M/s AT & T Global Betwork Services (india) Pvt. Ltd., Gurgaon V. DCIT, New Delhi

ITA 4882/DEL/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4436 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I2
• Next Hearing Date: 19-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; International transaction; Period of limitation; Advance ruling; Cost of acquisition; Initiation of penalty proceedings; Valuation report; Competent authority; Block assessment; Time period of passing order
• Section: 143(3); 142(1); 234B; 32; 144; 139

Judgement Text

AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I - 2: NEW DELHI BEFORE SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.4882/DEL/2013 (ASSESSMENT YEAR: 2008 - 09) AT & T GLOBAL NETWORK SERVICES (INDIA) PVT LTD., VATIKA LOK - 1, BLOCK - A, GURGAON PAN:AAFCA8810L VS. DCIT, CIRCLE - 2(1), NEW DELHI (APPELLANT) (RESPONDENT) ITA NO.4870/DEL/2013 (ASSESSMENT YEAR: 2008 - 09) DCIT, CIRCLE - 2(1), NEW DELHI VS. AT & T GLOBAL NETWORK SERVICES (INDIA) PVT LTD., VATIKA LOK - 1, BLOCK - A, GURGAON PAN:AAFCA8810L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KANCHAN KAUSHAL, CA SHRI ADITYA GUPTA, CA SHRI SANDEEP PURI, CA MS. CHINU BHASIN, CA REVENUE BY: SHRI N C SWAIN CIT DR SH RI T M SHIVKUMAR, CIT DR DATE OF HEARING 06 /07/2017 DATE OF PRONOUNCEMENT 1 8 /09/2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. FOR THE ASSESSMENT YEAR 2008 - 09 THE ASSESSEE HAS PREFERRED AN APPEAL AGAINST THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 { HEREIN AFTER REFERRED TO AS THE ACT] READ WITH SECTION 144C (13) OF THE ACT PASSED BY THE DEPUTY COMMISSIONER OF INCO ME TAX, CIRCLE 2 (1), NEW DELHI, HEREINAFTER REFERRED TO AS THE AO] RECEIVED BY THE ASSESSEE ON 24.06.2013 . THIS IMPUGNED ASSESSMENT ORDER WAS PASSED UNDER THE DIRECTION OF THE DISPUTE RESOLUTION PANEL - 1, NEW AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 2 DELHI [ HEREINAFTER REFERRED TO AS THE LD DRP] PASSED ON 27/5/2013 U/S 144C (5) OF THE ACT ON THE OBJECTIONS RAISED BY THE ASSESSEE ON DRAFT ASSESSMENT ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE 291), NEW DELHI ON 9/8/2012 WHERE I N THE ADJUSTMENT PROPOSED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX , TRANSFER PRICING OFFICER - 1(1) , NEW DELHI [ HEREINAFTER REFERRED TO AS THE LD TPO] VIDE ORDER U/S 92CA (3) OF THE ACT PASSED ON 24.10.2011. 2. THE REVENUE HAS PREFERRED AN APPEA L AGAINST THE DIRECTION OF DISPUTE RESOLUTION PANEL FOR DELETING THE ADDITION BY DIRECTION U/S 144C ( 5) OF THE INCOME TAX ACT DATED 27.05.2013. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED ON 25.10.2005 ENGAGED IN THE BUSINESS O F PROVIDING LONG DISTANCE TELECOMMUNICATION SERVICES BASED ON INTERNATIONAL LONG DISTANCE, NATIONAL LONG DISTANCE, AND INTERNET SERVICE PROVIDER LICENSE GRANTED BY THE DEPARTMENT OF TELECOMMUNICATION. THE COMPANY CARRIED ON THE BUSINESS IN TERMS OF ITS SER VICE AGREEMENTS ENTERED INTO WITH ITS CUSTOMERS FOR PROVISION OF END - TO - END TELECOMMUNICATION CONNECTIVITY SERVICES FOR TRANSMISSION OF DATA FROM SOURCE LOCATION IN INDIA TO DESTINATION LOCATION WITHIN OR OUTSIDE INDIA. 4. FOR THE IMPUGNED ASSESSMENT YEAR IT FILED ITS RETURN OF INCOME ON 30.09.2008 DECLARING INCOME OF RS. 363527736/ - . THE LD ASSESSING OFFICER PICKED UP THIS RETURN FOR SCRUTINY AFTER ISSUE OF NOTICES U/S 143(2) AND SECTION 142(1) OF THE ACT. CONSEQUENTLY, DRA FT ASSESSMENT ORDER WAS PASSED ON 09.08.2012 DETERMINING TOTAL INCOME OF RS. 872226990/ - . AGAINST THIS DRAFT ORDER ASSESSEE PREFERRED OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL ON 14.09.2012 AND DIRECTIONS WERE GIVEN BY THE LD DISPUTE RESOLUTION PANE L ON 27.05.2013 AND BASED ON THIS FINAL ORDER WAS PASSED BY THE LD ASSESSING OFFICER RECEIVED BY THE ASSESSEE ON 24.06.2013. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD ASSESSING OFFICER CAME TO CONCLUSION THAT ON EXAMINATION OF THE CASE RECORDS AND DETAILS FILED AND THE MANNER OF MAINTENANCE OF BOOKS OF ACCOUNTS THAT THE ACCOUNTS ARE AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 3 VERY COMPLEX AND DIFFICULT TO UNDERSTAND THEREFORE IT WAS NOT POSSIBLE FOR THE LD ASSESSING OFFICER TO DETERMINE THE TRUE AND CORRECT TAXABLE INCOME OF THE ASSESSEE AND THEREFORE, VIDE ORDER SHEET ENTRY DATED 19.10.2011 THE ASSESSEE WAS ASKED TO SHOW - CAUSE THAT WHY THE ACCOUNTS OF THE ASSESSEE SHOULD NOT BE GOT AUDITED U/S 142(2A) OF THE ACT. AFTER CONSIDERING THE WRITTEN REPLY OF THE ASSESSEE AND AFTER OBTAINING APPROVA L OF THE LD CIT - I ON 23.12.2011 IT WAS DECIDED TO GET THE ACCOUNTS AUDITED U/S 142(2A) OF THE ACT. HOWEVER, THE LD ASSESSING OFFICER HAS NOTED IN PARA NO. 2.3 OF HIS ORDER THAT EXTENSION OF THE PERIOD WAS GRANTED ON THE REQUEST OF THE ASSESSEE FOR 90 DAYS AS THE WORK OF AUDIT STARTED AROUND MID MARCH 2012 AND DUE TO NON COOPERATION OF THE ASSESSEE 86 DAYS WAS LOST. ULTIMATELY, THE AUDIT WAS COMPLETED ON 21.06.2012 AND THE ASSESSEE SUBMITTED SPECIAL AUDIT REPORT TO THE LD ASSESSING OFFICER ON 22.06.2012. ON THE BASIS OF THIS AGAINST THE RETURN INCOME OF THE ASSESSEE OF RS. 363527736/ - ASSESSMENT WAS MADE AT TOTAL INCOME OF RS. 699617672/ - BY MAKING AN ADDITION OF RS. 336089936/ - ON 10 DIFFERENT COUNTS. THIS ORDER IS UNDER CHALLENGE BEFORE US. 5. THE ASSESSEE H AS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 4882/DEL/2013 FOR THE ASSESSMENT YEAR 2008 - 09: - 1. GROUND NO, 1 - SPECIAL AUDIT ORDER IS BAD - IN - LAW AND THE DRAFT ASSESSMENT ORDER/ASSESSMENT ORDER IS BARRED BY LIMITATION. 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP HAS ERRED IN NOT ADJUDICATING ON THE ISSUE THAT THE SPECIAL AUDIT PROCEEDINGS CONDUCTED ON THE APPELLANT WERE BAD - IN - LAW AND IGNORING THE LEGAL AND FACTUAL SUBMISSION FILED BY THE APPEL LANT, AND THEREBY FAILING TO PASS A SPEAKING ORDER. 1.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, SINCE THE SPECIAL AUDIT ORDER DATED DECEMBER 26, 2011 IS BAD - IN - LAW AND VOID - AB - INITIO, THE DRAFT ASSESSMENT ORDER DATED AUGUST 9, 2012 AND CONSEQUENTLY, THE FINAL ASSESSMENT ORDER DATED JUNE 17, 2013 PASSED BY THE LEARNED AO ARE BARRED BY LIMITATION 2. GROUND NO. 2 - DISALLOWANCE OF INTEREST INCURRED ON EXTERNAL COMMERCIAL BORROWINGS CECBS' ) 2.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. THE LEARNED AO/ HON'BLE DRP HAS ERRED IN MAKING A DISALLOWANCE OF RS 22,16,117 TOWARDS INTEREST EXPENDITURE INCURRED IN RELATION TO AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 4 THE ECBS AVAILED BY THE APPELLANT FOR ACQUISITION OF FIXED ASSETS, BY INVOKING THE PROVISO TO SECTION 36(L)(III) OF THE ACT. 2.2 WITHOUT PREJUDICE TO THE ABOVE GROUND, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN MAKING EXCESS DISALLOWANCE OF RS 55,534 TOWARDS INTEREST EXPENSE INCURRED ON ECBS AVAILED DURING PRECEDING FINANCIAL YEAR (I.E. FY 2006 - 07), BY COMPUTING THE AMOUNT OF DISALLOWANCE FOR A PERIOD OF 396 DAYS INSTEAD OF 365 DAYS. 2.3 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN NOT ALLOWING DEPRECIATION UNDER SECTION 32 OF THE ACT ON THE DISALLOWED INTEREST AMOUNT, BY NOT ADDING THE SAME TO THE ACTUAL COST OF THE ACQUIRED FIXED ASSETS. 3. GROUND NO. 3 - DISALLOWANCE OF IN TER - GROUP CHARGES UNDER SECTION 40(A)(I) OF THE ACT 3.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN DISALLOWING INTER - GROUP CHARGES OF RS 54,06,328 PAID/ CREDITED BY THE APPELLANT TO AT&T COMMUNICATION SERVICES INTE RNATIONAL INC. ('AT&T CS1 INC.'), BY INVOKING THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT. 3.2 WITHOUT PREJUDICE TO THE GROUND 3.1 ABOVE AND GROUND NO. II, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN NOT TAKING A GNIZANCE OF THE FACT THAT THERE COULD B E NO DISALLOWANCE ON ACCOUNT OF THE AFORESAID ISSUE SINCE THAT ENTIRE AMOUNT OF INTER - GROUP CHARGES INCURRED BY THE APPELLANT HAS ALREADY BEEN DISALLOWED AS A RESULT OF THE ERRONEOUS ADDITION MADE UNDER SECTION 92CA OF THE ACT. 4. GROUND NO. 4 - DISAL LOWANCE OF CIRCUIT ACCRUALS 4.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN MAKING A DISALLOWANCE OF RS 3,08,24,183 ON ACCOUNT OF YEAR - END ACCRUALS CREATED TOWARDS BANDWIDTH AND LAST MILE SERVICES AVAILED BY THE APPELLANT DURING THE FINANCIAL YEAR RELEVANT FOR THE SUBJECT AY. 4.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN NOT FOLLOWING THE DIRECTION OF THE HON'BLE DRP TO VERIFY THE DOCUMENTARY EVIDENCE/ INVOICES SUPPORTING THE CLAIM FOR YEAR - END ACCRUALS BUT INSTEAD RESTRICTING THE SAME TO THE DOCUMENTARY EVIDENCE FURNISHED BY THE APPELLANT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ONLY AND COMPLETELY IGNORING THE INVOICES AND VOUCHERS SUPPORTING AN AMOUNT O F RS 2.04 CRORES SUBMITTED WITH THE LEARNED AO DURING THE DRP PROCEEDINGS. 4.3 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN NOT HOLDING THAT SINCE SUCH YEAR - END ACCRUALS HAVE BEEN REVERSED IN THE BEGINNING OF THE SUBSEQUENT FINANCIAL YEAR (I.E. FY 2008 - 09), THE SAME SHOULD BE ALLOWED AS TAX DEDUCTIBLE EXPENDITURE FOR THE SUBSEQUENT FINANCIAL YEAR. AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 5 5. GROUND NO. 5 - DISALLOWANCE OF CIRCUIT CHARGES UNDER SECTI ON 40(A)(IA) OF THE ACT 5.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN DISALLOWING CIRCUIT CHARGES (I.E. BANDWIDTH CHARGES AND LAST MILE CHARGES), AMOUNTING TO RS 1,38,84,736, BY INVOKING THE PROVIS IONS OF SECTION 40(A)(IA) OF THE ACT. 5.2 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/HON'BLE DRP HAS FAILED TO APPRECIATE THAT THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT INSERTED VIDE FINANCE ACT, 2012 IS CURATIVE IN NATURE AND HENCE, THE BENEFIT THEREOF SHOULD BE EXTENDED TO THE PAST YEARS, INCLUDING THE SUBJECT AY, AND ACCORDINGLY, THE HON'BLE DRP OUGHT TO HAVE DIRECTED THAT THE DEDUCTION OF THE DISALLOWED AMOUNT BE ALLOWED IN T HE SUBSEQUENT YEAR/S, ON THE SATISFACTION OF THE CONDITIONS PRESCRIBED IN THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. GROUND NO. 6 - DISALLOWANCE OF PRIOR PERIOD EXPENSES 6.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO/ HON'BLE DRP HAS ERRED MAKING A DISALLOWANCE OF RS 34,43,056 AS PRIOR PERIOD EXPENSES. 7. GROUND NO. 7 - DISALLOWANCE OF EXPENSES OF CAPITAL NATURE 7.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS ERRED DISALLOWING AN AMOUNT OF RS 9,43,870 AS CAPITAL EXPENSE DEBITED TO THE PROFIT AND LOSS ACCOUNT. 7.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT OUT OF RS 943,870, AN AMOUNT OF RS 108,762 WAS SUO - MOTO OFFERED TO TAX BY THE APPELLANT AND HENCE, HAS ERRED IN MAKING A DOUBLE DISALLOWANCE OF RS 108,762. 8. GROUND NO. 8 - DISALLOWANCE OF INTEREST INCURRED ON SHORT TIME LOANS 8.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARN ED AO/ HON'BLE DRP HAS ERRED IN DISALLOWING INTEREST EXPENSE OF RS 4,28,72,700 INCURRED ON SHORT TERM LOANS AVAILED BY THE APPELLANT, BY INVOKING THE PROVISO TO SECTION 36( 1 )(III) OF THE ACT. 8.2 WITHOUT PREJUDICE TO THE ABOVE GROUND, ON THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS FAILED TO TAKE COGNIZANCE OF THE FACT THAT THE SHORT TERM LOANS WERE AVAILED BY THE APPELLANT BOTH FOR THE PURPOSES OF FUNDING ITS WORKING CAPITAL REQUIREMENTS AND ACQUISITION OF FIXED ASSETS, WHICH IS CLEARLY EVIDENT FROM THE CASH FLOW STATEMENT OF THE APPELLANT, AND HENCE, DISALLOWANCE OF THE ENTIRE INTEREST EXPENDITURE IS UNJUSTIFIED AND UNTENABLE IN LAW. 8.3 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 6 DRP HAS ERRED IN NOT TAKING COGNIZANCE OF THE FACT THAT OUT OF RS 42,872,700, AN AMOUNT OF RS 74,800 WAS SUO MOTO OFFERED TO TAX TO TAX BY THE APPELLANT AND HENCE, HAS ERRED IN MAKING A DOUBLE DISALLOWANCE OF RS 74,800. 8.4 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ HON'BLE DRP HAS ERRED IN NOT ALLOWING DEPRECIATION UNDER SECTION 32 OF THE ACT ON THE DISALLOWED INTEREST AMOUNT BY NOT ADDIN G THE SAME TO THE COST OF ACQUISITION OF THE FIXED ASSETS. 9. GROUND NO. 9 - DEDUCTION IN RESPECT OF FOREIGN EXCHANGE FLUCTUATION GAIN OFFERED TO TAX IN THE RETURN OF INCOME 9.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ER RED IN NOT ALLOWING DEDUCTION FOR RS 35,82,075, BEING UNREALIZED FOREIGN EXCHANGE FLUCTUATION GAIN ON CAPITAL ACCOUNT ARISING DURING THE SUBJECT AY AND OFFERED TO TAX IN THE RETURN OF INCOME, DESPITE A SPECIFIC RECOMMENDATION BY THE SPECIAL AUDITOR TO THIS EFFECT. 10. GROUND NO. 10 - DEDUCTION OF PRIOR PERIOD EXPENSES PROPOSED FOR DISALLOWANCE IN AY 2009 - 10 10.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN NOT ALLOWING DEDUCTION FOR RS 6,24,870, BEING EXPENSES PROPOSED FOR DISALLOWANCE AS PRIOR PERIOD EXPENSES IN THE DRAFT ASSESSMENT ORDER PASSED FOR SUCCEEDING YEAR (I.E. AY 2009 - 10). 11. GROUND NO. 11 - ADDITION OF RS. 229,114,474 UNDER SECTION 92CA OF THE ACT 11.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO / TPO HAS ERRED IN MAKING AN ADDITION OF RS. 229,114,474 UNDER SECTION 92CA OF THE ACT TO THE TOTAL INCOME OF THE APPELLANT ON ACCOUNT OF ADJUSTMENT IN THE ARM'S LENGTH PRICE ('ALP') OF THE INTERNATIONAL 11.2 ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LEARNED AO / TPO HAS ERRED IN NOT ACCEPTING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE APPELLANT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT READ WITH THE INCOME - TAX RULES, 1962 ('THE RULES') IN RESPECT OF THE IMPUGNED TRANSA CTIONS AND INSTEAD, CONDUCTING A FRESH ECONOMIC ANALYSIS TO HOLD THAT THE SAME ARE NOT AT ARM'S LENGTH. 11.3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO / TPO HAS ERRED IN DISREGARDING THE ELABORATE DOCUMENTATION AND EVIDENCE SUBM ITTED AS PART OF ASSESSMENT PROCEEDINGS AND ASSUMING THAT 'NO BENEFIT' HAS BEEN CONFERRED UPON THE APPELLANT FROM THE INTERNATIONAL TRANSACTION PERTAINING TO AVAILING OF INTRA - GROUP SERVICES FROM ITS AE. 1 1.4 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO / TPO HAS ERRED IN APPLYING THE COMPARABLE UNCONTROLLED PRICE ('CUP') METHOD AN I DETERMINING THE ALP OF THE INTERNATIONAL TRANSACTION AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 7 PERTAINING TO AVAILING OF INTRA - GROUP SERVICES AS NIL, WITHOUT IDENTIFYING ANY UNCON TROLLED COMPARABLE TRANSACTIONS. 1 1.5 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DRP HAS FAILED TO CONSIDER THE SUITABILITY OF ALLOCATION KEYS ADOPTED AND ELABORATE DOCUMENTARY EVIDENCE FURNISHED BY THE APPELLANT THEREBY ENHANCING THE AMOUNT OF ADJUSTMENT MADE BY THE LEARNED AO IN THE DRAFT ASSESSMENT ORDER. 12. GROUND NO. 12 - INITIATION OF PENALTY PROCEEDINGS 12.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(L)(C) OF THE ACT AGAINST THE APPELLANT ON ACCOUNT OF THE ABOVE ADJUSTMENTS MADE IN THE ASSESSMENT ORDER. 13. GROUND NO. 13 - SHORT GRANT OF CREDIT IN RESPECT OF TAXES DEDUCTED AT SOURCE ('TDS') 13.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN CONSIDERING TDS CREDIT OF RS 36,798,922 [GRANTED IN THE INTIMATION ISSUED UNDER SECTION 143(1)] AS AGAINST TDS CREDIT OF RS 1 16,521,188 CLAIMED BY THE APPELLANT, WHILE DETERMINING THE TAX AND INTEREST LIABI LITY FOR THE SUBJECT AY. 14. GROUND NO. 14 - LEVY OF INTEREST UNDER SECTION 234B OF THE ACT 13.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN CHARGING INTEREST UNDER SECTION 234B OF THE ACT. 6. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 4870/DEL/2013 FOR THE ASSESSMENT YEAR 2008 - 09 AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE HONBLE DRP HAS ERRED IN DELETING THE ADDITION OF RS. 57005616/ - WITHOUT CONSIDERING THE FACTS THAT ASSESSEE HAS FAILED TO PRODUCE INVOICES TO THE SPECIAL AUDITOR FOR VERIFICATION. 2. WHETHER ON THE FACTS AND CIR CUMSTANCES OF THE CASE, HONBLE DRP HAS ERRED IN DELETING THE ADDITIONS OF RS. 156217913/ - ON ACCOUNT OF NO SUPPORTING INVOICES OF EXPENSES AND ALSO FAILED TO EXPLAIN PARTY - WISE DETAILS BEFORE THE ASSESSING OFFICER AND SPECIAL AUDITOR. 3. HONBLE DRP HAS E RRED IN DELETING THE ADDITION OF RS. 19488100/ - ON ACCOUNT OF NON DEDUCTION OF TDS, TREATING THAT BSNL IS ALSO TREATING AS ADC PARTY AND PARCEL OF IUC FOR LEVY OF SERVICE TAX. 7. THE FIRST GROUND OF APPEAL RAISED BY THE ASSESSEE IS THAT SPECIAL AUDIT ORDER IS BAD IN LAW AND THE DRAFT ASSESSMENT ORDER AND ASSESSMENT ORDER IS BARRED BY LIMITATION. THE ASSESSEE ARGUED THAT THE LD DRP DID NOT ADJUDICATE ON THE ASPECT OF SPECIAL AUDIT PROCEEDINGS AND FURTHER AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 8 THE ASSESSMENT ORDER PASSED BY THE LD ASSESSING OFFICER IS BARRED BY LIMITATION. 8. THE FACTUAL MATRIX PROVIDING THE SEQUENCE OF EVENTS/ DATE CHART OF THE CASE WITH RESPECT TO THE SPECIAL AUDIT IS AS UNDER: 1 30.09.2008 RETURN OF INCOME FILED 2 06.08.2009 NOTICE UNDER SEC 143(2) ISSUED BY ITO WARD 2(2) 3 20.01.2010 NOTICE UNDER SEC 143(2)/142(1) WAS ISSUED BY DCIT, CIRCLE 2(1) 4 22.07.2010 CASE TRANSFERRED TO ACIT, CIT - 1, NEW DELHI 5 12.08.2010 NOTICE UNDER SECTION 143(2) ISSUED BY ACIT FIXING THE CASE FOR 31.08.2010 6 1.09.2010 REPLY FILED IN RESPONSE TO NOTICE DATED 12.08.2010 7 10.10.2011 QUESTIONNAIRE U/S 142(1) ISSUED BY ACIT 8 19.10.2011 HEARING ATTENDED BY THE THE AR OF APPELLANT AND SHOW CAUSE GIVEN TO THE AR FOR SPECIAL AUDIT 9 31.10.2011 DETAILED RESPONSE TO THE SHOW CAUSE DATED 19.10.2011 AND QUESTIONNAIRE DATED 10.10.2011 10 01.11.2011 PROPOSAL SENT TO CIT FOR SPECIAL AUDIT 11 16.11.2011 SUBMISSION FILED BY APPELLANT 12 08.12.2011 SUBMISSION FILED BY APPELLANT 13 14.12.2011 SUBMISSION FILED BY APPELLANT 14 23.12.2011 APPROVAL GRANTED BY CIT 15 26.12.2011 APPOINTMENT OF SPECIAL AUDITOR 16 31.12.2011 DUE DATE OF COMPLETION OF ASSESSMENT PROCEEDINGS U/S 143(3) 17 22.06.2012 SPECIAL AUDIT REPORT RECEIVED BY THE LD. AO AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 9 18 09.08.2012 DATE OF DRAFT ASSESSMENT ORDER 19 17.06.2013 DATE OF FINAL ASSESSMENT ORDER 9. ON THE ISSUE OF THE ASSESSMENT BEING TIME BARRED, THE LD. AR COMMENCED THE ARGUMENTS THAT THE DRAFT ASSESSMENT ORDER BEING PASSED BEYOND THE PERIOD OF LIMITATION AS PROVIDED UNDER SECTION 153 OF THE ACT IS INVALID AND OUGHT TO BE QUASHED. THE VERY FIRST SUBMISSION OF THE ASSESSEE ON THIS GROUND IS AS UNDER: REGARDING GROUND NO. 1 SPECIAL AUDIT ORDER IS BAD IN LAW AND DRAFT ASSESSMENT ORDER IS BARRED BY LIMITATION 2.1 AT THE OUTSET, IT IS SUBMITTED THAT THE FOLLOWING ASPECTS MERIT CONSIDERATION WITH RESPECT TO THE ASSESSMENT PROCEEDINGS CARRIED OUT IN THE PRESENT CASE: THAT THIS IS THE FIRST YEAR OF COMMERCIAL OPERATIONS OF THE APPELLANT COMPANY. THAT THE ASSESSMENT UN DER SECTION 143(3) OF THE ACT IN NORMAL COURSE OUGHT TO HAVE BEEN COMPLETED BY DECEMBER 31, 2010. BUT AS IN THE PRESENT CASE, REFERENCE WAS MADE TO THE TPO, THE LIMITATION FOR PASSING THE ORDER WAS DECEMBER 31, 2011. THE TIME LIMITS PROVIDED UNDER SECTION 153 OF THE ACT ARE SACROSANCT, AND COULD ONLY BE EXTENDED UNDER SPECIFIC PROVISIONS AND CIRCUMSTANCES. THE APPELLANT IN THE PRESENT CASE RESPECTFULLY SUBMITS THAT THE DRAFT ORDER PASSED BY THE LD. ASSESSING OFFICER IS BARRED BY LIMITATION IN TERMS OF THE P ROVISIONS OF SECTION 153 OF THE ACT. 2.2 IT IS CLEARLY EVIDENT THAT THE ORDER HAS BEEN PASSED BEYOND PERIOD OF LIMITATION I.E. 31.12.2011. 2.3 IN THIS REGARD, THE RELEVANT PROVISION OF EXPLANATION 1 TO SECTION 153 READ WITH THE PROVISO TO SUCH EXPLANATION IS REP RODUCED BELOW FOR READY REFERENCE: QUOTE EXPLANATION 1 IN COMPUTING THE PERIOD OF LIMITATION 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 AUDITED UNDER AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 10 SUB - SECTION (2A) OF SECTION 142 AND ENDING WITH THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUD IT UNDER THAT 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 - SECTIONS (1), (1A), (1B),] 12A[(2), (2A) AND (4) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RE - COMPUTATION, 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 DEEMED TO BE EXTENDED AC CORDINGLY (EMPHASIS SUPPLIED) UNQUOTE 2.4 THE OBJECTIVE OF INSERTION OF EXPLANATION AND PROVISO THEREOF IS TO AMEND THE BAR OF LIMITATION IN CERTAIN CASES AND PROVIDE THE ASSESSING OFFICER AN EXTENDED PERIOD TO COMPLETE THE ASSESSMENT. IT IS RESPECTFULLY SU BMITTED THAT ROWLATT, J., OBSERVED IN CAPE BRANDY SYNDICATE V. INLAND REVENUE COMMISSIONERS OBSERVED AS UNDER: IN A TAXING ACT ONE HAS TO LOOK MERELY AT WHAT IS CLEARLY SAID. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. THERE IS NO PRESUMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. ONE CAN ONLY LOOK FAIRLY AT THE LANGUAGE USED . IN OTHER WORDS, THE TAXPAYER HAS A RIGHT TO STAND UPON THE WORDS USED IN THE TAXING ACT WHATEVER MIGHT BE THE CONSEQUENCE. F URTHER, WHEN SPECIFIC PROVISIONS OF A STATUTE EXIST, THERE IS NO ROOM FOR INVOKING THE AID OF THE GENERAL PRINCIPLES OF EQUITY, JUSTICE AND GOOD CONSCIENCE. 2.5 IN LIGHT OF THE ABOVE, THE APPELLANT HAS TRIED TO READ DOWN THE PROVISO TO EXPLANATION 1 TO SECTION 153 AS UNDER: - (I) PROVISO STARTS WITH 'THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID TIME OR PERIOD'. THUS, THE PERIOD REFERRED IN CLAUSE (1) TO (VIII) OF EXPLANATION 1 NEEDS TO BE EXCLUDED FOR COMPUTING THE PERIOD OF LIMITATION IN SUCH CASES. (II) THE SECOND LIMB OF THE PROVISO PROVIDES THAT 'THE PERIOD OF LIMITATION REFERRED TO IN SUB SECTIONS (1), (1A), (1B ), (2), (2A) AND (4) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 11 ASSESSMENT, REASSESSMENT OR RE - COMPUTATION, AS THE CAS E MAY BE, IS LESS THAN SIXTY DAYS,'. THUS, THE PROVISO WOULD BE APPLICABLE ONLY IN CASES WHERE THE PERIOD OF LIMITATION FOR COMPLETING THE ASSESSMENT IS LESS THAN SIXTY DAYS AFTER THE EXCLUSION OF THE PERIOD AND NOT OTHERWISE. (III) THE THIRD LIMB OF THE PR OVISO PROVIDES THAT 'SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY'. THUS, ONLY IN CASES WHERE ANY PERIOD IS REMAINING WITH THE ASSESSING OFFICER FOR COMPLETING THE A SSESSMENT, SUCH PERIOD CAN BE EXTENDED AS MENTIONED IN THE PROVISO, I.E. FOR A PERIOD OF 60 DAYS. 2.6 THUS, BASED ON A READING OF THE ABOVE PROVISO ALONG WITH EXPLANATION 1, IT IS CLEAR THAT THE LEGISLATURE HAS PROVIDED FOR EXTENSION OF TIME PERIOD FOR COMPLE TION OF ASSESSMENT PROCEEDINGS BY 60 DAYS. THE PERIOD HAS TO BE EXTENDED ONLY IN CASES WHERE AFTER EXCLUDING THE PERIOD AS SPECIFIED IN EXPLANATION 1, THE TIME AVAILABLE WITH THE ASSESSING OFFICER FOR COMPLETION OF THE ASSESSMENT PROCEEDINGS IS LESS THAN 6 0 DAYS. IN SUCH CASES, THE PROVISO HAS PROVIDED FOR EXTENSION OF THE REMAINING PERIOD TO 60 DAYS. 2.7 TO PUT IT SIMPLY, THE INTENTION OF LEGISLATURE IS TO PROVIDE FOR EXTENSION OF THE TIME PERIOD ONLY WHERE THE ASSESSING OFFICER HAD SOME TIME AVAILABLE FOR COMPLETION OF ASSESSMENT AFTER EXCLUDING THE TIME PERIOD IN VIEW OF EXPLANATION 1. 2.8 HOWEVER, NEITHER THE PROVISO NOR ANY OTHER PROVISION IN THE ACT ENVISAGE A SITUATION WHERE THE TIME LIMIT FOR COMPLETION OF ASSESSMENT PROCEEDINGS HAS ALREADY EXPIRED AFT ER CONSIDERING THE TIME PERIOD PROVIDED IN THE EXPLANATION. IN OTHER WORDS, WHEN THE TIME PERIOD PROVIDED IN THE EXPLANATION CROSSES THE LIMITATION PERIOD PROVIDED UNDER SECTION 153 FOR COMPLETION OF ASSESSMENT, THE ACT DOES NOT PROVIDE THE PERIOD OF LIM ITATION. IT IS SUBMITTED THAT AFTER EXCLUDING SUCH TIME PERIOD THE ASSESSING OFFICER SHOULD HAVE TIME AVAILABLE WITH HIM FOR COMPLETION OF THE ASSESSMENT PROCEEDINGS. THIS IS FURTHER SUPPORTED BY THE FACT THAT THE PROVISO ALLOWS EXTENSION OF THE REMAINING PERIOD; HOWEVER, WHERE THERE IS NO REMAINING PERIOD, THE BENEFIT OF SUCH EXTENSION IS NOT AVAILABLE WITH THE ASSESSING OFFICER. 2.9 ACCORDINGLY, IN THE FACTS OF THE PRESENT CASE, THE APPELLANT MOST RESPECTFULLY SUBMITS THAT THE INTERPRETATION OF THE PHRASE SUCH REMAINING PERIOD AS APPEARING IN ABOVE PROVISO REFERS TO THE PERIOD WHERE BOTH THE CONDITIONS IN THE PROVISO I.E. EXCLUSION OF AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 12 THE PERIOD (REFERRED TO IN THE EXPLANATION) AND THE REMAINING PERIOD BOTH FALL WITHIN THE LIMITATION PERIOD. 2.10 IN OTHER WORDS, AFTER EXCLUSION OF THE PERIOD REFERRED TO IN THE EXPLANATION, THERE SHOULD BE TIME AVAILABLE TO THE ASSESSING OFFICER WITHIN THE LIMITATION PERIOD TO COMPLETE THE ASSESSMENT. ONCE THE PERIOD OF LIMITATION IS CROSSED THEN THE PROVISO DOES NOT APPLY. THE LEGISLATURE OTHERWISE, VERY CATEGORICALLY, THROUGH SECTION 153(1) PROVIDES THE PERIOD WITHIN WHICH THE ASSESSMENT IS TO BE MADE. IT IS REITERATED THAT THE TIME LIMITS PROVIDED UNDER SECTION 153 OF THE ACT ARE SACROSANCT, AND COULD BE EXTENDED ONLY FOR THE PERIOD PROVIDED UNDER THE SPECIFIC PROVISIONS I.E. ONLY IN CASES WHERE ANY PERIOD IS REMAINING WITH THE ASSESSING OFFICER FOR COMPLETING THE ASSESSMENT. SUCH PERIOD CAN BE EXTENDED AS MENTIONED IN THE PROVISO, I.E. FOR A PERIOD OF 60 DAYS AND IF THE FR AMING OF THE ASSESSMENT IS NOT WITHIN SUCH TIME, SUCH ASSESSMENTS ARE BEYOND THE PERIOD OF LIMITATION AND HENCE, DESERVE TO BE QUASHED. 2.11 THE APPELLANT ALSO SUBMITS THAT THE MAXIMUM PERIOD FOR RECEIVING A SPECIAL AUDIT REPORT WOULD NOT BE MATERIAL WHILE INT ERPRETING THE ABOVE PROVISO AS LEGISLATURE HAS GIVEN THE EXTENDED PERIOD OF 60 DAYS FOR COMPLETING THE ASSESSMENT ONLY IN EXCEPTIONAL CIRCUMSTANCES AND NOT TO EXTEND THE PERIOD OF LIMITATION IN THE GARB OF PROPOSING SPECIAL AUDIT AT THE FAG END OF THE ASSE SSMENT PROCEEDINGS. 2.12 THUS, IN THE PRESENT CASE, WHERE THE AUDIT REPORT WAS SUBMITTED ON JUNE 22,2012, THE ASSESSING OFFICER DID NOT HAVE ANY TIME AVAILABLE FOR COMPLETION OF ASSESSMENT PROCEEDINGS AS SUCH DATE WAS WELL PAST DECEMBER 31, 2011, I.E. THE TIM E LIMIT FOR COMPLETION OF ASSESSMENT PROCEEDINGS. ACCORDINGLY, THE BENEFIT OF THE PROVISO IS NOT AVAILABLE WITH THE ASSESSING OFFICER AND THE ASSESSMENT ORDER PASSED AFTER THE STATUTORY TIMELINE IS BARRED BY LIMITATION AND THUS MAKING ASSESSMENT VOID - AB - IN ITIO. 2.13 IN LIGHT OF THE ABOVE FACTUAL AND LEGAL POSITION, IT IS PRAYED THAT THE ASSESSMENT MAY KINDLY BE QUASHED/ANNULLED. 10. FURTHER, THE LD. AR, SPECIFYING THE PROVISIONS OF SECTION - 142 INQUIRY BEFORE ASSESSMENT HAS ELABORATELY DISCUSSED THE SCHEME OF T HE ACT IN TERMS OF THE INTERTWINING BETWEEN SECTION 142 AND SECTION 153 OF THE ACT .THE MAIN THRUST OF THE ARGUMENT OF THE LD. AR HAD BEEN THAT SINCE SECTION 142 PROVIDES FOR INQUIRY BEFORE ASSESSMENT, SPECIAL AUDIT FALLING UNDER THE PROVISIONS OF SECTION 142(2A) SHOULD BE COMPLETED BEFORE THE TIME LIMIT PROVIDED FOR ASSESSMENT UNDER SECTION AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 13 153 WHICH ARE SACROSANCT IN NATURE AND NEED TO BE STRICTLY ADHERED TO. THE SUBMISSION OF THE LD. AR IN THIS REGARD IS REPRODUCED HEREIN BELOW: DRAFT ASSESSMENT ORDER IS BARRED BY LIMITATION 1. THE PROVISIONS OF SECTION 153 PROVIDING TIME LIMIT FOR COMPLETION OF ASSESSMENT, REASSESSMENT AND RECOMPUTATION ARE SACROSANCT UNDER THE SCHEME OF THE ACT. 2. SUBSECTION (1) OF SECTION 153 PROVIDES FOR TIME LIMIT FOR COMPLETI ON OF ASSESSMENT UNDER SECTION 143 OR 144 AND PROVIDES THAT NO ORDER OF ASSESSMENT SHALL BE MADE UNDER SECTION 143 OR SECTION 144 AT ANY TIME AFTER THE EXPIRY OF TWENTY - ONE MONTHS (THIRTY - THREE MONTHS IN THE CASE OF TRANSFER PRICING) FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE. 3. CHAPTER XIV OF THE INCOME - TAX ACT DEALS WITH THE PROCEDURE FOR ASSESSMENT UNDER WHICH SECTION 139 DEALS WITH RETURN OF INCOME, SECTION 140 DEALS WITH RETURN BY WHOM TO BE VERIFIED, SECTION 142 D EALS WITH INQUIRY BEFORE ASSESSMENT AND 143 DEALS WITH ASSESSMENT. UNDER INQUIRY BEFORE ASSESSMENT I.E. SECTION 142 142(1) PROVIDES FOR ISSUING A NOTICE ON A PERSON REQUIRING HIM TO PRODUCE SUCH DOCUMENTS AS MAY BE REQUIRED BY ASSESSING OFFICER FOR THE PURPOSE OF ASSESSMENT. 142(2) PROVIDES THAT FOR THE PURPOSE OF OBTAINING FULL INFORMATION, THE ASSESSING OFFICER MAY MAKE SUCH INQUIRY AS HE CONSIDERS NECESSARY AND 142(2A) PROVIDES THAT IF AT ANY STAGE OF PROCEEDINGS BEFORE THE ASSESSING OFFICER HAVING REGARD TO THE NATURE AND COMPLEXITY OF ACCOUNTS OR VOLUME OF TRANSACTIONS, HE MAY WITH THE PREVIOUS APPROVAL OF PRINCIPAL CIT OR CIT, IN THE INTEREST OF REVENUE GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT. 142(2C) PROVIDES THAT THE REPORT UNDER SUB - SECTION 2A SHALL BE FURNISHED WITHIN SUCH PERIOD AS MAY BE SPECIFIED, HOWEVER, THE SAME SHOULD NOT EXCEED 180 DAYS FROM THE DATE ON WHICH THE DIRECTION UNDER SUB - SECTION (2A) WAS RECEIVED BY THE ASSESSEE. 4. IT WILL NOT BE OUT OF PLACE TO SUBMIT THAT A PERUSAL OF THE CONTENT OF THE SECTIONS STATED ABOVE VERY CLEARLY AND CATEGORICALLY PROVIDES A PROCESS/PROCEDURE FOR AN ASSESSMENT TO BE MADE UNDER THE AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 14 INCOME - TAX ACT. SECTION 142 OF THE ACT PROVIDES POWER/AUTHORITY TO THE ASSESSING OFFICER TO COLLECT INFORMATION FROM THE ASSESSEE IN RESPECT OF THE RETURN OF INCOME TO ASSIST HIM IN MAKING THE ASSESSMENT. IT SIMULTANEOUSLY PROVIDES VARIOUS TIME LIMITS WITHIN WHICH SUCH ACT OF COLLECTION OF INFORMATION IN ANY FORM IS TO BE DONE. SUCH TIME LIMITATION CANNOT BE IGNORED BY THE ASSESSING OFFICER. 5. AS SUBMITTED ABOVE, THE TIME LIMITS UNDER SECTION 153 ARE SACROSANCT AND ARE TO BE STRICTLY FOLLOWED UNLESS AN EXCEPTION HAS BEEN PROVIDED IN THE SECTION FOR THE EXTENSION OF THE SAME. MEANING THEREBY THAT EVEN IN CASES WHE RE A REPORT UNDER 142(2A) IS TO BE ISSUED THE SAME SHOULD BE ISSUED AND RECEIVED WITHIN THE TIME LIMIT PRESCRIBED UNDER 153(1) OF THE ACT. THE INTENTION OF LEGISLATURE IS ALSO EVIDENCED FROM THE FACT THAT THE PERIOD OF 180 DAYS HAS BEEN MADE PART OF SECTIO N 142 - INQUIRY FOR ASSESSMENT AND NOT TIMELIMIT FOR COMPLETION OF ASSESSMENT UNDER SECTION 153 (1) OF THE ACT. 6. SUBSEQUENTLY, THE LAW MAKERS ENVISAGED AND CARVED OUT AN EXCEPTIONAL SITUATION THAT IN CASE AFTER THE RECEIPT OF THE REPORT UNDER 142(2A), T HE TIME AVAILABLE TO THE ASSESSING OFFICER FOR COMPLETION OF ASSESSMENT IS LESS THAN 60 DAYS, THEN, IN THAT CASE SUCH PERIOD SHALL BE EXTENDED UPTO SIXTY DAYS. THE PROVISO MENTIONING THE EXCEPTIONAL SITUATION IS REPRODUCED BELOW: PROVIDED THAT WHERE IMMED IATELY AFTER THE EXCLUSION OF THE AFORESAID TIME OR PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB - SECTIONS (1), (1A), (1B),] 12A[(2), (2A) AND (4) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RE - COMPUTATION, A S 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 DEEMED TO BE EXTENDED ACCORDINGLY READING OF THE ABOVE PROVISO CARVING OUT AN EXCEPTIONAL SITUATION HAS THE FOLLOWING IMPORTANT PHASES: EXCLUSION OF THE TIME PERIOD PERIOD OF LIMITATION SHOULD BE AVAILABLE WITH THE ASSESSING OFFICER SUCH AVAILABLE PERIOD IS LESS THAN 60 DAYS THE OVERALL PERIOD OF LIMITATION U/S 153 OF THE ACT SHOULD SUBSUME ALL ABOVE PHASES. IN THE FOLLOWING EXAMPLES WE HAVE TRIED TO BRING TO YOUR HONOURS KIND ATTENTION, THE VARIOUS SITUATION AND HOW PERIOD OF LIMITATION IS INTERPRETED IN THOSE SITUATIONS. SITUATION 1: AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 15 FINANCIAL YEAR: 2011 - 12 ASSESSMENT YEAR: 2012 - 13 DATE OF 142(2A) ORDER: 30 JUNE 2014 DATE ON WHICH AUDIT REPORT IS RECEIVED: 30 DECEMBER 2014 DATE OF COMPLETION OF ASSESSMENT: 31 MARCH 2015 TIME AVAILABLE = 90 DAYS IN SUCH A CASE THE ASSE SSMENT ORDER WILL BE PASSED BY 31 MARCH 2015 AS THE PERIOD AVAILABLE AFTER THE RECEIPT OF AUDIT REPORT IS MORE THAN 60 DAYS. SITUATION 2: FINANCIAL YEAR: 2011 - 12 ASSESSMENT YEAR: 2012 - 13 DATE OF 142(2A) ORDER: 30 SEPTEMBER 2014 DATE ON WHICH AUDIT REPOR T IS RECEIVED: 29 MARCH 2015 DATE OF COMPLETION OF ASSESSMENT: 31 MARCH 2015 TIME AVAILABLE= 2 DAYS IN SUCH A CASE SINCE THE PERIOD OF COMPLETION OF ASSESSMENT IS LESS THAN 60 DAYS, THE SAME SHOULD BE EXTENDED BY 58 DAYS AND THE ASSESSMENT ORDER SHOULD BE PASSED ON OR BEFORE 28 MAY 2015. SITUATION 3: FINANCIAL YEAR: 2011 - 12 ASSESSMENT YEAR: 2012 - 13 DATE OF 142(2A) ORDER: 30 SEPTEMBER 2014 WRIT UNDER ARTICLE 226 OF THE CONSTITUTION BEFORE THE HIGH COURT FILED: 3 OCTOBER 2014. PROCEEDINGS STAYED BY HIGH COURT AND ORDER PASSED ON 31 JULY 2015. TO ADDRESS SUCH A SITUATION CLAUSE (II) OF SUBSECTION 3 OF SECTION 153 PROVIDES THAT ASSESSMENT IN SUCH CASE CAN BE COMPLETED AT ANY TIME. THE RELEVANT CLAUSE IS REPRODUCED FOR THE SAKE OF EASY REFERENCE: 3) THE PROVISIONS OF SUB - SECTIONS (1), (1A), (1B) AND (2) SHALL NOT APPLY TO THE FOLLOWING CLASSES OF ASSESSMENTS, REASSESSMENTS AND RECOMPUTATIONS WHICH MAY, SUBJECT TO THE PROVISIONS OF SUB - SECTION (2A), BE COMPLETED AT ANY TIME (II) WHERE THE ASSESSMENT, REA SSESSMENT OR RECOMPUTATION IS MADE ON THE ASSESSEE OR ANY PERSON IN CONSEQUENCE OF OR TO GIVE EFFECT TO ANY FINDING OR DIRECTION CONTAINED IN AN ORDER UNDER SECTION 250, 254, 260, 262, 263, OR 264 OR IN AN ORDER OF ANY COURT IN A PROCEEDING OTHERWISE THAN BY WAY OF APPEAL OR REFERENCE UNDER THIS ACT. SITUATION 4: AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 16 FINANCIAL YEAR: 2011 - 12 ASSESSMENT YEAR: 2012 - 13 DATE OF 142(2A) ORDER: 26 DECEMBER 2014 DATE ON WHICH AUDIT REPORT IS RECEIVED: 22 JUNE 2015 DATE OF COMPLETION OF ASSESSMENT: 31 MARCH 2015 TIME AVAILABLE= NIL IN SUCH A CASE SINCE THE PERIOD OF COMPLETION OF ASSESSMENT HAS ALREADY CROSSED, NO TIME IS LEFT WITH THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT WHICH COULD BE FURTHER EXTENDED. 7. ON PERUSAL OF THE ABOVE SCHEME OF THE ACT, IT CLEARLY EMERGES THAT EXCEPT FOR THE SITUATIONS EXPRESSLY PROVIDED UNDER THE ACT, THE TIMELIMITS UNDER 153 (1) ARE TO BE STRICTLY ADHERED TO. 8. IN THE CASE OF 142(2A) THE ONUS IS ON ASSESSING OFFICER TO MAKE REFERENCE FOR THE SPECIAL AUDIT IN A MANNER THAT THE REPORT IS RECEIVED WELL WITHIN TIME AND IN CASE AFTER THE RECEIPT OF REPORT THE PERIOD AVAILABLE TO COMPLETE THE ASSESSMENT IS LESS THAN 60 DAYS, THE SAME SHALL ONLY BE EXTENDED BY 60 DAYS, ON THE OTHER HAND IF THE ASSESSING OFFICER RECEIVES THE REPORT ON A DATE WHICH LEAVES MORE THAN 60 DAYS TO THE AO, THEN NO EXTENSION SHALL BE GIVEN AND THE LIMITATION DATE AS ARRIVED U/S 153(1) SHALL BE STRICTLY ADHERED TO. 9. IN THE FACTS OF OUR CASE THE REFERENCE WA S MADE ON 26 DECEMBER 2011 AND THE TIME LIMIT FOR THE COMPLETION OF ASSESSMENT WAS 31 MARCH 2012. HOWEVER, THE REPORT WAS RECEIVED ON 22 JUNE 2012. THUS THERE WAS NO TIME AVAILABLE TO THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT AND HENCE PERIOD OF 60 DAYS SHOULD NOT BE PROVIDED TO THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT. ASSESSMENT IN SUCH CASES ARE BARRED BY LIMITATION AND SO THE ASSESSEE SHOULD NOT BE PENALIZED FOR THE LAPSE ON THE PART OF THE ASSESSING OFFICER IN COMPLETING THE ASSESSMENT O N TIME. AN ASSESSMENT MADE IN THE FACTS AS THAT OF THE APPELLANT THUS SHALL BE BARRED BY LIMITATION AND SO SHOULD BE ORDERED TO BE QUASHED. 11. IN RESPONSE TO THE ABOVE REPRODUCED SUBMISSION OF THE LD. DEPARTMENTS COUNSEL SUBMITTED HIS DETAILED REPLY WHICH I S QUOTED HEREAFTER: THE CHRONOLOGY OF PROCEEDINGS OF SCRUTINY ASSESSMENT IN THE CASE OF THE M/S. AT&T GLOBAL SERVICES PVT. LTD., FOR THE ASSESSMENT YEAR 2008 - 09 ALONG WITH CORRESPONDING PROVISIONS OF THE ACT FOR THE LIMITATION OF TIME AS UNDER: - AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 17 AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 18 AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 19 2. IT IS SUBMITTED THAT THE HON'BLE SUPREME COURT IN ITS JUDGMENT DATED 28.04.2016 IN THE CASE OF VLS FINANCE LTD & ANOTHER VS. CIT (CIVIL APPEAL NO 2667 OF 2007)HAS AGREED WITH THE HON'BLE HIGH COURT IN OBSERVING THAT THE SPECIAL AUDIT IS AN INTEGRAL STEP TO WARDS ASSESSMENT PROCEEDINGS. 3. THUS, ONCE A DIRECTION FOR SPECIAL AUDIT IS GIVEN BY THE AO U/S 142(2A), HE HAS TO WAIT TILL RECEIPT OF THE SPECIAL AUDIT REPORT AND HE CANNOT PROCEED WITH THE ASSESSMENT. 4. AS THE DIRECTION FOR SPECIAL AUDIT WAS ISSUED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND TIME WAS AVAILABLE FOR COMPLETION OF THE ASSESSMENT, THE DRAFT ORDER, AS WELL AS FINAL ASSESSMENT ORDER WAS WITHIN THE LIMITATION PERIOD, AS EVIDENT FROM THE CHRONOLOGY OF PROCEEDINGS AND RELEVANT PROVISI ONS OF THE ACT MENTIONED AS ABOVE. 5. THE SUBMISSION OF THE ASSESSEE IS DEVOID OF MERIT AS IT ONLY RELIED ON MAIN PROVISION OF SECTION 153(I) AND OMITS TO CONSIDER OTHER PROVISIONS OF SECTION 153 OF THE ACT. THE PROVISIONS OF THE SECTION HAS TO BE READ HARMO NIOUSLY TO GIVE A PROPER MEANING TO THE WORDS AND PHRASES AND PROMOTE INTENT OF THE LEGISLATURE. 6. THE SUBMISSION OF THE ASSESSEE CANVASSING THAT THE ASSESSMENT IS BARRED BY LIMITATION MUST FAIL. 12. IN RESPONSE TO THE ABOVE SUBMISSION OF THE LD. DR, THE LD.AR SUBMITTED ITS REJOINDER WHICH IS AS UNDER: IN RESPONSE TO THE SUBMISSIONS MADE BY THE LEARNED. DEPARTMENTAL REPRESENTATIVE, THE APPELLANT SEEKS TO SUBMIT AS FOLLOWS: 1. AT THE OUTSET, IT IS SUBMITTED THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE (LD. CIT DR ) IN HIS WRITTEN SYNOPSIS HAS ONLY NARRATED THE CHRONOLOGICAL SEQUENCE OF EVENTS DURING THE COURSE OF AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 20 THE PRESENT ASSESSMENT PROCEEDINGS ALONG WITH THE CORRESPONDING PROVISIONS OF THE INCOME - TAX ACT, 1961 (THE ACT). 2. IN THIS REGARD, IT IS SUBMITTED THAT AT S NO. 1 OF THE CHRONOLOGICAL SERIES OF THE ASSESSMENT PROCEEDINGS, THE DATE OF ISSUE OF DIRECTIONS FOR SPECIAL AUDIT BY THE ASSESSING OFFICER (LD. AO) HAS BEEN MENTIONED AS 26.11.2012. WHEREAS THE DIRECTIONS FOR SPECIAL AUDIT WERE ISSUED ON 26.12 .2011 I.E. 6 DAYS BEFORE THE PERIOD OF LIMITATION I.E. 31.12.2011. 3. THE MOOT POINT WHICH MERITS CONSIDERATION HERE IS THE DETERMINATION OF THE TIME AVAILABLE WITH THE AO TO MAKE THE ASSESSMENT AND WHETHER THE INTERPRETATION SO GIVEN BY THE LD. CIT DR IS JU STIFIED IN LAW. 4. IN RESPONSE TO THE ARGUMENT OF THE LD. CIT DR, THAT THE PERIOD OF LIMITATION AVAILABLE FOR MAKING THE ORDER OF ASSESSMENT WHEN DIRECTIONS FOR SPECIAL AUDIT WAS GIVEN WAS 6 DAYS, THE APPELLANT WISHES TO SUBMIT AS UNDER: - 4.1 AS PER THE PROVISI ONS OF SECTION 153(1) INCOME - TAX ACT, 1961, THE PERIOD OF LIMITATION IS AS UNDER: 153. (1) NO ORDER OF ASSESSMENT SHALL BE MADE UNDER SECTION 143 AT ANY TIME AFTER THE EXPIRY OF TWENTY - ONE MONTHS (THIRTY - THREE MONTHS IN THE CASE OF TRANSFER PRICING) FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE. EXPLANATION 1. FOR THE PURPOSES OF THIS SECTION, IN COMPUTING THE PERIOD OF LIMITATION FOLLOWING SHALL BE EXCLUDED (IV) THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OF FICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SUB - SECTION (2A) OF SECTION 142 AND (A) ENDING WITH THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT UNDER THAT SUB - SECTION; OR (B) ________ PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD,THE PERIOD OF LIMITATION AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION, 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 DEEMED TO BE EXTENDED ACCORDINGLY. 4.2 READING OF THE ABOVE PROVISO CARVING OUT AN EXCEPTIONAL SITUATION HAS THE FOLLOWING IMPORTANT PHRASES: EXCLUSION OF THE TIME PERIOD UTILIZED IN OB TAINING THE SPECIAL AUDIT REPORT AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 21 PERIOD OF LIMITATION AFTER OBTAINING THE SPECIAL AUDIT REPORT BEING AVAILABLE WITH THE ASSESSING OFFICER SUCH AVAILABLE/REMAINING PERIOD IS LESS THAN 60 DAYS THE OVERALL PERIOD OF LIMITATION U/S 153 OF THE ACT SHOULD SUBSU ME ALL ABOVE PHASES. 4.3 THUS, THE COMBINED READING AND THE INTENTION OF THE LEGISLATURE IN ABOVE PROVISO CLEARLY SHOWS THAT THE LEGISLATURE ENVISAGED A SITUATION IN CERTAIN CLASS OF CASES WHERE THE SPECIAL AUDIT REPORT IS RECEIVED AND LESS THAN 60 DAYS ARE RE MAINING OR AVAILABLE FOR PASSING THE ASSESSMENT ORDER. IN ORDER TO AVOID HARDSHIP AND GIVE REASONABLE PERIOD TO COMPLETE THE ASSESSMENT, THE PERIOD OF LIMITATION IS EXTENDED FOR 60 DAYS IN SUCH CASES ONLY 5. THE APPELLANT MOST RESPECTFULLY SUBMITS THAT IT WO ULD BE CONTRARY TO THE SPIRIT OF THE PROVISIONS IF THE EXTENSION OF TIME PERIOD IS DONE WHERE NO PERIOD IS AVAILABLE TO THE ASSESSING OFFICER AFTER OBTAINING THE SPECIAL AUDIT REPORT. 6. FURTHER, THE LD. CIT DR IN PARA 2 OF THE SYNOPSIS HAS RELIED ON THE D ECISION OF THE HONBLE SUPREME COURT IN THE CASE OF VLS FINANCE LTD VS CIT (IN CA NO. 2667/2007) DATED 28.04.2016 WHEREIN THE COURT AGREED WITH THE HONBLE HIGH COURT IN OBSERVING THAT SPECIAL AUDIT IS AN INTEGRAL STEP TOWARDS ASSESSMENT PROCEEDINGS. IN TH E SAID CASE, THE COURT WAS DEALING WITH A BLOCK ASSESSMENT CASE WHEREIN THE DIRECTION FOR SPECIAL AUDIT WAS QUASHED BY THE HIGH COURT IN WRIT PROCEEDINGS. 6.1 IN CONTEXT OF THE ABOVE JUDGEMENT, IT IS THE HUMBLE SUBMISSION OF THE APPELLANT THAT THE SAID JUDGEMENT IS ON DIFFERENT FACTS OF THE CASE WHEREIN WRIT PETITION OF THE APPELLANT AGAINST THE DIRECTIONS OF SPECIAL AUDIT WAS ALLOWED AND THE DIRECTIONS OF SPECIAL AUDIT WERE QUASHED. THE HONBLE SUPREME COURT DISREGARDED THE CONTENTION OF THE ASSESSEE TH AT IT WAS NOT OPEN TO THE AO TO WAIT FOR SPECIAL AUDIT. THE COURT HELD THAT IF THE ORDER DIRECTING SPECIAL AUDIT IS CHALLENGED AND AN INTERIM ORDER IS GRANTED STAYING THE MAKING OF A SPECIAL REPORT, THE ASSESSING OFFICER WOULD NOT PROCEED WITH THE ASSESSME NT IN THE ABSENCE OF THE AUDIT. THAT WOULD BE THE NORMAL AND NATURAL APPROACH OF THE ASSESSING OFFICER AT THAT TIME. RELEVANT EXTRACT OF THE JUDGEMENT IS REPRODUCED HEREIN BELOW: IF THE ORDER DIRECTING SPECIAL AUDIT IS CHALLENGED AND AN INTERIM ORDER IS GRANTED STAYING THE MAKING OF A SPECIAL REPORT, THE ASSESSING OFFICER WOULD NOT PROCEED WITH THE ASSESSMENT IN THE ABSENCE OF THE AUDIT AS HE THOUGHT, IN HIS WISDOM, THAT SPECIAL AUDIT REPORT IS NEEDED. THAT WOULD BE THE NORMAL AND NATURAL APPROACH OF THE ASSESSING OFFICER AT THAT TIME. IT IS STATED AT THE COST OF REPETITION THAT IN THE ESTIMATION OF THE ASSESSING OFFICER SPECIAL AUDIT WAS AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 22 ESSENTIAL FOR PASSING PROPER ASSESSMENT ORDER. IF THE COURT, WHILE UNDERTAKING JUDICIAL REVIEW OF SUCH AN ORDER OF THE ASSESSING OFFICER DIRECTING SPECIAL AUDIT ULTIMATELY HOLDS THAT SUCH AN ORDER IS WRONG (FOR WHATEVER REASON) THAT EVENT HAPPENS AT A LATER DATE AND WOULD NOT MEAN THAT THE BENEFIT OF EXCLUSION OF THE PERIOD DURING WHICH THERE WAS A STAY ORDER IS NOT TO BE GIVEN TO THE REVENUE. EXPLANATION 1 WHICH PERMITS EXCLUSION OF SUCH A TIME IS NOT DEPENDENT UPON THE FINAL OUTCOME OF THE PROCEEDINGS IN WHICH INTERIM STAY WAS GRANTED. 6.2 THE COURT HELD THAT STAY OF SPECIAL AUDIT QUALIFIES AS STAY OF ASSESSMENT PROCEEDING S AND, THEREFORE, PERIOD FOR SAID STAY HAS TO BE EXCLUDED WHILE COUNTING LIMITATION PERIOD FOR BLOCK ASSESSMENT PROCEEDINGS. 6.3 WITH REGARD THE ABOVE CASE, THE APPELLANT HUMBLY SEEKS TO SUBMIT THAT THE COURT HAD DEALT WITH A LIMITED ISSUE IN CASE OF VLS FINA NCE WHEREIN THE SPECIAL AUDIT PROCEEDINGS WERE STAYED BY AN ORDER OF COURT IN THE CASE OF BLOCK ASSESSMENT. THE COURT HELD THAT STAY OF SPECIAL AUDIT IS EQUIVALENT TO STAY OF ASSESSMENT PROCEEDINGS AND THEREFORE THAT PERIOD HAS TO BE EXCLUDED AS PROVIDED I N EXPLANATION 1 TO SECTION 158BE WHICH AT THAT POINT IN TIME ONLY EXCLUDED THE PERIOD OF STAY OF ASSESSMENT PROCEEDINGS AND NOT THE PERIOD INVOLVED IN SPECIAL AUDIT. THE OBSERVATIONS MADE IN VLS FINANCE ARE ON COMPLETELY DIFFERENT FOOTING AS THE PROCEEDING S ARE STAYED BY THE ORDER OF THE COURT AND SUCH STAY COULD EXTEND UPTO ANY PERIOD AS PER THE DIRECTIONS OF THE COURT. THE SAID PERIOD OF STAY IS COVERED UNDER CLAUSE (II) OF EXPLANATION. THE HONBLE COURT HAS NOT DELIBERATED ON THE ISSUE INVOLVED IN THE PR ESENT CASE WHICH IS COVERED BY CLAUSE (IV) OF EXPLANATION 1. SINCE THE SAID CASE DOES NOT DEAL WITH THE ISSUE RAISED IN THE FACTS OF THE PRESENT CASE AND HENCE BEING NOT APPLICABLE SHOULD NOT BE RELIED UPON. CONCLUSION THE LD. AO HAS NOT BEEN ABLE TO COUNTER THE PRIMARY ARGUMENT THAT SINCE THERE IS NO TIME AVAILABLE WITH THE AO AFTER THE RECEIPT OF SPECIAL AUDIT REPORT THE ASSESSMENT ORDER IS BARRED BY LIMITATION AND ILLEGAL IN THE EYES OF LAW. IN VIEW OF THE ABOVE, IT IS MOST RESPECTFULLY SUBMITTED TH AT THE ISSUE RAISED BY THE LD. DR STANDS ANSWERED. 7. WITHOUT PREJUDICE TO THE ABOVE, AND IN SUPPORT OF ARGUMENTS MADE DURING THE COURSE OF HEARING PROCEEDINGS THE APPELLANT FURTHER SUBMITS AS UNDER: 7.1 BEFORE WE ONCE AGAIN DRAW THE ATTENTION OF THE HONBLE TRIBUNAL TO THE PROVISION OF SECTION 153 READ WITH EXPLANATION 1 AND THE PROVISO, IT WOULD BE IMPORTANT TO CONSIDER THE DECISION OF DELHI HIGH AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 23 COURT IN THE CASE OF ACC LTD. VS. DISTRICT VALUATION OFFIC ER [2013] 357 ITR 160 (DELHI). THE JURISDICTIONAL DELHI HIGH COURT DELIBERATED ON A SITUATION WHERE REFERENCE WAS MADE TO THE VALUATION OFFICER UNDER SECTION 142A AND REPORT WAS NOT RECEIVED TILL THE DATE OF LIMITATION FOR ASSESSMENT PROCEEDINGS. CERTAIN I MPORTANT OBSERVATIONS MADE THEREIN AND RELEVANT EXTRACT OF THE DECISION IS AS FOLLOWS: (I) FACTS : REFERENCE WAS MADE TO THE VALUATION OFFICER IN TERMS OF PROVISION OF SECTION 55A OF THE ACT. REPORT WAS NOT RECEIVED TILL THE TIME LIMIT FOR COMPLETION OF ASSESS MENT. (II) RELEVANT PROVISION : PROVISION OF SECTION 153 EXPLANATION 1 CLAUSE (V) DEALS WITH SUCH REFERENCE QUOTED HEREIN BELOW: (V) 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; OR (III) RELEVANT EXTRACT : EVEN OTHERWISE THERE IS NO PROVISION IN THE ACT WHICH DEALS WITH THE SITUATION AS TO WHAT WOULD HAPPEN TO A REFERENCE MADE TO THE DVO UNDER SECTION 55A WHICH IS PENDING COMPLETION AT THE TIME OF PASSING THE ASSESSMENT ORDER. OBVIOUSLY THE ASSESSMENT ORDER CANNOT BE DEFERRED IN VIEW OF THE LIMITATION PRESCRIBED FOR PASSING THE SAME . THE REPORT OF THE DVO, AS A ND WHEN RECEIVED BY THE ASSESSING OFFICER, MAY BE ACTED UPON BY THE INCOME TAX AUTHORITIES AND IF THEY DO SO, THE VALIDITY OF THAT ACTION CAN BE QUESTIONED BY THE ASSESSEE ON GROUNDS WHICH HE MAY BE ADVISED TO TAKE. THAT IS NOT OF ANY CONCERN TO US IN THE PRESENT PROCEEDINGS. SECTION 55A DOES NOT IN TERMS CREATE ANY BAR ON THE DVO PROCEEDING TO VALUE THE PROPERTY ON THE BASIS OF A VALID REFERENCE MADE BY THE ASSESSING OFFICER. WE NEED NOT SPECULATE AS TO WHAT PURPOSE THE REPORT OF THE DVO WOULD SERVE IF IT IS RECEIVED AFTER THE COMPLETION OF THE ASSESSMENT. AS ALREADY POINTED OUT, IF ANY ACTION IS TAKEN BY THE DEPARTMENTAL AUTHORITIES ON THE BASIS OF THE REPORT OF THE DVO RECEIVED AFTER THE COMPLETION OF THE ASSESSMENT, SUCH ACTION WILL BE OPEN TO CHALLENGE BY THE PETITIONER AND IT IS AT THAT POINT OF TIME THAT THE COURT MAY BE CALLED UPON TO EXAMINE THE VALIDITY OF THE ACTION TAKEN BY THE REVENUE AUTHORITIES. THAT STAGE HAS NOT YET ARISEN IN THE PRESENT CASE. IT IS IN THIS BEHALF POINTED OUT IN THE COUNTER A FFIDAVIT THAT THE REFERENCE TO THE DVO DOES NOT BECOME INVALID ON THE COMPLETION OF THE ASSESSMENT PROCEEDINGS BEFORE THE RECEIPT OF THE VALUATION REPORT AND THAT AFTER THE RECEIPT OF THE VALUATION REPORT AFTER COMPLETION OF THE ASSESSMENT PROCEEDINGS, THE REPORT WOULD BECOME PART OF THE RECORD WHICH MAY ENABLE THE INCOME TAX AUTHORITIES TO TAKE ACTION AS PERMISSIBLE UNDER THE ACT, SUCH AS SECTION 147, SECTION 263, APPELLATE POWER UNDER SECTION 250 OR SECTION 251 ETC. IT IS NOT NECESSARY TO EXAMINE THE CONT ENTION OF THE PETITIONER THAT ONCE THE ASSESSMENT PROCEEDINGS ARE AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 24 COMPLETED, THE PENDING PROCEEDINGS UNDER SECTION 55A BECOME INFRUCTUOUS OR INVALID OR GET AUTOMATICALLY TERMINATED. EMPHASIS SUPPLIED 7.2 FURTHER, REFERENCE IS BROUGHT TO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJAN GUPTA[2010] 194 TAXMAN 287(DELHI) WHERE IT WAS HELD THAT EVEN WHERE AN APPLICATION IS MADE TO SETTLEMENT COMMISSION U/S 245C THE SAME APPLICATION DOES NOT CREATE ANY BAR ON THE AO IN PROCEEDING WITH TH E ASSESSMENT IN NORMAL COURSE. (I) FACTS : A SEARCH WAS CONDUCTED ON THE ASSESSEE AND A NOTICE U/S 158BC WAS ISSUED TO ASSESSEE TO FILE THE RETURN OF INCOME. PURSUANT TO THE SAME A NOTICE U/S 143(2) WAS ISSUED TO THE ASSESSEE AFTER 12 MONTHS FROM THE END OF TH E MONTH WHEN RETURN WAS FILED. (II) RELEVANT PROVISION : PROVISION OF SECTION 153 EXPLANATION 1 CLAUSE (VI) AND EXPLANATION 1 TO SECTION 158BE CLAUSE (IV) DEALS WITH SUCH REFERENCE QUOTED HEREIN BELOW: SECTION 153 EXPLANATION 1 (VI) IN A CASE WHERE AN APPLICATION MADE BEFORE THE INCOME - TAX SETTLEMENT COMMISSION IS REJECTED BY IT OR IS NOT ALLOWED TO BE PROCEEDED WITH BY IT, THE PERIOD COMMENCING FROM THE DATE ON WHICH AN APPLICATION IS MADE BEFORE THE SETTLEMENT COMMISSION UNDER SECTION 245C AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUB - SECTION (1) OF SECTION 245D IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER SUB - SECTION (2) OF THAT SECTION; OR SECTION 158BE CLAUSE (IV) (IV) IN A CASE WHERE AN APPLICATION MADE BEFORE THE SETT LEMENT COMMISSION UNDER SECTION 245C IS REJECTED BY IT OR IS NOT ALLOWED TO BE PROCEEDED WITH BY IT, THE PERIOD COMMENCING ON THE DATE ON WHICH SUCH APPLICATION IS MADE AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUB - SECTION (1) OF SECTION 245D IS RE CEIVED BY THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER UNDER SUB - SECTION (2) OF THAT SECTION, SHALL BE EXCLUDED: (III) HELD : IT IS ALSO CLEAR THAT THE FILING OF A SETTLEMENT APPLICATION UNDER SECTION 245C OF THE SAID ACT DOES NOT, BY ITSELF, AMOUNT TO ANY STAY OF THE ASSESSMENT PROCEEDINGS BEFORE AN ASSESSING OFFICER. THERE IS NO BAR ON THE ASSESSING OFFICER FROM PROCEEDING FURTHER WITH THE ASSESSMENT BY ISSUING THE MANDATORY NOTICE UNDER SECTION 143(2) WITHIN THE TIME STIPULATED OR EVEN FRAMING THE ASSESSMENT ORDER. AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 25 ---- WE HAVE ALREADY NOTED THE DECISIONS OF THIS COURT AS WELL AS OF THE SUPREME COURT WHICH CLEARLY INDICATE THAT THE FILING OF AN APPLICATION UNDER SECTION 245C BEFORE THE SETTLEMENT COMMISSION DOES NOT CREATE ANY BAR ON THE ASSESSING OFFICER IN PROCEEDING WITH THE ASSESSMENT IN THE NORMAL COURSE. THEREFORE, THERE IS NO QUESTION OF ANY EXCLUSION OF TIME WHEN THERE WAS NO IMPEDIMENT IN PROCEEDING WITH THE ASSESSMENT BY ISSUING AND SERVING UPON THE ASSESSEE A NOTICE UNDER SECTION 143(2) ETC. IN F ACT, THERE WAS NO IMPEDIMENT IN EVEN PASSING AN ASSESSMENT ORDER. ---- IT IS ALSO NOT A CASE WHERE A STAY ORDER OR AN INJUNCTION HAD BEEN PASSED BY ANY COURT AND, THEREFORE, THE QUESTION OF CONSTRUING THE ISSUANCE OF A NOTICE AS A PART OF AN 'ASSESSMENT PR OCEEDING' DOES NOT ARISE AT ALL IN THE PRESENT CASE. THE MANDATORY REQUIREMENT OF LAW OF SERVICE OF A NOTICE UNDER SECTION 143(2), WITHIN TIME, NOT HAVING BEEN COMPLIED WITH, THE BLOCK ASSESSMENT ORDER MADE PURSUANT THERETO WOULD BE BAD IN LAW. THE EXCLUSI ON OF TIME STIPULATED IN CLAUSE (V) OF EXPLANATION 1 TO SECTION 158BC WOULD NOT BE APPLICABLE IN RESPECT OF SERVICE OF NOTICE UNDER SECTION 143(2) OF THE SAID ACT INASMUCH AS IT RELATES ONLY TO THE COMPUTATION OF THE PERIOD OF LIMITATION FOR PASSING AN ORD ER UNDER SECTION 158BC(C) OF THE SAID ACT AND NOT TO THE COMPUTATION OF LIMITATION FOR SERVING A NOTICE UNDER SECTION 143(2). 7.3 SIMILAR OBSERVATION WAS MADE IN THE CASE OF THE JURISDICTIONAL HONBLE HIGH COURT IN CASE OF DEEN DAYAL DIDWANIA [1986] 160 ITR 1 2 (DELHI) THAT THERE IS NO BAR ON THE ITO FROM PROCEEDING FROM THE ASSESSMENT PROCEEDINGS DURING THE PERIOD WHEREIN THE SETTLEMENT COMMISSION IS CONTEMPLATING WHETHER TO PROCEED WITH THE APPLICATION U/S 245C OR REJECT THE SAME. THE RELEVANT EXTRACT OF THE JUDGEMENT IS QUOTED BELOW: THE QUESTION IS WHETHER THE INCOME - TAX AUTHORITIES CAN PROCEED WITH THE ASSESSMENT PROCEEDINGS WHILE THE SETTLEMENT COMMISSION IS CONTEMPLATING WHETHER TO PROCEED WITH THE APPLICATION OR REJECT THE SAME. WE HAVE EXAMINED THE P ROVISIONS OF THE ACT AND DO NOT FIND THAT THERE IS ANY BAR ON THE ITO FROM PROCEEDING WITH THE ASSESSMENT OR ANY PENDING CASE. RELIANCE WAS PLACED MAINLY, IF, NOT SOLELY, ON THE PROVISIONS OF EXPLANATION1TO SECTION 153(3) OF THE ACT, WHICH PROVIDES THAT CE RTAIN PERIODS HAVE TO BE EXCLUDED IN COMPUTING THE LIMITATION PERIOD FOR COMPLETING AN ASSESSMENT PROCEEDING. CLAUSE (V) OF THIS EXPLANATION READS: 'IN A CASE WHERE AN APPLICATION MADE BEFORE THE INCOME - TAX SETTLEMENT COMMISSION UNDER SECTION 245C IS REJEC TED BY IT OR IS NOT ALLOWED TO BE PROCEEDED WITH BY IT, THE PERIOD COMMENCING FROM THE DATE ON WHICH SUCH APPLICATION IS MADE AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUBSECTION (1) OF SECTION 245D IS RECEIVED BY THE COMMISSIONER UNDER SUB - SECTION (2) OF THAT SECTION.' AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 26 IN ANSWER TO THIS, THE LEARNED COUNSEL FOR THE RESPONDENTS HAS URGED THAT THERE ARE NUMBER OF CIRCUMSTANCES SHOWING THAT THERE WILL BE A POSSIBLE LOSS OF THE REVENUE IN CASE THE PROCEEDINGS ARE STAYED. IT IS POINTED OUT THAT NUMER OUS OTHER CASES IN THE CALCUTTA HIGH COURT AND THE MADRAS HIGH COURT HAVE BEEN FILED TO DELAY THE REALIZATION OF THE ASSETS AND THERE IS A GRAVE POSSIBILITY OF THE ASSETS NOT BEING AVAILABLE IN CASE THE ASSESSMENT PROCEEDINGS ARE DELAYED. WE HAVE EXAMINED THE VARIOUS ORDERS SUBMITTED ALONG WITH THE COUNTER AFFIDAVIT AND THE CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIRCUMSTANCES WOULD NOT JUSTIFY A STAY BY US.FURTHERMORE, THE ACT DOES NOT CONTEMPLATE A STAY OF THE ASSESSMENT PROCEEDINGS DURING THE PERIOD WHEN THE SETTLEMENT COMMISSION IS DECIDING WHETHER TO PROCEED OR NOT TO PROCEED. IF WE GRANT A STAY, WE WILL BE ADDING A PROVISION TO THE STATUTE WHICH IS NOT JUSTIFIED. IT IS UNNECESSARY TO AMPLIFY OUR REASONS BY A FULL ANALYSIS OF THE VARIOUS SECTIONS OF THE ACT DEALING WITH THE SETTLEMENT COMMISSION. HOWEVER, WE ARE OF THE VIEW THAT IN CASE THE SETTLEMENT COMMISSION DOES PROCEED WITH THE APPLICATION THEN THE SETTLEMENT COMMISSION WILL HAVE FULL POWER TO PASS ANY ORDER IT DEEMS FIT REGARDING THE SETTLEM ENT. THE ASSESSMENT ORDER OR ORDERS, IF PASSED, WILL BE NO IMPEDIMENT TO THE SETTLEMENT COMMISSION IN EXERCISING ITS POWERS IF IT DECIDES TO EXERCISE THEM. ON THE OTHER HAND, IF THE SETTLEMENT COMMISSION DECIDES NOT TO PROCEED WITH THE APPLICATION, THERE I S A DISTINCT POSSIBILITY OF THE DEPARTMENT NOT BEING ABLE TO REALISE THE TAXES IN THE CIRCUMSTANCES OF THIS CASE. SO, WE FIND THAT WE ARE UNABLE TO INTERFERE BOTH ON THE GROUND OF THERE BEING NO STATUTORY PROVISION TO JUSTIFY A STAY OF PROCEEDINGS BEFORE T HE INCOME - TAX AUTHORITIES AND ALSO BECAUSE THE CIRCUMSTANCES OF THE CASE WOULD NOT JUSTIFY SUCH AN ACT. 7.4 RELIANCE IS PLACED ON THE JUDGEMENT OF THE HONBLE HIGH COURT OF KOLKATA IN CASE OF SHAHDARA (DELHI) SAHARANPUR LIGHT RAILWAY CO. LTD. [1994] 208 ITR 882 (CAL.) WHERE IN ITS BEEN HELD THAT NO PROCEDURE OF THE ACT SHOULD BE INTERPRETED IN A MANNER TO DEFEAT THE VERY GOAL WHICH THE PROCEDURE SEEKS TO ACHIEVE. THE RELEVANT QUOTE FROM THE JUDGEMENT IS REPRODUCED BELOW: IF IT IS CONSTRUED RIGIDLY THAT TH E BINDING NATURE OF SECTION 16A (3) SHALL DETER THE ASSESSING OFFICER FROM COMPLETING THE ASSESSMENT AND LET THE ASSESSMENT BE BARRED BY LIMITATION OF TIME SIMPLY BECAUSE THE VALUATION OFFICER, FOR REASONS GOOD OR BAD, FAILS OR ELECTS TO ABSTAIN FROM MAKIN G A REPORT OF VALUATION, IT SHALL BE AGAINST THE VERY OBJECT OF THE PROVISIONS OF THE ACT. NO PROCEDURAL PROVISION OF THE ACT SHOULD BE INTERPRETED IN A MANNER TO DEFEAT THE VERY GOAL WHICH THE PROCEDURE SEEKS TO ACHIEVE. THE ENTIRE PROCEDURE OF SECTION 16 A IS TO FACILITATE THE DETERMINATION OF THE VALUE OF VARIOUS ASSETS TO EXPEDITE THE COMPLETION OF THE ASSESSMENT. THE SAID PROVISION CANNOT BE INTERPRETED IN A NEGATIVE MANNER SO THAT THE PROVISION BECOMES COUNTER - PRODUCTIVE AND A CLOG IN THE PROCEEDING. F AR FROM PROMOTING AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 27 AND ADVANCING THE CAUSE OF A SPEEDY AND JUST MANNER OF COMPLETION OF ASSESSMENT, IT CANNOT STALL THE PROCEEDING OF ASSESSMENT.THEREFORE, WE ARE NOT IMPRESSED WITH THE ARGUMENT ADVANCED BY LEARNED COUNSEL FOR THE ASSESSEE THAT, ONCE HAVING REFERRED THE CASE OF VALUATION OF AN ASSET TO THE DEPARTMENTAL VALUATION OFFICER, THE ASSESSING OFFICER IS TOTALLY ROBBED OF HIS JURISDICTION EVEN ON THE BRINK OF LIMITATION FOR FAILURE ON THE PART OF THE DEPARTMENTAL VALUATION OFFICER EITHER TO REPORT OR NOT BEING ENABLED TO REPORT ON THE VALUE OF THE ASSET REFERRED TO HIM. AS AN ALTERNATIVE, IN SUCH CONTINGENCIES, THE POWER OF VALUATION HAS TO REVERT TO THE ASSESSING OFFICER. UNLESS THE VALUATION OFFICER SENDS HIS REPORT, THERE IS NO BAR TO THE ASSESSING OFFICER'S COMPLETING THE ASSESSMENTS TAKING THE VALUE OF THE ASSET REFERRED FOR VALUATION IN THE BEST POSSIBLE METHOD HE CAN TAKE IN THE LIMITING CIRCUMSTANCES OF THE SITUATION.SO, IF, TILL THE EXPIRY DATE OF THE LIMITATION, NO REPORT OF VALUATION COMES F ROM THE DVO, THE ORIGINAL POWER OF THE ASSESSING OFFICER TO VALUE THE ASSET HIMSELF REVIVES. THEREFORE, IN THIS CASE, THE INCOME - TAX OFFICER WAS RIGHT IN VALUING THE PROPERTY IN THE BEST MANNER POSSIBLE ON THE FACTS OF THE CASE TO SAVE THE CASE FROM LIMITA TION BECAUSE THE ULTIMATE STATUTORY DUTY TO COMPLETE ASSESSMENT BEFORE THE EXPIRY OF THE LIMITATION PERIOD RESTS WITH THE ASSESSING OFFICER AND NOT WITH THE VALUATION OFFICER. 7.5 RELIANCE IS ALSO PLACED ON THE JUDGEMENT OF THE HONBLE HIGH COURT OF MADRAS I N CASE OF K.T. KURUVILLA [2000] 241 ITR 691 (MADRAS) WHERE IN IT WAS HELD THAT DELAY ON PART OF THE VALUATION OFFICER TO FURNISH THE REPORT CANNOT BE READ AS IMPOSING AN EMBARGO ON THE COMPLETION OF THE ASSESSMENT, TILL SUCH TIME THE VALUER SUBMITS HIS REP ORT. THE RELEVANT EXTRACT OF THE JUDGEMENT IS REPRODUCED BELOW: SECTION 16A OF THE WEALTH - TAX ACT PROVIDES FOR REFERENCE BY THE ASSESSING OFFICER. THAT SECTION DOES NOT PROVIDE THAT THE VALUATION OFFICER SHALL NOT PROCEED WITH THE VALUATION IF THE ASSESSMENT IS COMPLETED BEFORE THE VALUATION IS COMPLETED. SECTION 16A(6) OF THE ACT NO DOUBT PROVIDES THAT THE ASSESSMENT SHALL BE COMPLETED IN ACCORDANCE WITH THE VALUATION MADE BY THE VALUATION OFFICER. THAT PROVISION, HOWEVER, CANNOT BE READ AS IMPOSIN G AN EMBARGO ON THE COMPLETION OF THE ASSESSMENT, TILL SUCH TIME THE VALUER SUBMITS HIS REPORT. DELAY ON THE PART OF THE VALUER, CANNOT HAVE THE EFFECT OF DETERRING THE ASSESSING OFFICER FROM PROCEEDING TO COMPLETE THE ASSESSMENT, AND ALLOW THE PROCEEDING TO BE BARRED BY LIMITATION. 7.6 IN LIGHT OF THE ABOVE JUDGMENTS AND OUR SUBMISSIONS, THE PROVISIONS OF SECTION 153(1), 153(2) AND 152(2A) OF THE ACT ARE ABSOLUTE. THEY IMPOSE FETTERS UPON THE INCOME TAX AUTHORITIES TO COMPLETE THE ASSESSMENT AFTER THE EXPIRY OF TIME LIMIT MENTIONED ON THE SECTIONS AND SUB - SECTIONS. THEREFORE ANY ASSESSMENT MADE AFTER THE EXPIRY OF TIME LIMIT IS INVALID AND UNENFORCEABLE IN THE EYES OF LAW. THIS AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 28 POSITION OF LAW HAS BEEN UPHELD BY THE HONBLE APEX COURT IN FOLLOWING CASE: A HMEDABAD MFG. AND CALICO PRINTING CO. LTD VS. S G MEHTA 1963 (48 ITR 154) (SC) IT MUST BE REMEMBERED THAT IF THE INCOME - TAX ACT PRESCRIBES A PERIOD DURING WHICH THE TAX DUE IN ANY PARTICULAR ASSESSMENT YEAR MAY BE ASSESSED, THEN ON THE EXPIRY OF THAT PERI OD THE DEPARTMENT CANNOT MAKE AN ASSESSMENT. WHERE NO PERIOD IS PRESCRIBED THE ASSESSMENT CAN BE COMPLETED AT ANY TIME BUT ONCE COMPLETED IT IS FINAL. ONCE A FINAL ASSESSMENT HAS BEEN MADE, IT CAN ONLY BE REOPENED TO RECTIFY A MISTAKE APPARENT FROM THE REC ORD (SECTION 35) OR TO REASSESS WHERE THERE HAS BEEN AN ESCAPEMENT OF ASSESSMENT OF INCOME FOR ONE REASON OR ANOTHER (SECTION 34). BOTH THESE SECTIONS WHICH ENABLE REOPENING OF BACK ASSESSMENTS PROVIDE THEIR OWN PERIODS OF TIME FOR ACTION BUT ALL THESE PER IODS OF TIME, WHETHER FOR THE FIRST ASSESSMENT OR FOR RECTIFICATION, OR FOR REASSESSMENT, MERELY CREATE A BAR WHEN THAT TIME PASSED AGAINST THE MACHINERY SET UP BY THE INCOME - TAX ACT FOR THE ASSESSMENT AND LEVY OF THE TAX. THEY DO NOT CREATE AN EXEMPTION I N FAVOUR OF THE ASSESSEE OR GRANT AN ABSOLUTION ON THE EXPIRY OF THE PERIOD. THE LIABILITY IS NOT ENFORCEABLE BUT THE TAX MAY AGAIN BECOME EXIGIBLE IF THE BAR IS REMOVED AND THE TAXPAYER IS BROUGHT WITHIN THE JURISDICTION OF THE SAID MACHINERY BY REASON OF A NEW POWER. THIS IS, OF COURSE, SUBJECT TO THE CONDITION 1HAT THE LAW MUST SAY THAT SUCH IS THE JURISDICTION, EITHER EXPRESSLY OR BY CLEAR IMPLICATION. IF THE LANGUAGE OF THE LAW HAS THAT CLEAR MEANING, IT MUST BE GIVEN THAT EFFECT AND WHERE THE LANGUAGE EXPRESSLY SO DECLARES OR CLEARLY IMPLIES IT, THE RETROSPECTIVE OPERATION IS NOT CONTROLLED BY THE COMMENCEMENT CLAUSE. 7.7 THE LD. CIT DR IN HIS REPLY HAS STATED THAT THE APPELLANT HAS ONLY RELIED ON THE MAIN PROVISION OF SECTION 153 (1) AND OMITTED OTHER P ROVISIONS OF SECTION 153 OF THE ACT. TO BRING HOME THE POINT, THE APPELLANT REPRODUCES THE VARIOUS CLAUSES OF THE EXPLANATION TO SECTION 153 OF THE ACT. EXPLANATION 1. FOR THE PURPOSES OF THIS SECTION, IN COMPUTING THE PERIOD OF LIMITATION (I) THE TIME T AKEN IN REOPENING THE WHOLE OR ANY PART OF THE PROCEEDING OR IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE RE - HEARD UNDER THE PROVISO TO SECTION 129; OR (II) THE PERIOD DURING WHICH THE ASSESSMENT PROCEEDING IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT; O R (III) THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER INTIMATES THE CENTRAL GOVERNMENT OR THE PRESCRIBED AUTHORITY, THE CONTRAVENTION OF THE PROVISIONS OF CLAUSE (21) OR CLAUSE (22B) OR AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 29 CLAUSE (23A) OR CLAUSE (23B) OR SUB - CLAUSE (IV) OR SUB - CLAUSE (V) OR SUB - CLAUSE (VI) OR SUB - CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10, UNDER CLAUSE (I) OF THE PROVISO TO SUB - SECTION (3) OF SECTION 143 AND ENDING WITH THE DATE ON WHICH THE COPY OF THE ORDER WITHDRAWING THE APPROVAL OR RESCINDING THE NOTIFI CATION, AS THE CASE MAY BE, UNDER THOSE CLAUSES IS RECEIVED BY THE ASSESSING OFFICER; OR (IV) THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECTS THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SUB - SECTION (2A) OF SECTION 142 AND (A) E NDING WITH THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT UNDER THAT SUB - SECTION; OR (B) WHERE SUCH DIRECTION IS CHALLENGED BEFORE A COURT, ENDING WITH THE DATE ON WHICH THE ORDER SETTING ASIDE SUCH DIRECTION IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER; OR (V) 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 VALU ATION OFFICER IS RECEIVED BY THE ASSESSING OFFICER; OR (VI) THE PERIOD (NOT EXCEEDING SIXTY DAYS) COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER RECEIVED THE DECLARATION UNDER SUB - SECTION (1) OF SECTION 158A AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUB - SECTION (3) OF THAT SECTION IS MADE BY HIM; OR (VII) IN A CASE WHERE AN APPLICATION MADE BEFORE THE INCOME - TAX SETTLEMENT COMMISSION IS REJECTED BY IT OR IS NOT ALLOWED TO BE PROCEEDED WITH BY IT, THE PERIOD COMMENCING FROM THE DATE ON WHICH AN APPL ICATION IS MADE BEFORE THE SETTLEMENT COMMISSION UNDER SECTION 245C AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUB - SECTION (1) OF SECTION 245D IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER SUB - SECTION (2) OF THAT SECTION; OR (VIII) THE P ERIOD COMMENCING FROM THE DATE ON WHICH AN APPLICATION IS MADE BEFORE THE AUTHORITY FOR ADVANCE RULINGS UNDER SUB - SECTION (1) OF SECTION 245Q AND ENDING WITH THE DATE ON WHICH THE ORDER REJECTING THE APPLICATION IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER SUB - SECTION (3) OF SECTION 245R; OR (IX) THE PERIOD COMMENCING FROM THE DATE ON WHICH AN APPLICATION IS MADE BEFORE THE AUTHORITY FOR ADVANCE RULINGS UNDER SUB - SECTION (1) OF SECTION 245Q AND ENDING WITH THE DATE ON WHICH THE ADVANCE RULING PRONOUNCED BY IT IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER SUB - SECTION (7) OF SECTION 245R; OR AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 30 (X) THE PERIOD COMMENCING FROM THE DATE ON WHICH A REFERENCE OR FIRST OF THE REFERENCES FOR EXCHANGE OF INFORMATION IS MADE BY AN AUTHORITY C OMPETENT UNDER AN AGREEMENT REFERRED TO IN SECTION 90 OR SECTION 90A AND ENDING WITH THE DATE ON WHICH THE INFORMATION REQUESTED IS LAST RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER OR A PERIOD OF ONE YEAR, WHICHEVER IS LESS; OR (XI) THE PERIOD COMME NCING FROM THE DATE ON WHICH A REFERENCE FOR DECLARATION OF AN ARRANGEMENT TO BE AN IMPERMISSIBLE AVOIDANCE ARRANGEMENT IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER SUB - SECTION (1) OF SECTION 144BA AND ENDING ON THE DATE ON WHICH A DIREC TION UNDER SUB - SECTION (3) OR SUB - SECTION (6) OR AN ORDER UNDER SUB - SECTION (5) OF THE SAID SECTION IS RECEIVED BY THE ASSESSING OFFICER, SHALL BE EXCLUDED: PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB - SECTIONS (1), (2), (3) AND SUB - SECTION (8) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION, AS THE CASE MAY BE, IS LESS THAN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXTEND ED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY: 7.8 THE EXPLANATION PROVIDES THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION AVAILABLE TO THE ASSESSING OFFICER FO R MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION, 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 DEEMED TO BE EXTENDED ACCORDINGLY. 7.9 A PLAIN I NTERPRETATION OF THE ABOVE PROVISO TO THE EXPLANATION IS THAT THERE HAS TO BE SOME TIME AVAILABLE/REMAINING WITH THE AO BEFORE THE PERIOD OF LIMITATION ENDS AND IF THAT TIME IS LESS THAN 60 DAYS THEN SUCH AVAILABLE PERIOD WILL BE EXTENDED TO 60 DAYS. TO U NDERSTAND IT FURTHER, LET US LOOK AT THE DICTIONARY MEANINGS OF THE WORD AVAILABLE AND REMAINING. DICTIONARY MEANING OF THE WORD AVAILABLE DICTIONARIES MEANING OF THE WORD AVAILABLE OXFORD O ABLE TO BE USED OR OBTAINED; AT SOMEONE'S DISPOSAL BLACK LAW (ONLINE) O USABLE . BLACK LAW LEGALLY VALID OR COLORABLE LAW LEXICON O TO ONE'S DISPOSAL; AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 31 WEBSTERS O EFFECTUAL (EFFECTIVE, EFFICACIOUS, CONSTRUCTIVE) DICTIONARY MEANING OF THE WORD 'REMAINING' DICTIONARIES MEANING OF REMAINING / REMAINDER/ REMAINS OXFORD REMAIN: O BE LEFT OVER AFTER OTHERS OR OTHER PARTS HAVE BEEN COMPLETED, USED, OR DEALT WITH. REMAINDER: O A PART NUMBER OR QUANTITY THAT IS LEFT OVER O THE NUMBER WHICH IS LEFT OVER IS A DIVISION IN WHICH ONE QUANTITY DOES NOT EXACTLY DIVIDE ANOTHER. O A PART THAT IS STILL TO COME O A COPY OF A BOOK LEFT UNSOLD WHEN THE DEMAND HAS FALLEN . ADVANCE LAW LEXICON REMAINING O LEFT AFTER THE REMOVAL OR APPROPRIATION OF SOME PART, NUMBER OR QUANTITY. WEBSTERS REMAINDER O ANYTHING THAT REMAINS , OR IS LEFT , AFTER THE SEPARATION AND REMOVAL OF A PART ; RESIDUE . O THE QUANTITY OR SUM THAT IS LEFT AFTER SUBTRACTION , OR AF TER ANY DEDUCTION . O REMAINING ; LEF T ; LEFT OVER ; THUS LITERAL MEANING OF THE WORD AVAILABLE/REMAINING IS SOMETHING LEFT FOR ONES DISPOSAL OR USE. 7.10 IN LIGHT OF THE ABOVE, THE APPELLANT HAS TRIED TO READ DOWN THE PROVISO TO EXPLANATION 1 TO SECTION 153 AS UNDER: - A) THE FIRST LINE OF PROVISO READ AS THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID TIME OR PERIOD, THE ABOVE PHRASE CLEARLY REFERS TO TIME OR PERIOD REFERRED IN CLAUSE (I) TO (XI) OF EXPLANATION 1 WHICH NEEDS TO BE EXCLUDED FOR COMPUTING THE PERIOD OF LIMITATION. B) THEREAFTER, THE PROVISO READS AS THE PERIOD OF LIMITATION REFERRED TO IN SUB - SECTIONS ( 1) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 32 ORDER OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION, AS THE CASE MAY BE, IS LESS THAN SIXTY DAYS,. THE ABOVE PORTION SHOWS THAT PROVISO WOULD BE APPLICABLE, ONLY IN CASES WHERE AFTER THE EXCLUSION OF TH E PERIOD OF SPECIAL AUDIT I.E. AFTER RECEIVING THE SPECIAL AUDIT REPORT, THEPERIOD OF LIMITATION FOR COMPLETING THE ASSESSMENT AVAILABLE WITH THE ASSESSING OFFICER IS LESS THAN SIXTY DAYS IT IMPLIES THAT THE ASSESSING OFFICER, AFTER EXCLUDING THE TIME PE RIOD UTILIZED IN SPECIAL AUDIT, SHOULD HAVE SOME PERIOD AVAILABLE WITHIN THE PERIOD OF LIMITATION I.E. WITHIN THOSE 21 MONTHS/33 MONTHS (AS THE CASE MAY BE). C) AND AT THE END OF THE PROVISO, IT STATES WHICH PERIOD CAN BE EXTENDED IN THE FOLLOWING WORDS SU CH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY IT IMPLIES THAT THAT SUCH REMAINING / AVAILABLE PERIOD AFTER OBTAINING THE SPECIAL AUDIT REPORT WITHIN THE PERIOD OF LIMI TATION OF 21 MONTHS/33 MONTHS IF LESS THAN 60 DAYS SHOULD BE EXTENDED TO 60 DAYS. NOW READING THE MEANING OF THE WORD AVAILABLE/REMAINING HEREIN, IT CAN BE SAFELY CONCLUDED THAT THERE HAS TO BE SOMETHING POSITIVE AVAILABLE WITHIN THE PERIOD OF LIMITATI ON. IT CANNOT BE ZERO OR NIL. SOME PERIOD HAS BE LEFT OVER WITH THE AO TO BE CONSTRUED AS REMAINING OR AVAILABLE. 7.11 THUS, THE COMBINED READING AND THE INTENTION OF THE LEGISLATURE IN ABOVE PROVISO CLEARLY SHOWS THAT THE LEGISLATURE ENVISAGED THAT THERE WO ULD BE CLASS OF CASES WHERE THE SPECIAL AUDIT REPORT IS RECEIVED WHEN LESS THAN 60 DAYS ARE REMAINING OR AVAILABLE FROM THE PERIOD OF LIMITATION UNDER THE NORMAL PROVISIONS. THUS, IN ORDER TO AVOID HARDSHIP AND GIVE REASONABLE PERIOD TO COMPLETE THE ASSESS MENT, THE PERIOD OF LIMITATION IS EXTENDED UPTO 60 DAYS. 7.12 ATTENTION IS INVITED TO THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF GRINDLAYS BANK LTD. VS. INCOME - TAX OFFICER [1980] 122 ITR 55 (SC). THE HONBLE COURT OBSERVED THAT THE INTEREST OF JUSTICE REQUIRED THAT ANY UNDESERVED OR UNFAIR ADVANTAGE GAINED BY A PARTY INVOKING THE COURT'S JURISDICTION, BY THE MERE CIRCUMSTANCE THAT IT HAD INITIATED A PROCEEDING IN THE COURT, MUST BE NEUTRALISED. THE SIMPLE FACT OF THE INSTITUTION OF LITIGATION BY ITSELF SHOULD NOT BE PERMITTED TO CONFER AN ADVANTAGE ON THE PA RTY RESPONSIBLE FOR IT. AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 33 7.13 IN THE CASE OF M K SRIKANTA SETTY VS CIT (1986) 160 ITR 517 (KAR), HONBLE HIGH COURT HELD THAT THE FIXATION OF PERIODS OF LIMITATION MUST ALWAYS BE TO SOME EXTENT ARBITRARY AND MAY FREQUENTLY RESULT IN HARDSHIP. BUT, IN CONSTRUI NG SUCH PROVISIONS, EQUITABLE CONSIDERATIONS ARE OUT OF PLACE AND STRICT GRAMMATICAL MEANING OF THE WORDS IS THE ONLY SAFE GUIDE. 7.14 IN THE CASE OF K.M. SHARMA V. ITO [2002] 254 ITR 772(SC), THE SUPREME COURT HELD THAT THE PERIOD THAT IS TO BE EXCLUDED WHI LE COMPUTING THE PERIOD OF LIMITATION FOR COMPLETION OF BLOCK ASSESSMENTS IS THE PERIOD DURING WHICH ASSESSMENT PROCEEDINGS ARE STAYED BY AN ORDER OF A COURT AND THIS PROVISION SHALL NOT APPLY IF THE STAY OF SOME OTHER KIND, I.E, OTHER THAN STAYING THE ASS ESSMENT PROCEEDINGS, IS PASSED. THIS PRINCIPLE IS LAID DOWN IN THE FOLLOWING WORDS: '13. FISCAL STATUTE, MORE PARTICULARLY A PROVISION SUCH AS THE PRESENT ONE REGULATING PERIOD OF LIMITATION MUST RECEIVE STRICT CONSTRUCTION. THE LAW OF LIMITATION IS INTE NDED TO GIVE CERTAINTY AND FINALITY TO LEGAL PROCEEDINGS AND TO AVOID EXPOSURE TO RISK OF LITIGATION TO LITIGANT FOR INDEFINITE PERIOD ON FUTURE UNFORESEEN EVENTS. 7.15 THE APPELLANT MOST RESPECTFULLY SUBMITS THAT IT WOULD BE CONTRARY TO THE SPIRIT OF THE PRO VISIONS AND INTERPRETATIONS THEREOF IF THE EXTENSION OF PERIOD IS DONE WHERE NO PERIOD IS AVAILABLE TO THE ASSESSING OFFICER. 8. TO BUTTRESS THE ABOVE ARGUMENT, THE APPELLANT MOST HUMBLY SEEKS TO DRAW YOUR ATTENTION TOWARDS THE PROVISIONS OF THE SECTION 14 2 OF THE INCOME - TAX ACT I.E. INQUIRY BEFORE ASSESSMENT. SECTION 142 OF THEACTPROVIDES A PROCESS/PROCEDURE FOR THE ASSESSING OFFICER TO COLLECT INFORMATION FROM THE ASSESSEE IN RESPECT OF THE RETURN OF INCOME TO ASSIST HIM IN MAKING THE ASSESSMENT. SECTION 142(2A) PROVIDES THAT IN CASE THE ASSESSING OFFICER AT ANY STAGE OF THE ASSESSMENT PROCEEDINGS NEEDS THE ASSISTANCE OF AN EXPERT I.E. SPECIAL AUDITOR TO COMPLETE THE ASSESSMENT PROCEEDINGS THAT SHOULD BE DONE PRIOR TO DATE OF LIMITATION PRESCRIBED AND AVAI LABLE FOR COMPLETING ASSESSMENT, THEN ONLY THE HEADING OF THE SECTION INQUIRY BEFORE ASSESSMENT WOULD BE UNDERSTOOD IN THE CORRECT PERSPECTIVE. IT WOULD BE NOT OUT OF PLACE TO MENTION THAT THE HEADING OF THE SECTION ITSELF SAYS THAT ALL THE PROCESS OF GE TTING INFORMATION SHOULD BE COMPLETED BEFORE THE TIME LIMIT PRESCRIBED UNDER SECTION 153 FOR COMPLETION OF ASSESSMENT WHICH IS SACROSANCT. 8.1 AS SUBMITTED ABOVE, THE TIME LIMITS UNDER SECTION 153 ARE SACROSANCT AND ARE TO BE STRICTLY FOLLOWED UNLESS AN EXCEPTION HAS BEEN PROVIDED IN THE SECTION FOR THE EXTENSION OF THE SAME. MEANING THEREBY THAT EVEN IN CASES WHERE A REPORT UNDER 142(2A) IS TO B E ISSUED THE SAME SHOULD BE ISSUED AND RECEIVED WITHIN THE TIME LIMIT AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 34 PRESCRIBED UNDER 153(1) OF THE ACT. THE INTENTION OF LEGISLATURE IS ALSO EVIDENCED FROM THE FACT THAT THE PERIOD OF 180 DAYS HAS BEEN MADE PART OF SECTION 142 - INQUIRY BEFORE ASSESSMENT AND NOT TIMELIMIT FOR COMPLETION OF ASSESSMENT UNDER SECTION 153 (1) OF THE ACT. 9. FURTHER REFERENCE IS INVITED TO THE FOLLOWING CASE LAWS WHICH HAVE TIME AND AGAIN LAID DOWN THE PRINCIPLE THAT TIME LIMITS SHOULD BE FOLLOWED AND IN CASE THERE IS ANY LAPSE O N THE PART OF AUTHORITY, THE EXCHEQUER SHOULD BEAR THE COST: DR. SHASHI KANT GARG * VS. COMMISSIONER OF INCOME - TAX, MUZAFFAR NAGAR [2006] 285 ITR 158 (ALLAHABAD) WE ARE OF THE FURTHER OPINION THAT IF UNDER THE PROVISIONS OF THE ACT AN AUTHORITY IS REQUIR ED TO EXERCISE POWERS OR TO DO AN ACT IN A PARTICULAR MANNER, THEN THAT POWER HAS TO BE EXERCISED AND THE ACT HAS TO BE PERFORMED IN THAT MANNER ALONE AND NOT IN ANY OTHER MANNER. THE APEX COURT IN THE CASE OF DHANAJAYA REDDY V. STATE OF KARNATAKA [2001]4S CC 9, CIT V. ANJUM M.H. GASWALA [2001]252ITR 11 (SC), MEHSANA DISTRICT CENTRAL CO - OPERATIVE BANK LTD. V. STATE OF GUJARAT [2004]2SCC 463AND RAM PHAL KUNDU V. KAMAL SHARMA [2004]2SCC 759HAS HELD THAT WHERE A POWER IS GIVEN TO DO A CERTAIN THING IN A CERTAIN WAY, THE THING MUST BE DONE IN THAT WAY OR NOT AT ALL. PARASHURAM POTTERY WORKS CO. LTD. VS. INCOME TAX OFFICER [1977] AIR 429 (SC) IF SO, IT IS ESSENTIAL THAT THOSE WHO ARE ENTRUSTED WITH THE TASK OF CALCULATING AND REALISING THAT PRICE SHOULD FAMI LIARISE THEMSELVES WITH THE RELEVANT PROVISIONS AND BECOME WELL VERSED WITH THE LAW ON THE SUBJECT. ANY REMISSNESS ON THEIR PART CAN ONLY BE AT THE COST OF THE NATIONAL EXCHEQUER AND MUST NECESSARILY RESULT IN LOSS OF REVENUE. AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STATE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI - JU DICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. THUS, THE PROCEDURES AND THE RULES AS SPECIFIED IN THE ACT SHOULD BE FOLLOWED IN STRICT SENSE. IT IS MANIFEST FROM THE ABOVE STATUTORY PROVISIONS AND THE JUDICIAL PRECEDENTS, THAT IF THE SPECIAL AUDIT REPORT IS NOT AVAILABLE TILL THE PERIOD OF LIMITATION F OR COMPLETION OF ASSESSMENT, THE ASSESSING OFFICER SHOULD COMPLETE THE ASSESSMENT WITHIN THE PERIOD OF LIMITATION. THE ASSESSING OFFICER CAN THEREAFTER USE SUCH REPORT WHICH FORMS PART OF AVAILABLE RECORD TO LOOK FOR OTHER AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 35 POWERS AVAILABLE TO HIM UNDER SE CTIONS SUCH AS SECTION 147, SECTION 263, APPELLATE POWER UNDER SECTION 250 OR SECTION 251 ETC. IN VIEW OF THE ABOVE, THE APPELLANT RESPECTFULLY SUBMITS BEFORE THE HONBLE BENCH THAT IN THE FACTS OF THE PRESENT CASE THE DIRECTION OF SPECIAL AUDIT WAS MADE ON 26 DECEMBER 2011 AND THE REPORT WAS RECEIVED ON 22 JUNE 2012, THUS THERE WAS NO TIME AVAILABLE WITH THE ASSESSING OFFICER, WITHIN THE PERIOD OF LIMITATION, TO COMPLETE THE ASSESSMENT. HENCE, PERIOD OF 60 DAYS SHOULD NOT BE PROVIDED TO THE ASSESSING OFFI CER TO COMPLETE THE ASSESSMENT. ACCORDINGLY, THE IMPUGNED ASSESSMENT ORDER BEING TIME BARRED IS BAD IN LAW AND ORDERED TO BE QUASHED/ANNULLED. 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE ASSESSING OFFICER I.E. DRAFT ASSESSMENT ORDER AS WELL AS THE FINAL ORDER PASSED U/S 143(3) OF THE ACT AND THE DIRECTION ISSUED BY THE LD DISPUTE RESOLUTION PANEL. THE SIMPLE ISSUE INVOLVED IN THIS CONTEST IS THAT WHETHER THE ORDER PASSED BY THE LD ASSESSING OFFICER IS BARRED BY LIMITA TION OR NOT AND THE CONSEQUENT ASSESSMENT IS VOID AB INITIO. 14. BEFORE WE GO INTO THE ISSUE, THE FACTS, WHICH HAVE BEEN BROUGHT ON RECORD BY THE PARTIES, NEED TO BE APPRECIATED . IT WAS SUBMITTED THROUGH A DETAILED CHART BELOW THAT THE DRAFT ASSESSMENT ORDER, WHICH WAS PASSED ON 09.08.2012 ITSELF, WAS BEYOND TIME, THE CONSEQUENT ORDERS ARE BARRED BY LIMITATION. 1 30.09.2008 RETURN OF INCOME FILED 2 06.08.2009 NOTICE UNDER SEC 143(2) ISSUED BY ITO WARD 2(2) 3 20.01.2010 NOTICE UNDER SEC 143(2)/142(1) WAS ISSUED BY DCIT, CIRCLE 2(1) 4 22.07.2010 CASE TRANSFERRED TO ACIT, CIT - 1, AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 36 15. AS PER THE SCHEME OF THE ACT, THE RETURN IS FILED U/S 139 OF THE ACT, THEREAFTER INQUIRY BEFORE ASSESSMENT IS COVERED UNDER SECTION 142 OF THE ACT. ONCE THE INQUIRY IS COMPLETED, THE AO HAS TO PASS THE ORDER U/S 143(3) OF THE ACT. IN CASE THE ISSUE INVO LVED IS OF A FOREIGN COMPANY OR THE ADDITION PROPOSED IS ON ACCOUNT OF TRANSFER PRICING THE NEW DELHI 5 12.08.2010 NOTICE UNDER SECTION 143(2) ISSUED BY ACIT FIXING THE CASE FOR 31.08.2010 6 1.09.2010 REPLY FILED IN RESPONSE TO NOTICE DATED 12.08.2010 7 10.10.2011 QUESTIONNAIRE U/S 142(1) ISSUED BY ACIT 8 19.10.2011 HEARING ATTENDED BY THE AR OF APPELLANT AND SHOW CAUSE GIVEN TO THE AR FOR SPECIAL AUDIT 9 31.10.2011 DETAILED RESPONSE TO THE SHOW CAUSE DATED 19.10.2011 AND QUESTIONNAIRE DATED 10.10.2011 10 01.11.2011 PROPOSAL SENT TO CIT FOR SPECIAL AUDIT 11 16.11.2011 SUBMISSION FILED BY APPELLANT 12 08.12.2011 SUBMISSION FILED BY APPELLANT 13 14.12.2011 SUBMISSION FILED BY APPELLANT 14 23.12.2011 APPROVAL GRANTED BY CIT 15 26.12.2011 APPOINTMENT OF SPECIAL AUDITOR 16 31.12.2011 DUE DATE OF COMPLETION OF ASSESSMENT PROCEEDINGS U/S 143(3) 17 22.06.2012 SPECIAL AUDIT REPORT RECEIVED BY THE LD. AO 18 09.08.2012 DATE OF DRAFT ASSESSMENT ORDER 19 17.06.2013 DATE OF FINAL ASSESSMENT ORDER AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 37 ASSESSMENT HAS TO BE COMPLETED IN LINE WITH THE PROCEDURE LAID DOWN U/S 144C OF THE ACT. 16. WHAT IS IMPORTANT TO NOTE HERE IS THAT IRRESPECTIVE OF THE PROVISION UNDER WHICH THE ASSESSMENT IS TO BE COMPLETED, THE SAME NEEDS TO BE COMPLETED WITHIN THE LIMITATION PRESCRIBED U/S 153 OF THE ACT. THE MAIN THRUST OF THE LD. COUNSELS ARGUMENT IS THAT THE PROVISIONS OF SECTION 142(2A) FALL UNDER THE CHAPTER INQUIRY BEFORE ASS ESSMENT AND THEREFORE THE PROVISIONS OF 142(2A) OUGHT TO BE INVOKED WITHIN SUCH TIME AND IN SUCH MANNER SO AS TO COMPLETE THE ASSESSMENT WITHIN THE TIME LIMIT PRESCRIBED U/S 153 OF THE ACT. 17. TO APPRECIATE THE ARGUMENTS OF THE PARTIES IT SHALL BE RELEVANT TO REPRODUCE THE PROVISION MENTIONED ABOVE WHICH WILL HELP IN UNDERSTANDING THE SCHEME OF THE ACT - CHAPTER XIV OF THE INCOME - TAX ACT DEALS WITH THE PROCEDURE FOR ASSESSMENT UNDER WHICH SECTION 139 DEALS WITH RETURN OF INCOME, SECTION 140 DEALS WITH RETUR N BY WHOM TO BE VERIFIED, SECTION 142 DEALS WITH INQUIRY BEFORE ASSESSMENT AND 143 DEALS WITH ASSESSMENT. UNDER INQUIRY BEFORE ASSESSMENT I.E. SECTION 142 142(1) PROVIDES FOR ISSUING A NOTICE ON A PERSON REQUIRING HIM TO PRODUCE SUCH DOCUMENTS AS MAY BE R EQUIRED BY ASSESSING OFFICER FOR THE PURPOSE OF ASSESSMENT. 142(2) PROVIDES THAT FOR THE PURPOSE OF OBTAINING FULL INFORMATION, THE ASSESSING OFFICER MAY MAKE SUCH INQUIRY AS HE CONSIDERS NECESSARY AND 142(2A) PROVIDES THAT IF AT ANY STAGE OF PROCEEDINGS B EFORE THE ASSESSING OFFICER HAVING REGARD TO THE NATURE AND COMPLEXITY OF ACCOUNTS OR VOLUME OF TRANSACTIONS, HE MAY WITH THE PREVIOUS APPROVAL OF PRINCIPAL CIT OR CIT, IN THE INTEREST OF REVENUE GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT. 142(2C) PROVIDES THAT THE REPORT UNDER SUB - SECTION 2A SHALL BE FURNISHED WITHIN SUCH PERIOD AS MAY BE SPECIFIED, HOWEVER, THE SAME SHOULD NOT EXCEED 180 DAYS FROM THE DATE ON WHICH THE DIRECTION UNDER SUB - SECTION (2A) WAS RECEIVED BY THE ASSESSEE. 153. (1) NO ORDER OF A SSESSMENT SHALL BE MADE UNDER SECTION 143 AT ANY TIME AFTER THE EXPIRY OF TWENTY - ONE MONTHS (THIRTY - THREE MONTHS IN THE CASE OF AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 38 TRANSFER PRICING) FROM THE END OF THE ASSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE. EXPLANATION 1. FOR THE PURPOSE S OF THIS SECTION, IN COMPUTING THE PERIOD OF LIMITATION (XII) THE TIME TAKEN IN REOPENING THE WHOLE OR ANY PART OF THE PROCEEDING OR IN GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE RE - HEARD UNDER THE PROVISO TO SECTION 129; OR (XIII) THE PERIOD DURING WHICH THE ASSESSMENT PROCEEDING IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT; OR (XIV) THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER INTIMATES THE CENTRAL GOVERNMENT OR THE PRESCRIBED AUTHORITY, THE CONTRAVENTION OF THE PROVISIONS OF CLAUSE (21) OR CLAUSE (22B) OR CLAUSE (23A) OR CLAUSE (23B) OR SUB - CLAUSE (IV) OR SUB - CLAUSE (V) OR SUB - CLAUSE (VI) OR SUB - CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10, UNDER CLAUSE (I) OF THE PROVISO TO SUB - SECTION (3) OF SECTION 143 AND ENDING WITH THE DATE ON WHICH T HE COPY OF THE ORDER WITHDRAWING THE APPROVAL OR RESCINDING THE NOTIFICATION, AS THE CASE MAY BE, UNDER THOSE CLAUSES IS RECEIVED BY THE ASSESSING OFFICER; OR (XV) THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECTS THE ASSESSEE TO GET H IS ACCOUNTS AUDITED UNDER SUB - SECTION (2A) OF SECTION 142 AND (A) ENDING WITH THE LAST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AUDIT UNDER THAT SUB - SECTION; OR (B) WHERE SUCH DIRECTION IS CHALLENGED BEFORE A COURT, ENDING WITH THE DATE ON WHICH THE ORDER SETTING ASIDE SUCH DIRECTION IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER; OR (XVI) 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; OR (XVII) THE PERIOD (NOT EXCEEDING SIXTY DAYS) COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER RECEIVED THE DECLARATION UNDER SUB - SE CTION (1) OF SECTION 158A AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUB - SECTION (3) OF THAT SECTION IS MADE BY HIM; OR AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 39 (XVIII) IN A CASE WHERE AN APPLICATION MADE BEFORE THE INCOME - TAX SETTLEMENT COMMISSION IS REJECTED BY IT OR IS NOT ALLOWED TO BE PROCEEDED WITH BY IT, THE PERIOD COMMENCING FROM THE DATE ON WHICH AN APPLICATION IS MADE BEFORE THE SETTLEMENT COMMISSION UNDER SECTION 245C AND ENDING WITH THE DATE ON WHICH THE ORDER UNDER SUB - SECTION (1) OF SECTION 245D IS RECEIVED BY THE PRINCIPAL COM MISSIONER OR COMMISSIONER UNDER SUB - SECTION (2) OF THAT SECTION; OR (XIX) THE PERIOD COMMENCING FROM THE DATE ON WHICH AN APPLICATION IS MADE BEFORE THE AUTHORITY FOR ADVANCE RULINGS UNDER SUB - SECTION (1) OF SECTION 245Q AND ENDING WITH THE DATE ON WHICH THE OR DER REJECTING THE APPLICATION IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER SUB - SECTION (3) OF SECTION 245R; OR (XX) THE PERIOD COMMENCING FROM THE DATE ON WHICH AN APPLICATION IS MADE BEFORE THE AUTHORITY FOR ADVANCE RULINGS UNDER SUB - SECTIO N (1) OF SECTION 245Q AND ENDING WITH THE DATE ON WHICH THE ADVANCE RULING PRONOUNCED BY IT IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER SUB - SECTION (7) OF SECTION 245R; OR (XXI) THE PERIOD COMMENCING FROM THE DATE ON WHICH A REFERENCE OR FIR ST OF THE REFERENCES FOR EXCHANGE OF INFORMATION IS MADE BY AN AUTHORITY COMPETENT UNDER AN AGREEMENT REFERRED TO IN SECTION 90 OR SECTION 90A AND ENDING WITH THE DATE ON WHICH THE INFORMATION REQUESTED IS LAST RECEIVED BY THE PRINCIPAL COMMISSIONER OR COM MISSIONER OR A PERIOD OF ONE YEAR, WHICHEVER IS LESS; OR (XXII) THE PERIOD COMMENCING FROM THE DATE ON WHICH A REFERENCE FOR DECLARATION OF AN ARRANGEMENT TO BE AN IMPERMISSIBLE AVOIDANCE ARRANGEMENT IS RECEIVED BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDE R SUB - SECTION (1) OF SECTION 144BA AND ENDING ON THE DATE ON WHICH A DIRECTION UNDER SUB - SECTION (3) OR SUB - SECTION (6) OR AN ORDER UNDER SUB - SECTION (5) OF THE SAID SECTION IS RECEIVED BY THE ASSESSING OFFICER,SHALL BE EXCLUDED: PROVIDED THAT WHERE IMMEDI ATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB - SECTIONS (1), (2), (3) AND SUB - SECTION (8) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION, AS THE CASE MAY B E, IS LESS THAN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY: AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 40 18. ON GOING THROUGH THE RELEVANT PROVISIONS THE POINT WHICH MERITS CONSIDERATION HERE IS THAT THE LIMITATION PROVIDED UNDER SECTION 153 ARE SACROSANCT AND THE TIME LIMIT THEREIN CANNOT BE EXTENDED AT THE WHIMS AND FANCIES OF THE AO. IN THIS CONNECTION HE RELIED UPON THE JUDGMENT OF M K SRIKANTA SETTY VS CIT (1986) 160 ITR 517 (KAR), WHEREIN THE HO NBLE HIGH COURT HELD THAT THE FIXATION OF PERIODS OF LIMITATION MUST ALWAYS BE TO SOME EXTENT ARBITRARY AND MAY FREQUENTLY RESULT IN HARDSHIP. HOWEVER , IN CONSTRUING SUCH PROVISIONS, EQUITABLE CONSIDERATIONS ARE OUT OF PLACE AND STRICT GRAMMATICAL MEANIN G OF THE WORDS IS THE ONLY SAFE GUIDE. 19. FURTHER IN THE CASE OF K M SHARMA (SC) 254 ITR 772, THE HONBLE SUPREME COURT AT PARA 13 STATED AS UNDER: '13. FISCAL STATUTE, MORE PARTICULARLY A PROVISION SUCH AS THE PRESENT ONE REGULATING PERIOD OF LIMITATION MUST RECEIVE STRICT CONSTRUCTION. THE LAW OF LIMITATION IS INTENDED TO GIVE CERTAINTY AND FINALITY TO LEGAL PROCEEDINGS AND TO AVOID EXPOSURE TO RISK OF LITIGATION TO LITIGANT FOR INDEFINITE PERIOD ON FUTURE UNFORESEEN EVENTS. 20. THE MOOT POINT RAISED IS THAT LIMITATION PRESCRIBED U/S 153 ARE SACROSANCT AND CANNOT BE EXTENDED EXCEPT WHEREVER EXPRESSLY PROVIDED FOR IN THE ACT. THE SITUATIONS ENVISAGED UN DER EXPLANATION 1 PROVIDE FOR CERTAIN EXCEPTIONAL CIRCUMSTANCES WHEREIN THE AO DURING THE COURSE OF THE ASSESSMENT MAY REFER A CASE TO AN EXPERT FOR EXAMPLE A VALUATION OFFICER OR A SPECIAL AUDITOR OR EVEN FOR THE EXCHANGE OF INFORMATION. IT ALSO CAPTURES SITUATIONS WHERE THE ASSESSEE HAS APPROACHED SETTLEMENT COMMISSION OR HAS SOUGHT RULING FROM THE ADVANCE RULING AUTHORITY. 21. TO PROTECT THE INTEREST OF REVENUE, THE SCHEME OF ACT PROVIDED THAT IN CASE PERIOD AVAILABLE TO THE TAX OFFICER, AFTER EXCLUDING THE CIRCUMSTANCES COVERED IN EXPLANATION 1, IS LESS THAN 60 DAYS, SUCH AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 41 REMAINING PERIOD CAN BE EXTENDED UP TO 60 DAYS AS PER THE PROVISO. TO APPRECIATE THE CONTENT OF THE PROVISO IT IS BEING REPRODUCED AS UNDER: PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXC LUSION OF THE AFORESAID TIME OR PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB - SECTIONS (1), (1A), (1B),] 12A[(2), (2A) AND (4) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RE - COMPUTATION, AS THE CASE MAY BE, I S LESS THAN SIXTY DAYS, SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY 22. THE ABOVE PROVISO STIPULATES THREE ESSENTIAL CONDITIONS AND STRESSES THAT UNLESS ALL THE BELOW PHASES EXISTS, THE PROVISO CANNOT BE GIVEN EFFECT TO. EXCLUSION OF THE TIME PERIOD STATED IN THE EXPLANATION; PERIOD OF LIMITATION AVAILABLE WITH THE ASSESSING OFFICER; AND SUCH AVAILABLE PERIOD IS LESS THAN 60 DAYS 23. VARIOUS SIMULATIONS OF SITUATIONS WERE RAISED WHERE TIME LIMIT CAN BE EXTENDED UNDER PROVISO. IT WAS EMPHASIZED THAT THE OVERALL PERIOD OF LIMITATION U/S 153 OF THE ACT SHOULD SUBSUME ALL THE ABOVE PHASES. THE LD. COUNSEL ALSO REFERR ED TO THE DICTIONARY MEANING OF THE TERM AVAILABLE AND REMAINING TO EXPLAIN HIS ARGUMENT. IT WAS EXPLAINED THAT AS PER THE PLAIN DICTIONARY MEANING AVAILABLE MEANS USABLE OR AT ONES DISPOSAL AND REMAINING MEANS LEFT AFTER THE REMOVAL OR APPROPRIAT ION OF SOME PART, NUMBER OR QUANTITY. THUS, THE LITERAL MEANING OF THE WORD AVAILABLE OR REMAINING IS WHEN SOMETHING IS LEFT FOR ONES DISPOSAL OR USE. 24. WE APPRECIATE THAT : A) THE FIRST LINE OF PROVISO TO EXPLANATION 1 TO SECTION 153 READS THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID TIME OR PERIOD, AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 42 THE ABOVE PHRASE CLEARLY REFERS TO TIME OR PERIOD REFERRED IN CLAUSE (I) TO (XI) OF EXPLANATION 1, WHICH NEEDS TO BE EXCLUDED FOR COMPUTING THE PERIOD OF LIMITATION. B) THEREAFTER, THE PROVISO READS THE PERIOD OF LIMITATION REFERRED TO IN SUB - SECTIONS (1) AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER OF ASSESSMENT, REASSESSMENT OR RECOMPUTATION, AS THE CASE MAY BE, IS LESS THAN SIXTY DAYS, THE ABOVE PORTION SHOWS THAT PROVISO WOULD BE APPLICABLE, ONLY IN CASES WHERE AFTER THE EXCLUSION OF THE PERIOD OF SPECIAL AUDIT I.E. AFTER RECEIVING THE SPECIAL AUDIT REPORT, THE PERIOD OF LIMITATION FOR COMPLETING THE ASSESSMENT AVAILABLE WITH THE ASSESSING OFFICER IS LESS THAN SIXTY DAYS IT IMPLIES THAT THE ASSESSING OFFICER, AFTER EXCLUDING THE TIME UTILIZED IN SPECIAL AUDIT, SHOULD HAVE SOME PERIOD AVAILABLE WITHIN THE PERIOD OF LIMITATION I.E. WITHIN THOSE 21 MONT HS/ 33 MONTHS (AS THE CASE MAY BE). C) AND AT THE END OF THE PROVISO, IT STATES WHICH PERIOD CAN BE EXTENDED IN THE FOLLOWING WORDS SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED AC CORDINGLY IT IMPLIES THAT THAT SUCH REMAINING / AVAILABLE PERIOD AFTER OBTAINING THE SPECIAL AUDIT REPORT WITHIN THE PERIOD OF LIMITATION OF 21 MONTHS/33 MONTHS IF LESS THAN 60 DAYS SHOULD BE EXTENDED TO 60 DAYS. READING THE ABOVE MEANING OF THE WORD AV AILABLE/REMAINING HEREIN, IT CAN BE INFERRED THAT THERE HAS TO BE SOMETHING POSITIVE AVAILABLE WITHIN THE PERIOD OF LIMITATION. IT CANNOT BE ZERO OR NIL. SOME PERIOD HAS BE LEFT OVER WITH THE AO TO BE CONSTRUED AS REMAINING OR AVAILABLE. AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 43 25. WE ALSO APPRECIATE THE ARGUMENTS OF THE REVENUE STATING CHRONOLOGICAL EVENTS AND HIGHLIGHTED THAT AT THE TIME OF RECEIPT OF THE AUDIT REPORT BY THE ASSESSING OFFICER 6 DAYS WERE REMAINING WHEN THE MATTER WAS REFERRED TO THE SPECIAL AUDITOR. THUS, SINCE THE REFERENCE WAS MADE WELL WITHIN THE PERIOD OF LIMITATION, THE AO SHOULD BE GIVEN THE BENEFIT OF THE PROVISO . HE RELIED ON DECISION OF THE HONBLE SUPREME COURT DECISION IN THE CASE OF VLS FINANCE LTD & ANOTHER. VS. CIT (CA NO. 2667 OF 2007) WHEREIN THE HON BLE APEX COURT HAS HELD THAT, THE SPECIAL AUDIT IS AN INTEGRAL STEP TOWARDS THE ASSESSMENT PROCEEDINGS. HOWEVER AS THE ISSUE DEALT HEREIN IS COMPLETELY DIFFERENT AND HENCE, THE DECISION OF HONBLE APEX COURT IN THE CASE OF VLS FINANCE CANNOT BE RELIED ON THE FACTS IN CASE. 26. FROM THE PERUSAL OF THE ABOVE DISCUSSION AND THE SUBMISSIONS PLACED ON RECORD, IT IS SEEN THAT THE PROVISO TO EXPLANATION 1 TO SECTION 153(1) OF THE ACT COMES INTO BEING, WHEN, AFTER THE RECEIPT OF THE SPECIAL AUDIT REPORT OR VALUATION REPORT OR INFORMATION FROM THE COMPETENT AUTHORITY OR THE REJECTION OF APPLICATION BY THE SETTLEMENT COMMISSION, THE PERIOD AVAILABLE TO THE ASSESSING OFFICER IS LESS THAN 60 DAYS, THEN THE P ERIOD SHALL BE EXTENDED TO 60 DAYS TO ENABLE HIM TO COMPLETE THE ASSESSMENT. 27. PROVISIONS OF THE ACT HERE CAST AN OBLIGATION ON THE AO THAT IN CASE THE MATTER IS REFERRED TO A VALUATION OFFICER OR FOR SPECIAL AUDIT OR TO A COMPETENT AUTHORITY, THE AO IS AB LE TO RECEIVE THE INFORMATION WITHIN THE TIME LIMIT PRESCRIBED UNDER SECTION 153(1) AND IN CASE WHERE THE REMAINING PERIOD TO COMPLETE THE ASSESSMENT IS LESS THAN 60 DAYS THEN PROVISO GIVES A PERIOD OF UP TO 60 DAYS TO COMPLETE THE ASSESSMENT. 28. WE SEE CON SIDERABLE FORCE IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL THAT AFTER THE EXCLUSION OF THE TIME TAKEN UNDER THE SITUATIONS ENVISAGED UNDER EXPLANATION 1, THERE HAS TO BE SOME TIME AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 44 AVAILABLE WITH THE AO, WHICH CAN BE EXTENDED IN TERMS OF PROVISO TO EXPLAN ATION 1. 29. A COMBINED READING AND THE INTENTION OF THE LEGISLATURE IN ABOVE PROVISO CLEARLY SHOWS THAT THE LEGISLATURE ENVISAGED THAT THERE WOULD BE CLASS OF CASES WHERE THE SPECIAL AUDIT REPORT IS RECEIVED WHEN LESS THAN 60 DAYS ARE REMAINING OR AVAILABLE FROM THE PERIOD OF LIMITATION UNDER THE NORMAL PROVISIONS. THUS, IN ORDER TO AVOID HARDSHIP AND GIVE REASONABLE PERIOD TO COMPLETE THE ASSESSMENT, THE PERIOD OF LIMITATION IS EXTENDED UP TO 60 DAYS. 30. IN THE PRESENT CASE, THE AO REFERRED THE MATTER FOR THE SPECIAL AUDIT AT THE FAG END ON 26.12.2011, WHEN THE DATE FOR COMPLETION OF ASSESSMENT WAS 31.12.2011. THE REPORT OF THE SPECIAL AUDITOR WAS RECEIVED ON 22.06.2012, WHICH WAS AFTER THE DATE OF LIMITATION I.E. 31.12.2011. IT WAS SUBMITTED BY THE LD. COUNSEL THAT ONCE LIMITATION PERIOD WAS CROSSED, AND THE INFORMATION SOUGHT BY THE AO UNDER THE EXPLANATION 1 TO SECTION 153 WAS PENDING, THEN THERE WAS NO PROVISION IN THE ACT, WHICH DEALT WITH SUCH SITUATION. 31. IN THIS CONNECTION HE RELIED ON THE DELHI HC DECIS ION IN THE CASE OF ACC LTD. VS. DISTRICT VALUATION OFFICER [2013] 357 ITR 160 (DELHI) WHILE DELIBERATING CLAUSE (V) OF EXPLANATION I.E. WHERE REFERENCE WAS MADE TO THE VALUATION OFFICER UNDER SECTION 142A AND REPORT WAS NOT RECEIVED TILL THE DATE OF LIMITA TION FOR ASSESSMENT PROCEEDINGS. THE RELEVANT OBSERVATION OF THE HONBLE DELHI HIGH COURT IS REPRODUCED TO UNDERSTAND THE SITUATION: EVEN OTHERWISE THERE IS NO PROVISION IN THE ACT WHICH DEALS WITH THE SITUATION AS TO WHAT WOULD HAPPEN TO A REFERENCE MADE TO THE DVO UNDER SECTION 55A WHICH IS PENDING COMPLETION AT THE TIME OF PASSING THE ASSESSMENT ORDER. OBVIOUSLY THE ASSESSMENT ORDER CANNOT BE DEFERRED IN VIEW OF THE LIMITATION PRESCRIBED FOR PASSING THE SAME . THE REPORT OF THE DVO, AS AND WHEN RECEIVED BY THE ASSESSING OFFICER, MAY BE ACTED UPON BY THE INCOME TAX AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 45 AUTHORITIES AND IF THEY DO SO, THE VALIDITY OF THAT ACTION CAN BE QUESTI ONED BY THE ASSESSEE ON GROUNDS WHICH HE MAY BE ADVISED TO TAKE. THAT IS NOT OF ANY CONCERN TO US IN THE PRESENT PROCEEDINGS. SECTION 55A DOES NOT IN TERMS CREATE ANY BAR ON THE DVO PROCEEDING TO VALUE THE PROPERTY ON THE BASIS OF A VALID REFERENCE MADE BY THE ASSESSING OFFICER. WE NEED NOT SPECULATE AS TO WHAT PURPOSE THE REPORT OF THE DVO WOULD SERVE IF IT IS RECEIVED AFTER THE COMPLETION OF THE ASSESSMENT. AS ALREADY POINTED OUT, IF ANY ACTION IS TAKEN BY THE DEPARTMENTAL AUTHORITIES ON THE BASIS OF THE REPORT OF THE DVO RECEIVED AFTER THE COMPLETION OF THE ASSESSMENT, SUCH ACTION WILL BE OPEN TO CHALLENGE BY THE PETITIONER AND IT IS AT THAT POINT OF TIME THAT THE COURT MAY BE CALLED UPON TO EXAMINE THE VALIDITY OF THE ACTION TAKEN BY THE REVENUE AUTHORIT IES. THAT STAGE HAS NOT YET ARISEN IN THE PRESENT CASE. IT IS IN THIS BEHALF POINTED OUT IN THE COUNTER AFFIDAVIT THAT THE REFERENCE TO THE DVO DOES NOT BECOME INVALID ON THE COMPLETION OF THE ASSESSMENT PROCEEDINGS BEFORE THE RECEIPT OF THE VALUATION REPO RT AND THAT AFTER THE RECEIPT OF THE VALUATION REPORT AFTER COMPLETION OF THE ASSESSMENT PROCEEDINGS, THE REPORT WOULD BECOME PART OF THE RECORD WHICH MAY ENABLE THE INCOME TAX AUTHORITIES TO TAKE ACTION AS PERMISSIBLE UNDER THE ACT, SUCH AS SECTION 147, S ECTION 263, APPELLATE POWER UNDER SECTION 250 OR SECTION 251 ETC. IT IS NOT NECESSARY TO EXAMINE THE CONTENTION OF THE PETITIONER THAT ONCE THE ASSESSMENT PROCEEDINGS ARE COMPLETED, THE PENDING PROCEEDINGS UNDER SECTION 55A BECOME INFRUCTUOUS OR INVALID OR GET AUTOMATICALLY TERMINATED. EMPHASIS SUPPLIED 32. THE HONBLE HIGH COURT MADE A VERY RELEVANT OBSERVATION HERE THAT THE ASSESSMENT ORDER CANNOT BE DEFERRED IN VIEW OF THE TIME LIMIT PRESCRIBED UNDER THE PROVISIONS OF THE ACT. THE HONOURABLE HIGH COURT F URTHER OBSERVED THAT AS AND WHEN THE REPORT OF THE DVO IS RECEIVED, IT CAN BE ACTED UPON BY THE TAX AUTHORITIES BY INVOKING OTHER PROVISIONS OF THE ACT. 33. IN ANOTHER CASE OF DEEN DAYAL DIDWANIA [1986] 160 ITR 12 (DELHI), THE JURISDICTIONAL HONBLE HIGH COURT WHILE DEALING WITH CLAUSE (VI) OF EXPLANATION 1 I.E. THE ISSUE OF STAY OF PROCEEDINGS DURING AN APPLICATION MADE TO THE SETTLEMENT COMMISSION HELD THAT THERE IS NO BAR ON THE ITO FROM PROCEEDING FROM THE ASSESSMENT PROCEEDINGS DURING THE PERIOD WHERE IN THE SETTLEMENT COMMISSION IS CONTEMPLATING AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 46 WHETHER TO PROCEED WITH THE APPLICATION U/S 245C OR REJECT THE SAME. THE RELEVANT EXTRACT OF THE JUDGMENT IS QUOTED BELOW: THE QUESTION IS WHETHER THE INCOME - TAX AUTHORITIES CAN PROCEED WITH THE ASSESSMENT PR OCEEDINGS WHILE THE SETTLEMENT COMMISSION IS CONTEMPLATING WHETHER TO PROCEED WITH THE APPLICATION OR REJECT THE SAME. WE HAVE EXAMINED THE PROVISIONS OF THE ACT AND DO NOT FIND THAT THERE IS ANY BAR ON THE ITO FROM PROCEEDING WITH THE ASSESSMENT OR ANY PE NDING CASE. WE FIND THAT THE CIRCUMSTANCES WOULD NOT JUSTIFY A STAY BY US. FURTHERMORE , THE ACT DOES NOT CONTEMPLATE A STAY OF THE ASSESSMENT PROCEEDINGS DURING THE PERIOD WHEN THE SETTLEMENT COMMISSION IS DECIDING WHETHER TO PROCEED OR NOT TO PROCEED. IF WE GRANT A STAY, WE WILL BE ADDING A PROVISION TO THE STATUTE, WHICH IS NOT JUSTIFIED. ON THE OTHER HAND, IF THE SETTLEMENT COMMISSION DECIDES NOT TO PROCEED WITH THE APPLICATION, THERE IS A DISTINCT POSSIBILITY OF THE DEPARTMENT NOT BEING ABLE TO REALISE THE TAXES IN THE CIRCUMSTANCES OF THIS CASE. SO, WE FIND THAT WE ARE UNABLE TO INTERFERE BOTH ON THE GROUND OF THERE BEING NO STATUTORY PROVISION TO JUSTIFY A STAY OF PROCEEDINGS BEFORE THE INCOME - TAX AUTHORITIES AND ALSO BECAUSE THE CIRCUMSTANCES OF THE CASE WOULD NOT JUSTIFY SUCH AN ACT. 34. THE ABOVE POSITION WAS FOLLOWED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAJAN GUPTA VS. CIT 194 TAXMAN 287 (DEL.) WHEREIN THE HONBLE HIGH COURT HELD THAT IN A CASE WHERE AN APPLICATION IS MADE TO THE S ETTLEMENT COMMISSION U/S 245C, THE SAME DOES NOT BY ITSELF AMOUNT TO STAY OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. THE HONOURABLE COURT ALSO WENT AHEAD AND SAID THAT IN SUCH SITUATION THERE WAS NO IMPEDIMENT IN PASSING THE ASSESSMENT ORDER. 35. WITH REGARD TO THE PROTECTION OF THE INTEREST OF THE REVENUE WHERE THE REPORT OR INFORMATION CALLED UNDER THE EXPLANATION IS RECEIVED BEYOND TIME AND THE TIME LIMIT FOR COMPLETION OF ASSESSMENT HAS EXPIRED, THE COURT HELD THAT THE AO SHOULD COMPLETE THE A SSESSMENT KEEPING IN MIND THE LIMITATION AS PER THE PROVISIONS OF THE ACT. TO GIVE EFFECT TO THE REPORT OF THE VALUATION OFFICER OR THE SPECIAL AUDIT REPORT RECEIVED SUBSEQUENTLY HE CAN INVOKE OTHER PROVISIONS AVAILABLE UNDER THE ACT. AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 47 36. THE HONBLE CALCUT TA HIGH COURT IN THE CASE OF SHAHDARA (DELHI) SAHARANPUR LIGHT RAILWAY CO. LTD. [1994] 208 ITR 882 (CAL.) AFFIRMING THE ABOVE APPROACH HELD AS UNDER: IF IT IS CONSTRUED RIGIDLY THAT THE BINDING NATURE OF SECTION 16A (3) SHALL DETER THE ASSESSING OFFICER FROM COMPLETING THE ASSESSMENT AND LET THE ASSESSMENT BE BARRED BY LIMITATION OF TIME SIMPLY BECAUSE THE VALUATION OFFICER, FOR REASONS GOOD OR BAD, FA ILS OR ELECTS TO ABSTAIN FROM MAKING A REPORT OF VALUATION, IT SHALL BE AGAINST THE VERY OBJECT OF THE PROVISIONS OF THE ACT. NO PROCEDURAL PROVISION OF THE ACT SHOULD BE INTERPRETED IN A MANNER TO DEFEAT THE VERY GOAL WHICH THE PROCEDURE SEEKS TO ACHIEVE. THE ENTIRE PROCEDURE OF SECTION 16A IS TO FACILITATE THE DETERMINATION OF THE VALUE OF VARIOUS ASSETS TO EXPEDITE THE COMPLETION OF THE ASSESSMENT. THE SAID PROVISION CANNOT BE INTERPRETED IN A NEGATIVE MANNER SO THAT THE PROVISION BECOMES COUNTER - PRODUCT IVE AND A CLOG IN THE PROCEEDING. FAR FROM PROMOTING AND ADVANCING THE CAUSE OF A SPEEDY AND JUST MANNER OF COMPLETION OF ASSESSMENT, IT CANNOT STALL THE PROCEEDING OF ASSESSMENT.THEREFORE, WE ARE NOT IMPRESSED WITH THE ARGUMENT ADVANCED BY LEARNED COUNSEL FOR THE ASSESSEE THAT, ONCE HAVING REFERRED THE CASE OF VALUATION OF AN ASSET TO THE DEPARTMENTAL VALUATION OFFICER, THE ASSESSING OFFICER IS TOTALLY ROBBED OF HIS JURISDICTION EVEN ON THE BRINK OF LIMITATION FOR FAILURE ON THE PART OF THE DEPARTMENTAL VA LUATION OFFICER EITHER TO REPORT OR NOT BEING ENABLED TO REPORT ON THE VALUE OF THE ASSET REFERRED TO HIM. AS AN ALTERNATIVE, IN SUCH CONTINGENCIES, THE POWER OF VALUATION HAS TO REVERT TO THE ASSESSING OFFICER. UNLESS THE VALUATION OFFICER SENDS HIS REPOR T, THERE IS NO BAR TO THE ASSESSING OFFICER'S COMPLETING THE ASSESSMENTS TAKING THE VALUE OF THE ASSET REFERRED FOR VALUATION IN THE BEST POSSIBLE METHOD HE CAN TAKE IN THE LIMITING CIRCUMSTANCES OF THE SITUATION.SO, IF, TILL THE EXPIRY DATE OF THE LIMITAT ION, NO REPORT OF VALUATION COMES FROM THE DVO, THE ORIGINAL POWER OF THE ASSESSING OFFICER TO VALUE THE ASSET HIMSELF REVIVES. THEREFORE, IN THIS CASE, THE INCOME - TAX OFFICER WAS RIGHT IN VALUING THE PROPERTY IN THE BEST MANNER POSSIBLE ON THE FACTS OF T HE CASE TO SAVE THE CASE FROM LIMITATION BECAUSE THE ULTIMATE STATUTORY DUTY TO COMPLETE ASSESSMENT BEFORE THE EXPIRY OF THE LIMITATION PERIOD RESTS WITH THE ASSESSING OFFICER AND NOT WITH THE VALUATION OFFICER. 37. IN VIEW OF THE ABOVE FACTS AND DETAILED SUBMISSIONS BROUGHT ON RECORD, WE AGREE WITH THE ARGUMENTS PUT FORTH BY THE LD. COUNSEL OF THE AT & T GLOBAL NETWORK SERVICES ( INDIA) PVT. LTD V DCIT ITA NO 4882/DEL/213 ( D) & ITA NO 487/DEL/2013 (A) A Y 2008 - 09 48 ASSESSEE. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT AND CALCUTTA HIGH COURT AS CITED ABO VE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS BREACHED THE PERIOD OF LIMITATION WHILE PASSING THE DRAFT ASSESSMENT ORDER. 38. WITH ABOVE FINDINGS GROUND NO.1 OF THE APPEAL IS ALLOWED AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS NULLITY BEING BARRED BY LIMITATION. 39. AS REGARDS THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE, SINCE WE HAVE ALREADY HELD THAT THE ASSESSMENT IS NULL AND VOID THERE IS NO NEED TO ADJUDICATE THE OTHER GROUNDS AND HENCE THEY ARE DISMISSED . 40. IN THE RESULT APPEAL O F THE ASSESSEE IS PARTLY ALLOWED. 41. AS REGARDS THE APPEAL OF THE REVENUE SINCE WE HAVE ALREADY HELD THAT THE ASSESSMENT IS NULL AND VOID THERE IS NO NEED TO ADJUDICATE THE ON THOSE GROUNDS THERE IN AND HENCE THEY ARE DISMISSED . 42. IN THE RESULTS, APPEAL OF TH E ASSESSEE IS ALLOWED AND APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 / 09/2017. - S D / - - S D / - (I.C.SUDHIR) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 /09/2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI