Jindal Dyechem Industries P Ltd, New Delhi V. DCIT, New Delhi

CO 179/DEL/2008

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2098 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 2 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 24-11-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA; ANIL JAIN SENIOR
• Keywords: Period of limitation
• Section: 92C; 143(3); 133A; 234B; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.4809/DEL./2007 (ASSESSMENT YEAR : 2003-04) DCIT, CIRCLE 4 (1), VS. M/S. JINDAL DYECHEM INDUST RIES PVT. LTD., NEW DELHI. 110, BABAR ROAD, NEW DELHI 110 011. (PAN : AAACJ0719Q) CO NO.179/DEL/2008 (IN ITA NO.4809/DEL./2007) (ASSESSMENT YEAR : 2003-04) M/S. JINDAL DYECHEM INDUSTRIES PVT. LTD., VS. DCIT , CIRCLE 4 (1), 110, BABAR ROAD, NEW DELHI. NEW DELHI 110 011. (PAN : AAACJ0719Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGGARWAL, ADVOCATE & SHRI SHAILESH GUPTA, CA REVENUE BY : SHRI A.K. SAROHA, CIT DR & SHRI ANIL JAIN, SENIOR DR O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : 2 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT (APPEALS)-VII, NEW DELHI DATED 26.9.2007 FOR ASSESSMENT YEAR 2003-04. 2 THE GROUNDS TAKEN BY THE REVENUE IN ITA NO.4809/ DEL/2007 ARE AS UNDER; 1 THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CON TRARY TO FACTS AND LAW. 2 THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS IN HOLDING THE ASSESSMENT MADE BY THE AO ON 14.9.2006 AS BARRED BY LIMITATION U/S 153(1) OF THE I.T.ACT, 1961 WITHOUT CONSIDERING THE FACT THAT IN PURSUANCE TO PROVISO TO SECTION 142(2C) AND PROVISO TO EXPLAN ATION 1(III) TO SECTION 153(3) OF THE I.T. ACT, 1961 THE LIMITATION FOR COM PLETION OF ASSESSMENT EXPIRED ON 15.9.2006. THUS THE ORDER PASSED U/S 14 3(3) OF I.T. ACT, 1961 PASSED ON 14.9.2006 IS WITHIN THE STATUTORY LIMIT. 3 THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS IN R ELYING ON THE ARGUMENTS BASED ON INCORRECT SUBMISSION OF THE ASSE SSEE WHILE IGNORING THE FACTS ON RECORDS AS UNDER:- A) THE DATE OF FILING AUDIT HAD BEEN EXTENDED TO 17 .7.2006 B) EVEN ON THAT DATE THE ASSESSEE DID NOT FILE THE AUDIT REPORT C) ON THAT DATE I.E. 17.7.2006, SPECIAL AUDITOR FIL ED A COPY OF THE REPORT BEFORE AO D) LD. CIT(A) NEW DELHI DID NOT TAKE COGNIZANCE OF PROVISION OF SECTION 142(2C) E) LD. FIRST APPELLATE AUTHORITY HAS WRONGLY INTERP RETED THE PROVISIONS OF EXPLANATION 1(III) TO SECTION TO SECT ION 153(3) OF I.T. ACT, 1961 IN HOLDING THAT THE LAST DATE IS ONE DECIDED B Y AO WHEREAS THE DATE OF COMPLIANCE EXTENDS UPTO 180 DAYS 3 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 F) THE ASSESSEE TRIED TO TAKE ADVANTAGE OF ITS OWN FAULT IN DISCHARGING ITS OWN STATUTORY LIABILITY IN GETTING THE ACCOUNTS AUDITED AND SUBMIT THE REPORT BEFORE AO WITHIN THE PRESCRIBED TIME G) AO HAD BEEN LIBERAL IN GRANTING EXTENSIONS FOR F ILING THE AUDIT REPORT AND FURTHER IN THE ASSESSMENT PROCEEDINGS WH ILE SUBSTANTIALLY REDUCING THE QUANTUM OF ADDITION SUGGESTED BY SPECI AL AUDITORS BUT THE ASSESSEE HAS TAKEN THE ADVANTAGE OF THE LIBERAL ATT ITUDE OF AO IN ASSESSMENT PROCEEDINGS. 4 THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR A MEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARI NG. 3. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE CROSS OBJECTION NO. 179/D/2008 :- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT DELETING THE ADDITI ON OF RS. 74,90,362/- ON ACCOUNT OF ALLEGED UNRECORDED CASH SALES MADE BY TH E APPELLANT COMPANY BY INVOKING THE PROVISIONS OF SECTION 69A OF THE AC T. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN NOT DELETING THE DISALLOWANCE OF RS. 50,33,653/- OUT OF RS. 60,33,653/- INCURRED ON FORE IGN TRAVELLING BY THE APPELLANT COMPANY. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN NOT DELETING THE ADDITION OF SUM OF RS. 1,96,71,741/- ON ACCOUNT OF ALLEGED UNEXPLAINED INV ESTMENT BY COMPUTING THE PURPORTED NEGATIVE STOCK. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ALSO ERRED BOTH IN LAW AND, ON FACTS IN NOT DELETING THE ADDITION OF RS. 1,55,15,069/- ON ACCOUNT OF ALLEGED UNDISCLOSED INV ESTMENT IN STOCK. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED IN NOT DELETING THE ADDITION OF RS. 4 1,30,033/- U/S 92C OF THE ACT. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN NOT DELETING THE DISALLOWANCE OF SUM OF 4 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 RS. 5,06,150/- OUT OF EXPENDITURE INCURRED ON BUSIN ESS PROMOTION CLAIMED BY THE APPELLANT COMPANY. 7. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED BOTH IN LAW AND ON FACTS IN NOT DELETING THE ADDITION OF RS .5,76,521/- ON ACCOUNT OF ALLEGED UNRECORDED SALES OF SILVER BY THE APPELLANT COMPANY. 8. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ALSO ERRED BOTH IN LAW AND ON FACTS IN NOT DELETING THE DISALLOWING A SUM OF RS.73,604/- OUT OF EXPENDITURE CLAIMED ON TRAVELLIN G BY THE APPELLANT COMPANY ON AN ERRONEOUS ASSUMPTION THAT SUCH EXPEND ITURE INCURRED WAS PERSONAL IN NATURE AND, IN DISREGARD OF THE FACT TH AT, THE ASSESSEE COMPANY HAS ANY CLAIMED RS. 32,000.50/- AS EXPENDITURE IN T HE RETURN OF INCOME. 9 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) HAS FAILED TO APPRECIATE THAT, THE APPELLANT COMPANY, UNDER MI SCONCEPTION OF LAW HAD OFFERED AN INCOME OF RS. 1,50,00,000/- ON THE DATE OF SURVEY U/S 133A OF THE ACT ERRONEOUSLY AND, AS SUCH HE OUGHT TO HAVE A LSO DELETED THE ADDITION OF SAID SUM, WHILE DISPOSING OFF THE APPEAL. 10. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN NOT DELET ING THE LEVYING INTEREST OF RS.75,20,977/- AND RS.3,39,889/- UNDER SECTION 234B AND SECTION 234D OF THE ACT RESPECTIVELY. 4. THE FACTS IN BRIEF ARE THAT RETURN OF INCOME WAS FILED ON 2.12.2003 SHOWING TOTAL INCOME AT RS. 2,04,84,373/-. THE RET URN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER 'TH E ACT') ON 15.3.2004. M/S SUSHIL JEETPURIA & CO., CHARTERED ACCOUNTANTS, NEW DELHI (HEREINAFTER CALLED SPECIAL AUDITORS) WERE ALLOTTED THE TASK OF SPECIAL AUDIT U/S 142(2A) OF THE ACT VIDE ORDER F.NO. DCIT/CIRCLE 4(1)/2005-0 6/142(2A)/871 DATED 17.2.2006. THE REPORT DATED 7.7.2006 OF THE SPECIA L AUDITOR WAS RECEIVED BY THE AO ON 17.7.2006. AFTER RECEIPT OF THE SPECIAL AUDIT REPORT U/S 142(2A) 5 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 ON 17.7.2006 AN ORDER DATED 14.9.2006 WAS PASSED UN DER SECTION 143(3) OF THE ACT. ON APPEAL THE CIT(A) QUASHED THE ASSESSME NT ON THE GROUND IT IS BARRED BY LIMITATION VIDE ORDER DATED 26.9.2007 BY OBSERVING AS UNDER: 6 I HAVE CAREFULLY CONSIDERED THE FINDINGS CONTA INED IN THE ORDER OF ASSESSMENT, SUBMISSION OF THE APPELLANT COMPANY, CO MMENTS OF THE LEARNED ASSESSING OFFICER, REJOINDER SUBMISSION MAD E BY THE APPELLANT AND MATERIAL ON RECORD. THE CONTENTION OF THE APPELLAN T COMPANY IS THAT, THE IMPUGNED ASSESSMENT DATED 14.9.2006 IS BARRED BY LI MITATION. THUS, THE ISSUE, WHICH REQUIRES DETERMINATION, IS WHETHER THE ASSESSMENT MADE ON 14.9.2006 CAN BE HELD TO HAVE BEEN MADE WITHIN THE STATUTORY PERIOD OF LIMITATION PROVIDED IN SECTION 153(1) AND, THE EXPL ANATION 1 OF SECTION 153(1) OF THE ACT. 6.1 BEFORE PROCEEDING TO ADJUDICATE ON THIS ISSUE, IT WOULD BE RELEVANT TO EXTRACT THE STATUTORY PROVISIONS OF LAW. THE RE LEVANT PORTION OF SECTION 153(1) OF THE ACT AND, THE EXPLANATION 1 OF SECTION 153(1) OF THE ACT READS AS UNDER: 153(1) NO ORDER OF ASSESSMENT SHALL BE MADE UNDER SECTION 143 OR SECTION 144 AT ANY TIME AFTER THE EXPIRY OF A) TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE ..(EXPLANATION 1-IN COMPUTING THE PERIOD OF LIMIT ATION FOR THE PURPOSE OF THIS SECTION .. (IV) THE PERIOD COMMENCING FROM THE DATE ON WHICH T HE [ASSESSING] OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AU DITED UNDER SUB-SECTION (2A) OF SECTION 142 AND ENDING WITH [THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH]A REPORT OF SUCH AUDIT UNDER TH AT SUB- SECTION... SHALL BE EXCLUDED: PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID TIME OR PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB-SECTION (1), [1A), (1B)} (2) AND (2A) AVAILABLE TO THE ASSESSING OFFIC ER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RE-COMPUTATION, AS T HE CASE MAY BE, IS LESS THAN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXT ENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY 6 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 6.2 FROM THE PERUSAL OF THE AFORESAID PROVISIONS, I T WILL BE SEEN THAT, AN ORDER OF ASSESSMENT HAS TO BE MADE WITHIN A PERIOD OF TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH, THE INCOME WAS FIRST ASSESSABLE. IT HAS BEEN FURTHER PROVIDED IN THE EXPLANATION THAT I N COMPUTING THE PERIOD OF LIMITATION, THE PERIOD COMMENCING FROM THE DATE ON WHICH, THE A.O. DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UN DER SUB SECTION (2A) OF SECTION 142 OF THE ACT AND END WITH THE LAST DATE O N WHICH THE ASSESSEE IS REQUIRED TO FURNISH THE REPORT OF SPECIAL AUDIT UND ER THAT SECTION IS TO BE EXCLUDED. IN OTHER WORDS, THE PERIOD FROM THE DATE OF DIRECTION OF THE AUDIT TO THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT U/S 142(2A) OF THE ACT IS TO BE EXCLUDED WHIL E COMPUTING THE PERIOD OF LIMITATION AS PROVIDED U/S 153(1) OF THE ACT. H OWEVER, THE PROVISO FURTHER PROVIDES THAT, WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION AVAILABL E TO THE AO FOR MAKING AN ORDER OF ASSESSMENT IS LESS THAN 60 DAYS, SUCH R EMAINING PERIOD SHALL BE EXTENDED TO 60 DAYS AND THE AFORESAID PERIOD OF LIM ITATION SHALL BE EXTENDED ACCORDINGLY. 6.3 APPLYING THE AFORESAID STATUTORY PROVISIONS TO THE FACTS OF THE INSTANT CASE, IT IS EVIDENT THAT, THE IMPUGNED ASSE SSMENT FOR ASSESSMENT YEAR 2003-04 HAD TO BE COMPLETED BY 31.3.2006. HOW EVER SINCE THE AO HAD DIRECTED THE ASSESSEE TO GETS ITS ACCOUNTS AUDI TED U/S 142(2A) OF THE ACT, THE PERIOD OF LIMITATION HAD TO BE EXTENDED IN VIEW OF THE PROVISIONS CONTAINED IN EXPLANATION 1 TO SECTION 153(1) OF THE ACT. FROM THE FACTS ON RECORD, IT IS EVIDENT THAT, PERIOD TO BE EXCLUDED E NDED ON 7.7.2006 WHICH IS THE DATE ON WHICH THE ASSESSEE WAS REQUIRED TO FURN ISH THE REPORT OF SPECIAL AUDIT. THIS IS IN VIEW OF FACT THAT, THE LEARNED A O HAD VIDE ORDER DATED 16/17.2.2006 DIRECTED THE ASSESSEE TO GET HIS ACCOU NTS U/S 142(2A) OF THE ACT WITHIN A PERIOD OF 35 DAYS. HE FURTHER EXTENDE D THIS PERIOD SUBSEQUENTLY THROUGH DIRECTIONS DATED 24.3.2006 (FO R A FURTHER PERIOD OF 45 DAYS) DATED 10.5.2006 (FOR A FURTHER PERIOD OF 30 D AYS) DATED 9.6.2006 (FOR A FURTHER PERIOD OF 10 DAYS) DATED 21.6.2006 (FOR A FURTHER PERIOD OF 7 DAYS) AND DATED 28 TH JUNE 06 (FOR A FURTHER PERIOD OF 7 DAYS). ACCORDINGLY, TOTAL PERIOD TO GET THE ACCOUNTS AUDIT ED AS DIRECTED BY HIM WAS 134 DAYS. HOWEVER, IN THE EXTENSION DATED 28 TH OF JUNE 2006, THE DATE STATED FOR COMPLETION OF AUDIT WAS 7 TH OF JULY 2006. THUS AS A MATTER OF FACT, TAKING INTO ACCOUNT ALL THE AFORESAID EXTENSI ONS, THE ASSESSEE WAS REQUIRED TO FURNISH THE AUDIT REPORT BY 7.7.2006. ACCORDINGLY, IN TERMS OF EXPLANATION TO SECTION 153 OF THE ACT, THE PERIOD O F LIMITATION EXPIRED ON 6.9.2006, WHEREAS THE INSTANT ASSESSMENT HAD BEEN F RAMED ON 14.9.2006. THUS THE ASSESSMENT ORDER IS BARRED BY THE LIMITATI ON IN VIEW OF THE PROVISIONS CONTAINED IN SECTION 153 OF THE ACT, AND CONSEQUENTLY THE SAME IS VOID AB-INITIO AND, DESERVES TO BE ANNULLED AS S UCH. 7 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 5. BEFORE US, THE LD. CIT DR POINTED OUT THAT A REF ERENCE WAS MADE IN THIS CASE UNDER SECTION 142(2A) THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2003-04. AFTER SEEKING CERTAIN EXT ENSION (BY THE ASSESSEE COMPANY), A REPORT FROM SPECIAL AUDITOR DATED 7.7.2 006 WAS RECEIVED BY AO ON 17.7.2006. IT WAS STATED THAT REPORT WAS REC EIVED WITHIN STATUTORY TIME LIMIT OF 180 DAYS PROVIDED PROVISO TO SECTION 142(2C) OF THE ACT. IT WAS FURTHER SUBMITTED THAT AFTER EXCLUSION OF PERIO D UNDER SECTION 142(2C) AND PROVISO TO EXPLANATION 1(III) TO SECTION 153(3) OF THE ACT, THE LIMITATION FOR COMPLETION OF ASSESSMENT WAS TO EXPIRE ON 15.9. 2006. IT WAS SUBMITTED THAT ORDER PASSED UNDER SECTION 143(3) OF THE ACT O N 14.9.2006 WAS THEREFORE WITHIN THE STATUTORY LIMIT AND CIT(A) WAS IN ERROR IN HOLDING THE ASSESSMENT IS BARRED BY LIMITATION. 6. THE LEARNED COUNSEL FOR ASSESSEE HOWEVER SUBMITT ED THAT IN THE INSTANT CASE, IN NORMAL COURSE, THE INSTANT ASSESSMENT COUL D HAVE BEEN FRAMED TILL 31.3.2006 I.E. WITHIN A PERIOD OF TWO YEARS FROM TH E END OF THE ASSESSMENT YEAR. THE ASSESSING OFFICER VIDE HIS ORDER DATED 1 6/17.2.2006, DIRECTED THE ASSESSEE TO GET HIS ACCOUNTS AUDITED U/S 142(2A) OF THE ACT, WITHIN A PERIOD OF 35 DAYS. HE FURTHER EXTENDED THIS PERIOD SUBSEQ UENTLY THROUGH DIRECTIONS 8 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 DATED 24.3.2006 (FOR A FURTHER PERIOD OF 45 DAYS) D ATED 10.5.2006 (FOR A FURTHER PERIOD OF 30 DAYS), DATED 9.6.2006 (FOR A F URTHER PERIOD OF 10 DAYS), DATED 21.6.2006 (FOR A FURTHER PERIOD OF 7 DAYS) AN D DATED 28 TH JUNE 06 (FOR A FURTHER PERIOD OF 7 DAYS. HE STATED THAT TOTAL PER IOD TO GET THE ACCOUNTS AUDITED WAS 134 DAYS. IT WAS SUBMITTED THAT IN THE EXTENSION DATED 28 TH OF JUNE 06, THE DATE STATED FOR COMPLETION OF AUDIT W AS 7 TH OF JULY 06. THUS THE ASSESSEE WAS TO GET HIS ACCOUNTS AUDITED BY 134 DAYS FROM 17.2.2006, BUT SINCE THE AO HAD STATED IN THE EXTENSION DATED 28 TH OF JUNE 2006, THAT THE AUDIT WAS TO BE COMPLETED BY 7 TH OF JULY, 2006, THEREFORE, THE PERIOD FROM 17.2.2006 TO 7.7.2006 IS TO BE EXCLUDED IN TERMS OF EXPLANATION TO SECTION 153 OF THE ACT. IT WAS SUBMITTED THAT PERIOD OF LI MITATION EXPIRED ON 6.9.2006, WHEREAS THE INSTANT ASSESSMENT HAD BEEN F RAMED ON 14.9.2006. IT WAS THEREFORE SUBMITTED THAT THE ASSESSMENT ORDER I S BARRED BY THE LIMITATION STIPULATED U/S 153 OF THE ACT. IT WAS SUBMITTED TH AT THE DATE OF 17.7.2006 IS THE DATE OF FURNISHING THE REPORT BY SPECIAL AUDITO R AND, IT IS NOT THE DATE ON WHICH THE SPECIAL AUDITORS WERE REQUIRED TO FURNISH THE SPECIAL AUDIT REPORT AND THEREFORE THE DATE ON WHICH THE SPECIAL AUDITOR WERE REQUIRED TO FURNISH THE REPORT WAS 7.7.2006 AND AS SUCH, THE CONTENTION OF THE LEARNED DR THAT 9 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 17.7.2006 SHOULD BE ADOPTED AS THE DATE FOR DETERMI NING THE PERIOD OF LIMITATION IS BASED ON MISINTERPRETATION OF THE PRO VISIONS OF LAW. 7. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. WE FIND THAT THE CIT(A) QUASHED THE ASSESSMENT ORDER DATED 14.9.2006 ON THE GROUND IT IS BARRED BY LIMITATION. SECTION 153(1) OF THE ACT PROVIDES AS U NDER: 153(1) NO ORDER OF ASSESSMENT SHALL BE MADE UNDER SECTION 143 OR SECTION 144 AT ANY TIME AFTER THE EXPIRY OF A) TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE ..(EXPLANATION 1-IN COMPUTING THE PERIOD OF LIMIT ATION FOR THE PURPOSE OF THIS SECTION .. (IV) THE PERIOD COMMENCING FROM THE DATE ON WHICH T HE [ASSESSING] OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AU DITED UNDER SUB-SECTION (2A) OF SECTION 142 AND ENDING WITH [THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH]A REPORT OF SUCH AUDIT UNDER TH AT SUB-SECTION. .. SHALL BE EXCLUDED: PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID TIME OR PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB-SECTION (1), [1A), (1B)} (2) AND (2A) AVAILABLE TO THE ASSESSING OFFIC ER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RE-COMPUTATION, AS T HE CASE MAY BE, IS LESS THAN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXT ENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY 8. A PLAIN READING OF THE ABOVE WOULD MAKE IT APPAR ENT THAT AN ORDER OF ASSESSMENT HAS TO BE MADE WITHIN A PERIOD OF TWO YE ARS FROM THE END OF THE ASSESSMENT YEAR. ACCORDING TO THE EXPLANATION THE PERIOD COMMENCING FROM 10 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 THE DATE ON WHICH, THE AO DIRECTS THE ASSESSEE TO G ET HIS ACCOUNTS AUDITED UNDER SUB-SECTION (2A) OF SECTION 142 OF THE ACT AN D THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH THE REPORT OF S PECIAL AUDITOR IS TO BE EXCLUDED IN COMPUTING PERIOD OF LIMITATION. THE PR OVISO FURTHER PROVIDES THAT, WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION AVAILABLE TO THE AO FOR MAKING AN ORDER OF ASSESSMENT IS LESS THAN 60 DAYS, SUCH REMAINING PERIOD SHALL BE E XTENDED TO 60 DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE EXTENDE D ACCORDINGLY. 9. IN THE INSTANT CASE, THE AO VIDE ORDER DATED 16/ 17.2.2006 DIRECTED THE ASSESSEE TO GET HIS ACCOUNTS U/S 142(2A) OF THE ACT WITHIN A PERIOD OF 35 DAYS. HE FURTHER EXTENDED THIS PERIOD SUBSEQUENTLY VIDE FOLLOWING DIRECTIONS: S NO. DATE OF THE ORDER FOR EXTENSION FOR PERIOD OF AUDIT UNDER PROVISO TO SECTION 142(2C) OF THE ACT PERIOD EXTEND ED DATE BY WHICH THE ASSESSEE WAS REQUIRED TO FURNISH THE AUDIT REPORT U/S 142(2A) OF THE ACT REMARKS, IF ANY 1 24.03.2006 45 DAYS 08.05.2006 2 10.05.2006 30 DAYS 07.06.2006 ORDER WAS MADE AFTER 08.05.2006 AND, NOT BEFORE OR 08.05.2006 3 09.06.2006 10 DAYS 17.06.2006 ORDER WAS MADE AFTER 07.06.2006 AND, NOT BEFORE OR 07.06.2006 11 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 4 21.06.2006 7 DAYS 27.06.2006 ORDER WAS MADE AFTER 17.06.2006 AND, NOT BEFORE OR 17.06.2006 5 28.06.2006 7 DAYS 04.07.2006 HOWEVER AO HAS STATED TIME TILL 07.07.2006. ORDER WAS MADE AFTER 27.06.2006 AND, NOT BEFORE OR 27.06.2006 TOTAL 134 DAYS 10. THE CONTENTION OF THE LD. AO BEFORE THE CIT(A) IN THE REMAND REPORT WAS THAT, SINCE THE AUDIT REPORT WAS RECEIVED ON 17 .7.2006, THE PERIOD TO BE EXCLUDED DOES NOT END ON 7.7.2006 BUT ENDED ON 17.7 .2006. WE ARE IN AGREEMENT WITH THE CONCLUSION OF THE CIT(A) THAT SE CTION 153(1) OF THE ACT CLEARLY PROVIDES THAT THE PERIOD OF LIMITATION IS T O BE GOVERNED BY NOT THE ACTUAL DATE OF FURNISHING THE REPORT BUT THE LAST D ATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH REPORT OF SUCH AUDIT. THIS FAC T IS FULLY EXPLICIT FROM THE ORDER DATED 28.6.2006 MADE BY THE LEARNED AO U/S 14 2(2A) READ WITH SECTION 142(2C) OF THE ACT WHICH READS AS UNDER: THIS HAS REFERENCE TO YOUR LETTER DATED 27.6.2006 RECEIVED FROM YOUR AUTHORIZED REPRESENTATIVE IN THIS OFFICE ON 28.6.20 06. YOU HAVE REQUESTED FOR EXTENSION OF TIME ALLOWED TO THE SPECIAL AUDITO R FOR FILING HIS REPORT BY ONE WEEK. IT HAD EARLIER BEEN UNDERTAKEN THAT NO F URTHER EXTENSION WILL BE SOUGHT AFTER ONE WEEK. 2 YOUR APPLICATION HAS BEEN CONSIDERED. THE TIME ALLOWED FOR COMPLETION OF THE SPECIAL AUDIT IS FURTHER EXTENDED BY ONE WEEK I.E. UPTO 7.7.2006, AS REQUESTED IN YOUR LETTER UNDER REFEREN CE IN VIEW OF THE POWERS CONFERRED BY THE PROVISO TO SECTION 142(2A) OF INCO ME TAX ACT, 1961. YOU ARE ADVISED TO EXTEND FULL COOPERATION TO THE S PECIAL AUDITOR SO AS TO ENABLE HIM TO FILE THE REPORT WITHIN STIPULATED TIM E. 12 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 IT MAY BE NOTED THAT NO FURTHER EXTENSION WILL BE GRANTED AFTER 7.7.2006 11. THE ABOVE CONCLUSION IS ALSO STRENGTHENED FROM THE FACT THAT THE INTERPRETATION OF AO IS BASED ON THE LAW AS STOOD P RIOR TO AMENDMENT BY FINANCE NO. 2 ACT, 1996 W.E.F. 1.4.1997 AND, NOT ON THE LAW RELEVANT TO THE INSTANT YEAR. THE FINDINGS OF CIT(A) IN THIS REGAR D ARE AS UNDER: 6.5 INFACT, I MAY HASTEN TO ADD HERE THAT, THE INT ERPRETATION OF THE LEARNED OFFICE IS OTHERWISE NOT IN ACCORDANCE WITH LAW SINCE IT IS BASED ON THE INTERPRETATION OF THE STATUTORY PROVISIONS OF T HE ACT AS THEY STOOD PRIOR TO AMENDMENT BY FINANCE NO. 2 ACT, 1996 W.E.F. 1.4. 1997. THE PROVISIONS PRIOR TO AMENDMENT READ AS UNDER; EXPLANATION 1-IN COMPUTING THE PERIOD OF LIMITATI ON FOR THE PURPOSES OF THIS SECTION- (III) THE PERIOD COMMENCING FROM THE DATE ON WHICH THE [ASSESSING OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AU DITED UNDER SUB-SECTION (2A) OF SECTION 142 AND ENDING WITH SUBSTITUTED FOR THE DATE ON WHICH THE ASSESSEE FURNISHES BY THE FINANCE (NO. 2) ACT, 195 6 W.E.F. 1.4.1997 [THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURN ISH] A REPORT OF SUCH AUDIT UNDER THE SUB-SECTION OR . SHALL BE EXCLUDED [PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSI ON OF THE AFORESAID TIME OR PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB-SECTIONS (1), [(1A), (1B),[ (2) AND (2A) AVAILABLE TO THE ASSESSING OFFI CER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RE-COMPUTATION, AS T HE CASE MAY BE, IS LESS THAN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXT ENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY.] 6.6 THE CONCLUSION IS FURTHER SUPPORTED FROM THE ME MORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL AND NOTES ON CLAUSES REPORTED IN 220 ITR 89 (STATUE) AMENDMENT OF TIME LIMIT FOR COMPLETION OF ASSESSME NTS AND REASSESSMENTS. 13 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 UNDER THE EXISTING PROVISIONS OF INCOME TAX ACT, TH E TIME LIMIT FOR MAKING AN ORDER OF ASSESSMENT IS TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE. HOW EVER IN CERTAIN CIRCUMSTANCES THE TIME IS EXTENDED, OR CERTAIN PERI ODS ARE EXCLUDED FROM THE PERIOD OF LIMITATION. IN CASE WHERE SPECIAL AUDIT IS ORDERED, THE ASSESSI NG OFFICER IS OF THE OPINION THAT, HAVING REGARD TO THE NATURE AND COMPL EXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTERESTS OF THE REVENUE, IT I S NECESSARY SO TO DO, HE MAY WITH THE PREVIOUS APPROVAL OF THE CHIEF COMMISS IONER OR COMMISSIONER, DIRECT THE ASSESSEE TO GET THE ACCOUN TS AUDITED BY AN ACCOUNTANT NOMINATED BY THE CHIEF COMMISSIONER OR T HE COMMISSIONER IN THIS BEHALF. THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY THE ACC OUNTANT. IN SUCH CASES, THE PERIOD COMMENCING FROM THE DATE ON WHICH THE AS SESSING OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UN DER SECTION 142(2A) AND ENDING WITH THE DATE ON WHICH THE ASSESSEE FURNISHE S A REPORT OF SUCH AUDIT IS EXCLUDED WHILE RECKONING THE PERIOD OF LIMITATIO N FOR COMPLETION OF THE ASSESSMENT. AS PER THE EXISTING PROVISIONS, THE SP ECIAL AUDIT REPORT IS TO BE SUBMITTED WITHIN THE TIME ALLOWED BY THE ASSESSING OFFICER SUBJECT TO A MAXIMUM OF 180 DAYS. IT HAS BEEN THE EXPERIENCE OF THE DEPARTMENT THAT I N A FEW CASES WHERE SPECIAL AUDIT IS ORDERED, THE ASSESSEES TO NOT CO-O PERATE WITH THE ACCOUNTANT AS A RESULT OF WHICH THE REPORT IS NOT PREPARED AND , THEREFORE, NOT FURNISHED. IN SUCH CASES THE NORMAL TIME LIMIT OF TWO YEARS I S OPERATIVE AND THE ASSESSING OFFICER DOES NOT GET ANY ADDITIONAL TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT BECAUSE THE TIME TAKEN FOR FUR NISHING THE AUDIT REPORT IS EXCLUDED ONLY IF THE REPORT OF SUCH AUDIT IS FURNISHED. IN ORDER TO OVERCOME THIS PROBLEM, IT IS PROPOSED TO PROVIDE TH AT THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFF ICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED AND ENDING ON THE DATE ON WHICH THE REPORT OF SUCH AUDIT WAS REQUIRED TO BE FURNISHED, SHALL BE EXCLUDED FROM THE PERIOD OF LIMITATION THE PROPOSED AMENDMENT WILL TAKE EFFECT FROM 1 ST APRIL 1997AND WILL ACCORDINGLY, APPLY IN RELATION TO ASSESSMENT YEAR 1 997-98 AND SUBSEQUENT YEARS. 6.7 LIKEWISE EVEN THE CBDT CIRCULAR NO. 762 DATED 1 8.2.1998 REPORTED IN 230 ITR PAGE 12 (STATUE) AT PAGE 44 PRO VIDES:- 14 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 AMENDMENT OF TIME LIMIT FOR COMPLETION OF ASSESSME NTS AND REASSESSMENTS 49.1 UNDER THE EXISTING PROVISIONS OF THE INCOME T AX ACT, THE TIME LIMIT FOR MAKING AN ORDER OF ASSESSMENT IS TWO YEARS FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSES SABLE. HOWEVER, IN CERTAIN CIRCUMSTANCES THE TIME IS EXTENDED, OR CERT AIN PERIOD ARE EXCLUDED FROM THE PERIOD OF LIMITATION. 49.2 IN CASE WHERE SPECIAL AUDIT IS ORDERED, THE AS SESSING OFFICER IS OF THE OPINION THAT, HAVING REGARD TO THE NATURE AND C OMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTERESTS OF THE R EVENUE, IT IS NECESSARY SO TO DO, HE MAY WITH THE PREVIOUS APPROVAL OF THE CHI EF COMMISSIONER OR COMMISSIONER, DIRECT THE ASSESSEE TO GET THE ACCOUN TS AUDITED BY AN ACCOUNTANT NOMINATED BY THE CHIEF COMMISSIONER OR T HE COMMISSIONER IN THIS BEHALF. THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY THE PRE SCRIBED FORM DULY SIGNED AND VERIFIED BY THE PRESCRIBED ACCOUNTANT. IN SUCH CASES, THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFF ICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SECTION 142(2A) AND ENDING WITH THE DATE ON WHICH THE ASSESSEE FURNISHES A REP ORT OF SUCH AUDIT IS EXCLUDED WHILE RECKONING THE PERIOD OF LIMITATION F OR COMPLETION OF THE ASSESSMENT. AS PER THE EXISTING PROVISIONS, THE SP ECIAL AUDIT REPORT IS TO BE SUBMITTED WITHIN THE TIME ALLOWED BY THE ASSESSING OFFICER SUBJECT TO A MAXIMUM OF 180 DAYS. 49.3 IT HAS BEEN THE EXPERIENCE OF THE DEPARTMENT T HAT IN A FEW CASES WHERE SPECIAL AUDIT IS ORDERED, THE ASSESSEES TO NO T CO-OPERATE WITH THE ACCOUNTANT AS A RESULT OF WHICH THE REPORT IS NOT P REPARED AND, THEREFORE, NO FURNISHED. IN SUCH CASES THE NORMAL TIME LIMIT OF TWO YEARS IS OPERATIVE AND THE ASSESSING OFFICER DOES NOT GET ANY ADDITION AL TIME FOR THE PURPOSE OF MAKING AN ASSESSMENT BECAUSE THE TIME TAKEN FOR FURNISHING THE AUDIT REPORT IS EXCLUDED ONLY IF THE REPORT OF SUCH AUDIT IS FURNISHED. IN ORDER TO OVERCOME THIS PROBLEM, THE ACT PROVIDES THAT THE PE RIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED AND ENDING ON THE DATE ON WHICH TH E REPORT OF SUCH AUDIT WAS REQUIRED TO BE FURNISHED, SHALL BE EXCLUDED FRO M THE PERIOD OF LIMITATION. 49.4 THE AMENDMENT WILL TAKE EFFECT FROM 1 ST APRIL 1997 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 1997-98 AND SUBSEQUENT YEARS. 15 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 6.8 INFACT, EVEN IN THE DECISION OF NAGPUR BENCH OF HONBLE TRIBUNAL IN THE CASE OF MAHAKOSHAL ENGINEERS & CONTRACTORS C O. (P) LTD. VS. ACIT REPORTED IN 85 ITD 267, IT HAS BEEN HELD AS UNDER; THE CONCLUSION THAT ONE CAN DRAW ON A PLAIN READIN G OF SECTION 153 EXPLANATION 1(III) IN OUR VIEW IS THAT THE PERIOD A S FIXED UNDER SECTION 142(2A) ALONE NEEDS TO BE EXCLUDED AND NOT A PERIOD OF 180 DAYS REFERRED TO IN SECTION 142(2C) 6.9 IT IS THUS EVIDENT THAT, THE PERIOD REQUIRED TO BE EXCLUDED IS THE PERIOD FROM WHICH THE ASSESSEE IS DIRECTED TO GETS HIS ACCOUNTS AUDITED AND ENDS WITH THE DATE ON WHICH THE ASSESSEE IS REQUIRE D TO FURNISH HIS REPORT U/S 142(2A) OF THE ACT AND, THEREFORE, SINCE IN THE PRESENT CASE, THE ASSESSEE WAS REQUIRED TO FURNISH ITS REPORT U/S 142 (2A) OF THE ACT BY 7.7.2006 AND, NOT BY 17.7.2006 THE LIMITATION FOR T HE VARIOUS REASONS AS DISCUSSED HEREINABOVE, FOR FRAMING ASSESSMENT EXPIR ED ON 6.9.2006. ACCORDINGLY, THE ASSESSMENT MADE ON 14.9.2006 IS CL EARLY BARRED BY LIMITATION IN TERMS OF SECTION 153(1) OF THE ACT. IN THAT VIEW OF THE MATTER, I HOLD THAT, SAID ASSESSMENT TO BE INVALID BEING BA RRED BY LIMITATION AND ANNUL THE SAME. 12. HAVING REGARD TO THE ABOVE, WE HOLD THAT THE CI T(A) WAS JUSTIFIED IN CONCLUDING THE ORDER OF ASSESSMENT IS BARRED BY LIM ITATION. 13. APART FROM THE ABOVE THE LEARNED DR IN WRITTEN SUBMISSION HAS SUBMITTED AS UNDER: 3 IT IS REITERATED THAT IMPUGNED ASSESSMENT IS NOT BARRED BY LIMITATION AND IS BASED ON THE FACT THAT THE REPORT OF SPECIAL AUDITOR HAD BEEN RECEIVED BY AO ON 17.7.2006 ONLY. THE AO HAD HIMSE LF EXTENDED THE LAST DATE FOR THE SUBMISSION OF SPECIAL AUDIT REPORT TO BE TO 17.7.2006 (AS EVIDENT FROM THE NOTINGS ON LETTER DATED 12.7.2006 OF THE ASSESSEE; PAGE NO 5 OF THE PAPER BOOK). THE SAID FACT HAS BEEN COMPL ETELY IGNORED BY THE LD. CIT(A). HENCE 17.7.2006 IS THE TIME GIVEN BY THE A O TO SUBMIT THE AUDIT REPORT AND NOT 7.7.2006. AS PER OWN ADMISSION OF T HE ASSESSEE, THE DETAILS WERE SUBMITTED AT 5:0 PM OF 7.7.2006 (PAGE NO. 6 OF THE PAPER BOOK) I.E. THE LAST DATE OF SUBMISSION OF THE REPORT. IT MEAN S THAT DUE TO (MIS)DEED OF THE ASSESSEE, IT BECAME IMPOSSIBLE TO COMPLY WITH T HE DEADLINE SET BY THE AO TO SUBMIT THE REPORT. HENCE, AO HAD TO EXTEND T HE DATE TO MAKE SEC. 142(2C) OF THE ACT WORKABLE. 16 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 4 PROVISO TO SECTION 142(2C) EMPOWERS THE AO TO EXT END THE TIME PERIOD TO SUBMIT THE AUDIT REPORT. HENCE, THE AO H AS RIGHTLY EXTENDED THE PERIOD OF SUBMITTING THE AUDIT REPORT U/S 142(2A) T ILL 17.7.2006. SUCH POWER IS ALWAYS INHERENT IN QUASI-JUDICIAL AUTHORIT IES. THE LATER AMENDMENT GIVING SUO-MOTTO POWER OF EXTENSION TO AO IS BASICALLY CLARIFICATION OF THE INTENTION WHICH WAS EXISTING F ROM THE DAY ONE WHEN THIS PROVISION WAS BROUGHT INTO THE STATUE. IT IS NO BODYS CASE THAT THE AMENDMENT GIVING SUO-MOTTO POWER OF EXTENSION TO AO IS DUE TO CHANGE OF INTENTION OF PARLIAMENT. 5 ALSO, THE PROVISION OF EXTENSION BY APPLICATION F ROM THE ASSESSEE SIDE IS A CHECK ON THE AOS POWER, IN ORDER TO PROT ECT UNDUE HARASSMENT OF THE ASSESSEE. ANY CONTRARY INTERPRETATION IS LEADI NG TO ABSURD SITUATION WHERE ASSESSEE WILLFULLY COMES IN WAY OF NATURAL CO URSE OF LAW AND GETS BENEFIT, ALSO. THEREFORE, FOLLOWING THE RATIO OF H ONBLE SC, LAID DOWN IN CASE TARULA SHYAM (108 ITR 345-COPY ENCLOSED), WE W ILL HAVE TO GO INTO THE INTENTION OF THE LEGISLATURE AND MAKE AN INTERP RETATION WHICH MAKES THE PROVISIONS WORKABLE. THE ONLY INTERPRETATION IN SU CH CIRCUMSTANCES WOULD BE TO THAT THE AO HAS INHERENT POWER TO INCREASE DA TE OF COMPLIANCE, SUO- MOTTO IN THE CIRCUMSTANCES OF NON-CO-OPERATION BY T HE ASSESSEE OF COURSE WITHIN OVER ALL LIMIT OF SIX MONTHS PROVIDED BY THE ACT. 6 THE ASSESSMENT WAS MADE IN PURSUANCE TO PROVISO T O SECTION 142(2C) AND PROVISO TO EXPLANATION 1(III) TO SECTIO N 153(3) OF THE I.T. ACT, 1961. THE SPECIAL AUDIT WAS GRANTED VIDE ORDER U/S 142(2A) VIDE ORDER DATED 17.2.2006, HENCE THE NUMBER OF DAYS REMAINING FOR MAKING ASSESSMENT WERE 42 DAYS TILL 31.3.2006. THE EXTEND ED DATE BY WHICH SPECIAL AUDIT REPORT WAS REQUIRED TO BE FURNISHED I S 17.7.2006. THE PERIOD OF LIMITATION OF 60 DAYS (AS PER PROVISO TO EXPLANATION TO SECTION 153) STARTS FROM 17.7.2006 AND THE LIMITATION TO CO MPLETE THE ASSESSMENT FALLS ON 15.9.2006. THE ASSESSMENT ORDER WAS PASSE D ON 14.9.2006 WITHIN 60 DAYS PERIOD AS STIPULATED. IN VIEW OF THESE FAC TS, THE ASSESSMENT ORDER PASSED IS NOT BARRED BY LIMITATION. 14. THE LEARNED COUNSEL FOR THE ASSESSEE REBUTTING THE ABOVE CONTENTION SUBMITTED THAT THE AFORESAID CONTENTION HAS BEEN RA ISED BEFORE THE TRIBUNAL FOR THE FIRST TIME. IT WAS SUBMITTED THAT REVENUE HAS PLACED RELIANCE ON AN ENDORSEMENT MADE ON THE REVERSE SIDE OF A COPY OF L ETTER DATED 12.07.2006 17 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 ADDRESSED BY M/S SUSHIL JEETPURIA & CO. TO THE L EARNED COMMISSIONER OF INCOME TAX-II AND, RECEIVED BY THE ASSESSING OFFICE R ON 13.07.2006. IT WAS SUBMITTED THAT NO SUCH LETTER WAS ADDRESSED TO THE AO BUT WAS ADDRESSED TO THE COMMISSIONER OF INCOME TAX, IT WAS FURTHER SUBM ITTED THAT, IF COPY OF SUCH A LETTER WAS RECEIVED BY AO, THEN IT IS NOT KN OWN ON WHAT DATE AND, HOW SUCH A LETTER WAS RECEIVED BY AO. IT WAS SUBMIT TED THAT THERE IS NO MATERIAL BROUGHT ON RECORD TO STATE THAT, PURPORTED ENDORSEMENT COULD HAVE BEEN MADE OR WAS MADE ON 13.07.2006 UNILATERALLY, P ARTICULARLY WHEN IT IS NOT DENIED THAT, COPY OF THE REPORT WAS RECEIVED EV EN BY THE COMMISSIONER OF INCOME TAX TO WHOM THIS LETTER WAS ADDRESSED. I T WAS ALSO SUBMITTED THAT SUCH AN ENDORSEMENT WHICH HAD NOT BEEN EVEN COMMUNI CATED, AS IS SO ADMITTED COULD NOT BE REGARDED AS AN EXTENSION U/S 142(2C) OF THE ACT AND RUNS CONTRARY TO EARLIER EXTENSIONS. IT WAS FURTHER SUBMITTED THAT THE CONTENTION THUS RAISED IS BASED ON NON-EXISTENT MAT ERIAL. IN NUTSHELL IT WAS CONTENDED THAT AFORESAID ENDORSEMENT CANNOT BE READ TO BE AN ORDER IN LAW UNDER PROVISO TO SECTION 142(2A) OF THE ACT FOR THE FOLLOWING REASONS: A) FIRSTLY THERE WAS NO SUCH COPY OF THE LETTER WA S AVAILABLE WITH THE AO ON 13.07.2006. B) SECONDLY, THERE WAS NO SUCH ALLEGED ENDORSEMENT MADE, AS THERE WAS NO OCCASION TO HAVE MADE SUCH AN ENDORSEMENT; 18 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 C) IN ANY CASE, IT CAN NEVER BE TREATED TO BE ORDER UNDER PROVISO TO SECTION 142(2C) OF THE ACT SINCE REPORT HAD ALREADY BEEN FURNISHED AND, FURTHER-MORE THERE WAS NO GOOD AND, SUFFICIENT REAS ON TO GRANT SUCH AN EXTENSION; D) IN ANY CASE, SUCH AN PURPORTED EXTENSION BY WAY OF ENDORSEMENT TO FURNISH A COPY OF THE REPORT BY 17.7.2006 WAS NEVER COMMUNICATED, THOUGH THE SAME WAS AN ORDER UNDER THE STATUTORY PR OVISIONS OF LAW AND SOUGHT TO HAVE BEEN COMMUNICATED TO THE ASSESSEE WH O WAS SUPPOSED TO HAVE OBTAINED, ASSUMING IT WAS IN LAW IT WAS THE AS SESSEE WHO WAS TO HAVE OBTAINED. IT NEEDS TO KINDLY APPRECIATED THAT THE ALLEGED END ORSEMENT AND STATED TO BE AN ORDER GRANTING AN EXTENSION WIT HIN THE MEANING OF PROVISO TO SECTION 142(2C) OF THE ACT, CANNOT BE ST ATED TO BE AN ORDER OF EXTENSION FOR THE VARIOUS REASONS STATED ABOVE A ND MORE PARTICULARLY WHEN IT IS SEEN THAT WHERE THE LEARNED AO HAD BEEN ALLOWING EXTENSION ALBEIT WITHOUT JURISDICTION, YET HE HAD SPECIFICALLY PASSED SUCH ORDERS DATED 24.03.2006 (PAGE 6), 10.05 .2006 (PAGE 7- 8), 9.06.2006 (PAGE 9), 21.06.2006 (PAGE 10), 28.06 .2006 (PAGE 11 & 12). THUS, IT IS MORE THAN VOCAL THAT THE ALLEGED E NDORSEMENT WHICH IS A MANIPULATED ENDORSEMENT AND IS UNQUESTIONABLY AFTERTHOUGHT CANNOT BE READ AS AN ORDER GRANTING EXTENSION WITHI N THE MEANING OF PROVISO TO SECTION 142(2C) OF THE ACT ; E) IT WAS NEVER EVEN WHISPERED MUCH LESS CONTENDED TILL 12.02.2009, THAT THE PERIOD TO FURNISH A REPORT WAS EXTENDED TI LL 17.7.2006 AS WOULD BE EVIDENT FROM ORDER OF ASSESSMENT AND, REMAND REPORT OF AO DATED 11.06.2007 (PAGES 1015 TO 1022 OF PB-E), WHEREIN TOO NO SUCH ALLEGATION WAS EVEN MADE; F) LASTLY, IT IS SUBMITTED THAT, THE ALLEGED ENDORS EMENT ON THE AFORESAID LETTER IS AN ACT OF MANIPULATION AND HAS BEEN MADE LATER FOR COLLATERAL PURPOSE. 15. THE LD ADVOCATE FURTHER CONTENDED THAT SINCE TH ERE WAS NO APPLICATION FOR EXTENSION OF PERIOD OF AUDIT, THERE WAS NO ORDE R U/S 142(2C) OF THE ACT DATED 13.07.2006 AND, AS SUCH, THE PURPORTED ORDER DATED 13.07.2006 GRANTING EXTENSION TILL 17.07.2006 WAS OTHERWISE NO T A VALID ORDER. RELIANCE IN SUPPORT OF THE ABOVE SUBMISSION WAS PLACED ON TH E FOLLOWING JUDGMENTS: 19 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 (I) M/S SUNDER EXPORTS V DCIT IN ITA NO. 766/D/2008 FOR ASSESSMENT YEAR 2003-04 AND UPHELD BY THE HONBLE HIGH COURT BY ITS JUDGMENT DATED 27.05.2011 ( ITA 1350/2010). (II) MADHUVANA HOUSE BUILDING CO-OPERATIVE SOCIETY V ACIT 76 TTJ 948 (BANG) (III) DCIT V. POPULAR AUTOMOBILES 90 ITD 333 (COCH) (IV) MAHAKOSHAL ENGINEERS & CONTRACTORS CO. (P.) LTD. V ACIT 85 ITD 267 (NAG) (V) CIT V BISHAN SAROOP RAM KISHAN AGRO (P) LTD 203 TAXMAN 326 (DEL) 16. HAVING CONSIDERED THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V BISHAN SAROOP RAM KISHAN AGRO (P) LTD . 203 TAXMAN 326 WE NOTICE THAT THEIR LORDSHIPS HAVE HELD AS UNDER:- 19. IT WAS TO RATIONALIZE THE SAID PROVISO THAT TH E WORD 'SUO MOTU' CAME TO BE ADDED BY WAY OF AMENDMENT WITH EFFECT FROM 1S T APRIL, 2008. AS PER CLAUSE 27.3 OF THE CIRCULAR DATED 27TH MARCH, 2009 WHILE THE ASSESSING OFFICER SHALL CONTINUE TO HAVE THE POWER TO GRANT E XTENSION ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE, HE COULD ALSO GRANT EXTENSION OF HIS OWN WHEN THERE ARE GOOD AND SUFFIC IENT REASONS FOR SUCH EXTENSION. THUS, IT IS NOTICED THAT SUB-SECTION (2C ) BEFORE THE AMENDMENT DID NOT EMPOWER THE ASSESSING OFFICER TO EXTEND THE TIME FOR SUBMISSIONS OF SPECIAL AUDIT REPORT UNDER SUB-SECTION (2A). FUR THER, THE POWER OF EXTENSION OF TIME FOR SUBMISSION OF SPECIAL AUDIT R EPORT IS ALSO SUBJECT TO LIMITATION OF A PERIOD OF 180 DAYS FROM THE DATE ON WHICH THE DIRECTIONS UNDER SECTION 142(2A) OF THE ACT FOR THE AUDIT WAS RECEIVED BY THE ASSESSEE. IT IS AN ADMITTED FACT THAT IN THE PRESEN T CASE, THE ASSESSEE HAD NOT MADE ANY APPLICATION FOR EXTENSION OF PERIOD OF AUDIT REPORT. THEREFORE, THE EXTENSION WHICH WAS GRANTED BY THE A SSESSING OFFICER ON THE REQUEST OF THE AUDITOR COULD BE TAKEN TO BE A S UO MOTU ACTION OF THE ASSESSING OFFICER WHICH POWER, AS NOTED ABOVE, WAS NOT AVAILABLE WITH THE ASSESSING OFFICER PRIOR TO THE AMENDMENT WITH EFFEC T FROM 1ST APRIL, 2008. NOT ONLY THIS, SAID POWER OF EXTENSION WAS ALSO FUR THER CONTROLLED IN THE WORDS, 'FOR ANY GOOD AND SUFFICIENT REASONS'. THIS WOULD MEAN THAT THE ASSESSING OFFICER WAS SUPPOSED TO RECORD REASONS FO R GRANTING EXTENSION ON HIS OWN. CLAUSE 27.4 OF THE CIRCULAR ALSO CLARIF IES THAT THIS AMENDMENT HAS BEEN MADE APPLICABLE WITH EFFECT FROM 1ST APRIL , 2008 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 MO TU. 20 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 20. IN THE LIGHT OF INTERPRETATION OF THE PROVISO A S IS EXISTED BEFORE OR AFTER THE AMENDMENT AND THE LEGISLATIVE INTENT BEHIND THE AMENDMENT AS GATHERED FROM THE MEMORANDUM AND THE CIRCULAR NOTED ABOVE, WE ARE NOT PERSUADED TO AGREE WITH THE INTERPRETATION AS GIVEN BY THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF JAGJIT SUGAR MILL S COMPANY LIMITED (SUPRA). FURTHER IN VIEW OF OUR ABOVE DISCU SSION, IT COMES TO BE CONCLUDED THAT THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE ASSESSMENT ORDER WAS BARRED BY LIMITATION. THAT BEING SO, WE A NSWER QUESTION NO.1 IN AFFIRMATIVE IN FAVOUR OF THE ASSESSEE AND AGAINS T THE REVENUE. 21. IN VIEW OF FOREGOING DISCUSSION THAT THE AMENDM ENT WHEREBY THE WORD 'SUO MOTU' WERE INSERTED IN SUB-SECTION (2C) OF SEC TION 142 OF THE ACT WAS TO BE APPLICABLE WITH EFFECT FROM 1ST APRIL, 2008 O NLY, THE AMENDMENT CANNOT BE SAID TO BE CLARIFICATORY OR RETROSPECTIVE IN NATURE. THE AMENDMENT WAS PROSPECTIVE AND WAS TO BE APPLICABLE WITH EFFECT FROM 1ST APRIL, 2008 ONLY. ACCORDINGLY, WE ANSWER QUESTION N O.2 AGAINST THE REVENUE. 17. APPLYING THE RATIO OF THE AFORESAID JUDGMENT, I T IS NOT DENIED AND DISPUTED THAT THERE WAS NO APPLICATION FOR EXTENSIO N OF PERIOD OF AUDIT AND THEREFORE ORDER U/S 142(2C) OF THE ACT DATED 13.7.2 006 GRANTING EXTENSION TILL 17.7.2006 WAS NOT A VALID ORDER. IN VIEW OF T HE ABOVE THE ONLY CONCLUSION EMERGES THAT AUDIT WAS TO BE COMPLETED B Y 7 TH OF JULY2006 AND, AS SUCH THE PERIOD FROM 17.02.2006 TO 07.07.2006 IS TO BE EXCLUDED IN TERMS OF EXPLANATION TO SECTION 153 OF THE ACT. FURTHER, AFTER CONSIDERING THE PERIOD OF 60 DAYS, AS PROVIDED IN THE PROVISO TO EX PLANATION 1 TO SECTION 153(1) OF THE ACT, THE PERIOD OF LIMITATION EXPIRED ON 6.09.2006; WHEREAS THE INSTANT ASSESSMENT HAD BEEN FRAMED ON 14.09.2006 AN D THEREFORE, THE ASSESSMENT ORDER IS BARRED BY THE LIMITATION 21 ITA NO.4809/DEL./2007 CO NO.179/DEL/2008 18. AS WE HAVE ALREADY UPHELD THE ORDER OF THE LD. CIT(A) IN ANNULLING THE ASSESSMENT IN THE CASE OF THE ASSESSEE ON THE GROUN D OF LIMITATION, THE CROSS OBJECTION FILED BY THE ASSESSEE IN CO. NO. 179/D/20 08 SUPPORTING THE ORDER OF THE LD. CIT(A)-VIII, NEW DELHI ALSO BECOMES INFR UCTUOUS AND THE SAME IS ALSO DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF FEBRUARY, 2016. SD/- SD/- (O.P. KANT) (A.T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 23 RD DAY OF FEBRUARY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.