CIT V. BISHAN SAROOP RAM KISHAN AGRO PVT LTD

ITA/2039/2010

AI Insights

The case involves multiple appeals by the Revenue against the Assessee, Bishan Saroop Ram Kishan Agro Pvt. Ltd., concerning the assessment orders passed under the Income Tax Act, 1961. The primary legal issues revolved around the limitation period for completing assessments under Section 153A and the authority of the Assessing Officer to extend the time for submission of audit reports under Section 142(2A) and (2C). The Income Tax Appellate Tribunal had earlier ruled in favor of the Assessee, leading to these appeals by the Revenue. The High Court of Delhi examined the legislative intent and the specific provisions of the Income Tax Act, particularly focusing on the amendments made by the Finance Act, 2008.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 689060 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 27-05-2011
• Assessment Year: misc
• Other Referred Cases: Jagjit Sugar Mills Co. Ltd. vs. CIT, CIT v Puthuthotam Estates Ltd., P.V. Devassy v. CIT, CIT v Gangaram Chapolia
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K P MALL; KAVITA JHA
• Assessee Lawyers: PREM LATA BANSAL
• Keywords: Extension of time; Limitation of Assessment; Special Audit; Suo motu
• Section: 143(3); 153A; 142(2A); 142(2C); 1534

Judgement Text

", 1 a @ IN T['IE HIGH COUR.T OF DELHI AT NIEW DELhII + (1) ITA No.L775l2oLO % Date of Decisio n: MaY 27 , 2OII coM M I s s loN E R oF' .n?iff,Jo*t r. prenr t-ata Ba nr., ;';11ffi 33il: . with Mr. Deepak Anad, Advocates Versus BISHAN SAROOP RAM KISHAN AGRO PVT. LTD. ... RESPONDENT Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates . (2) ITA lVo.L776l2olo IIUCOME TAX ' ... Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates ' l/ersus BISHAN SAR,OOP RAM KISHAN AGRO PVi. L]TD. ... R,E5POIUDEN]T Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates (3) rTA trto.L777l2OnO IIUCOME TAX Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. DeepakAnad, Advocates Versus I BISI.IAN SAROOP RAM KISHAN AGRO. PVT. LTD. ... RESPOhIDENT Through: Mr. K.P.. Mall and. Ms. Kavita Jha, Advocates % ' (4) ITA trlo.L965/20l0 coMMrssloNER oF rlvcoME TAX Appellant % COMMISSIONER OF % COMMISSIONER OF Through: Mr. Prem Lata Bansal, Sr. Advocate rryith Mr. Deepak Anad, Advocates lTAs No.1775 / ZOhO, L776/2070, 1777 /2010,1r965/20t0,2032/2Ot0,2033/2010,2034/20t0,2035/20!0, 2036/2OtO, 2037 /20!0, 2038/2010, 2039/zOtO, 2048/2Ot0 & 2Q47 /2O!0 I't !t +-<--.---- - -- i lr Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified % COMMISSIONER OF o/ i -/o -! \" COMMISSIONER OF : IIUCOME TAX ... Appellant Versus BISFIAN SAROOP RAM KISHAN AGRO PVT. LTD., ... R,ESPOI IDENT' Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates (s) lTA No.? o3zlzciTa, INCOIvIE TAX ' ... Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate ' with Mr. Deepak Anad, Advocates ' Versus tsISI.IAN SAROOP RAM KISHAN AGRO PVT. LTD. ... RESPONDENT , rhroush: Xi;,[ii\"I.,, and Ms. Kavita Jha, ,(6) @ o/o ' COMMISSIONER OF- lNCOtdlE TAX ... Appellant Through: Mr. Prem :-ata Bansal, Sr. ,Advocate . with Mr. Deepak Anad, Advocates Versus BIS!.IAN SAR,OOP R,AM KISHAN AGRO PVT. I.TD. ... RESPONDEIUT . rhroush: Xj;\"::i\"'yt\" ancr Ms' Kavita Jha' Through: 14r. Prenr Lata Bansal, Sr. Advocate . vvith Mr. Deepak Anad, Advocates . , Versus BISI.IAN SAROOP RAM KISHI AGR,O PVT. !.TD. ... R,ESPONDENT rhroush H;Iji\"It,l and Ms. Kavita Jha, t' (B) lTr lvo.2O351293,0 o/^ tv r I :. lTAs No.1775 / zOtO, t776/2010, !777/20IC,1965/20tp,7O32/?.J.10,2033/2010,2O34/2OLO,2A35/?}tO, 2O36i2OtO, 2037 l2OtO, 2038/2O1i), 2039/2010, 2045/2OrO & 2047 /'2OLO' Pay,e 2 of 5 COMMISSIONER OF Through: Mr. Prem Lata Bansal, Sr. Advocate 'with Mr. Deepak Anad, Advocates Versus t' BISHAN SAR.OOP RAM KISHAN AGR,O PV'T. I.-TD. ... RESPONDENT . Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates INCOME TAX ... Appellant % COMMISSNONER OF o/o COMMISSIONER OF (9) ITA No.2o3612oLo INCOME TAX . \".. Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates I Versus BISHAN SAROOP RAM KISHAN AGRO PVT. LTD; ... RE5PONDEIU'F Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates (10) ITA hlo.2o37l2oLo INCOME TAX ... Appel[ant Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates . Versus : .! BISHAN SAR,OOP RAM KISHAN AGRO PVT. I-TD. ... R,ESPOIVDENT Through: Mr'. K.P. Mall and Ms. Kavita Jha, Advocates yo . (11) ITA lVo,2O38/2Otr 0 COMMISSIONER OF INCOME TAX ...Appeilant Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates Versus lTAs No.1775 / ?OtO, !776/20!0, t777 lzltl, tg65/2070\" 2O32/2OIO,:2O33/20t0,2O34/20t0,2035/2O!0, 2036/20to, 2037 /20]L0, 2o38/z0to, zo3glzoLo, 2046/2010.& 2047 /20t0 Page 3 of 5 @ t I I i t I I I I i I I r f I .i I i I I t I I I I I I I ! I I BI'HAN sARooP *\"ttfl;,ffii ^fflt -rYh}ilo;.; ^fitffi,T35ilJ Advocates (L2) ITA No.2o39l2oLo % CpMMISSIONER, OF INCOME TAX .. Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates Versus BISHAN SI ROOP RAM KISI.II AGR,O PVT. LTD. ... R.ESPONDEIUT Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates -' (13) ITA il1o.2o46l20l0 .! % ' COMMISSIONER, OF INCOME TAX .'. Appellant Through: . Mr. Prem Lata Bansal, Sr. Advocate . ,. with Mr. DeePak Anad, Advocates ' Versus BISHAN SAROOP RAM KISI-IAN AGRO PVT. LTD. ... R,ESPONDENT Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates (14) ITA No.2o4712oL0 % COMMISSIONER, OF INCOME TAX .. Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate ith Mr. DeePak Anad, Advocates -1 versus BISHAN SAROOP RAM KISI.IAN AGR,O PVT. LTD. ... RESPONDENT Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates CORAM: l-loN'BLE MR. JUSTICE A.K.S[KRl . HON',BLE MR. iUSTICE M.L.MEl-lTA 1. Whether the ReporLers of local papers may be allowed to see the judgment? Yes . lTAs No.I775/ zOtO,l776/2010,|-777 /2Q!0, !965/2OLO,2032/2OtO,2033/20tO,2O34/2O!O,2O35/2O1O, zoza/zoto, 2037 /2oLO, 2038/2OtO, 2039/2010, 2046/2010 & 2047 12010 Page 4 of 5 2.To be referred to RePorter or not? 3. Whether the judgment should be reported in the Digest? M.L.MEHTA, l. (Oral) 1. For orders see ITA ]-775 of 2010. Yes Yes 4. 1 ' -/) ,@\" , M.[-.ME[-[TA r (jt DGE) fug'Lrc A;r.slRni May 27, rd 20LL (JTJDGE) Page 5 of 5 o I 203 6 / 2OrO, 2037 / 20 LO, 2038 / 20 10| 2039 / 2OtO, 20 45 / 20 rO & 20 47 / 20 t0 t I I t- COMMISSIONE,,R OF INCOME lAX .., Appellant Through: Mr. Prenr l_ata Bansal, Sr. Advocate with It{r. Deepak Anad, Advocates Versus BISHAN SAROOP RAM KISFIAN AGRO F'VT. LTD. ... R.ESPONDENT Througir: Mr. GPJ-4€+| and IVls. Kavita Jha, AtJvcr;ates ftlntft t*,4-* l-? fu1n (2) LTA No.1776l201t1 + % BISHAN SAR,OOP IN THE HIGI-I COUITT OF DELHI AT hIEW DELHI (1) ITA No.L77sl2oLo . Derte of Decisio n:.lvlay 27, ZOLI I RAM KISFIAhI AGRO PVT. LTD. ....RESPOT{I]FNT ^l % CO|vIMISSIONER OF tNCpME TAX .. Appeltant Througlr: Mr. Prerl Lata Bansal, Sr. Advocate with Mr Deepak Anad, Advocates Versus Through: Mr. l*44all and' Ms. Kavita Jha, Advocatet &U !btl,{ ..6n_ t-|zlfr (9) ITA No.2o36/2olo INCOME TAX ' ... APPellant . Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates % COMMISSIONER OF i , BISHAN SAR,OOP o/o coMMlsslo Versus RAM KISI{AN AGRO PVT. LTD. ... RESPONDENT Thiough: Mr. 1gp-p461F and Ms. Kavita Jha, , Odvocates \"37'\"*ffi, I I (10) l'fl No.203.7/2O1o NER OF INCOTUE TAX ... Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate with lvlr. DeePak Anad, Advocates i I l f ll'----- BTSHAN SAdOOP RAM KISHAN AGRO PV'l', LTD. ... RESPoNDENT I I Throtrgh: Mr. K+-+4€:tl. and Ms' l(avita Jha' i, I Advocate, N^t v.\"Wmputing the period of timitation for the purposes of this section,- (i) the period during which the assessment proceeding . is stayed by an order or injunction of any court; or ' (ii) the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of s€ction 742 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section; or xxxxx (2) The iuthorization referred to in clause (a) and clause (b) gf sub-section (7) shall be deemed to have been executed. (a) in tie case, of search, on the conclusion of search as recorded in the last panchnatna, drawn in relation to any person in nrhose case the warrant o.f authorization has been issued; (b) in the case of requisition under Section 7324, on the actual receipt of the books of account or other documents or assefs by the Authorized Officer.l lTAsNo.17751 20L0,:';776/2OtO,t777IIOLO,7gGS/20t0.2032/?-OtO,2033/2070,2034/2010,2035/2OLO, 20361 2070, 2037 /2OrO, 2O38{2O!O, 2O39/2OLO, ?.046/20t0 & 7047 l2OrO Page 10 of 23 I I I t I t 6. Section 742 provides the procedure for the enquiry that is required before making assessment. Sub'section (2A) provides for conducting special urdit during the proceedings of assessment. This sub section provides that if at any stage of the proceedings, the Assessing Officer was of the opinion, having regard to the nature and .complexity of the u..ornit of the Assessee and in the interest of revenue so to do, he may direct the Assessee to get the accounts audited by the Accountant in the manner prescribed therein. Sub section (2C) provides that every audit report under sub section (2A) is 'to be furnished by the Assessee to the Assessing Officer within such period as may be specified by th.e Assessing Officer. lt was submitted by the learned counsel for the Assessee that the assessment cirder passed under Section 1534 on 3'd August, 2OO7 was barred by limitation insofar as the order of special audit was made by the Assessing.Ofticer on 12th December 2006 and the special audit was to be conducted on or before 12th March , 2007. He submitted that the Assessing Officer. did not have inherent power to extend. time'under sub Sections (2A) or (2C) of Section 142 of the Act and the time could only.be extended at the request of the Assessee and consequently the limitation as per Explanation (ii) to Section 1538(1) for the purpose of computing aSsessment expired on 11th May, 2007. 'He also submitted that the power to suo motu extend the period for special audit under Section I42(2A) has been provided in the proviso to section U2(2C) by lrAs No.17751 201:0, 1776/zOtO, t777 l2OtO, ]196512070,203212010,2033/zOtO, 2034/20t0,203512070, 2036/2070, 2037 /20t0,2038/201O, 2039/2070, 2046/201:0 & 2047 /ZO]:O Page LL of 23 I I I { it. I I I ri @ the Finance Act, 2008 with effect from 1\" April, 2008 and the same being prospective in nature, the AO was not empowered to.extend the time for audit report of his own. The learned counsel also placed reliance upon the Memorandum explaining the provisions of finance bill, 2008. and also the circular No.1 issued by CBDT datdd 27th March, 2009. The said Memorandum and Circular shall be referred to a litter later. 7. This was not in disoute that the word 'suo motu' camd to be inserted by way of an amendment with .effect from 1't April, 2008. However, it was contendeci by learned counsel for the Revenue that the Assessing Ofticer had the porver to extend the time of audit repoft under Section I42(2C) of the Act since the word \"and\" appearing before the words \"for any good and sufficient reaso/?s\" was to be read as'of .In other words, the submissions of the learned counsel was that the Assessing Officer suo motu had the power to direct the assessee to get audit report and also to extend the.time for submission of audit report. Learned counsel relied upon cases of lagiit Sugar Mills Co. Ltd.vs. CIT, 2I0 ITR 468 (Punjab &.Haryana); CIT v Puthuthotam Esfafes Wd. I27 ITR 481 (Madras), P.V. Devassy v. CIT [1972] 84 ITR 502 (Kerala) arrd CIT v Gangaram Chapolia, 703 ITR 673 (Orissa). lTAs No.17751 20]:0,7776/20::0, t777 /2070,7965/20tO,2032/20!0,2033120L0,2034120t0,2035/2OtO, 2O36/2OilO, 2037 /20tO, 2038/2010, 2O39/2OLO, 2046/201.0 & 2047 l2OtO Page 72 of 23 8. . ln lagjft SAgar Mitls Co, Ltd (supra), the Hon'ble High Court of Punja.b and Haryana had treated the vuord \"at7d\" appearing between the words \"application made by the assessee\" and \"for any good and sufficient reasons\" ,under Sectiorr ].42 ('2C) aS \"or\" and had held that . period for submission of report by the Special Auditor is extendable by . the Assessing Officer, even without an application in this regard by the assessee. 9. In case of CIT v Futhuthotam Fsfates l-fd. (supra) it was held that, \"The circumstances under which the word \"and\" may be construed as \"or\" and vice versa should be sornewhat rare. Otherwise L. , if the two are taken to be interchangeable terms, then it would result in Partiament throwing into the statufe the two . expressions indiscriminately and leave them to th.e courts to sort out the meaning. In ordinary usage \"and\" is coniur,ctive and \"or\" is disiunctive\". 10. ln the case of P.v. Devassy y. ctT (supra), it was held as under: \"An assessee is required to file the return within the time altowed and in the manner prescribed in order that the Inccne Tax Officer may complete the assessme nt within the period specified in the lncome Tax Act. tf the return is not'filed in time or, if filed in lT, sNo.1775l 21to,iztt,/z1!o,t777/2o!o,Is6'it2lta,2l32/2ot0,2033/2otl,2o34/?-o!O,zoiaS/zotO, 2036/20!0, 2037 lz}t}, 2O38/2OhO, 2039l2OtO, 2046lz}t} & 2047 /2O7O Page 13 of 23 I i' I f I time, it does not contain all the particulars required, it witt not be possible for the tncome Tbx Officer to . complete the asses sment within'the pteriod specified , in the Act. ln other words, the obiect of tfie legislature . in insisting upon the assessee filing' the return within ' the'time and in the manner prescribed is to enable e lncome Tax Officer to complete the assessmenf within a period of four years as specified in the Act and that obiect wi,ll be frustrated unless the assessee . files the return within the time allowed and in the -.. manner prescribed. To carry out the object of the legislature, it is necessary to attach a sanction for the failure to fulfitt any of the two conditions. tf the obiect is clear, we do not think the use of the coniunctive word \"and\" in the sub section is conclusive. The word . ' \"and\" .has generally a cumutative sense, and is thus the antithesis of disiunctive \"or\"; but occasionatly it is . permissibte to read \"and\" as \"or\" if the context so requires. ln Ishwar Singh Bindra v. Stafe of U.F,' it is observed: : \"And has generally a cumulative sense, requiring the futfittment of atl the conditions that it ioins together and herein it is the antithesis of or. Sometimes, lTAs No.1775l 2O7J, t776/201]0,7777/2O7O, 11965/2070,2O32/2OuO,2O33/2O1O,2034120::0,2035/20!0, 2036/2OtO, 2037 /20!O, 2O38/2O]iO, 2039/2OtO, 2046/2070 & 2047 lz0t0 Page 14 of 23 v however, even in such a connection, it is, by force of '.a context, reads as or. Sometimes to carry out the intention of .the legistature it is founi n\".Lr\"u ry to ' read the coniunctions 'or' and 'and' cne for the other,\" . In wtaxwdll on the Interpretation of Statutes, 12th edition, at page 232, it is observed, \"ln ordinary usage, '.and' is coniunctive and 'or' disiunctivb. But to . carry out t.he intention of the'legislature. it may be n\"rurrury to read 'and' .in place of the coniu\"nction 'or' and vice versa.\" 11. ln the case of CIT. vs, GanEaram Chapotia (supra), it was netO as under: \"(ii) The conjunctive \"and\" in the seccnd clause of section ZZl(1)(a) should be consil ued as \"or\". Therefore, even if the return of the assessee had been filed in the manner prescribed, as it was not fited within the time allowed under section 739(7), and as such one of the'two conditions prescribed in section 271(7).(a) had not been'fulfllled, the assessee would be liable to PenaltY.\" ra lTAs No.17751 2Ot0,11776/2OtO,1777lzltl,1965/20::0,2032/2Ot0,2033/20]:0,2034/20!0,203512010, 2036/2010, 2037 /2OrO, 2O38l2OtO, 2}3gl2o!o, 204612010 & 2047 lz}t} Page 15 of 23 I I uc r' 12. lt is a cardinal principle for interpreting a fiscal statute that, a taxing statute 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 particulariy where the language is plain arrd unambiguous. 13. The Supreme Court irr the case of Mathuram Aggarwal v Sfate of Madhya Pradesh, S SCC 667[1999] held that, \"!0 a taxing Act lt is'not possibie to assume any . intentiott or governing purpose of the statute m.ore than whatis sfatec/ in the plain language' lt is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally irnpermissible is an interpretation .which does not fotlow from the plain, unambiguous tanguage of the sfatute. Words cannot be added to or substituted so as to give a meaning of the statute which wilt serve the spirit and intention of the . tegisldture. The sfatute should clearly and unambiguousiyConveythethreecomponentsofthe ' t\"\" !aw, i.e., the subiect of the tax, the person v'tho is |iabtetopaythetaxandtherateatnhichthetaxis lTAs No.17751 2Oto,:r776/2o7a, !777 l']cto, Lg6s/2ot0,2032/2oto,2033/2ot},2034/zotl, ?o3!tl2OLo' 20361lOtO, 2037 /2070, 2o38l2}t}, 2O3g/2O10, 2046/217.0 & 2o+7 /2O7() Page 16 of 23 t ,l I J I I i I I t' I I @ to be paidl. lf there is any ambiguity rega'rding any of fhese in'gredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the neediut in the matter.\" ln the case of Nasiruddin and others v Sita Ram Agarwal 2 SCC 577 (2003), it is held: -37. The court's iurisdiction to interpret a statute can be invok€d when the same is ambiguous. lt is well known that\" in a given case the court can iron out the fabric, but is cannot change ,the texture of the fabric. lt cannot enlarge the scope of legislation or intention when the language of provision is plain and unambiguous. lt canncit add or subtract words to a statufe or read something into it which is not there. lt cannot re-write or recast tegislation. tt is' also necessary to determine that there exists a presumption that the legislature has not used any superfluous words. tt is well settled that the real intention of the legislation mist be gathered from the language used. It may be'true that use of the expression'\"shall\" or may\" is not decisive for arriyring a finding as to whether stafute is directory or mandatory. But the iitention of thd tegislature must be found out front {he scheme of the Act. lt is also equatly well settled that whe'n ndgative words are used, the 'courts witl presume that the intention of lTAs No.1775l 2O!0, t776/20t0,11777 /20t0,7g65/2OtO,2O32l2O!0,2033/20t0,2034/2OtO' 2O3sl2O7O', 2O36l2OtO, 2037 /2070,2038/2010, 2O39l2OtO, 2046/2010 & 2047 /20t0 PageLT of23 14. the tegislature \"was that the provisions should be mand atory in character.\" @ i --, v 15: With these princip|es of interpretation, we may note, that the provisions as existing in sub section (2c) of the Act before 1't April' 2008 did not empower the Assessing officer to suo motu extend the time for submission of audit report under sub section (24)' This is also clear from the fact that the Memorandum explaining the provisions of granting power to the Assessing oflicer to extend time for completion of special audit under sub section (2A) of section 142 mentions about the reasons in the said Memo which reads as under: ,'GrantingofpowertotheAssessingofficertoextend tne tiii for completion of special audit under sub- se ction (2A) of section 742 iub-sections'(2A)7g(2D)ofsectionT42dealwith .powerofAssessingofficertoorderaspecialaudit. such power is r6quired to be exercised by the assessiig officer h'aving regEtrd to the nature and comptexity of the accoints of the assessee and the interest of the Revenue' Sub.section(2C)of.thesaidsectionspecifiest|e perioi- iitni, whicit the audit report is to be rurniinea. ii\" proriso to said sub-section efftpsv/srt- , the iiiusring officer to extenil this period. .of. . furnisiing of Sudit report. Further, it is a/so provided tnat ine-aggregate of the originally fixed peri,od and . the perioai1 so extended shatt not exceed 780 days fromthe-dateofissuanceofdirectionofspecial audit. Further, such extension can be rnade only when ai ipptii,ation is made in this behalf by the assesseea,ndtherearegoodandsufficientreason for such extension. ttisproposedtoamendthesaidprovisosoastoalso attow iie Assessing officer to. extend this period of lTAsNo.Ll75l K[to,L776/20t0,t777lz}t},!965120!0'2032/2O::O'2O33l2OtO'2034/2}t1',2O35l2OtO' zoza I zot6, 2037 / 2oto, zosa / zoto, 2o3s / 2o!0, zo 46 | zoto & 20 47 | 20ro Page 18 of 23 x 'lllf . t' I II , ll. i l! lt I I furnishing of audit report suo motu. Hence, while the I i Assessin-g officer shatl continue to have power to- I I qrant exiension on an apptication made in this behalf .l I bV the assessee and when there are good and I t sufficient reasbns for such extension, he can also I i qrant such extension on his own' I I ine amendment wiy thke effect from 7't April, 2008. tl II I I 16. Further, the circular No.1. of CBDT dated 27th March, 2009 has II I I also.clarified on the issue of applicability of the aforesaid amendment n I i in sub section (2C) with efiect from 1't April, 2008. The said circular rl i reads as undel:- t i I L I \"DirectTax Circutar No.7 dated 27th March, 2009 h; F-xplanatory Notes to the provisictns of the Finance ! Act,2008. 1. lntroduction: 1.1 -fhe Finance Act, 2008 (hereafter referred to as . the Act) as passed by the Parliament, received the ' assent of ihe President on the 10th day of May, 2008 'and has been enacted as act No'18 of 2008' This circular explains the substance of the provisions of the Act relating to direct taxes' 27. Granting of power of the Assessing Officer to extend the time for completion of special audit under ' sub-section (2A) of section 142.' 27.1 Sub-sections (2A) to (2D) of section 142 with powerofAssessingofficertoorderaspecia|audit. Such power if r-equired to be exercised by the nsses'sing officer lraving regard to the nature and complexily of the accounts of the assessee and the interest of the revenue. 27.2Sub-sections(2C)ofthesaidsectionspecifies theperiodwithinwhichtheauditreportistobe .turnished.Theprovisotosaidsub-sectionempowers. . the Assessing Officer to extend this period of . furnishing of Judit report. Further, it is also provided that the lggregate cf the origjinaliy fixed period and the periodGl ro extencled shall not exceed 180 days tTAs No.1775,/ zOtO, L776!2C]LO, L777 /2OIO, Lg6sl2oto, 2g3\"t!201'O' 203312070' Z134/l1to', zo3slaot9', 2036/20:i0,2037/2OLO,ZO38/2O::O,2}:igl2oto,2o46l2C1}&zo17lzoto p3ge tgof?3 lr ti tl ,i I '',\",'. t. 1' : fromthedateofissuanceofdirectionofspecific audit. Further, such extension can be made only ' when an application is made in this behalf by the assessee and there are good and sufficient reasons . for such extension. 2T.3.Withaviewtorationalizethesaidprovisosoas toa|soa||owtheAssessingofficertoextendthis periodoffurnishingofauditreportsuomotu,thesaid proviso has been amended. Hence, while the Assessing Officer shall continue to have powef t9- grant exiension on an application made in this behalf nV the assessee 'and when there are good and sufricient reasons for such extension, he can also grant such extension on his ourn' h ,q Applicability - This amendment has been made applicabie with -effect from 1-4-2008' Hence, from thi's date and onwards, the Assessing officer sha|| also have power to extend the period of furrrishing of audit report suo motu\". (Emphasis supplied) L7. The Memo explaining the provisions of Finance Bill, 2008 and also Circular No.1 clated 27th March, 2009 of CBDT as reproduced. hereinabove would clearly bring out that sub section (2A) to (2D) of Section I42 deal with the powers of the Assessing Officer to order for special audit and the same was to be exercised by him having regard to the nature and comple>:ity of the account of the assessee and the interest of the revenue. 1g. The word ,,and,,appearing before the words \"for any good and sufficient reasons\" in the pi'oviso to sub section (2c) by any stretch of interpretation could not be read aS \"or\"' The fact that the Words'\"suo motLt\" have been added by way of an amendment with effect from 01.04,2008 would show the legislative intention in the proviso as existed before the amendment which is that the Assessing officer prior lrAsNo.1775l 20Lo,t776/2070,1777 2A11O,1s6s/201lo,203212070'2033/21rc'2034/2OtO'2035/2010' 203612010, 2037 /20:':0, 2038/ zOtO, 2o3s /201:0, 2046/20].;0 & 2047 l2O7O Page 20 of 23 @ I t t I I I I I I I I I I I L I I I , I r'-t li I rL i $ to amendment had no power to extend the period of furnishing audit report of his own. 19. . lt was to rationalize the said proviso.that the word \" suo motu\" .came to be addecl by way of amendment with effect from 1* April 2008. As per Clause 27.3 of the Circular dated 27th March,2009.while the Assessing Officer shall ccntinue to have the power to grant extension on an application made in this behalf by the Assessee' he could .also'grant extension of his own when there are good and sufficient reasons for such extension. Thus, it is noticed that sub section (2C) before the amendment did not empower the Assessing officer to extend ilre time for submissions of special audit repott under sub Section (2A). Further, the power of extension of time for submission of special aridit report is also subject to limitation.of a period of 180 days from the date on which the directions under section 'l42.(2A) of the nct tor the audit was received by the Assessee..lt is an admitted fact that in the present case, the assessee had not made any application for extension of .period of audit report. Therefore, the extension which was granted by the Assessing Ofiicer on the request of the Auditor could be taken to be a suo motu action of the Assessing Officer which powei, as noted above, ffas not available with the Assessing Officer prior to the amendment with eltect from 1't Apri[' 2008. Not only this, said power of extension was also further controlled lTAsNo.17751 zOtO,t776/20:10,t777/2OtO,ts65l2OrO,2O32l2O1iO'2033l2OtO'2034/2010',2035/2OtO' 2O3 6 I 20 10, 2037 / 20 tO, 2038 / 2OrO, d}3s | 2O!0, 20 46 | ZO]:l & 20 47 / 20 to Page2,l of 23 tt il ll li il li ti fl li II i I Il. ' lf I I I I I i 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 applicable with eftect from 1.'t April, 2008 and it is from this date onwards that the Assessing Ofticer shall have power to extend the period of furnishing of special audit report suo motu. 20, ln the light of interpretation of the proviso as 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 l;larybna High Court in the case of lagjit Sugar Mitts Company Limi.ted (supra). Further in vier,v of our above discussion, it comes to be concluded that the Tribunal was correct in holding that the Assessment Order was barred by limitation. That being so, we answer Question No.l in affirmative in favour of the Assessee and against the revenue. 2L'. ln view of fciregoing discussion that the amendment whereby the word 'suo motu' were insertecl in sub section (2C) of Section 142 of Llre Act was to be applicable with effect frorn 1't April, 2008 only, the amendment. cannot be said to be clarificatory or retrospective in lTAsNo.L775l 2OtO,t776/2070,1777/2OtO,tg65/2010,2032/2070,2033/2Ot0,2034/2070,2O3sl2OtO, 2036/2OtO, 2037 /20t0, 2038/2OrO, 2O39/20t0, 204612O]:O & 2047 lz}t' . Page22of23 -t0 No.2 nature. The amendment was prospective and effect from 1't April, 2008 only. Accordingl!, against the revenue. was to. be applicable. we answer Question 22 In view of foregoing reasons, all. the above app'eals merit dismissal and are hereby dismissed UUDGE) .K.SIKRI ur.tDGEI I I I I i -6'