Appeal details
Counselvise Citation
[2011] 140 COUNSELVISE.COM (IT) 53310 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 2 month(s) 21 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
09-12-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
E
Next Hearing Date
07-12-2011
Assessment Year
2003-2004
Appeal Filed On
18-09-2008
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.2942/DEL/2008 ASSESSMENT YEAR : 2003-04 MR. MANISH BANSAL, AM-78, SHALIMAR BAGH, DELHI 110 088. PAN : AAHPG4321F VS. DCIT, CIRCLE-19(1), NEW DELHI. ITA NO.2986/DEL/2008 ASSESSMENT YEAR : 2003-04 DCIT, CIRCLE-19(1), NEW DELHI VS. MR. MANISH BANSAL, PROP. M/S SUNDER STEELS, AM-78, SHALIMAR BAGH, DELHI 110 088. PAN : AAHPG4321F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA, ADVOCATE, SHRI ROHIT JAIN & SHRI ROHIT GARG, AR REVENUE BY : SHRI R.S. NEGI, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THESE ARE CROSS APPEALS; ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE. BOTH OF THEM ARE DIRECTED AGAINST THE ORDE R PASSED BY THE CIT (A) DATED 17 TH JULY, 2008 FOR ASSESSMENT YEAR 2003-04. 2. THE ASSESSEE IN ITS APPEAL, APART FROM AGITATING THE ADDITIONS SUSTAINED BY THE CIT (A) HAS CHALLENGED THE VALIDITY O F THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON THE GROUND THAT THE SAM E IS BARRED BY LIMITATION. THE DEPARTMENT IN ITS APPEAL IS AGITATIN G THE DELETIONS MADE BY THE LEARNED CIT (A). ITA NO.2942/DEL/2008 ITA NO.2986/DEL/2008 2 3. THE ASSESSEE IN ITS APPEAL HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER ON THE GROUND THAT THE SAME HAS BECOME BARRED BY TIME. THE ASSESSING OFFICER WAS REQUIRED TO PASS ORDER WITHIN 60 DAYS FROM THE END OF THE PERIOD BY WHICH THE ASSESSEE WAS REQUIRED TO SUBMIT THE REPORT AS PER FIRST ORDER OF THE ASSESSING OFFICER AS THE SAID ISSUE WILL GO TO THE VERY ROOT OF THE MATTER AND IF IT IS FOUND THAT THE CONTENTION OF THE ASSESSEE IS CORRECT THAT THE ASSESSMENT HAS BECOME TIME BARRED, TH EN, THE OTHER GROUNDS RELATING TO MERITS OF THE ADDITIONS WILL BECOM E INFRUCTUOUS AS THE ASSESSMENT ITSELF HAS TO BE HELD TO BE TIME BARRED. 4. THE BRIEF FACTS RELATING TO THE ISSUE HAVE BEEN ENU MERATED IN THE CHART OF DATES FURNISHED BY THE LEARNED AR AND IT WIL L BE RELEVANT TO REPRODUCE THE SAID CHART:- DATE PARTICULARS REMARKS PG. NO. 22/23.03.06 SPECIAL AUDITOR APPOINTED AND DIRECTION S GIVEN TO GET THE BOOKS OF ACCOUNT AUDITED SECTION 142(2A) OF THE IT ACT. 90 DAYS GIVEN TO COMPLETE THE AUDIT 1 31.03.06 NORMAL TIME LIMIT TO COMPLETE ASSESSMENT U/S 153(3) EXPIRES 13.05.2006 FIRST LETTER RECEIVED FROM SPECIAL AUDITO R ASKING TIME TO THE ASSESSEE TO START THE AUDIT. [REFER LETTER DATED 12.08.2006] ASSESSEE REPLIED VIDE LETTER DATED 18.05.2006 TO START AUDIT IMMEDIATELY [REFER LETTER DATED 12.08.2006] 3 23.05.2006 AUDIT TEAM SENT BY THE SPECIAL AUDITOR [REFER LETTER DATED 12.08.2006] 3 09.06.2006 TIME LIMIT EXTENDED BY A.O. BY FURTHER 9 0 DAYS ON THE APPLICATION OF THE SPECIAL AUDITOR FOR COMPLETION OF SPECIAL AUDIT DATE EXTENDED EVEN THOUGH MANY DAYS STILL LEFT TO COMPLETE THE AUDIT. 2 20.06.2006 90 DAYS PERIOD EXPIRED FOR COMPLETING THE AUDIT A.O. GETS ADDITIONAL 60 DAY FROM HERE 12.08.2006 OBJECTIONS FILED BY THE APPELLANT AGAINST EXTENSION OF TIME TO THE SPECIAL AUDITOR 3-6 19.08.2006 TIME LIMIT FOR COMPLETION OF ASSESSMENT AS PER SECTION 153 (3) INCLUDING EXTENDED PERIOD AS PER FIRST PROVISO 20.06.2006 + 60 DAYS [90 DAYS FROM 23.03.06 + 60 DAYS] 15.11.2006 ASSESSMENT ORDER PASSED BEYOND LIMITATION 5. IT CAN BE SEEN FROM THE ABOVE CHART THAT VIDE LET TER DATED 22/23 RD MARCH, 2006, COPY OF WHICH IS PLACED AT PAGE 1 OF TH E PAPER BOOK, THE ASSESSING OFFICER APPOINTED THE SPECIAL AUDITOR WHO WAS D IRECTED TO AUDIT ITA NO.2942/DEL/2008 ITA NO.2986/DEL/2008 3 THE ACCOUNTS OF THE ASSESSEE UNDER THE PROVISIONS OF SECTI ON 142 (2A)OF THE IT ACT, 1961 (THE ACT) WITHIN 90 DAYS. THE NORMAL TI ME LIMIT TO COMPLETE THE ASSESSMENT U/S 153 (3) WOULD EXPIRE ON 31 ST MARCH, 2006. THERE MAY BE SOME CONTROVERSY WITH REGARD TO THE INITIAL EXPIRY PE RIOD OF 90 DAYS, WHICH, ACCORDING TO THE ASSESSING OFFICER IS 18 TH JUNE, 2006 AS HE HAS WRITTEN IN THE LETTER DATED 9 TH JUNE, 2006 AND, AS ACCORDING TO THE ASSESSEE THE SAID PE RIOD OF 90 DAYS WILL EXPIRE ON 20 TH JUNE, 2006. HOWEVER, ACCORDING TO THE FACTS OF THE CASE THIS DIFFERENCE HAS NO RELEVANCE FOR THE POIN T TO BE DETERMINED THAT WHETHER OR NOT THE ASSESSMENT HAS BECOME TIME BARRE D. THE FACT REMAINS THAT BEFORE EXPIRY OF EITHER 18.6.2006 OR 20 TH JUNE, 2006, THE ASSESSING OFFICER ISSUED A LETTER DATED 9 TH JUNE, 2006 IN WHICH HE HAS EXTENDED THE PERIOD OF AUDIT FOR ANOTHER 90 DAYS FRO M THE EXPIRY OF TIME LIMIT IN THE ORDER DATED 23 RD MARCH, 2006 U/S 142 (2A) OF THE ACT. IT WILL BE RELEVANT TO REPRODUCE THE LETTER OF THE ASSESSING OFFIC ER DATED 9 TH JUNE, 2006 COPY OF WHICH HAS BEEN ENCLOSED AT PAGE 2 OF THE PAPER BOOK:- NO.DCIT/CIR.19(1)/2006-07/38 OFFICE OF THE DY. COMMISSIONER OF INCOME-TAX CIRCLE 19(1), NEW DELHI. DATED 9.6.2006. TO SH. MANISH BANSAL, PROP., M/S SUNDER STEEL, AM-78, SHALIMAR BAGH, DELHI. SIR, SUB : SPECIAL AUDIT U/S 142(2A) OF THE IT ACT, 1961 FOR THE A.Y. 2003-04. PLEASE REFER TO EARLIER LETTER NO. DCIT/CIR.19(1)/0 5-06/340 DATED 23.3.2006 ON THE SUBJECT CITED ABOVE. AS PER THIS LETTER, TIME LIMIT FOR COMPLETION OF AUDIT U/S 142 (2A) WAS 90 DAYS FROM T HE DATE OF ORDER OF COMMISSIONER OF INCOME-TAX, DELHI-VII, NEW DELHI DI RECTING THE ASSESSEE TO GET ITS BOOKS OF ACCOUNTS AUDITED BY SPECIALLY NOMI NATED AUDITOR IN YOUR CASE. THE AUDITORS HAVE INFORMED THAT THE AUDIT WORK COUL D BE COMMENCED AFTER REPEATED REQUESTS AND REMINDER MADE, ONLY ON 22.5. 2006. LOT OF INFORMATION IS STILL AWAITED FROM YOU AND THEREFORE, IT IS NOT POSSIBLE TO COMPLETE THE AUDIT WORK BEFORE 18.6.2006 AND THEREFORE, THE AUDITOR HA S REQUESTED FOR EXTENSION OF TIME LIMIT. IN VIEW OF THE REASONS AS MENTIONED BY THE AUDITOR , IT IS CONSIDERED NECESSARY THAT TIME LIMIT MAY SUITABLY BE EXTENDED TO COMPLETE THE AUDIT IN YOUR CASE. ACCORDINGLY, PERIOD TO COMPLETE THE SPE CIAL AUDIT IN THE CASE IS ITA NO.2942/DEL/2008 ITA NO.2986/DEL/2008 4 EXTENDED BY ANOTHER 90 DAYS FROM THE EXPIRY OF TIME LIMIT IN ORDER DATED 23.3.2006 U/S 142 (2A) OF THE IT ACT, 1961. YOURS FAITHFULLY, SD/- (A.K. MONGA) DY. COMMISSIONER OF INCOME-TAX, CIRCLE 19(1), NEW DELHI. 6. IT IS THE CASE OF THE LEARNED AR THAT IF THE LETTE R OF THE ASSESSING OFFICER DATED 9 TH JUNE, 2006 IS IGNORED AND THE LIMITATION IS TO BE CO UNTED FROM THE FIRST ORDER DATED 23 RD MARCH, 2006 AND EXPIRY OF 90 DAYS FROM THAT ORDER IS COUNTED AS 20 TH JUNE, 2006, THEN, 60 CLEAR DAYS WERE REQUIRED TO BE GIVEN TO THE ASSESSING OFFICER FROM 20 TH JUNE, 2006 AND THE LIMITATION TO PASS ASSESSMENT ORDER WILL EXPIRE ON 19 TH AUGUST, 2006 AGAINST WHICH THE ASSESSING OFFICER HAS PASSED ASSESSMENT ORDER ON 15 TH NOVEMBER, 2006 WHICH HAS TO BE HELD TO BE ORDER PASSED BEYOND LIMITAT ION. 7. AFTER NARRATING THE FACTS, IT IS THE CASE OF THE LE ARNED AR THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 15 TH NOVEMBER, 2006 HAS TO BE CONSIDERED TO BE BEYOND LIMITATION IN VIEW OF THE RECENT DECISION OF HONBLE JURISDICTIONAL HIGH COURT DATED 27 TH MAY, 2011 PASSED IN THE CASE OF CIT VS. BISHAN SAROOP RAM KISHAN AGRO PVT. LTD. IN ITA NO.1775/DEL/2010. HE SUBMITTED THAT THE COPY OF THE SAID ORDER, SINCE BE ING UNREPORTED HAS BEEN PLACED AT PAGES 368-390 OF THE PAPER BOOK. IN THE SAID CASE, IT IS HELD THAT THE WORD SUO MOTU INSERTED IN SUB-SECTION (2C) OF SECTION 142 OF THE ACT WAS TO BE APPLICABLE W.E.F. 1 ST APRIL, 2008 ONLY, THE AMENDMENT CANNOT BE SAID TO BE CLARIFICATORY OR RETROSPECTIVE IN NATUR E THE AMENDMENT WAS PROSPECTIVE AND WAS TO BE APPLICABLE W.E.F. 1 ST APRIL, 2008 ONLY AND, THEREFORE, THE ORDER OF ITAT WAS UPHELD VIDE WHICH I T WAS HELD THAT THE ASSESSMENT ORDER WAS BARRED BY LIMITATION AS THE ASSESSING OF FICER DID NOT HAVE SUO MOTU POWER TO EXTEND THE PERIOD OF OBTAINING SPECIAL AUD IT REPORT. IN THE SAID CASE, ASSESSMENT ORDER WAS PASSED U/S 153A ON 3 RD AUGUST, 2007 AND IT WAS THE CONTENTION OF THE ASSESSEE THAT THE SAME IS BARRED BY LIMITATION IN SO FAR AS THE ORDER OF THE SPECIAL AUDIT WAS MADE BY THE ASSESSING OFFICER ON 12 TH DECEMBER, 2006 AND THE SPECIAL AUDIT WAS TO BE CONDUCTED ON OR BEFORE 12 TH MARCH, 2007. IT WAS THE CONTENTION OF THE ITA NO.2942/DEL/2008 ITA NO.2986/DEL/2008 5 ASSESSEE THAT THE ASSESSING OFFICER DID NOT HAVE INHERENT P OWER TO EXTEND TIME LIMIT UNDER SUB-SECTION (2A) OR (2C) OF SECTION 142 OF THE ACT AND THE TIME COULD ONLY BE EXTENDED AT THE REQUEST OF THE ASSE SSEE AND, CONSEQUENTLY, THE LIMITATION AS PER EXPLANATION (II) TO SECTION 153B(I) FOR THE PURPOSE OF COMPUTING ASSESSMENT EXPIRED ON 11 TH MAY, 2007. IT WAS THE CASE OF THE ASSESSEE THAT POWER TO SUO MOTU EXTEND THE PERIOD FOR SPECIAL AUDIT U/S 142(2A) IS PROVIDED IN PROVISO TO SECTION 14 2(2C) BY THE FINANCE ACT, 2008 W.E.F. 1 ST APRIL, 2008 AND THE SAME IS PROSPECTIVE IN NATURE. T HE ASSESSING OFFICER WAS NOT EMPOWERED TO EXTEND THE TIME F OR AUDIT ON HIS OWN AND AFTER CONSIDERING THE PROVISIONS AND THE JUDIC IAL PRONOUNCEMENTS, THEIR LORDSHIPS HAVE HELD THE ISSUE IN FAVOUR OF THE ASSE SSEE. 8. IT IS THE CASE OF THE LEARNED AR THAT THE FACTS OF THE SAID CASE AND THE CASE OF THE ASSESSEE AND THE RELEVANT STATUTORY PROVISION S ARE SAME, THEREFORE, APPLYING THE SAME RATIO, IT IS TO BE HELD THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE HAS BECOME TIME BARRED AND THE A PPEAL OF THE ASSESSEE SHOULD BE ALLOWED. 9. ON THE OTHER HAND, THE LEARNED DR THOUGH DID NOT RAISE ANY DISPUTE WITH REGARD TO DATES, SUBMITTED THAT DUE TO THE FAULT OF THE ASSESSEE, SPECIAL AUDITOR COULD NOT PERFORM THE AUDIT, THEREFO RE, HE REQUESTED THE ASSESSING OFFICER TO EXTEND THE PERIOD. THEREFORE, IT IS THE CASE OF THE LEARNED DR THAT IN THE PRESENT CASE, ACCORDING TO THE SPECIAL FACTS OF THE CASE OF THE ASSESSEE, THE PERIOD WAS EXTENDED BY THE ASSESSIN G OFFICER. THUS, IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSESSME NT ORDER PASSED BY THE ASSESSING OFFICER SHOULD BE HELD WITHIN TIME. 10. WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALSO CAR EFULLY GONE THROUGH THE RELEVANT PROVISIONS AND THE DECISION OF HONBLE HI GH COURT IN THE CASE OF BISHAN SAROOP RAM KISHAN AGRO PVT. LTD. (SUPRA). THE PRESENT CASE RELATES TO ASSESSMENT YEAR 2003-04 AND THE PROVISIONS AS THEY STOOD FOR THE RELEVANT ASSESSMENT YEAR WERE CONSIDERED BY HONBLE DELH I HIGH COURT IN THE AFOREMENTIONED CASE AND AFTER CONSIDERING THE STAT UTORY PROVISIONS AND ITA NO.2942/DEL/2008 ITA NO.2986/DEL/2008 6 THE RELEVANT CASE LAW, THEIR LORDSHIPS HAVE COME TO TH E CONCLUSION THAT BEFORE 1 ST APRIL, 2008 THE ASSESSING OFFICER DID NOT HAVE SUO MOTU POWER TO EXTEND THE PERIOD, THEREFORE, THE ASSESSMENT WAS TO BE H ELD TO BE TIME BARRED. THE CONTENTS OF LETTER VIDE WHICH THE PERIO D FOR SPECIAL AUDIT HAS BEEN EXTENDED HAVE ALSO BEEN REPRODUCED IN THE ABOVE PART OF THIS ORDER. THE CONTENTS OF THE AFOREMENTIONED LETTER DATED 9 TH JUNE, 2006 ISSUED BY THE ASSESSING OFFICER TO THE ASSESSEE CLEARLY INDICATED THA T THE ASSESSEE DID NOT SEEK EXTENSION OF PERIOD FOR CONDUCTING SPECIAL AU DIT AND THE ASSESSING OFFICER HIMSELF ( SUO MOTU ) HAS EXTENDED THE PERIOD BY FURTHER 90 DAYS. ACCORDING TO THE RATIO OF AFOREMENTIONED DECISION OF HONBLE DELHI HIGH COURT, THE ASSESSING OFFICER DID NOT HAVE POWER TO EXTE ND THE PERIOD OF SPECIAL AUDIT SUO MOTU . THEREFORE, THE AFOREMENTIONED LETTER DATED 9 TH JUNE, 2006 HAS BEEN WRITTEN WITHOUT THE AUTHORITY OF LAW. THEREFORE, THE SAME HAS TO BE IGNORED AND THE PERIOD OF SPECIAL AUDIT HAS TO BE CONSIDERED AS PER THE FIRST LETTER ISSUED BY THE ASSESSING OFFICER WHICH IS DATED 22/23 MARCH, 2006. IF THE LIMITATION IS TO BE COUNTED FRO M THE SAID DATE, THEN, IT WILL BE EXPIRED LATEST BY 19 TH AUGUST, 2006 (IGNORING THE CONTROVERSY WHETHER THE LIMITATION WILL EXPIRE ON 18 TH JUNE, 2006 OR 20 TH JUNE, 2006). SINCE THE ASSESSMENT ORDER IN THE PRESENT CASE HAS UNDISPUT EDLY BEEN PASSED ON 15 TH NOVEMBER, 2006, THE ASSESSMENT HAS TO BE HELD TO BE TIM E BARRED IN THE LIGHT OF THE AFOREMENTIONED DECISION O F HONBLE JURISDICTIONAL HIGH COURT. THEREFORE, THE IMPUGNED ASSESSMENT FRAMED IS NOT A VALID ASSESSMENT IN THE EYES OF LAW AND THE SAME IS QUASHED. HAV ING HELD THAT THE ASSESSMENT IS INVALID AND BARRED BY LIMITATION, THE OTHER ISSUES RAISED BY THE ASSESSEE IN HIS APPEAL AND IN THE APPEAL FILED BY THE DEPARTMENT HAVE BECOME INFRUCTUOUS AND NEED NO ADJUDICATION SEPA RATELY. WE ORDER ACCORDINGLY. 11. BEFORE PARTING, WE MAY MENTION HERE THAT THE LI MITATION FOR COMPLETION OF ASSESSMENT AND RE-ASSESSMENTS IS DESCRIBED IN SE CTION 153 AND THE SPECIAL AUDIT CASES PRIOR TO AMENDMENTS IN CLAU SE (III) OF EXPLANATION 1 BROUGHT INTO THE STATUTE BY FINANCE (N O.2) ACT OF 1996 W.E.F. ITA NO.2942/DEL/2008 ITA NO.2986/DEL/2008 7 1.4.97 WILL FALL UNDER SEPARATE CATEGORY AS W.E.F. 1. 4.97 THE LIMITATION IN THE CASES FALLING U/S 142 (2A) WILL BE COMPUTED BY EXCLUDI NG THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECT THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SUB-SECTION (2A) OF SECTION 142 AND ENDING WITH THE DATE ON WHICH THE ASSESSEE FURNISHES A REPORT OF SUCH AUDIT UNDER THAT SUB-SECTION. THUS, PRIOR TO AMENDMEN T BROUGHT BY FINANCE (NO.2) ACT, 1996 W.E.F. 1.4.97, THE PERIOD WHICH IS REQUIRED TO BE EXCLUDED FROM LIMITATION WILL FALL UNDER SEPARATE CATEGORY AS THE PERIOD OF EXCLUSION WILL BE FROM THE DATE OF DIRECTION OF THE ASSESSING OFF ICER FOR GETTING THE ACCOUNTS AUDITED UNDER SUB-SECTION (2A) OF SECTION 142 AND IT WILL END WITH THE DATE ON WHICH THE ASSESSEE HAS FURNISHED A REPORT OF SUCH AUDIT, IRRESPECTIVE OF THE FACT THAT THE PERIOD WAS EXTENDED BY THE ASSESSING OFFICER SUO MOTU OR AT THE REQUEST OF THE ASSESSEE. HOWE VER, THE PRESENT CASE RELATING TO AN ASSESSMENT YEAR 2003-04 IS MUCH BEYON D THE AFOREMENTIONED AMENDMENT AND, THUS, THIS POSITION OF LAW WILL NOT BE APPLICABLE TO THE CASE OF THE ASSESSEE. THIS OBSERVATION IS NECESSARY FOR THE REASON THAT THIS ORDER MAY NOT BE CONSIDERED AS PRE CEDENT FOR SUCH CASES WHICH FALL PRIOR TO 1.4.97. 12. IN VIEW OF THE AFOREMENTIONED DISCUSSION, THE APPE AL FILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.12.20 11. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 09.12.2011. DK ITA NO.2942/DEL/2008 ITA NO.2986/DEL/2008 8 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR, ITAT, DELHI BENCHES
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