF VALUATION M LLPORT. ALSO, THE VALUATION OFFICER HAD NO POWER TO ESTIMATE VALUE OF THE PROPERTY TO # J THE BEST OF HIS JUDGMENT, IF THE ASSESSEE DID NOT CO - OPERATE OR COMPLY. BY THE FI NANCE ACT 2014, W.E.F. 01.10.2014, THE ENTIRE SECTION 142A OF I.T ACT, 1961 WAS _ REPLACED. AS PER THE AMENDMENT, THE VALUATION OFFICER HAS TO SEND VALUATION REPORT THE ASSESSING OFFICER WITHIN A PERIOD OF SIX MONTHS FOR END OF MONTH IN WHICH A REFERENCE I S MADE BY THE ASSESSING OFFICER. THE VALUATION OFFICER CAN NOT GET MORE THAN THIS TIME TO SUBMIT THE VALUATION REPORT. THE PURPOSE OF REPLACING THE SECTION 142A HAS BEEN EXPLAINED IN MEMORANDUM WHICH IS AS BELOW: - 'UNDER THE EXISTING PROVISIONS CONTAINED IN SECTION 142A, THE ASSESSING OFFICER MAY, FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT, REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT, ANY BULLION, JEWELLERY OR FAT MARKET VALUE OF ANY PROPERTY. ON RECEIPT OF THE REPORT OF THE VALUATION OFFICER, THE ASSESSING OFFICER MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD TAKE INTO ACCOUNT SUCH REPORT FOR THE PURPOSES OF ASSESSMENT OR REASSESSMENT. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 44 SECTION 142A DOES NOT ENVISAGE REJECTION OF BOOKS OF ACCOU NT AS A PRE - CONDITION FOR REFERENCE TO THE VALUATION OFFICER FOR ESTIMATION OF THE VALUE OF ANY INVESTMENT OR PROPERTY. FURTHER, SECTION 142A DOES NOT PROVIDE FOR ANY TIME LIMIT FOR FURNISHING OF THE REPORT BY THE VALUATION OFFICER. ACCORDINGLY, IT IS PRO POSED TO SUBSTITUTE THE SAID SECTION 142A SO AS TO PROVIDE THAT THE ASSESSING OFFICER MAY, FOR THE PURPOSES OF ASSESSMENT OR REASSESSMENT, REQUIRE THE ASSISTANCE OF VALUATION OFFICER TO ESTIMATE THE VALUE, INCLUDING FAIR MARKET VALUE, OF ANY ASSET, PROPERT Y OR INVESTMENT AND SUBMIT THE REPORT TO HIM. THE ASSESSING OFFICER MAY MAKE A REFERENCE WHETHER OR NOT HE IS SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. THE VALUATION OFFICER, SHALL, FOR THE PURPOSE OF ESTIMATING THE.V ALUE OF THE ASSET, PROPERTY OR INVESTMENT, HAVE ALL THE POWERS OF SECTION 38A OF THE WEALTH - TAX ACT, 1957. THE VALUATION OFFICER IS REQUIRED TO ESTIMATE THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT AFTER TAKING INTO ACCOUNT THE EVIDENCE PRODUCED BY THE A SSESSEE AND ANY OTHER EVIDENCE IN HIS POSSESSION GATHERED, AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IF THE ASSESSEE DOES NOT CO - OPERATE OR COMPLY WITH THE DIRECTIONS OF THE VALUATION OFFICER HE MAY, ESTIMATE THE VALUE OF THE ASSET, PROP ERTY OR INVESTMENT TO THE BEST OF HIS JUDGMENT IT IS ALSO PROPOSED TO PROVIDE THAT THE VALUATION OFFICER SHALL SEND A COPY OF HIS ESTIMATE TO THE ASSESSING OFFICER AND THE ASSESSEE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE REFERE NCE IS MADE. THE ASSESSING OFFICER ON RECEIPT OF THE REPORT FROM THE VALUATION OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, TAKE INTO ACCOUNT SUCH REPORT IN MAKING THE ASSESSMENT OR REASSESSMENT. IT IS ALSO PROPOSED TO AMEND SECTI ONS 153 AND 153B OF THE ACT SO AS TO PROVIDE THAT THE TIME PERIOD BEGINNING WITH THE DATE ON WHICH THE REFERENCE IS MADE TO THE VALUATION OFFICER AND ENDING WITH THE DATE ON WHICH HIS REPORT IS RECEIVED BY THE ASSESSING OFFICER SHALL BE EXCLUDED FROM THE TIME LIMIT PROVIDED UNDER THE AFORESAID SECTION FOR COMPLETION OF ASSESSMENT OR REASSESSMENT. THESE AMENDMENTS WILL TAKE EFFECT FROM OF OCTOBER, 2014. 4.8 THUS, THERE IS NO DOUBT THAT THE VALUATION OFFICER HAS TO COMPLETE THE VALUATION - OF PROPERTY AND S END REPORT TO THE ASSESSING OFFICER WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH HE RECEIVED A REFERENCE FROM THE ASSESSING OFFICER. A REFERENCE MADE THE ASSESSING OFFICER U/S. 142A(1) OF I.T ACT, 1961 IS NOT A GENERAL ENQUIRY BUT IT IS A STATUTORY REFERENCE. SIMILARLY, A 'REPORT SENT BY - THE VALUATION OFFICER U/S. 142A(6) OF I.T ACT, 1961 IS ALSO A STATUTORY REPORT AND, THEREFORE, THE TIME LIMIT PRESCRIBED THEREIN ARE STATUTORY TIME LIMITS. IF THE VALUATION REPORT IS MADE BEYOND THE TIME PRESCRIBED, THEN IT WILL HAVE TO BE CONSTRUED AS BEING BARRED BY LIMITATION OF TIME. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 45 4.9 NOW, THE MOOT POINT IS, HOW MUCH TIME IS TO BE EXCLUDED UNDER THE PROVISIONS OF SECTIONS 1530 R.W.S. EXPLANATION (III). FOR THIS PURPOSE, GUIDANCE CAN BE OBTAINED FO RM SIMILAR PROVISIONS OF SECTION 142(2A) OF I.T ACT, 1961, IN WHICH THE ASSESSING OFFICER MAKES REFERENCE OF SPECIAL AUDIT. THE TIME LIMIT UNDER THIS SECTION IS OF 180 DAYS FROM THE DATE ON WHICH A DIRECTION OF SPECIAL AUDIT IS RECEIVED BY THE ASSESSEE. TH IS TIME LIMIT IS AN EXISTENCE W.E.F. 01.04.1976. HON'BLE HIGH COURTS AND TRIBUNALS IN THE FOLLOWING CASES HAVE HELD THAT A PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECTS AN ASSESSEE TO GET ACCOUNT AUDITED AND ENDING WITH THE DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH THE AUDIT REPORT WILL BE EXCLUDED, BUT IN NO CASE IT CAN EXCEED A PERIOD OF 180 DAYS FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECTS AN ASSESSEE TO GET HIS ACCOUNT AUDITED. A. CIT VS BJN HOTELS LTD. (2017) 79 TAXMANN.COM 336 (KAMATAKA) B. PR. CIT VS NILKANTH CONCAST (P) LTD. (2016) 241 TAXMANN 194 (DELHI) C. MAHAKOSHAL ENGINEERS & CONTRACTORS CO. (P) LTD. VS. ACIT[2003] 85ITD 267 (NAGPUR TRIB.) D. DC IT, CC - LO VS. RAM KISHANDASS [2010] 38 SOT 102 (DELHI TRIB.) E CIT VS DHARIWAL SALES ENTERPRISES [1996] 221 TAXMAN 240 (MP) F. PCIT - 5 VS. JINDAL DYECHEM INDUSTRIES (P) LTD.[2017] 248 TAXMAN 123 (DELHI) G. CLT VS. BISHARI SAROOP RAM KIS HAN AGRO (P) LTD.[2011] 203 TAXMAN 326 (DELHI) 4.10 THE PROVISIONS OF SECTIONS 153B AND 142A OF I.T ACT, 1961 HAVE TO BE READ TOGETHER AND THEY HAVE TO BE HARMONIOUSLY CONSTRUCTED. OTHERWISE, TIME LIMIT FOR THE SUBMISSION OF THE VALUATION REPORT UNDER THE PROVISIONS OF SECTION 142A (6) WILL > HAVE NO MEANING. THE DECISIONS REFERRED TO IN PARAGRAPH 4.9 ABOVE, IN FAVOUR OF THE ASSESSEE, ARE APPLICABLE TO THE CASE OF THE APPELLANT. THEREFORE, THE PERIOD OF EXCLUSION FOR CALCULATION OF TIME BARRING DATE U/S. 1 53B OF I.T ACT, 1961, IN THE CASE OF THE APPELLANT, WILL BE A PART OF THE MONTH OF JANUARY AND SIX MONTHS THEREAFTER, CALCULATED FROM 01.04.2016. 4.11 CONSIDERING THE ABOVE ASPECTS, I AM CONSTRAINED TO DECIDE THAT ASSESSMENT ORDER HAD TO BE PASSED ON OR B EFORE 18.10.2016, AS A REFERENCE TO VALUATION OFFICER WAS MADE ON 14.01.2016. THE ASSESSMENT ORDER U/S. 153/143(3) OF IT ACT, 1961 MADE BY THE ASSESSING OFFICER ON 25.11.2016, IS BARRED BY LIMITATION OF TIME, IT IS BAD IN LAW AND THEREFORE, IT IS ANNULLED. THE GROUND OF APPEAL IS ALLOWED. 5. GROUND NO. 3: - IN THIS GROUND, THE APPELLANT HAS CONTESTED THAT THE ASSESSING 'OFFICER HAS PASSED THE ORDER WITHOUT APPROVAL OF THE JOINT COMMISSIONER OF IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 46 INCOME TAX AS CONTEMPLATED U/S. 153D OF I.T ACT, 1961. IN WRITTEN SUBMISSION, THE APPELLANT HAS ITSELF AGREED THAT THE JOINT COMMISSIONER OF INCOME TAX HAS APPROVED THE ASSESSMENT ORDER U/S. 153D OF I.T ACT, 1961 ON 25.11.2016. THEREFORE, THE APPELLANT'S SUBMISSION IS NOT CORRECT. THE GROUND OF APPEAL IS DISMI SSED. 6. GROUND NO. 4, 5 AND 6: - IN THESE GROUNDS, THE APPELLANT HAS CONTESTED THE ADDITION OF RS 5,00,00,000/ - ON ACCOUNT OF UNEXPLAINED CREDITS AGAINST SALE OF SHARES, OF RS 4,75, 36,314/ - ON ACCOUNT OF UNSECURED LOAN AND OF RS 2,21,50,000/ - (R S 1,72,50,000/ - + RS.49,00,000/ - ) ON ACCOUNT OF UNEXPLAINED CASH. IN PARAGRAPH 4 ABOVE, I HAVE ANNULLED THE ASSESSMENT ORDER. THEREFORE , THESE GROUNDS ARE INFRU CT U OUS AND ARE NOT ADJUDICATED. 18. FROM THE ABOVE ORDER IT IS CLEAR THA T T HE CIT(A) HAS CONSIDERED THE ISSUE IN DETAILS AS RAISED BY THE ASSESSEE BEFORE HIM REGARDING CHALLENGING THE ASSESSMENT ORDER PASSED BY THE AO THAT IT WAS A TIME BARRED WHICH HAS NO VALUE. THE ASSESSMENTS HAVE BEEN COMPLETED U/S 153A, WE ALSO OBSERVE T HAT THE ASSESSMENT ORDER IS NOT IN ACCORDANCE WITH THE PRESCRIBED TIME PROVIDED AS PER SECTION 153B OF THE ACT. AS PER THE AMENDED PROVISIONS BROUGHT BY THE FINANCE ACT, 2014, THE VALUATION OFFICER HAS TO SUBMIT HIS REPORT WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE REFERENCE HAS BEEN MADE TO HIM. IN THIS CASE, THE REPORT OF THE VALUATION OFFICER HAS BEEN RECEIVED ON 03.10.2016 BY POST. IN THE IMPUGNED CASE, THE CASE WAS REFERRED TO THE VALUATION OFFICER AS PER SECTION142A(6) OF THE ACT FOR DET ERMINING THE COST OF INVESTMENT/ CONSTRUCTION IN THE PROPERTY AT SIDDHI VINAYAK ENCLAVE LAXMI NAGAR , NEAR YATRI NIWAS, CUTTACK ROAD, BHUBNESWAR ODISHA . ON OBSERVATION OF THE VALUATION REPORT AT PAGE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 47 NO.49 PARA NO. 3.2 OF THE PAPER BOOK SUBMITTED BY THE ASSESSEE THAT AS PER HIS OBSERVATION THE ASSESSEE HAS DULY COMPLIED THE TECHNICAL DATA AND THE DATE OF INSPECTION OF PROPERTY WAS ON 13.05.2016 , HOWEVER, THE VALUER HAS SUBMITTED HIS REPORT AFTER EXPIRY OF THE SIX MONTHS, WHEREAS THE AO HAS SPECIFICALLY M ENTIONED IN THE LETTER WRITTEN TO HIM THAT IT IS A TIME BARRING CASE AND THE VALUATION REPORT IS TO BE SUBMITTED UPTO 5 TH MARCH, 2016 AS PER THE AMENDED PROVISIONS . IF THE ASSESSEE HAS NOT COMPLIED THE DIRECTION OF THE DVO, HE MAY, ESTIMATE THE VALUE OF TH E ASSET, PROPERTY OR INVESTMENT TO THE BEST OF HIS JUDGMENT. AS PER THE FINANCE BILL, 2014, THE GIST OF AMENDMENT READS AS UNDER : - ESTIMATE OF VALUE OF ASSETS BY VALUATION OFFICER UNDER THE EXISTING PROVISIONS CONTAINED IN SECTION 142A, THE ASSESSING OFF ICER MAY, FOR THE PURPOSE OF MAKING AN ASSESSMENT OR REASSESSMENT, REQUIRE THE VALUATION OFFICER TO MAKE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT, ANY BULLION, JEWELLERY OR FAIR MARKET VALUE OF ANY PROPERTY. ON RECEIPT OF THE REPORT OF THE VALUATION OFFI CER, THE ASSESSING OFFICER MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD TAKE INTO ACCOUNT SUCH REPORT FOR THE PURPOSES OF ASSESSMENT OR REASSESSMENT. SECTION 142A DOES NOT ENVISAGE REJECTION OF BOOKS OF ACCOUNT AS A PRE - CONDITION FOR REFERE NCE TO THE VALUATION OFFICER FOR ESTIMATION OF THE VALUE OF ANY INVESTMENT OR PROPERTY. FURTHER, SECTION 142A DOES NOT PROVIDE FOR ANY TIME LIMIT FOR FURNISHING OF THE REPORT BY THE VALUATION OFFICER. ACCORDINGLY, IT IS PROPOSED TO SUBSTITUTE THE SAID SEC TION 142A SO AS TO PROVIDE THAT THE ASSESSING OFFICER MAY, FOR THE PURPOSES OF ASSESSMENT OR REASSESSMENT, REQUIRE THE ASSISTANCE OF A VALUATION OFFICER TO ESTIMATE THE VALUE, INCLUDING FAIR MARKET VALUE, OF ANY ASSET, PROPERTY OR INVESTMENT AND SUBMIT THE REPORT TO HIM. THE ASSESSING OFFICER MAY MAKE A REFERENCE WHETHER OR NOT HE IS SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. THE VALUATION OFFICER, SHALL, FOR THE PURPOSE OF ESTIMATING THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT, HAVE ALL THE POWERS OF SECTION 38A OF THE WEALTH - TAX ACT, 1957. THE VALUATION OFFICER IS REQUIRED TO ESTIMATE THE VALUE OF THE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 48 ASSET, PROPERTY OR INVESTMENT AFTER TAKING INTO ACCOUNT THE EVIDENCE PRODUCED BY THE ASSESSEE AND ANY OTHER EVIDENCE IN HIS POSSESSION GATHERED, AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IF THE ASSESSEE DOES NOT CO - OPERATE OR COMPLY WITH THE DIRECTIONS OF THE VALUATION OFFICER HE MAY, ESTIMATE THE VALUE OF THE ASSET, PROPERTY OR INVESTMENT TO THE BEST OF HIS JUDGMENT. IT IS ALSO PROPOSED TO PROVIDE THAT THE VALUATION OFFICER SHALL SEND A COPY OF HIS ESTIMATE TO THE ASSESSING OFFICER AND THE ASSESSEE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE REFERENCE IS MADE. THE ASSESSING OF FICER ON RECEIPT OF THE REPORT FROM THE VALUATION OFFICER MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, TAKE INTO ACCOUNT SUCH REPORT IN MAKING THE ASSESSMENT OR REASSESSMENT. IT IS ALSO PROPOSED TO AMEND SECTIONS 153 AND 153BOF THE ACT SO AS TO PROVIDE THAT THE TIME PERIOD BEGINNING WITH THE DATE ON WHICH THE REFERENCE IS MADE TO THE VALUATION OFFICER AND ENDING WITH THE DATE ON WHICH HIS REPORT IS RECEIVED BY THE ASSESSING OFFICER SHALL BE EXCLUDED FROM THE TIME LIMIT PROVIDED UNDER THE AF ORESAID SECTION FOR COMPLETION OF ASSESSMENT OR REASSESSMENT. THESE AMENDMENTS WILL TAKE EFFECT FROM 1 SL OCTOBER, 2014. [CLAUSES 49, 51 & 52] 19. LD. CIT DR ALSO CONTENDED THAT THE ASSESSEE H AS FILED HIS WRITTEN OF INCOME BELATEDLY. IN THIS REGARD, WE OBSERVE THAT THERE IS NO ANY INFORMATION IN THE ASSESSMENT ORDER THAT THE AO HAS TAKEN ANY ACTION AGAINST THE ASSESSEE FOR FILING THE RETURN OF INCOME AFTER ISSUING THE NOTICE U/S.153A OF THE ACT . IF THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE REGARDING NOTICE(S) ISSUED BY THE AO, THE AO SHOULD HAVE TAKEN OTHER STEPS/REMEDY AS PROVIDED IN THE INCOME TAX ACT. 1961 BY ISSUING NOTICE OR LETTER TO THE ASSESSEE FOR COMPLIANCE. SECTION 153A OF T HE ACT IS A SPECIAL PROVISIONS FOR COLLECTING TAX FROM THE TAX PAYERS WHO ARE NOT PAYING TAX PROPERLY IN THE EYES OF THE LAW. THE AO HAS NOT COMPLETED THE ASSESSMENT WITHIN PRESCRIBED TIME AS PER U/S 153B IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 49 R.W.S.142A (6) AND THE APPROVAL HAS BEEN GIVEN BY T HE COMPETENT AUTHORITY U/S 153D OF THE INCOME TAX ACT. WITHOUT OBSERVING DATE OF THE REPORT OF THE DVO AS PER AMENDMENT MADE IN THE FINANCE ACT. 2014 IN THE SECTION 142A (6) OF THE INCOME TAX ACT. 1961 . TO SUPPORT OUR VIEW, RELIANCE CAN BE PLACED ON TH E DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI ZULFI REVDJEE VS. ACIT, ITA NO.2415/HYD/2018, ORDER DATED 05.09.2019, WHEREIN THE TRIBUNAL HAS HELD AS UNDER : - 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A), STATIN G THAT AS PER SECTION 142(1)(VI) OF THE ACT, THE DVO IS REQUIRED TO SUBMIT THE VALUATION REPORT WITHIN SIX MONTHS FROM THE DATE OF THE REFERENCE AND FURTHER THAT THE AO HAS TO COMPLETE THE ASSESSMENT WI THIN TWO MONTHS THEREAFTER, AS PER CLAUSE (IV) OF EXPLANATION 1 TO SECTION 153 OF THE ACT. FURTHER, HE ALSO CHALLENGED THE ADOPTION OF SRO VALUE AS ON THE DATE OF SALE ON 3.9.2012 WHEREAS THE AGREEMENT O F SALE IS DATED 8.2.2010 PARTICULARLY SINCE THE AO ALSO HAD MADE REFERENCE TO THE DVO TO DETERMINE THE VALUE OF THE PROPERTY AS ON 8.2.2010. THE CIT (A) HOWEVER, DISMISSED THE ASSESSEE'S APPEAL AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: '1. THE ORDER OF THE LEARNED CIT(APPEALS) - 6, HYDERABAD IS AGAINST LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2.(A) THE LEARNED CIT(A) GROSSLY ERRED IN DISMISSING THE ADDITIONAL GROUND RAISED BEFORE HIM THAT THE IM PUGNED ASSESSMENT IS BARRED BY LIMITATION IN TERMS OF THE PROVISIONS OF SECTION 153 R/W. SECTION 142A OF THE INCOME TAX ACT, 1961. (B) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE MAXIMUM TIME LIMIT STIPULATED FOR RECEIPT OF VALUATION REPORT FROM THE DVO UNDER SUBSECTION (6) OF SECTION 142A IS A PERIOD OF SIX MONTHS FORM THE END OF THE MONTH IN WHICH A REFERENCE IS MADE UNDER SUB - SECTION (1) OF SECTION 142A OF THE INCOME TAX ACT, 1961. CONSEQUENTLY, HE ERRED IN HOLDING THAT THE IMPUGNED ASSESSMENT IS NOT BARRED BY THE LIMITATION. (C) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT REFERENCE TO THE V ALUATION OFFICER U/S.142A(1) WAS MADE BY LETTER DATED 19.02.2016 AND CONSEQUENTLY THE VALUATION OFFICER SHOULD HAVE SENT A COPY OF THE REPORT IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 50 OF ESTIMATE MADE UNDER SUB - SECTION (4) OR SUB - SECTION (5) WITHIN A PERIOD OF 6 MONTHS, I.E., BY END OF AUGUST 2016 . WHEREAS THE REPORT WAS SUBMITTED BY HIM ONLY IN JULY 2017 AND CONSEQUENTLY THE IMPUGNED ASSESSMENT IS BARRED BY LIMITATION. 3. WITHOUT PREJUDICE TO GROUND NO.2: (A) THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING THE ADOPTION OF SALE CONSIDERATION AS PER SECTION SOC VALUATION AS ON THE DATE OF SALE DEED VIZ., 03.09.2012 IGNORING THE APPLICABILITY OF THE FIRST PROVISO AND THE SECOND PROVISO TO SUB - SECTION (1) OF SECTION 50C . (B) THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED IN TOTO ON THE ABOVE GROUNDS'. 4. FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED. 5. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR MODIFY THE A BOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL, IF IT IS CONSIDERED NECESSARY'. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT (A), SUBMITTED THAT SECTION 153 PROVIDES THE TIME LIMIT FOR COMPLETION OF AN ASSESSMENT OR RE - ASSESSMENT AND RE - COMPUTATION AND THE EXPLANATION(1) THEREOF, PROVIDES THE PERIOD WHICH IS TO BE EXCLUDED FROM THE LIMITATION PERIOD. HE SUBMITTED T HAT SUB - SECTION (1) OF SECTION 153 PROVIDES FOR THE LIMITATION PERIOD OF 21 MONTHS FROM THE END OF THE A.Y IN WHICH THE INCOME WAS ASSESSABLE, IF THE ASSESSMENT IS TO BE MADE U/S 143 OR 144 OF THE I.T. ACT . HE REFERRED TO CLAUSE (V) OF EXPLANATION 1 TO SECTION 153 , WHICH PROVIDES THAT THE PERIOD COMMENCING FROM THE DATE ON WHICH THE AO MAKES A REFEREN CE TO THE VALUATION OFFICER UNDER SUB - SECTION 142A AND THAT THE DATE ON WHICH THE REPORT OF THE VALUATION OFFICER IS RECEIVED BY THE AO IS TO BE CALCULATED FOR CALCULATING THE LIMITATION PERIOD. HE THERE AFTER REFERRED TO SECTION 142A(VI) OF THE ACT WHICH PROVIDES THAT THE VALUATION OFFICER SHALL SEND A COPY OF THE REPORT UNDER SUB - SECTION (V), AS THE CASE MAY BE, TO THE AO AND THE ASSESSEE, WITHIN A PER IOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH A REFERENCE IS MADE UNDER SUB - SECTION (1) OF THE ACT. HE SUBMITTED THAT THE SINCE THE WORDS USED IN THIS CLAUSE IS 'SHALL', IT IS MANDATORY FOR THE VALUATION OFFICER TO FOLLOW THE TIMELINE GIVEN IN THE A CT. HE ALSO REFERRED TO THE OTHER SUB - SECTIONS OF SECTION 142(A) , WHERE THE WORDS 'MAY' OR 'SHALL' ARE USED IN DIFFERENT CONTEXTS. IN SUPPORT OF HIS CONTENTION THAT, WHERE IN THE SAME SECTION BOTH THE W ORDS ARE USED, WORD 'SHALL' BE CONSIDERED MANDATORY, HE RELIED ON CENTRAL BOARD OF DIRECT TAXES CIRCULAR REPORTED IN 371 ITR 22 AND ALSO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF B.K. K HANNA & CO. VS UNION OF INDIA AND OTHERS ON 14 SEPTEMBER, 1984(156 ITR 796 (DEL.). HE SUBMITTED THAT AS PER SECTION 153A OF THE ACT, THE ASSESSMENT ORDER HAS TO BE PASSED ON OR BEFORE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 51 31.03.2016, WHEREA S THE ASSESSMENT ORDER IS PASSED ON 19.09.2017. THEREFORE, HE SOUGHT THE SETTING ASIDE OF THE ASSESSMENT ORDER ON THIS GROUND ALONE. ON MERITS ALSO, HE ARGUED THAT THE SRO VALUE AS ON THE DATE OF THE AGREEMENT OF SALE SHOULD BE CONSIDERED AND THOUGH THE A O HAD REFERRED THE VALUATION OF THE PROPERTY AS ON AGREEMENT OF SALE, THE DVO HAS SUBMITTED THE REPORT GIVING THE VALUE AS ON THE DATE OF THE EXECUTION OF THE SALE DEED. THEREFORE, ACCORDING TO HIM, THE ASSESSMENT ORDER ON THE BASIS OF SUCH AN ERRONEOUS VA LUATION REPORT ALSO IS NOT SUSTAINABLE. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT PRIOR TO THE INSERTION OF SUB - SECTION (VI) TO SECTION 142A OF THE ACT, THERE WAS NO TIME LIMIT FOR THE VALUATION OFFICER TO SUBMIT THE REPORT AND THE PERIOD TAKEN BY THE VALUATION OFFICER FROM THE DATE OF REFERENCE TO THE SUBMISSION OF THE REPORT, WAS TO BE EXCLUDED WHILE COMPUTING THE PERIOD OF 21 MONTHS FROM THE END OF THE RELEVANT A.Y AS PROVIDED UNDER SECTION 153 OF THE ACT. THEREFORE, HE SUBMITTED THAT THE ASSESSMENT ORDER IS TO BE UPHELD. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE RELEVANT A.Y BEFORE US IS A.Y 2013 - 14 AND THE RETURN OF INCOME WAS FILED ON 30.09.2013. THEREFORE, 21 MONTHS FROM SUCH DATE WOULD EXPIRE ON 31.3.2016. THUS, THE ASSESSMENT ORDER U/S 143(3) WAS REQUIRED TO BE PASSED BY 31.03.2016 BUT SINCE THE AO HAS MADE A REFERENCE TO THE VALUATION OFFICER U/S 142 A OF THE ACT , VIDE LETTER DATED 19.02.2016, AND THE VALUATION REPORT WAS FILED ON 20.7.2017, THE SAID PERIOD WILL HAVE TO BE EXCLUDED FOR DET ERMINING THE TIME LIMIT. HOWEVER, THE QUESTION BEFORE US IS THE PERIOD ALLOWED TO THE DVO TO SUBMIT THE REPORT. U/S 142 A OF THE ACT , THE VALUATION REPORT HAS TO BE SUBMITTED WITHIN SIX MONTHS FROM THE D ATE OF THE RECEIPT OF THE REFERENCE. ADMITTEDLY, IN THE CASE BEFORE US, THE VALUATION OFFICER HAS SUBMITTED THE REPORT BEYOND A PERIOD OF 15 MONTHS. WHETHER THIS PERIOD CAN BE ENLARGED OR CONDONED IS TO BE SEEN. AS RIGHTLY POINTED BY THE LEARNED COUNSEL FO R THE ASSESSEE, THE WORD USED IN SUB - SECTION 6 OF SECTION 142A IS 'SHALL' AND IN OTHER SUB SECTIONS, THE WORD USED IS 'MAY'. THE HON'BLE DELHI HIGH CO URT IN THE CASE OF B.K. KHANNA & CO. VS UNION OF INDIA AND OTHERS ON 14 SEPTEMBER, 1984 (SUPRA) HAS CLEARLY HELD THAT WHERE THE WORDS 'MAY' AND 'SHALL' ARE USED IN VARIOUS PROVISIONS OF SAME SECTIONS, T HEN BOTH OF THEM CONTAIN DIFFERENT MEANING AND THE WORD 'SHALL' SHALL MEAN 'MANDATORY'. AS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE AO WAS REQUIRED TO CALL FOR A REPORT FROM THE VALUATION OFFICER WITHIN SIX MONTHS FROM THE DATE OF THE REFERENCE AND THE VALUATION OFFICER WAS BOUND TO GIVE SUCH A REPORT WITH SUCH PRESCRIBED PERIOD. FURTHER, AS SEEN FROM THE ASSESSMENT ORDER, THE AO HAD DIRECTED THE VALUATION OFFICER TO GIVE THE VALUATION OF THE PROPERTY AS ON 8.2.2010, WHEREAS THE VALUATION OFFICER HAS GIVEN THE REPORT AS ON THE DATE OF THE EXECUTION OF THE SALE DEED. THEREFORE, THE DVO HAS CLEARLY NOT FOLLOWED THE DIRECTIONS OF THE AO AND ALSO NOT FOLLOWED THE TIMELINE FIXED UNDER THE ACT. WHEN IT IS MANDATORY FOR AN OFFICER TO FOLLOW THE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 52 TIMELINE PRESCRIBED UNDER THE ACT, SUCH DELAY CANNOT BE CONDONED. THEREFORE, WE AGREE WITH THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE REPORT OF THE VALUATION OFFICER HAS TO BE FILED WITHIN THE TIME GIVEN U/S 142A(VI) OF THE ACT AND THEREFORE, THE ASSESSMENT ORDER PASSED ON THE BASIS OF SUCH REPORT OF VALUATION OFFICER BEYOND THE TIME LIMIT IS NOT SUSTAINABLE. THEREFORE, WE ALLOW THE ASSESSEE'S APPEAL AND THE ASSESSMENT ORDER IS SET ASIDE. 8. IN THE RESULT, ASSESSEE'S APPEAL IS ALLOWED. ORDER P RONOUNCED IN THE OPEN COURT ON 5TH SEPTEMBER, 2019. AFTER CONSIDERING THE WRITTEN SUBMISSIONS AND THE ORDERS OF THE AUTHORITIES BELOW ALONG WITH THE DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL (SUPRA) , WE DO NOT WANT TO INTERFERE WITH THE OR DER OF THE CIT(A). ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE FILED FOR A.Y.2012 - 2013 IN IT(SS)A NO. 56/CTK/2018. 20 . THUS, IT(SS)A NO.56/CTK/2018 (AY: 2012 - 2013) IS DISMISSED. 2 1 . THE GROUNDS RAISED BY THE REVENUE IN IT(SS)A NO. 57/CTK/2018 ARE SIMIL AR TO THE APPEAL DECIDED BY US FOR THE ASSESSMENT YEAR 2012 - 2013. ACCORDINGLY, OUR OBSERVATIONS MADE IN THE ABOVE APPEAL SHALL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. THUS, IT(SS)A NO.57/CTK/2018 FILED BY THE REVENUE FOR A.Y.2013 - 2014 IS DISMISSED. 2 2 . THUS, IT(SS)A NO.57/CTK/2018 (AY: 2013 - 2014) IS DISMISSED. 2 3 . SINCE, WE HAVE UPHELD THE ORDER PASSED BY THE CIT(A) AND THE CIT(A) HAS ANNULLED THE ASSESSMENT ORDER, THEREFORE, WE THINK THAT THERE IS NO NEED TO DECIDE THE CASE ON MERITS. ACCORDINGLY, THE CROSS OBJECTIONS FILED BY THE ASSESSEE IS ON THE MERITS OF THE CASE, THEREFORE, IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 53 THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR A.Y.2012 - 2013 & 2013 - 2014 HAVE BECOME INFRUCTUOUS AND THE SAME ARE DISMISSED. 2 4 . THUS, CO NOS.15&16/CTK/2019 ARE DISMISSED. 2 5 . NOW, WE SHALL TAKE THE APPEAL OF REVENUE FILED IN IT(SS)A NO. 188/CTK/2019 FOR THE ASSESSMENT YEAR 2015 - 2016, WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : - (I) IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT (A) ERRED IN DELETING ADDITION OF RS.50,00, 000/ - CONSIDERING THAT PROVISION OF SECTION 40(A)(IA) OF THE I.T. ACT IS NOT APPLICABLE IN THIS CASE. (II) IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT (A) IGNORED THE FACT THAT THE ASSESSEE HAS MADE BUSINESS EXPENDITURE IN THIS CASE AND THE PAYMENT WAS CL AIMED TO BE MADE FOR BUSINESS EXIGENCY. SO, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AGAINST THIS EXPENDITURE. NO CONCRETE REASON WITH CORROBORATIVE EVIDENCE WAS FILED BY THE ASSESSEE FOR NON DEDUCTION OF TAX IN THIS CASE. MOREOVER, NO BILLS AND VOUCHERS AND OTHER DETAILS WERE PRODUCED BEFORE ASSESSING OFFICER FOR VERIFICATION. HENCE, THE ADDITION MADE OF RS.50,00,000/ - SHOULD BE SUSTAINED. (III) IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT (A) ERRED IN DELETING ADDITION OF RS.99,825/ - ON ACCOUNT OF STAFF SALA RY EXPENSES CONSIDERING THE SAME AS AD - HOC THOUGH THE ASSESSEE WAS UNABLE TO FURNISH DETAILS OF EMPLOYEE AND OTHER DETAILS ON THIS MATTER BEFORE ASSESSING OFFICER. (IV) IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT (A) ERRED IN DELETING ADDITION OF RS.82,44 ,128/ - ON ACCOUNT OF SUBCONTRACT EXPENSES IGNORING THE FACT THAT THE ASSESSING OFFICER MADE ADDITION ( ONLY 15% OF TOTAL EXPENSES ) AS THE ASSESSEE IS UNABLE TO FURNISH DETAILS OF SUCH EXPENSES BEFORE ASSESSING OFFICER FOR EXAMINATION. (V) IN THE FACTS AN D CIRCUMSTANCES, THE LD. CIT (A) ERRED IN DELETING ADDITION OF RS.28,00,000/ - ON ACCOUNT OF DECREASE IN LIABILITY WITHOUT ANY CORROBORATIVE EVIDENCE FILED BY ASSESSEE IN SUPPORT OF CLAIM AND WITHOUT ALLOWING ANY OPPORTUNITY TO ASSESSING OFFICER TO VERIFY T HE CLAIM OF THE ASSESSEE. (VI) ANY OTHER GROUND TO BE RAISED WITH THE PERMISSION OF THE COURT. 2 6 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 29.12.2015 DECLARING TOTAL INCOME AT A LOSS OF RS.2,32,384/ - . THE CASE WAS SELEC TED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED TO THE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 54 ASSESSEE. IN PURSUANCE TOO THE NOTICE ISSUED U/S.142(1) OF THE ACT, THE ASSESSEE FILED RELEVANT DOCUMENTS. ON EXAMINATION OF THE DOCUMENTS FILED BY THE ASSESSEE IT WAS NOTICED BY THE AO THAT THE ASS ESSEE HAS DEBITED UNDER THE ACCOUNT HEAD OF DEVELOPMENT EXPENSES OF RS.6 3 ,50,000/ - AND UNDER THE STAFF SALARY EXPENSES OF RS.6,65,500/ - . THE ASSESSEE WAS ASKED TO PRODUCE THE RELEVANT DOCUMENTS FOR EXAMINATION OF SUCH EXPENSES BUT AS PER THE AO THE ASSESSE E COULD NOT PRODUCE THE RELEVANT DOCUMENTS TO EXAMINE THE GENUINENESS OF THE EXPENSES. AS REGARDS DEVELOPMENT EXPENSES OF RS.63,50,000/ - THE ASSESSEE PRODUCED COPY OF LEDGER ACCOUNT OF THE DEVELOPMENT EXPENSES, IT WAS NOTICED THAT THE ASSESSEE HAS PAID TO KAMALINI BEHERA AN AMOUNT OF RS.63.50LAKH. FURTHER LEDGER A/C. COPY OF KAMALINI BEHERA SHOWS PAYMENT VIDE CHEQUE OF AXIS BANK ON 20.02.2014 AN AMOUNT OF RS.30.00LAKH. THIS ACCOUNT COPY IS FOR THE PERIOD 01.10.2014 TO 31.03.2015 (A.Y.2015 - 16) IS GIVEN SHOW ING OPENING BALANCE SINCE 01.10.2014 AT RS.30.00LAKH & PAYMENTS ON 10.10.2014 THROUGH BANK RS.20.00LAKH & BY CASH RS. 1 3.50LAKH. IT MEANS IN THE F.Y.2014 - 15(RELEVANT TO THE A.Y.2015 - 16), PAYMENT IS RS.33.50LAKH. THE OPENING BALANCE OF RS.30.00LAKH RELATES T O PREVIOUS A SSESSMENT Y EAR . SO RS.33.50LAKH IS RELEVANT FOR THE A.Y.2015 - 16. HOWEVER, THE AO NOTICED THAT FOR CASH PAYMENT OF RS.L3.50LAKH SEC.40A(3) OF THE I.T. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 55 ACT,1961 IS ATTRACTED AND ASSESSEE HAS NOT DEDUCTED TDS ON THE PAYMENT OF RS.63,50,000/ - DEBIT ED TO THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD DEVELOPMENTAL EXPENSES. THE AO NOTICED THAT IN THIS REGARD RELEVANT BILLS, VOUCHERS FOR SUCH EXPENSES WERE NOT PRODUCED BY THE ASSESSEE BEFORE THE AO. ACCORDINGLY, HE FOUND SOME IRREGULARITIES, THEREFORE, HE ADDED RS.63,50,000/ - TO THE TOTAL INCOME OF THE ASSESSEE. 27 . FURTHER AS REGARDS EXPENSES OF RS.6,65,500/ - CLAIMED FOR STAFF SALARY, THE ASSESSEE DID NOT GIVE DETAILS OF EMPLOYEES AND WORK DONE BY THEM, THEREFORE, THE AO DISALLOWED A LUMP SUM 15% OF THE T OTAL EXPENSES, RESULTANTLY RS.99,825/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 28 . FURTHER ON SCRUTINY OF ACCOUNTS, THE AO FOUND THAT THE ASSESSEE HAS INCURRED RS. 5,49,60,859/ - TOWARDS SUB - CONTRACT EXPENSES AND THE AMOUNT IS PAID TO THE SUB - CONTRACT OR, M/S.CMM INFRA PROJECTS. TDS IS ALSO DONE BY THE A SSESSEE. BUT DETAILS OF EXPENSES ARE NOT FURNISHED FOR EXAMINATION DESPITE REPEATED REQUIREMENTS DURING COURSE OF ASSESSMENT PROCEEDINGS. ONLY MAKING A TDS FROM PAYMENT DOES NOT LEND GENUINENESS TO THE T RANSACTIONS. MAKING' TDS IS A DISCHARGE OF OBLIGATION AS PER THE TDS PROVISIONS UNDER THE I.T. ACT, 1961. IT MAY SO HAPPEN THAT TDS IS MADE WITH MAKING ANY ACTUA L PAYMENT. SUCH MAKING OF TDS MAY BE RESORTED TO ADD A COLOUR OF GENUINENESS TO THE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 56 EXPENSES IN CURRED. HE FURTHER NOTICED THAT DETAILS OF EXPENSES, PARTICULARS OF WORKS DONE & AGREEMENT WITH THE SUB - CONTRACTOR FOR EXECUTING THE CONTRACT WORK ARE NOT PRODUCED FOR EXAMINATION. THEREFORE, C ONSIDERING SUCH FACTS OF ABNORMALITY, THE AO DISALLOWED RS.82,4 4,128/ - BEING 15% OF THE EXPENSES CLAIMED AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 29 . FURTHER THE LEDGER ACCOUNT OF THE ASSESSEE AS MAINTAINED BY THE SUB - CONTRACTOR, 'M/S.CMM INFRA PROJECTS LTD' WAS EXAMINED, WHICH SHOWS AN AMOUNT OF RS.1, 93,73,273/ - BEING THE AMOUNT PAYABLE BY THE ASSESSEE AS ON 18/03/2015(ALSO CONSIDERED ON 31.03.2015). IT IS SHOWN AS 'TRADE PAYABLE' IN THE BALANCE SHEET VIDE NOTE - 4. BUT, THE EXAMINATION OF THE AFORESAID LEDGER ACCOUNT COPY SHOWS THAT THIS CLOSING BALAN CE OF RS. 1,93,73,273/ - ( A LIABILITY OF THE ASSESSEE) IS ARRIVED AT AFTER RECEIPT OF RS.L6.00LAKHS ON 02/02/2015 AND RS.L2.00LAKH ON 02/03/2015 (TOTALLING RS.28.00LAKH) FROM M/S.VECTUS WORLD WHO DIRECTLY PAID TO THE SUB - CONTRACTOR, 'M/S.CMM INFRA PROJECTS LTD' ON BEHALF OF THE ASSESSEE. SUCH PAYMENT BY VECTUS WORLD LED TO THE DECREASE OF LIABILITY TO THIS EXTENT. THE A.R. FAILED TO EXPLAIN PROPERLY, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE NATURE OF SUCH RECEIPT OF RS.28.00LAKH FROM M/S. VECTUS WOR LD. IN VIEW OF THIS, THE AO CONSIDERED THE RECEIPT AS AN UNEXPLAINED RECEIPT IN THE HANDS OF IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 57 THE ASSESSEE AND HENCE ADDED THE SAME TO THE T OTAL I NCOME OF THE A SSESSEE. 30 . FEELING AGGRIEVED FROM THE ORDER OF AO, THE ASSESSEE APPEALED BEFORE THE CIT(A). BEF ORE THE CIT(A) THE ASSESSEE FIELD DETAILED WRITTEN SUBMISSIONS AND CONSIDERING THE SAME AND THE ORDER OF AO, THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE PARTLY. 31 . FEELING FURTHER AGGRIEVED FROM THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL . 32 . LD. DR RELIED ON THE ORDER OF AO AND SUBMITTED THAT THE ASSESSEE HAS DEBITED RS. 63.50 LAKHS WITHOUT DEDUCTING TDS . THE ASSESSEE COULD NOT PRODUCE RELEVANT BILLS, VOUCHERS FOR SUCH EXPENSES BEFORE THE AO. THE ASSESSEE C OULD NOT SUBSTANTIATE THE NATURE OF PAYMENTS BEFORE THE AO . THEREFORE, HE HAS RIGHTLY MADE THE ADDITION. HE ALSO SUBMITTED THAT IN RESPECT OF THE STAFF SALARY PAYMENTS, THE ASSESSEE COULD NOT PRODUCE THE DETAILS AS REQUIRED BY THE AO, THEREFORE, THE AO W AS JUSTIFIED TO MAKE ADDITION FOR WANT OF DOCUMENTS REQUIRED BY HIM. HE FURTHER SUBMITTED THAT IN RESPECT OF PAYMENT MADE TO SUB - CONTRACT EXPENSES OF RS.82,84,128/ - , THE DETAILS OF EXPENSES, PARTICULARS OF WORKS DONE & AGREEMENT WITH THE SUB - CONTRACTOR FOR EXECUTING THE CONTRACT WORK AR E NOT PRODUCED FOR EXAMINATION WHEREAS THE CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THERE IS A MEAGER IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 58 DIFFERENCE BETWEEN THE EXPENSES CLAIMED BY THE ASSESSEE AND THE VALUATION DONE BY THE DVO WHICH IS WITHIN THE LIMIT PRESCRIBED BY THE CBDT NOTIFICATION. THEREFORE, THE CIT(A) IS NOT JUSTIFIED TO DELETE THE ADDITION AND IN RESPECT OF DELETION OF RS.28 LAKHS, THE LD. CITDR SUBMITTED THAT THE ASSESSEE COULD NOT EXPLAIN PROPERLY DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE NATURE OF SUCH RECEIPTS FROM M/S VECTUS WORLD , WHO DIRECTLY PAID TO THE SUB - CONTRACTOR. THEREFORE, THE AO WAS JUSTIFIED TO MAKE ADDITION ON THIS ACCOUNT AND THE CIT(A) WITHOUT CONSIDERING IN DETAILS, DELETED THE ADDITION MADE BY THE AO. THE REFORE, THE LD. CITDR SUBMITTED THAT THE ORDER OF THE AO DESERVES TO BE RESTORED. 33 . ON THE OTHER HAND, LD. AR OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND RELIED ON THE ORDER OF THE CIT(A). HE FURTHER SUBMITTED THAT TH E CIT(A) HAS RIGHTLY DELETED THE ADDITIONS MADE BY THE AO AFTER CONSIDERING IN DETAILS THE WRITTEN SUBMISSION FILED BY THE ASSESSEE AND THE EVIDENCE PRODUCED BEFORE HIM. HE FURTHER SUBMITTED THAT KAMALINI BEHERA WAS PAID RS.63,50,000/ - TOWARDS THE SETTLEME NT OF PURCHASE OF LAND OUT OF THE COURT, WHICH NEVER ATTRACTS TDS LIABILITY. THE ASSESSEE WAS ENGAGED IN PURCHASE OF LAND AND CONSTRUCTION OF APARTMENT BUSINESS AND THE AMOUNT HAS BEEN PAID TOWARDS PURCHASE OF THE LAND, THEREFORE, THE TDS IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 59 LIABILITY CANNOT BE ATTRACTED AND THE AO HAS ALSO NOT STATED THAT IN WHICH PROVISIONS THE TDS SHOULD BE DEDUCTED. THE PAYMENTS HAVE MADE ON THREE DATES THROUGH CHEQUES AND CASH, DETAILS OF WHICH ARE AS UNDER : - DATE AMOUNT MODE OF PAYMENT 20.02.2014 30 LAKHS CHEQUE 10. 10.2014 20 LAKHS CHEQUE 10.10.2014 13.50 LAKHS CASH HE ALSO SUBMITTED THAT DURING THE SEARCH AND SEIZURE PROCEEDINGS, ,THE DOCUMENTS WERE FOUND IN REGARD TO THE DISPUTED LAND AND THERE WERE LITIGATIONS PENDING AMONG THE SELLER REGARDING PURCHASE AND T O SECURE THE TITLE ON THE LAND AND THE COURT CASES DOCUMENTS WERE ALSO FOUND AND SEIZED, THEREFORE, THE AO CANNOT SAY THAT NO DOCUMENTARY EVIDENCES WERE AVAILABLE BEFORE HIM IN THIS REGARD. THE ASSESSEE GOT LAND FREE FROM ALL LEGAL DISPUTES SO THAT THE CON STRUCTION WORK COULD BE STARTED ON THE SAME AT THE EARLIEST AND IT WAS A REVENUE EXPENDITURE, THEREFORE, DEBITED UNDER THE DEVELOPMENT EXPENSES. FURTHER IN REGARD TO DELETION OF RS.99,825/ - , HE SUBMITTED THAT IT WAS A SALARY PAYMENT MADE TO THE STAFF AND T HERE WAS ONLY FOUR STAFFS WERE ENGAGED. THE AO HAS MADE ADDITION ONLY ON ADHOC BASIS, THEREFORE, THE CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE DELETED THE ADDITION MADE BY THE AO. HE FURTHER SUBMITTED IN RESPECT OF PAYMENT OF RS.82,44,128/ - , THE CASE WAS REFERRED TO THE VALUATION OFFICER BY THE AO AND HE HAS SUBMITTED IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 60 HIS REPORT. MERELY THERE IS A SLIGHT DIFFERENCE BETWEEN THE VALUATION DONE BY THE DVO AND THE EXPENDITURE INCURRED BY THE ASSESSEE, WHICH IS MERELY RS.2,22,900/ - AND IT IS INCLUDIBLE ON T HE TOTAL PROJECT COST OF RS.35,82, 48, 565/ - . THE CIT(A) AFTER CONSIDERING THE DETAILS, HAS RIGHTLY ALLOWED THIS GROUND OF ASSESSEE. HE FURTHER REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) IN RESPECT OF DELETING OF ADDITION OF RS.28 LAKHS, AND SUBMITTED THAT IT WAS JUST A BOOK ADJUSTMENT ENTRY REGARDING PURCHASE OF MATERIALS. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE. 34 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIR E MATERIAL AVAILABLE ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE CIT(A) HAS DELETED THE ADDITIONS MADE BY THE AO, AGAINST WHICH THE REVENUE IS IN APPEAL. THE FINDINGS RECORD BY THE CIT(A) ARE AS UNDER : - 4. GROUND NO. 2: 4.1 IN THI S GROUND, THE APPELLANT HAS CONTESTED THAT THE ASSESSING OFFICER ERRED IN DISALLOWING DEVELOPMENT EXPENSES OF RS.63,50,000/ - . ACCORDING TO THE ASSESSING OFFICER, THE APPELLANT HAS PAID RS.63,50,000/ - TO MRS. KAMALINI BEHRA OUT OF WHICH RS. 13,50,000/ - IS B Y CASH AND HENCE THIS AMOUNT IS TO BE DISALLOWED U/S.40A(3) OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HAS FURTHER HELD THAT THE ENTIRE AMOUNT OF RS.63,50,000/ - HAS NOT UNDERGONE TDS AND FOR THIS REASON THE AMOUNT OF RS.63,50,000/ - AS TO BE DISALLO WED U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. THEREAFTER, THE ASSESSING OFFICER HELD THAT THE BILLS AND VOUCHERS FOR THESE DEVELOPMENT EXPENSES WERE NOT PRODUCED AND FOR THIS REASON ALSO THE ADDITION OF RS.63,50,000/ - IS JUSTIFIED. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 61 4.2 DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAS STATED THAT IT HAD PURCHASED A PLOT OF LAND IN F.Y.2011 - 12 FOR CONSTRUCTION OF BUILDING. ONE MRS. KAMALINI BEHERA HAD FILED A SUIT AGAINST THE APPELLANT CLAIMING THAT SHE HAD RIGHT, TITLE AND INTEREST ON THE PROPERT Y AND THEREFORE SHE NEEDS TO BE PAID FOR PURCHASE OF LAND BY THE APPELLANT. THEREAFTER, THE APPELLANT HAS STATED THAT OUT - OF - COURT SETTLEMENT WAS REACHED WITH MRS. KAMALINI BEHERA AND AN AMOUNT OF RS.63,50,000/ - WAS PAID TO HER TO SETTLE HER CLAIM OF RIGHT , TITLE AND INTEREST IN THE PROPERTY. IT IS THE SUBMISSION OF THE APPELLANT THAT ADDITION U/S 40(A)(3) OF THE INCOME TAX ACT, 1961 CANNOT BE MADE AS THE PAYMENT WAS MADE AS A RESULT OF BUSINESS EXIGENCY AND FURTHER THAT ADDITION U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 CANNOT BE MADE AS THE SAID PAYMENT HAS BEEN MADE FOR PURCHASE OF LAND. THE APPELLANT HAS ALSO STATED THAT THE PAYMENT TO MRS. KAMALINI BEHERA IS IN LIEU OF OUT - OF - COURT SETTLEMENT WITH HER IS NOT IN DISPUTE AND THEREFORE THE ENTIRE PAYMENT IS TO BE ALLOWED. THE RELEVANT PORTION OF THE APPELLANT'S SUBMISSION IS AS BELOW: 'SIR, IN RELATION TO THIS GROUND WE WOULD LIKE TO FIRST APPRAISE YOU WITH THE FACTS OF THE CASE. THE APPELLANT COMPANY HAD IDENTIFIED A PLOT OF LAND FOR CONSTRUCTION PURPOSE . THE APPELLANT COMPANY THEN PURCHASED THE SAID LAND FROM THE RIGHTFUL OWNERS OF THE PROPERTY DURING THE F.Y. 2011 - 12. BUT LATER ON THE OWNERS OF THE LAND HAD A DISPUTE AMONGST THEMSELVES REGARDING THEIR SHARE OF OWNERSHIP AND THEY FILED A CASE IN THE COUR T THAT THE SALE DEED EXECUTED WITH THE APPELLANT COMPANY SHOULD BE DECLARED NULL AND VOID. THE MAIN DISPUTE RAISER WAS ONE MRS. KAMALINI BEHRA WHO ALONG WITH HER SISTER AND ONE BROTHER HAD FILED THIS CASE. MEANWHILE THE PARTIES NAMELY THE APPELLANT COMPAN Y AND MRS KAMALINI BEHRA REACHED AN OUT - OF - COURT SETTLEMENT WHEREIN THE APPELLANT COMPANY WOULD PAY HER RS. 63.50 LAKHS AND ON SUCH PAYMENT SHE ALONG WITH HER SISTER WOULD WITHDRAW THEIR SUIT FILED IN THE COURT AND DROP THEIR CLAIM ON THE LAND. A CHEQUE OF RS.30,00,000/ - WAS GIVEN TO HER ON 20. 02.2014 AS AN ASSURANCE AND IT WAS DECIDED THAT THE REST AMOUNT SHALL BE PAID TO HER ON THE DATE SHE WOULD WITHDRAW HER SUIT PENDING IN THE COURT. AS PER ABOVE TERMS THE LADY WITHDREW HER CASE ON 15.09.2014 AND WAS T HUS PAID THE REMAINING AMOUNT OF RS. 33.50 LAKHS (RS. 20 LAKHS IN CHEQUE AND 13.50 LAKHS IN CASH). A MEMORANDUM OF UNDERSTANDING (COPY ENCLOSED) WAS ALSO SIGNED BETWEEN THE TWO PARTIES ON 10.10.2014. THE LADY HAD DEMANDED THAT SOME AMOUNT HAD TO BE PAID IN CASH SO THAT SHE IS ASSURED OF THE DEAL FROM HER END ALSO. SINCE, THE LAND HAD BECOME A DISPUTED LAND AND THERE WERE LITIGATIONS PENDING AMONG THE SELLERS REGARDING PARTITION AND TO SECURE THE TITLE ON THE LAND THE APPELLANT COMPANY HAD TO PAY THIS AMOUNT . DOCUMENTARY EVIDENCES OF SUCH COURT CASES WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ALSO. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 62 AS THE APPELLANT COMPANY IS IN THE BUSINESS OF REAL ESTATE THE ABOVE COST INCURRED WAS REVENUE EXPENDITURE FOR IT AND THE SAME HAD TO BE ADDED TO THE COST OF THE PROJECT. DEVELOPMENT EXPENDITURE AS DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE APPELLANT COMPANY IS NOTHING BUT THIS EXPENDITURE INCURRED BY THE COMPANY OF RS. 63.50 LAKHS. FROM THE ABOVE IT IS VERY CLEAR THAT THE EXPENDITUR E WAS INCURRED FOR GETTING - THE LAND FREE FROM ALL LEGAL DISPUTES SO T HAT THE CONSTRUCTION WORK COULD START ON THE SAME AT THE EARLIEST. THE APPELLANT COMPANY CHOSE TO DEBIT THE ACCOUNT 'LAND DEVELOPMENT EXPENSE' AND RIGHTFULLY CLAIMED THE SAME AS BUSINESS EXPENDITURE. IN BRIEF THE AMOUNT WAS PAID TO MRS KAMALINI BEHRA WAS AS FOLLOWS: DATE AMOUNT MODE OF PAYMENT 20.02.2014 30 LAKHS CHEQUE 10.10.201 4 20 LAKHS CHEQUE 13.50 LAKHS CASH IT IS PERTINENT TO NOTE THAT THE A. O. HAD ALSO COMPLETED ASSESSME NTS U/S 153A OF THE APPELLANT COMPANY AND WAS COMPLETELY AWARE OF THE ABOVE FACTS .AND DOCUMENTS. SO TO SAY THAT THE APPELLANT COMPANY FAILED TO FURNISH ANY DOCUMENTS , WHEN ALL THESE MATERIAL WAS AVAILABLE WITH HIM, IS COMPLETELY ABSURD ARGUMENT AND DEVOID OF ANY MERIT. THE A. O. IN HIS ORDER HAS RAISED TWO POINTS ON THIS ISSUE. FIRST HE SAYS THAT WITH REGARDS TO RS. 13.50 LAKHS PAID IN CASH THERE IS A VIOLATION OF SECTION 40A(3). SECOND HE SAYS THAT THE APPELLANT COMPANY OUGHT TO HAVE DEDUCTED TDS ON THESE PAYMENTS. SINCE THE A.O. HAS ADDED THE WHOLE AMOUNT OF RS. 63.50 LATHS WE OUGHT TO ASSUME THAT THE ADDITIONS HAVE BEEN MADE U/S 40(A)(IA) OTHERWISE HE WOULD HAVE MADE AN ADDITION OF ONLY RS. 13.50 LATHS IF HE WAS MAKING ADDITION U/S 40A(3). SO WE TAKE UP THE ISSUE ONE BY ONE. FIRSTLY, AS FAR AS DEDUCTION OF TDS IS CONCERNED THERE IS NO PROVISION IN THE ACT IN WHICH TAX WAS REQUIRED TO BE DEDUCTED ON THESE PAYMENTS. THE NATURE OF PAYMENT IS BASICALLY SETTLEMENT OF CLAIM FOR PURCHASE OF LAND ON WHICH THERE IS NO REQUIREMENT OF TAX DEDUCTION UNDER ANY SECTION OF THE ACT WHATSOEVER BY THE APPELLANT COMPANY. EVEN THE A.O. HAS NOT LISTED OUT THE SECTION UNDER WHICH HE THINKS TAX SHOULD HAVE BEEN DEDUCTED BECAUSE NONE EXISTS. HENCE DISALLOWANCE U/S 40(A)(IA) IS COMPLETELY OUT OF QUESTION AND HOLDS NO MERIT AT ALL AND THUS THE SAME SHOULD BE DELETED. COMING ON TO THE SECOND ISSUE, A QUESTION OF DISALLOWANCE U/S 40A(3) FOR THE AMOUNT OF RS. 13.50 LAKHS PAID IN CASH STILL REMAINS OPEN, IT IS PLEADED THAT IN TERMS O F SECTION 40A(3), CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICER IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 63 THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. THERE ARE INNUMERABLE JUDGMENTS BY VARIOUS COURTS WHICH STATES THAT IN CASE OF BUSINESS EXIGENCY IF THE PAYMENTS IS MADE IN CASH THE SAME WILL NOT BE TREATED AS CONTRAVENTION TO SECTION 40A(3) OF THE INCOME TAX ACT, 1961. (I) ATTAR SINGH GURMUKH SINGH VS. INCOME TAX OFFICER, 191 ITR 0667 (SC) : IN THIS CASE THE APEX COURT HELD THAT: 'THAT SECTION 40A(3) MUST NOT BE READ IN ISOLATION OR TO THE EXCLUSION OF RULE 6DD. THIS SECTION MUST BE READ ALONG WITH THE RULE 6DD AND IF READ TOGETHER IT IS CLEAR THAT THE PROVISIONS OF THE SECTION ARE NOT INTENDED TO RESTRICT THE BUSINESS ACTIVITIES. IT ONL Y EMPOWERS THE ASSESSING OFFICER TO DISALLOW THE DEDUCTIONS CLAIMED AS EXPENDITURE IN RESPECT OF WHICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BANK DRAFT. THE SAME IS INSISTED ONLY TO ENABLE THE ASSESSING AUTHORITY TO ASCERTAIN WHETHER IT WAS OUT OF THE INCOME FROM DIS CLOSED SOURCES AND EVEN THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED, SINCE IT IS OPEN TO THE ASSESSEE TO FURNISH THE CIRCUMSTANCES UNDER WHICH THE PAY MENT WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT IN THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. THUS SECTION 40A(3) AND RULE 6DD ARE INTENDED TO REGULATE THE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCE TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS. MOREOVER WHILE INTERPRETING A TAXING STATUTE THE COURT CANNOT BE O BLIVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH IS IN CIRCULATION IN OUR COUNTRY - THUS ANY RESTRAINT INTENDED TO USE OR CREATE BLACK SHOULD NOT HE REGARDED AS CURTAILING THE FREEDOM OF TRADE OR BUSINESS.' (II) CIT VS. J RAJMOHAN PILLAI, 267 JTR 0561 ( KERALA) IN THIS CASE THE ASSESSEE WAS ASKED TO PRODUCE THE CONFIRMATORY LETTERS FROM THE PAYEE THAT THEY HAD RECEIVED THE CHARGES FROM THE ASSESSEE IN CASH FOR ALLOWABILITY OF THE PAYMENTS U/S 40A(3). ( III ) CIT VS. RHYDBURG PHARMACEUTICALS LTD., (269 I TR 0561)(DELHI) IT WAS POINTED OUT IN THE CASE THAT THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF T HE SECTION. (IV) GOENKA AGENCIES VS. CIT, 263 ITR 0145 (CALCUTTA) IT WAS HELD THAT THE TRANSACTIONS WERE GENUINE AND PAYMENTS WERE MADE IN EXCEPTIONAL IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 64 CIRCUMSTANCES COULD NOT BE DISALLOWED U/S 40A(3) OF THE INCOME TAX ACT. (V) RAMADITYA INVESTMENTS VS. C IT, 262 ITR 0491 (DELHI) IT WAS HELD THAT THE GENUINENESS OF THESE TRANSACTIONS WAS NOT DOUBTED OR CALLED IN QUESTION. THE AMOUNTS COULD NOT BE DISALLOWED. SIR, IN THIS CASE ALSO THERE IS NO DOUBT REGARDING THE IDENTITY OF THE PAYEE AND ALSO NO DOUBT WHET HER THE PAYMENT WAS ACTUALLY MADE. IT IS COMPLETELY A GENUINE TRANSACTION AND THE PURCHASE OF LAND WOULD NOT HAVE BEEN POSSIBLE IF THE APPELLANT COMPANY HAD NOT MADE THE PAYMENTS TO THE VENDORS IN CASH AS THEY WERE NOT READY TO ACCEPT THE WHOLE AMOUNT THRO UGH CHEQUES AND WAIT TILL THE SAME GOT CLEARED. THUS, YOU WILL APPRECIATE THAT IN THE CASE OF YOUR ASSESSEE THE PAYMENT MADE IN CASH FOR PURCHASE OF LAND WAS A BUSINESS EXIGENCY AND HENCE NO DISALLOWANCE SHOULD BE MADE U/S 40A(3) OF THE I. T. ACT, 1961. ' 4.3 I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THERE IS NO DOUBT THAT THE PAYMENT HAS BEEN MADE EITHER FOR PURCHASE OF LAND OR FOR CURING THE DEFECT IN TITLE OF THE PROPERTY OF THE APPELLANT. IN EITHER CASE , IT DOES NOT ATTRACT TDS PROVISIONS AND NO ADDITION U/S. 40(A)(IA) OF THE INCOME TAX ACT, 1961 CAN BE MADE. FURTHER, PENDENCY OF DISPUTE BEFORE THE COURT AND OUT - OF - COURT SETTLEMENT WITH MRS. KAMALINI BEHERA IS NOT IN DISPUTE. THEREFORE, THE ASSESSING OFF ICER'S CONTENTION THAT BILLS AND VOUCHERS WERE NOT PRODUCED IS NOT RELEVANT. HOWEVER, I FIND THAT THE APPELLANT HAS MADE THE PAYMENT OF RS.13,50,000/ - IN CASH, STATING THAT THERE WAS BUSINESS EXIGENCY. BUT NO EVIDENCE HAS BEEN PRODUCED BY THE APPELLANT TO DEMONSTRATE THAT THERE INDEED WAS A BUSINESS EXIGENCY AND THAT MRS. KAMALINI BEHERA WAS NOT READY TO ACCEPT CHEQUE FOR RS. 13,50,000/ - . IN FACT, THE PAYMENT OF RS.50,00,000/ - HAS BEEN ACCEPTED BY HER IN CHEQUE AND THERE IS NO PLAUSIBLE REASON THAT SHE WOUL D NO1RILAVE ACCEPTED' THE PAYMENT OF RS. 13,50,000/ - IN CHEQUE. CONSIDERING THESE ASPECTS, THE ADDITION O F RS. 13,50,000/ - IS CONFIRMED U/S. 40(A)(3) OF THE INCOME TAX ACT, 1961 AND THE ADDITION OF RS.50,00,000/ - IS DIRECTED TO BE DELETED. THE GROUND OF AP PEAL IS PARTLY ALLOWED. 5. GROUND NO. 3: IN THIS GROUND, THE APPELLANT HAS CONTESTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.99,825/ - ON ACCOUNT OF STAFF SALARY EXPENSES. DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAS STATED THA T THIS IS PURELY AN AD - HOC ADDITION. IT IS SEEN THAT THERE ARE ONLY FOUR EMPLOYEES AND THE APPELLANT HAS CLAIMED SALARY EXPENSES IN RESPECT OF THESE FOUR EMPLOYEES. THERE IS NO REASON FOR MAKING THE AD - HOC DISALLOWANCE AND THE ADDITION OF RS.99,825/ - IS OR DERED TO BE DELETED. THE GROUND OF APPEAL IS ALLOWED. IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 65 6. GROUND NO. 4: IN THIS GROUND, THE APPELLANT HAS CONTESTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.30,000/ - , HOLDING THAT IT IS A CAPITAL EXPENDITURE. DURING THE COURSE OF APPEAL PROCE EDINGS, THE APPELLANT HAS ACCEPTED THAT THIS AMOUNT HAS BEEN PAID FOR RAISING CAPITAL. THEREFORE, THE DECISION OF THE ASSESSING OFFICER IS CORRECT AND THE ADDITION OF RS. 30,000/ - IS CONFIRMED. THE GROUND OF APPEAL IS DISMISSED. 7. GROUND NO. 5: 7.1 IN THI S GROUND, THE APPELLANT HAS CONTESTED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.82,44,128/ - ON ACCOUNT OF SUB - CONTRACT EXPENSES. ACCORDING TO THE ASSESSING OFFICER, THE APPELLANT HAS DEDUCTED TAX AT SOURCE AND THAT ALONE DOES NOT QUALIFY FOR ALLOWAN CE OF EXPENSES AND THEREFORE HE DISALLOWED 15% OF SUB - CONTRACT EXPENSES 'OF RS.5,49,60,859/ - AMOUNTING TO RS.82,44,128/ - . DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAS STATED THAT THE PAYMENT OF RS.5,49,85,663/ - WAS MADE TO CMM INFRA PROJECTS L TD. FOR CONSTRUCTION OF A BUILDINGS IN A PROJECT NAMED 'SIDDHI VINAYAK ENCLAVE'. ACCORDING TO THE APPELLANT, THE TOTAL DECLARED COST OF INVESTMENT IN THE PROJECT IS OF RS.35,82,45,565/ - AND THE ASSESSING OFFICER HAD CARRIED OUT ENTIRE INVESTIGATION IN RESP ECT OF THE EXPENDITURE. THE APPELLANT HAS FURTHER STATED THAT THE ASSESSING OFFICER HAD REFERRED THE WHOLE PROJECT TO THE VALUATION OFFICER WHO HAD VALUED IT AT RS.35,80,22,665/ - AND THERE IS A MEAGRE DIFFERENCE OF RS.2,22,900/ - . ACCORDING TO THE APPELLANT , THE ASSESSING OFFICER HAS MADE THE ADDITION ON AD - HOC BASIS WITHOUT ANY INVESTIGATION. THE RELEVANT PORTION OF THE APPELLANT'S SUBMISSION IS AS BELOW: 'THE APPELLANT HAD UNDERTAKEN A PROJECT NAMED 'SIDDHI VINAYAK ENCLAVE' DURING THE PERIOD UNDER CONSIDE RATION. AN AGREEMENT FOR CONSTRUCTION OF BUILDING WAS EXECUTED BETWEEN THE APPELLANT COMPANY AND M/S CMM INFRAPROJECTS LTD. 28.05.2012 (COPY ENCLOSED) WHEREIN M/S CMM INFRAPROJECTS LTD. WOULD CONSTRUCT A MULTI - STORIED RESIDENTIAL COMPLEX ON THE LAND OWNED BY THE APPELLANT COMPANY. THE CONSTRUCTION STARTED DURING THE F.Y 2012 - 13. THE YEAR - WISE AMOUNT PAYABLE TO CMM INFRAPROJECTS LTD. (LEDGERS AS APPEARING IN OUR BOOKS ARE ENCLOSED) IS AS FOLLOWS: FINANCIAL YEAR AMOUNT (RS.) 2012 - 13 1,54,74,834 2013 - 14 4,49 ,00,983 2014 - 15 5,49,85,663 IT IS PERTINENT TO NOTE THAT DURING THE COURSE OF ASSESSMENT THE THEN A.O. HAD REFERRED THE CASE TO THE VALUATION OFFICER. AS PER THE REPORT RECEIVED ON 03.10.2016, I.E. MORE THAN A YEAR BEFORE THE A.O. HAD PASSED THIS ORDER, FROM THE VALUATION OFFICER (COPY ENCLOSED) THE SAID FACTS WERE REVEALED: IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 66 FINANCIAL YEAR DECLARED COST OF INVESTMENT COST AS PER VALUATION OFFICER 2011 - 12 11,79,73,591 11,79,00,188 2012 - 13 4,61,257996 4,60,97,296 2013 - 14 8,07,10,8 71 8,06,60,653 2014 - 15 5,85,67,026 5,85,30,579 2015 - 16 5,48,68,08 7 5,48,33,949 TOTAL 35,82,45,565 35,80,22,665 THUS THERE WAS A DIFFERENCE OF MEAGRE RS. 2,22,900/ - WHICH IS NEGLIGIBLE. THIS VALUATION REPORTS ALSO SUBSTANTIATES THAT THE SUB - CONTRACT E XPENSES AS SHOWN BY THE APPELLANT COMPANY IN ITS BOOKS OF ACCOUNTS ARE CORRECT AND THERE REMAINS NO OF AD - HOC OR ARBITRARY DISALLOWANCES TO BE MADE BY THE A. O. THE APPELLANT COMPANY HAD ALSO GIVEN THE ADDRESS OF THE CONTRACTOR AND NO ONE HAD LIMITED THE A.O.'S POWER TO CROSS EXAMINE THE LEDGERS FROM THEM. IN FACT THE APPELLANT COMPANY ITSELF HAD PRODUCED THE LEDGER CONFIRMATION FROM M/S CMM INFRA PROJECTS LTD. (COPY ENCLOSED) BEFORE THE A. O. AFTER ALL THIS EXERCISE DONE BY THE APPELLANT COMP ANY AND HAVING VALUATION CERTIFICATE IN HAND BY THE A.O. THERE STANDS NO CHANCE THAT AN ARBITRARY ADDITION MADE BY THE A.O. AMOUNTING TO RS. 82,44,128/ - HOLDS ANY VALUE IN ITSELF. ' 7.2 I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. IT IS UNDISPUTED THAT THE ASSESSING OFFICER HAD REFERRED THE PROJECT TO APPROVED VALUATION OFFICER WHO HAS SENT HIS REPORT TO THE ASSESSING OFFICER. THE DECLARED COST OF INVESTMENT AND THE COST, AS PER THE VALUATION OFFICER IS ALMOST THE SAME. THE ENTIRE PAYMENT HAS BEEN MADE TO ONLY ONE PERSON WHOSE DETAILS WERE PROVIDED BY THE APPELLANT TO THE ASSESSING OFFICER. THE ASSESSING OFFICER IS NOT ENTITLED TO MAKE AN ADDITION WITHOUT INVESTIGATION AND EVIDENCE. ACCORDINGLY, THE ADDITION OF RS.82,44,1 28/ - IS ORDERED TO BE DELETED. THE GROUND OF APPEAL - IS - * ALLOWED. 8. GROUND NO. 6: 8.1 IN THIS GROUND, THE APPELLANT HAS CONTESTED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.28,00,000/ - ON ACCOUNT OF DECREASE IN LIABILITY. ACCORDING TO THE AS SESSING OFFICER, VECTUS WORLD (VW) MADE PAYMENT OF RS.28,00,000/ - TO CMM INFRA PROJECTS LTD. (CIPL) AND DUE TO THIS, THERE IS DECREASE IN THE LIABILITY OF THE APPELLANT. THE ASSESSING OFFICER HAS FURTHER HELD THAT THE APPELLANT FAILED TO EXPLAIN THE TRANSA CTION PROPERLY AND HE MADE ADDITION OF RS.28,00,000/ - . 8.2 DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAS STATED THAT AS PER THE L AGREEMENT WITH CIPL ALL THE PAYMENTS FOR THE PROJECT WERE TO BE MADE BY CIPL. IN THE MEANWHILE, THE APPELL ANT HAS MADE CERTAIN PURCHASES AMOUNTING TO RS.28,00,000/ - FROM VW AND THE PAYMENT S WERE MADE THROUGH BAN KING CHANNEL AND THE MATERIAL WAS IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 67 RECEIV ED BY CIPL. DUE TO THIS, CIPL GAVE CREDIT TO THE APPELLANT AND REDUCED ITS LIABILITY BY RS.28,00,000/ - . THE REL EVANT PORTION OF THE APPELLANT'S SUBMISSION IS AS BELOW: 'THE SUB CONTRACT AGREEMENT BETWEEN THE APPELLANT COMPANY AND M/S CMM INFRAPROJECTS LTD. (HEREINAFTER MENTIONED AS CIPL) WAS SUCH THAT THE LATTER WAS TO CONSTRUCT PROPERTY ON THE LAND WHICH BELONGED TO THE APPELLANT COMPANY. AN AGREEMENT FOR CONSTRUCTION OF BUILDING BETWEEN THE APPELLANT COMPANY AND CIPL WAS EXECUTED ON 28TH MAY, 2012. AS PER THE SAID AGREEMENT (COPY ENCLOSED) ON PAGE 8 THE FOLLOWING IS MENTIONED: 'THE AFORESAID PRICE AGREED BETWEEN THE PARTIES INCLUDES THE COST OF ALL M ATERIALS, MACHINERY CHARGES, LABOUR PAYMENTS, CONTRIBUTION TOWARDS PROVIDENT FUND AND EMPLOYEES 'STATE INSURANCE, LABOUR CESS, VAT AND ANY OTHER STATUTORY LIABILITIES IN RESPECT OF THE EMPLOYEES BE ENGAGED, LABOUR LI CENSE ETC. HOWEVER, THE SAME DOES NOT INCLUDE SERVICE TAX, IF MADE APPLICABLE.' FROM THE ABOVE AGREEMENT IT IS CRYSTAL CLEAR THAT ALL MATERIALS WAS TO BE ARRANGED BY CIPL. DURING THE RELEVANT ASSESSMENT YEAR SOME SANITARY MATERIALS WORTH RS. 28,00,000/ - WERE PURCHASED BY THE APPELLANT COMPANY FROM VECTUS WORLD. PAYMENTS FOR THE SAME WERE MADE TO VECTUS WORLD VIA CHEQUE NOS. 021115 DATED 27.06.2014 AND 022679 DATED 19.07.2014 OF RS. 16,00,000/ - AND RS. 12,00,000/ - ON AND RESPECTIVELY. SUCH MATERIALS WERE D IRECTLY RECEIVED BY CIPL AND HENCE ITS ACCOUNT WAS DEBITED BY THE SAME IN THE BOOKS OF THE APPELLANT. (LEDGERS OF VECTUS WORLD AND CIPL ARE DULY ENCLOSED FOR YOUR REFERENCE) THE A.O. MISCONSTRUED THE WHOLE AFFAIR AND BELIEVED THAT RS. 28,00,000/ - WAS PAID BY VECTUS WORLD TO CIPL. THE AMOUNT PAYABLE BY THE APPELLANT COMPANY TO CIPL WAS ADJUSTED BY SUCH AMOUNT AS VECTUS WORLD HAD MADE THE PAYMENT TO CIPL ON THE APPELLANT'S BEHALF THIS VIEW TAKEN BY THE A. O. HOLDS NO BASIS SINCE THE ACTUAL TRANSACTION IS TOTA LLY DIFFERENT FROM THE ONE UNDERSTOOD BY HIM. IT IS ALSO NOTABLE THAT THE A.O. DURING THE COURSE OF HEARING HAD NEVER SOUGHT ANY EXPLANATION FROM THE APPELLANT COMPANY ON THE SAID POINT OTHERWISE THE APPELLANT COMPANY WOULD HAVE TRIED TO EXPLAIN THE TRANSA CTION AS THE SAID TRANSACTION IS VERY SIMPLE AND UNCOMPLICATED. TO PUT IT I N A SIMPLER WAY, THE APPELLANT COMPANY PURCHASED SOME MATERIALS AND MADE PAYMENT FOR THE SAME ON BEHALF OF THE SUB - CONTRACTOR, CIPL AND DEBITED ITS ACCOUNT. THE APPELLANT COMPANY H AD NOT RECEIVED ANY UNEXPLAINED RECEIPTS AND HENCE THE ADDITION OF RS. 28,00,000/ - MADE BY THE A. O. IS UNCALLED FOR. FROM THE ABOVE SUBMISSION IT IS VERY CLEAR THAT NONE OF THE ADDITIONS MADE BY THE ASSESSING OFFICER HAS ANY WORTH ATTACHED TO IT AND ALL O F THEM DESERVES TO BE DELETED. YOUR APPELLANT PRAYS BEFORE YOU TO KINDLY IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 68 DELETE THE CAPRICIOUS, AUTHORITARIAN AND DRACONIAN ADDITIONS MADE BY THE A.O. AND GRANT NATURAL JUSTICE TO IT.' 8.3 I HAVE CAREFULLY ANALYSED THE ASSESSMENT ORDER AND SUB MISSIONS OF THE APPELLANT. THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER DUE TO NON - APPRECIATION OF THE ACCOUNTING ENTRIES. THERE IS NO BASIS TO SUSTAIN THIS ADDITION. ACCORDINGLY, THE ADDITION OF RS.28,00,000/ - IS DIRECTED TO BE DELETED. THE GROUND O F APPEAL IS ALLOWED. ON PERUSAL OF THE ABOVE FINDINGS OF THE CIT(A) , WE NOTICE THAT THE PAYMENT MADE TO KAMALINI BEHERA WAS TOWARDS SETTLEMENT OF THE DISPUTE ARISING TOWARDS PURCHASE OF LAND OUT OF THE WHICH RS.30 LAKHS WERE PAID IN THE PREVIOUS FINANCIAL YEAR AND RS.20 LAKHS WERE PAID IN THE CURRENT FINANCIAL YEAR OUT OF THE COURT SETTLEMENT AND THESE DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ALSO, THEREFORE, ,THE GENUINENESS OF THE PAYMENTS CANNOT BE DENIED. THE AO COULD HAV E EXAMINED THE ISSUE BECAUSE THE DOCUMENTS WERE FOUND DURING THE SEARCH & SEIZURE OPERATION AND IF HE WAS IN DOUBT HE CAN CALL FOR EXAMIN ATION TO THE PAYEE I.E. KAMALINI BAHERA THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PURCHASE OF LAND AND CONSTRUCTION O F APARTMENT, THEREFORE, THE ASSESSEE HAS RIGHTLY DEBITED INTO THE PROFIT AND LOSS ACCOUNT. FURTHER, WE OBSERVE THAT THE TDS PROVISION IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE IT WAS SETTLEMENT FOR PURCHASE OF LAND AND THE AO HAS ALSO NOT BROUGHT ON R ECORD THAT UNDER WHICH PROVISION THE TDS SHOULD BE DEDUCTED ON THE PAYMENTS MADE TO KAMALINI BEHERA WHEREAS THE DOCUMENTS WERE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 69 AVAILABLE BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITIONS . ACCORD INGLY, WE DO NOT SEE ANY INTERFERENCE IS CALLED FOR IN THE FINDINGS RECORDED BY THE CIT(A) IN THIS REGARD. THUS, GROUND NO. (I) & (II) RAISED BY THE REVENUE ARE DISMISSED. 35 . IN REGARD TO SALARY EXPENSES OF RS.99,825/ - , THE ASSESSEE HAS SUBMITTED THAT THER E WERE FOUR EMPLOYEES WORKING BUT THE AO HAS MADE ADDITION ON ADHOC BASIS. THE ADHOC DISALLOWANCE SHOULD NOT BE MADE BY THE AO. WE FOUND SUBSTANCE ON THE ARGUMENTS ADVANCED BY THE LD. AR OF THE ASSESSEE IN THIS REGARD AND THE CIT(A) HAS RIGHTLY DELETED THI S ADDITION. ACCORDINGLY, WE DO NOT SEE ANY INTERFERENCE IS CALLED FOR IN THE FINDINGS RECORDED BY THE CIT(A) IN THIS REGARD. THUS, GROUND NO. (III) RAISED BY THE REVENUE IS DISMISSED. 36 . IN RESPECT OF ADDITION OF RS.82,44,128/ - , THE AO MADE LUMPSUM DISALLO WANCE OF 15% OF TOTAL EXPENSES AS THE ASSESSEE IS UNABLE TO FURNISH THE DETAILS OF SUCH EXPENSES BEFORE THE AO FOR HIS EXAMINATION. WE OBSERVE FROM THE ORDER OF LOWER AUTHORITIES THAT THE ASSESSEE HAS MADE TDS ON THE ENTIRE PAYMENTS. THE CIT(A) HAS DELETED THIS ADDITION THAT THERE IS A SLIGHT DIFFERENCE BETWEEN THE DECLARED COST OF INVESTMENT AND THE COST AS PER THE VALUATION OFFICER. THE DETAILS OF THE COST INCURRED IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 70 BY THE ASSESSEE IN THE PROJECT SHIDHI VINAYAK ENCLAVE AND DETAILS OF VALUATION OFFICER IS A S UNDER : - FINANCIAL YEAR DECLARED COST OF INVESTMENT COST AS PER VALUATION OFFICER 2011 - 12 11,79,73,591 11,79,00,188 2012 - 13 4,61,257996 4,60,97,296 2013 - 14 8,07,10,871 8,06,60,653 2014 - 15 5,85,67,026 5,85,30,579 2015 - 16 5,48,68,08 7 5,48,33,949 TOTA L 35,82,45,565 35,80,22,665 37. WE OBSERVE FROM THE ABOVE TABLE THAT THERE IS A DIFFERENCE OF RS.2,22,900/ - WHICH IS A MEAGER. THE ASSESSEE HAD ALSO SUBMITTED DETAILS OF THE ADDRESS OF THE CONTRACTOR AND THE AO COULD HAVE CALLED FOR THE EXAMINATION BUT T HE AO HAS NOT DONE SO. THE AO HAS OBSERVED DURING THE COURSE OF ASSESSMENT THAT THE ASSESSEE COULD NOT PRODUCE THE DETAILS OF EXPENSES, PARTICULARS OF WORKS DONE & AGREEMENT WITH THE SUB - CONTRACTOR FOR EXECUTING THE CONTRACTOR WORK , THEREFORE, THE AO MADE LUMPSUM DISALLOWANCE OF 15%, IF THE ASSESSEE DID NOT COMPLY AS REQUIRED BY THE AO, HE SHOULD HAVE MADE ADDITION TO THE ENTIRE AMOUNT IN SPITE OF MAKING ADHOC DISALLOWANCE OF 15% . IF THE AO DOES NOT BELIEVE ON THE PAYMENTS MADE TO THE SUB - CONTRACTORS M/S C MM INFRA PROJECTS LTD. HE COULD HAVE CALLED FOR THE EXAMINATION BY ISSUING NOTICE TO M/S CMM INFRA PROJECTS LTD., HOWEVER, THE AO HAD NOT DONE SO. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. ACCORDINGLY, WE IT (SS) A NO S . 56 - 58 /CTK/201 8 IT(SS)A NO.188/CTK/2019 & CO NOS.15 17/CTK/ 2019 71 UPHOLD THE FINDINGS RECORDED BY THE C IT(A) IN THIS REGARD AND DISMISS THE GROUND NO. (IV) OF APPEAL RAISED BY THE REVENUE . 38 . IN RESPECT OF GROUND NO. (V) REGARDING PAYMENT OF RS.28 LAKHS ON ACCOUNT OF DECREASE IN LIABILITY, THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AFTER CONSIDERING THE DET AILED DOCUMENTS FILED BY THE ASSESSEE BEFORE HIM. THEREFORE, WE DO NOT WANT TO INTERFERE WITH THE FINDINGS RECORDED BY THE CIT(A) IN THIS REGARD AND WE DISMISS TH E GROUND NO.(V) OF THE REVENUE. 39 . THUS, IT(SS)A NO.188/CTK/2019 (AY : 2015 - 2016) IS DISMISSE D. 40 . IN THE RESULT, ALL APPEALS OF THE REVENUE I.E. IT(SS)A NOS.56&57/2018 & 188/CTK/2019 ALONG WITH CROSS OBJECTIONS OF THE ASSESSEE I.E. CO NOS.15&16/CTK/2019 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 / 12 / 20 20 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 14 / 12 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//