Income-tax Officer, V. M/s. Siddhant Consultancy Services Pvt. ltd., Pune

ITA 574/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6978 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-02-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 24-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Period of limitation; Additional evidence; Reasonable cause; Time period of passing order; Documents seized
• Section: 143(3); 153A; 54; 6; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 543 /P U N/201 4 / ASSESSMENT YEAR: 20 0 4 - 05 M/S. SIDDHANT CONSULTANCY PVT. LTD., FLAT NO.1202, BLDG P - 4, EMPIRE ESTATE, CHINCHWAD, PUNE 411019 . / APPELLANT PAN: AA QFS6491M VS. THE INCOME TAX OFFICER , C IRCLE - 1, PUNE . / RESPONDENT . / ITA NO. 574 /P U N/201 4 / ASSESSMENT YEAR: 20 0 4 - 05 THE INCOME TAX OFFICER, CIRCLE - 1, PUNE . / APPELLANT VS. M/S. SIDDHANT CONSULTANCY PVT. LTD., FLAT NO.1202, BLDG P - 4, EMPIRE ESTATE, CHINCHWAD, PUNE 411019 . / RESPONDENT PAN: AAQFS6491M ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 2 . / ITA NO S . 54 4 & 545 /P U N/201 4 / ASSESSMENT YEAR S : 20 0 5 - 0 6 & 2006 - 07 / ASSESSMENT YEAR S : 20 0 5 - 0 6 & 2006 - 07 M/S. SIDDHANT CONSULTANCY PVT. LTD., FLAT NO.1202, BLD G P - 4, EMPIRE ESTATE, CHINCHWAD, PUNE 411019 . / APPELLANT PAN: AAQFS6491M VS. THE INCOME TAX OFFICER, CIRCLE - 1, PUNE . / RESPONDENT CIRCLE - 1, PUNE . / RESPONDENT ASSESSEE BY : S HRI NIKHIL PATHAK REVENUE BY : SHRI RAJEEV KUMAR, CIT / DATE OF HEARING : 1 6 . 0 2 .201 7 / DATE OF PRONOUNCEMENT: 03 . 0 3 .201 7 / ORDER / ORDER PER SUSHMA CHOWLA, JM: THE CROSS APPEAL S FILED BY THE ASSESSEE AND THE REVENUE AND OTHER APPEALS FILED BY THE ASSESSEE ARE AGAINS T CONSOLIDATED ORDER OF CIT( A ) - CENTRAL , PUNE , DATED 23 . 1 2 .201 3 RELATING TO ASSESSMENT YEAR S 2004 - 05, 2005 - 06 & 2006 - 07 AGAINST RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) R.W.S. 153A(B) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. THE CROSS APPE ALS FILED BY THE ASSESSEE AND REVENUE RELATING TO ASSESSMENT YEAR 2004 - 05 AND THE APPEALS FILED BY THE ASSESSEE RELATING TO ASSESSMENT YEARS 2005 - 06 & 2006 - 07 ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUE, THE FACTS AND ISSUES RAISED IN ITA NO.543/PUN/2014 ARE BEING REFERRED TO. ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 3 3. THE ASSESSEE IN ITA NO. 543 /P U N/201 4 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASST. ORDER PASSED U/S 153A R.W.S. 143(3) WAS NOT BARRED BY LIMITATION AND THUS, THE SAME WAS VALID IN LAW. 1.1] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE REFERENCE FOR SPECIAL AUDIT U/ S 142(2A) MAD E IN THE CASE OF THE ASSESSEE WAS VAL ID IN LAW WITHOUT APPRECIATING THE CORRECT FACTS OF THE CASE. 1.2] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE REFERENCE FOR COMPULSORY AUDIT U/S 142(2A) WAS NOT VALID IN VIEW OF THE RAJASTHAN H.C. DECISION IN THE CASE OF BAJARANG TEXTILES [294 ITR 5 61] AND HENCE, THE TIME LIMIT FOR COMPLETION OF ASST. COULD NOT BE EXTENDED BY THE PERIOD OF SPECIAL AUDIT ALLOWED U/S 153B OF THE ACT AND THUS, THE ASST. WAS TIME BARRED AND VOID. 1.3] THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE REFERENCE U/S 1 42(2A) FOR SPECIAL AUDIT WAS AN ILLEGAL ONE AS THE A.O HAD NOT GIVEN AN OPPORTUNITY OF HEARING TO THE ASSESSEE AS REQUIRED UNDER PROVISO TO SECTION 142(2A) AND HENCE, THE TIME LIMIT FOR COMPLETION OF ASST. COULD NOT BE EXTENDED BY THE PERIOD OF SPECIAL AUD IT ALLOWED U/S 153B OF THE ACT AND THUS, THE ASST. WAS TIME BARRED AND VOID. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASSESSEE SUBMITS AS UNDER 2] THE LEARNED CIT(A) ERRED IN DIRECTING THE LEARNED A.O. TO DISALLOW THE ADMISSION AND TUITION FEES IN R ESPECT OF WHICH THE PAYEE COULD NOT BE ADMISSION AND TUITION FEES IN R ESPECT OF WHICH THE PAYEE COULD NOT BE IDENTIFIED BY THE ASSESSEE COMPANY WITHOUT APPRECIATING THAT ALL SUCH PAYMENTS MADE BY THE ASSESSEE COMPANY WERE GENUINE AND HENCE, THERE WAS NO REASON TO MAKE ANY DISALLOW ON THIS ISSUE. 2.1] THE LEARNED CIT(A) ERRE D IN HOLDING THAT THE PAYMENT OF ADMISSION AND TUITION FEE TO THE COLLEGES WAS PROHIBITED BY LAW WITHOUT APPRECIATING THAT THE ASSESSEE HAD PAID ACTUAL FEE TOWARDS TUITION, HOSTEL CHARGES, ETC. COLLECTED FROM THE STUDENTS AND THEY WERE NOT IN THE NATURE OF CAPITATION FEE AS ALLEGED AND HENCE, THERE WAS NO REASON TO MAKE ANY DISALLOW ON THIS ISSUE. 2.2] WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE AMOUNTS COLLECTED FROM VARIOUS STUDENTS TOWARDS ADMISSION FEES TO BE PAID TO COLLEGES COULD NOT BE CONSIDERED AS INCOME OF THE ASSESSEE AND THEREFORE, THE ADDITION MADE IS NOT JUSTIFIED AT ALL. 3] THE LEARNED CIT (A) ERRED IN CONFIRMING PART DISALLOWANCE ON ACCOUNT OF THE REFUND OF FEES TO THE STUDENTS ON THE GROUND THAT THE ASSESSEE HAD FAILED TO ESTABLISH THE GENUINENESS OF THE PAYMENTS MADE TO THE STUDENTS THROUGH NON BANKING CHANNELS OR WHERE THE IDENTITY OF THE STUDENT COULD NOT BE ESTABLISHED BY THE ASSESSEE. 3.1] THE LEARNED CIT (A) ERRED IN NOT APPRECIATING THAT THE VARIOUS PAYMENTS MADE BY THE ASSESSEE TOWARDS REFUND OF FEES TO STUDENTS WERE GENUINE IN NATURE AND THEREFORE, THERE WAS NO REASON TO MAKE ANY DISALLOWANCE IN RESPECT OF THE SAME. 3.2] THE LEARNED CIT (A) OUGHT TO HAVE APPRECIATED THAT MOST OF TH E PAYMENTS TOWARDS REFUND OF FEES WERE ALSO NOTED IN THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AND HENCE, THE DISALLOWANCE MADE IN RESPECT OF SUCH PAYMENTS WAS NOT WARRANTED ON FACTS OF THE CASE. ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 4 3.3] WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEAR NED CIT(A) ERRED IN NOT APPRECIATING THAT THE REFUND OF FEES TO THE STUDENTS COULD NOT BE CONSIDERED AS INCOME OF THE ASSESSEE AND THUS, THE ADDITION MADE IS NOT JUSTIFIED AT ALL. 4] THE LEARNED CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE U/S 40A(2)(B) T O THE EXTENT OF RS.4,50,000/ - OUT OF THE TOTAL DISALLOWANCE OF RS.6 LACS MADE BY THE LEARNED A.O. IN RESPECT OF DIRECTORS REMUNERATION PAID TO SHRI NAVINKUMAR YADAV. 4.1] THE LEARNED CIT (A) FAILED TO APPRECIATE THAT THE PAYMENT MADE TO SHRI NAVINKUMAR Y ADAV WAS QUITE REASONABLE CONSIDERING THE SERVICES RENDERED BY HIM AS A DIRECTOR OF THE APPELLANT COMPANY AND THEREFORE, THE DISALLOWANCE MADE U/S 40A(2)(B) WAS NOT JUSTIFIED ON FACTS OF THE CASE. 5] THE LEARNED CIT (A) ERRED IN CONFIRMING THE DISALLOWANC E OF RS.1,35,279/ - MADE IN RESPECT OF VARIOUS EXPENSES ON THE GROUND THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE SAID EXPENSES WERE INCURRED FOR BUSINESS PURPOSES OF THE ASSESSEE AND THUS, THE ADDITION MADE WAS JUSTIFIED. 5.1] THE LEARNED CIT (A) FURTH ER ERRED IN HOLDING THAT THERE WAS NO REASONABLE CAUSE ON PART OF THE ASSESSEE FOR FURNISHING ADDITIONAL DETAILS IN RESPECT OF THE SAID EXPENSES IN THE COURSE OF APPELLATE PROCEEDINGS AND HENCE, THE SAME COULD NOT BE ADMITTED AS ADDITIONAL EVIDENCE U/R 46A AND THEREFORE, THE SAID ADDITION WAS JUSTIFIED. 5.2] THE LEARNED CIT (A) FAILED TO APPRECIATE THAT ALL THE SAID EXPENSES WERE INCURRED FOR BUSINESS PURPOSES OF THE ASSESSEE AND MOST OF THE PAYMENTS WERE PAID THROUGH BANK AND THEREFORE, THE DISALLOWANCE M ADE WAS NOT WARRANTED ON FACTS OF THE CASE. WARRANTED ON FACTS OF THE CASE. 5.3] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE ASSESSEE HAD NOT FURNISHED ANY ADDITIONAL EVIDENCE IN THE COURSE OF THE APPELLATE PROCEEDINGS AND THE CLAIM OF THE ASSESSEE WAS BASED ON THE DOCUMENTS F URNISHED BEFORE THE LEARNED A.O. AND HENCE, THE ADDITION MADE SHOULD HAVE BEEN DELETED. 4. THE REVENUE IN ITA NO.574/PUN/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETI NG THE ADDITION BY THE A.O ON ACCOUNT OF NEGATIVE CASH BALANCE IN THE BOOKS BY GIVING THE BENEFIT OF TELESCOPING OF THE AMOUNT DISALLOWED/ADDED UNDER OTHER HEAD WITHOUT APPRECIATING THE FACT THAT AMOUNT DISALLOWED/ ADDED UNDER OTHER HEADS WERE AVAILABLE TO THE ASSESSEE IN THE PERIOD WHICH WAS MUCH AFTER THE CASH DEFICIT ON ACCOUNT OF NEGATIVE CASH BALANCE, PEAK OF WHICH WAS FOUND IN SEPTEMBER 2003. 2. THE ORDER OF THE LD. CIT(A) MAY BE VACATED AND THAT OF THE A.O. BE RESTORED. 5. THE LEARNED AUTHORIZED RE PRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE PRELIMINARY ISSUE HAS BEEN RAISED BY THE ASSESSEE AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT, WHEREIN THE ASSESSMENT ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 5 HAD BECOME BARRED BY LIMITATION. THE ASSESSEE C HALLENGES THE ORDER OF ASSESSING OFFICER IN MAKING REFERENCE UNDER SECTION 142(2A) OF THE ACT FOR SPECIAL AUDIT, WHEREIN THE ASSESSING OFFICER HAD FAILED TO GIVE ANY OPPORTUNITY OF HEARING TO THE ASSESSEE AT PRE - DECISIONAL STAGE AND CONSEQUENTLY, THE TIME LIMIT FOR COMPLETION OF ASSESSMENT COULD NOT BE EXTENDED BY THE PERIOD OF SPECIAL AUDIT ALLOWED UNDER SECTION 153B OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARE LY COVERED BY THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. IN ITA NO.447/PN/2013, RELATING TO ASSESSMENT YEAR 2004 - 05, IN VILSONS PARTICLE BOARD INDUSTRIES LTD. VS. ITO IN ITA NOS.309 & 310/PN/2013, RE LATING TO ASSESSMENT YEARS 2005 - 06 & 2006 - 07 AND IN ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. IN ITA NOS.448 & 449/PN/2013, RELATING TO ASSESSMENT YEARS 2005 - 06 & 2006 - 07, VIDE CONSOLIDATED ORDER DATED 21.12.2016 AND THE COPY OF THE SAID ORDER WAS FIL ED ON RECORD. AND THE COPY OF THE SAID ORDER WAS FIL ED ON RECORD. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF CIT(A). 7. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 21,52,360/ - ON 01.11.2004. SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN YADAV GROUP OF CASES ON 20.07.2005 AND THE ASSESSEE WAS MEMBER OF YADAV GROUP ; THE ASSESSEE WAS ALSO SEARCHED. IN RESPONSE TO NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 21,52,855/ - . THE ASSESSEE WAS RENDERING CONSULTANCY SERVICES AND WAS ALSO DERIVING INCOME FROM CONSULTANCY CHARGES AND COMMISSION. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER NOTED THE MODUS OPERANDI OF SERVICES PROVIDED BY THE ASSESSEE FOR SECURING SEATS IN COLLEGES FOR STUDENTS AND ALSO NOTED VARIOUS ASPECTS OF THE ASSESSEES BUSINESS AND THE REASONS FOR INVESTIGATION WING OF THE ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 6 INCOME TAX DEPARTMENT, P UNE TO CONDUCT SEARCH AND SEIZURE OPERATION AGAINST THE ASSESSEE GROUP. VARIOUS BOOKS OF ACCOUNT AND DOCUMENTS WERE SEIZED, WHEREIN IT WAS OBSERVED THAT THE ASSESSEE HAD ARRANGED ADMISSIONS IN DIFFERENT COLLEGES. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE DCIT, CENTRAL CIRCLE 1(2), PUNE NOTED THAT CERTAIN DATA WHICH WAS AVAILABLE IN COMPUTERS KEPT IN THE OFFICE PREMISES AT WADHWANI PLAZA WAS COPIED DOWN IN NINE FLOPPIES AS PER ANNEXURE D TO THE PANCHANAMA DATED 22.07.2005 . THE SAID FLOPPIES HAVE SU BSEQUENTLY BEEN CONVERTED INTO CD AS PER PANCHANAMA DATED 14.09.2005 AND THE PRINT OUTS OF RELEVANT DOCUMENTS WERE TAKEN. ON PERUSAL OF THE SAID DOCUMENTS AND STATEMENTS RECORDED OF THE KEY PERSONS AND ALSO IN VIEW OF THE INCRIMINATING DOCUMENTS FOUND DUR ING THE COURSE OF SEARCH, THE ASSESSING OFFICER WAS OF THE VIEW THAT IN THE ABSENCE OF ANY REGULAR BOOKS OF ACCOUNT BEING FOUND, THE VERACITY OF TRANSACTIONS NOTED IN THE BOOKS OF ACCOUNT AND DOCUMENTS SEIZED DURING THE COURSE OF SEARCH / SURVEY COULD NOT BE VERIFIED. THE ASSESSING OFFICER DURING THE COURSE OF SEARCH / SURVEY COULD NOT BE VERIFIED. THE ASSESSING OFFICER ALSO NOTED THAT THE TRANSACTIONS IN SUCH REGISTERS / DIARIES SEIZED WERE MIXED ONE AND PERTAINED TO DIFFERENT CONCERNS, WHEREIN THE ASSESSEE HAD FAILED TO IDENTIFY THE TRANSACTIONS PERTAINING TO EACH SUCH ASSESSEE SEPARA TELY DURING THE COURSE OF SEARCH AND THEREAFTER. THE LIST OF INCRIMINATING TRANSACTIONS WERE NOTED BY THE ASSESSING OFFICER AND IN VIEW THEREOF AND BECAUSE OF NATURE AND COMPLEXITY OF THE ACCOUNTS AND IN THE INTEREST OF REVENUE, THE ASSESSING OFFICER WAS OF THE OPINION THAT IT WAS NECESSARY TO GET THE ACCOUNTS AUDITED FOR THE PERIOD RELEVANT TO ASSESSMENT YEAR 2004 - 05 BY AN ACCOUNTANT AS LAID DOWN UNDER SECTION 142(2A) OF THE ACT. THE ASSESSING OFFICER VIDE LETTER DATED 26.09.2007 SENT A PROPOSAL FOR COND UCT OF SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT IN THE CASE OF ASSESSEE TO THE CIT, CENTRAL, PUNE, WHO IN TURN, APPROVED THE PROPOSAL FOR CONDUCT OF SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT AND GRANTED APPROVAL VIDE ORDER DATED 22.11.2007. THE REAFTER, THE SPECIAL AUDITOR WAS NOMINATED WHO SUBMITTED HIS SPECIAL AUDIT REPORT ON 13.06.2008 , WHICH WAS FORWARDED TO THE ASSESSING ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 7 OFFICER ON 16.06.2008 BY THE ASSESSEE. SUBSEQUENTLY, THEREAFTER, ASSESSMENT PROCEEDINGS WERE TAKEN UP AND THE ASSESSEE ST ATED THAT THE ASSESSMENT WAS TIME BARRED SINCE THE SPECIAL AUDIT WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 142(2A) OF THE ACT. THE CONTENTION OF ASSESSEE WAS REJECTED WHERE THE ASSESSEE WAS GIVEN DUE OPPORTUNITY BEFORE ORDERING FOR AUDIT UNDER SECTION 142(2A) OF THE ACT . T HE ASSESSING OFFICER NOTES THAT AFTER DUE SATISFACTION, RECORDED IN WRITING, THE CIT, CENTRAL, PUNE ORDERED FOR THE AUDIT TO BE CONDUCTED UNDER SECTION 142(2A) OF THE ACT. THE ASSESSING OFFICER ALSO NOTED THAT REQUISITE INFOR MATION AND RECORDS WERE CALLED FROM THE ASSESSEE. SEVERAL OPPORTUNITIES WERE GIVEN TO THE ASSESSEE TO REPLY. HOWEVER, THE ASSESSEE FAILED TO COMPLY WITH THE NOTICES SATISFACTORILY AND FULLY AND IN VIEW THEREOF, THE ASSESSING OFFICER WENT THROUGH THE RECO RDS AND SUBMITTED THE PROPOSAL UNDER SECTION 142(2A) OF THE ACT. THE ASSESSING OFFICER FURTHER NOTES THAT IN ORDER TO BE F AIR , THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUCHERS FOR EXAMINATION BY HIM PRODUCE BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUCHERS FOR EXAMINATION BY HIM AND THE ADD L. CIT, CR - 1, PUNE AND EXPLAINED ALL THE COMPLEXITIES TO THEM, SO THAT DOUBTS COULD BE CLEARED. IT WAS FURTHER POINTED OUT TO THE REPRESENTATIVE OF THE ASSESSEE THAT IN CASE THE ASSESSEE FAILS TO CLEAR THE DOUBTS, COMPULSORY AUDIT SHALL BE ORDERED. HOWEV ER, THE ASSESSEE DID PRODUCE THE BOOKS ONLY, WITHOUT ANY SUPPORTING DOCUMENTS BEFORE THE ASSESSING OFFICER. ON THIS BASIS, THE ASSESSING OFFICER PREPARED NOTE AND SUBMITTED IT FOR PERUSAL OF CIT(CENTRAL) WHICH PROVES THE LOT OF COMPLEXITIES IN THE BOOKS O F ACCOUNT, WHEN COMPARED WITH THE SEIZED MATERIAL. THE OPPORTUNITY WAS GIVEN BY THE CIT (CENTRAL) TO THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, THE CIT (CENTRAL) DISPOSED OF THE MATTER ON THE BASIS OF MATERIAL AVAILABL E ON RECORD. THE CIT(CENTRAL), THEREAFTER, AGREED WITH THE PROPOSAL OF ASSESSING OFFICER AND CONSIDERED IT TO BE A FIT CASE FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT. ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 8 8 . BEFORE THE CIT(A), THE FIRST ISSUE RAISED BY THE ASSESSEE WAS AGAINST THE S AID REFERENCE UNDER SECTION 142(2A) OF THE ACT. THE PLEA OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT NO OPPORTUNITY OF HEARING WAS GRANTED BY THE ASSESSING OFFICER AS REQUIRED UNDER PROVISO TO SECTION 142(2A) OF THE ACT. HOWEVER, ADMITTEDLY, AN OPPORTUNIT Y WAS GRANTED BY THE CIT (CENTRAL), BUT WHICH WAS NOT SUFFICIENT COMPLIANCE TO THE PROVISIONS OF THE ACT. THE CIT(A) REFERRING TO THE PROVISIONS OF THE ACT OBSERVED THAT AN OPPORTUNITY HAS TO BE GIVEN TO THE ASSESSEE BEFORE MAKING REFERENCE FOR SPECIAL AU DIT UNDER SECTION 142(2A) OF THE ACT. HE FURTHER GOES ON TO SAY THAT IT WAS NOT THE CONTENTION OF ASSESSEE THAT NO OPPORTUNITY WAS GRANTED TO THE ASSESSEE AND THE CONTENTION WAS THAT NO SUCH OPPORTUNITY WAS GRANTED BY THE ASSESSING OFFICER. HE FURTHER OB SERVED THAT WHERE THE OPPORTUNITY WAS DULY GIVEN BY THE CIT BEFORE GIVING APPROVAL TO ASSESSING OFFICERS PROPOSAL FOR MAKING REFERENCE, THEN THE SAID REFERENCE IS VALID. 9 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 10 . WE HAVE HEARD THE RIV AL CONTENTIONS AND PERUSED THE RECORD. THE SEQUENCE OF EVENTS RELATING TO ASSESSMENT COMPLETED IN THE CASE OF ASSESSEE IS AS UNDER: - DATE OF SEARCH 20.07.2005 FY IN WHICH THE LAST OF THE AUTHORIZATIONS FOR SEARCH WAS EXECUTED 2005 - 06 NORMAL LIMITATION PERIOD UNDER SECTION 153B(1)(A) R.W. PROVISO TO SECTION 153B(1) 31.12.2007 DATE OF ISSUE OF DIRECTION UNDER SECTION 142(2A) BY THE AO 17.12.2007 DATE ON WHICH THE SPECIAL AUDITOR WAS REQUIRED TO FURNISH 16.06.2008 T HE AUDIT REPORT (ORIGINAL PERIOD 150 DAYS + EXTENDED PERIOD [15.06.2008, 30 DAYS VIDE AO'S LETTER NO.PN/DCIT/C.CIR.1(2) /142(2A)/ BEING SUNDAY YADAV GROUP/2008 - 09 DTD.01.05.2008] EXCLUDED) LIMITATION PERIOD UNDER THE 5 TH PROVISO TO S. 153B 15.08.2008 (16.06. 2008 + 60 DAYS) ORDER A CTUALLY PASSED 12.08.2008 ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 9 1 1 . THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST THE REFERENCE MADE UNDER SECTION 142(2A) OF THE ACT. SEARCH WAS CONDUCTED AT THE PREMISES OF ASSESSEE ON 20.07.2005 AND THE TIME LIMIT FO R COMPLETING ASSESSMENT UNDER SECTION 143(3) R.W.S. 153A OF THE ACT IN SUCH CASE WAS 31.12.2007 . EVEN FOR SEARCH YEAR I.E. WHERE THE ASSESSMENT HAD TO BE COMPLETED UNDER SECTION 143(3) OF THE ACT , THE TIME LIMIT FOR COMPLETION OF ASSESSMENT WAS 31.12.2007 . THE ASSESSMENT ORDER FOR ALL THE YEARS WAS PASSED BY THE ASSESSING OFFICER ON 12.08.2008. THE CASE OF ASSESSEE BEFORE US IS THAT THE SAID ORDER PASSED BY THE ASSESSING OFFICER WAS TIME BARRED SINCE THE REFERENCE MADE FOR SPECIAL AUDIT UNDER SECTION 142 (2A) OF THE ACT WAS INCORRECT AS NO OPPORTUNITY OF HEARING WAS GIVEN AT THE PRE - DECISIONAL STAGE. THE PERUSAL OF RECORD REFLECTS THAT THE SHOW CAUSE NOTICE WAS ISSUED ON 02.11.2007 BY THE CIT (CENTRAL), PUNE AFTER RECEIVING PROPOSAL FROM THE ASSESSING OFF ICER RECOMMENDING COMPULSORY AUDIT UNDER SECTION 142(2A) OF THE ACT. THE SAID NOTICE ITSELF MENTIONED THAT THE ASSESSEE WAS SECTION 142(2A) OF THE ACT. THE SAID NOTICE ITSELF MENTIONED THAT THE ASSESSEE WAS BEING GIVEN AN OPPORTUNITY IN VIEW OF PROVISO TO SECTION 142(2A) OF THE ACT AS TO WHY COMPULSORY AUDIT SHOULD NOT BE ORDERED IN THE CASE. THEREAFTER, THE ASSESSING OFFICER NO DOUBT , HAD MADE PROPOSAL UNDER SECTION 142(2A) OF THE ACT WHICH IS PLACED AT PAGES 45 AND 46 OF THE PAPER BOOK, WHEREIN THE ASSESSEE WAS ASKED TO EXPLAIN AND RECONCILE THE TRANSACTIONS NOTED IN THE RECORDS SEIZE D DURING THE COURSE OF SEARCH. THIS WAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT SINCE THE ASSESSEE DID NOT FURNISH ANY EXPLANATION OR RECONCILE THE TRANSACTION, THE ASSESSING OFFICER MADE PROPOSAL TO THE CIT FOR UNDERTAKING SPECIAL AUDIT UNDER SEC TION 142(2A) OF THE ACT, CONSEQUENT TO WHICH, THE CIT (CENTRAL), ISSUED SHOW CAUSE NOTICE AND THEREAFTER, ORDER GRANTING APPROVAL UNDER SECTION 142(2A) OF THE ACT WAS PASSED ON 22.11.2007 BY THE CIT (CENTRAL), COPY OF THAT CORRESPONDENCE IS PLACED AT PAGES 44 TO 52 OF THE PAPER BOOK. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE TO GET THE SPECIAL AUDIT DONE VIDE LETTER DATED 17.12.2007 . IN ALL THIS COMMUNICATION WHICH IS PLACED ON RECORD, THERE IS NO SHOW ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 10 CAUSE NOTICE GIVEN BY THE ASSES SING OFFICER AT PRE - DECISIONAL STAGE. UNDOUBTEDLY, THE DESIGNATED COMMISSIONER HAD GIVEN AN OPPORTUNITY OF HEARING TO THE ASSESSEE AS TO WHY SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT SHOULD NOT BE UNDERT AKEN IN THE CASE OF ASSESSEE BUT THIS OPPORTUNI TY IS NOT AS PER PROVISO TO SECTION 142(2A) OF THE ACT, WHEREIN THE ASSESSING OFFICER AT PRE - DECISIONAL STAGE HAS TO GIVE SHOW CAUSE NOTICE TO THE ASSESSEE , SINCE THE ACCOUNTS WERE NOT RECONCILABLE WHY HIS CASE SHOULD NOT BE REFERRED TO FOR SPECIAL AUDIT U NDER SECTION 142(2A) OF THE ACT. THEREAFTER, THE DESIGNATED COMMISSIONER HAS TO GIVE AN OPPORTUNITY TO THE ASSESSEE AND FURTHER PASS AN ORDER A S TO WHETHER THE SPECIAL AUDIT NEEDS TO BE UNDERTAKEN IN THE CASE OF ASSESSEE. AS POINTED OUT, THE EXERCISE OF POWER BY THE ASSESSING OFFICER AT PRE - DECISIONAL STAGE IS MISSING IN THE CASE OF ASSESSEE. 1 2 . WE FIND THAT SIMILAR ISSUE OF NON - GRANTING OF PRE - DECISIONAL HEARING ON PRE - DECISIONAL STAGE TO THE ASSESSEE BEFORE MAKING REFERENCE UNDER SECTION 142(2A) OF TH E ACT AROSE BEFORE THE PUNE BENCH OF TRIBUNAL IN THE CASE OF ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. (SUPRA) AND WHEREIN IT WAS HELD AS UNDER: - 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE PROVISIONS OF SECTION 142(2A) OF THE ACT I.E. LOOKING AT THE NATURE AND COMPLEXITY OF THE ACCOUNTS AND VOLUME AND MULTIPLICITY OF TRANSACTIONS AND INTEREST OF REVENUE, THEN THE PROCEDURE TO BE FOLLOWED BY THE ASSESSING OFFICER IN MAK ING REFERENCE FOR SPECIAL AUDIT AND APPLYING THE REPORT OF SPECIAL AUDITOR FOR CARRYING OUT THE ASSESSMENT IN THE CASE OF CONCERNED ASSESSEE. SECTION 142(2A) OF THE ACT READS AS UNDER: - 142.. (2A) IF, AT ANY STAGE OF THE PROCEEDINGS BEFORE HIM, THE AS SESSING OFFICER, HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTERESTS OF THE REVENUE, IS OF THE OPINION THAT IT IS NECESSARY SO TO DO, HE MAY, WITH THE PREVIOUS APPROVAL OF THE CHIEF COMMISSIONER OR COMMISSIONER, DIR ECT THE ASSESSEE TO GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SUB - SECTION (2) OF SECTION 288, NOMINATED BY THE CHIEF COMMISSIONER OR COMMISSIONER IN THIS BEHALF AND TO FURNISH A REPORT OF SUCH AUDIT IN THE PRESCRIBED FOR M DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED AND SUCH OTHER PARTICULARS AS THE ASSESSING OFFICER MAY REQUIRE: PROVIDED THAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 11 21. AS PER PROVISIONS OF SAID SECTION IF AT ANY STAGE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER IN VIEW OF THE NATURE AND COMPLEXITY OF THE ACCO UNTS, ITS VOLUME, DOUBTS ABOUT CORRECTNESS OF THE ACCOUNTS, MULTIPLICITY OF TRANSACTIONS IN THE ACCOUNTS OR SPECIALIZED NATURE OF BUSINESS ACTIVITY OF ASSESSEE AND THE INTERESTS OF REVENUE, IS OF THE OPINION THAT IT IS NECESSARY TO DO SO, HE MAY, WITH PREV IOUS APPROVAL OF PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER AS THE CASE MAY BE, DIRECT THE ASSESSEE TO GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT, AND TO FURNISH A REPORT OF SUCH DATA IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED, AND SUCH OTHER PARTICULARS AS MAY BE REQUIRED. THE PROVISO THEREUNDER STIPULATES THAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. 22. SUB - SECTION (2B) THEREUNDER PROVIDES THAT THE PROVISIONS OF SUB - SECTION (2A) SHALL HAVE EFFECT NOTWITHSTANDING THAT THE ACCOUNTS OF THE ASSESSEE HAVE BEEN AUDITED UND ER ANY OTHER LAW FOR THE TIME BEING IN FORCE. SUB - SECTION (2C) PROVIDES THE TIME LIMIT I.E. EVERY REPORT UNDER SUB - SECTION (2A) SHALL BE FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER WITHIN SUCH PERIOD AS MAY BE SPECIFIED BY THE ASSESSING OFFICER. T HE PROVISO UNDER SECTION 142 (2C) OF THE ACT READS AS UNDER: - PROVIDED THAT THE ASSESSING OFFICER MAY, SUO MOTU, OR ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE AND FOR ANY GOOD AND SUFFICIENT REASON, EXTEND THE SAID PERIOD BY SUCH FURTHER PERIO D OR PERIODS AS HE THINKS FIT ; SO, HOWEVER, THAT THE AGGREGATE OF THE PERIOD ORIGINALLY FIXED AND THE PERIOD OR PERIODS SO EXTENDED SHALL NOT, IN ANY CASE, EXCEED ONE HUNDRED AND EIGHTY DAYS FROM THE DATE ON WHICH THE DIRECTION UNDER SUB - SECTION (2A) IS R ECEIVED BY THE ASSESSEE. 23. THE PROVISO DEALS WITH THE EXTENSION OF PERIOD FOR COMPLETION OF SPECIAL AUDIT AND IT IS PROVIDED THAT THE ASSESSING OFFICER MAY SUO MOTU, WHICH IS INSERTED BY THE FINANCE ACT, 2008 W.E.F. 01.04.2008, OR ON AN APPLICATION MAD E BY THE ASSESSEE AND FOR ANY GOOD AND SUFFICIENT REASON, EXTEND THE PERIOD FOR SUCH FURTHER PERIOD OR PERIODS AS HE THINKS FIT. HOWEVER, THERE IS A CAP THAT THE AGGREGATE OF THE PERIOD ORIGINALLY FIXED AND EXTENDED IN NO CASE SHALL EXCEED 180 DAYS FROM T HE DATE ON WHICH DIRECTION UNDER SUB - SECTION (2A) IS RECEIVED BY THE ASSESSEE. READING THE ABOVE SAID PROVISIONS, IT IS CLEAR THAT WHERE THE ASSESSING OFFICER HAS SOUGHT SPECIAL AUDIT REPORT, THEN IT IS INCUMBENT UPON THE ASSESSEE TO SUBMIT THE SAID REPOR T WITHIN SUCH PERIOD WHICH IS SPECIFIED BY THE ASSESSING OFFICER. HOWEVER, IF THE SAID AUDIT HAS NOT BEEN COMPLETED WITHIN SUCH FIXED PERIOD, THEN THE ASSESSING OFFICER HAS POWER ON HIS OWN MOTION OR ON AN APPLICATION MOVED BY THE ASSESSEE OR FOR ANY OTHE R REASONS, TO EXTEND THE PERIOD FOR FURNISHING THE SPECIAL AUDIT REPORT WITHIN SUCH EXTENDED PERIOD. 24. SECTION 142(2A) OF THE ACT IN THE FIRST INSTANCE TALKS ABOUT THE PERIOD WHICH IS SPECIFIED BY THE ASSESSING OFFICER I.E. THE PERIOD GIVEN TO ASSESSE E TO CONDUCT SPECIAL AUDIT BY ISSUE OF NOTICE IN THIS BEHALF. WHEN THE PERIOD IS EXTENDED THEN, THE CAP IS PLACED ON AGGREGATE PERIOD IN WHICH THE REPORT IS TO BE GIVEN WHEREIN, IT IS PROVIDED THAT THE SAME SHALL NOT EXCEED 180 DAYS FROM THE DATE ON WHICH THE DIRECTION UNDER SUB - SECTION (2A) IS RECEIVED BY THE ASSESSEE. IF WE CONSIDER THE MAIN PROVISIONS OF SUB - SECTION (2C) AND PROVISO THEREUNDER, THEN THE REFERENCE IS MADE TO DIFFERENT PERIODS. IN THE MAIN PROVISION, THE REFERENCE IS MADE TO THE PERIOD WHICH HAS BEEN SPECIFIED BY THE ASSESSING OFFICER IN THE NOTICE ISSUED TO THE ASSESSEE. HOWEVER, IN ORDER TO RECKON THE PERIOD OF 180 DAYS, THEN FROM THE DATE ON WHICH DIRECTION UNDER SUB - SECTION (2A) IS RECEIVED BY THE ASSESSEE. 25. THE RELEVANCE OF D ATES AND THE TIME PERIOD WITHIN WHICH SPECIAL AUDIT IS TO BE TAKEN NOTE OF IS TO BE APPLIED WHILE CALCULATING THE TIME LIMIT FOR COMPLETION OF ASSESSMENT UNDER SECTION 153A OF THE ACT. THE PROVISIONS AT THE RELEVANT TIME PROVIDED THAT WHILE COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSE OF COMPLETION ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 12 OF ASSESSMENT, THE PERIOD COMMENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECT THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SECTION 142(2A) OF THE ACT AND ENDING WITH LAST DATE ON WHICH THE ASS ESSEE IS REQUIRED TO FURNISH REPORT OF SUCH AUDIT UNDER THAT SUB - SECTION OR WHERE SUCH DIRECTION IS CHALLENGED BEFORE THE COURT ENDING WITH DATE ON WHICH THE ORDER SETTING ASIDE THE ORDER IS RECEIVED, BY THE PRINCIPAL COMMISSIONER OR COMMISSIONER, IS TO BE EXCLUDED. THIS IS AS PER EXPLANATION UNDER SECTION 153B CLAUSE (II). THE PROVISIONS OF SECTION 142(2A) OF THE ACT HAVE BEEN THE SUBJECT MATTER OF VARIOUS JUDICIAL RULINGS. 26. THE APEX COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) VIDE JUDGMENT D ATED 01.11.2006 HAS LAID THE PROPOSITION THAT DIRECTION ISSUED UNDER SECTION 142(2A) OF THE ACT FOR SPECIAL AUDIT OF THE ACCOUNTS OF ASSESSEE WAS NOT ADMINISTRATIVE IN NATURE BUT WAS QUASI - JUDICIAL ORDER. REFERRING TO THE EXPRESSION HAVING REGARD TO IN SE CTION 142(2A) OF THE ACT, THE APEX COURT HELD THAT THE SAME WAS SIGNIFICANT AND THE OPINION MUST BE FORMED STRICTLY IN TERMS OF FACTORS ENUMERATED THEREIN. THE APEX COURT HELD THAT WHERE ONCE IT IS HELD THAT THE ASSESSEE SUFFERS CIVIL CONSEQUENCES AND ANY ORDER PASSED WOULD BE PREJUDICIAL TO HIM, THEN THE PRINCIPLES NATURAL JUSTICE MUST BE HELD TO BE IMPLICIT, WHICH WAS REQUIRED TO BE APPLIED INTER - ALIA TO MINIMIZE ARBITRARINESS. IT WAS FURTHER OBSERVED BY THE APEX COURT THAT IF THE ASSESSEE IS PUT TO NOT ICE HE COULD SHOW THAT THE NATURE OF ACCOUNTS WAS NOT SUCH AS WOULD REQUIRE APPOINTMENT OF SPECIAL AUDITOR. HE COULD ALSO SHOW THAT WHAT THE ASSESSING OFFICER CONSIDERS COMPLEX IS IN FACT NOT SO. IT WAS FURTHER HELD THAT FORMATION OF OPINION UNDER SECTIO N 142(2A) OF THE ACT THAT THE ACCOUNTS OF ASSESSEE REQUIRES AN EXPERT AUDIT SHOULD INDISPUTABLY BE BASED ON OBJECTIVE CONSIDERATIONS AND NO ORDER CAN BE PASSED ON WHIMS OR CAPRICE. THE HONBLE SUPREME COURT CONCLUDED BY HOLDING AS UNDER: - 55. THE FACTOR S ENUMERATED IN SECTION 142(2A) OF THE ACT, THUS, ARE NOT EXHAUSTIVE. ONCE IT IS HELD THAT THE ASSESSEE SUFFERS CIVIL CONSEQUENCES AND ANY ORDER PASSED BY IT WOULD BE PREJUDICIAL TO HIM, PRINCIPLES OF NATURAL AND ANY ORDER PASSED BY IT WOULD BE PREJUDICIAL TO HIM, PRINCIPLES OF NATURAL JUSTICE MUST BE HELD TO BE IMPLICIT. THE PRINCI PLES OF NATURAL JUSTICE ARE REQUIRED TO BE APPLIED, INTER ALIA, TO MINIMIZE ARBITRARINESS. 56. IT IS TRITE, EVEN IF THERE IS A POSSIBILITY THAT THE TRIBUNAL WOULD CORRECTLY FOLLOW THE STATUTORY PROVISIONS, STILL COMPLIANCE WITH PRINCIPLES OF NATURAL JUS TICE WOULD BE REQUIRED. [SEE R. V. KENSINGTON AND CHELSEA RENT TRIBUNAL, EX P. MACFARLANE [1974] 1 WLR 1486 (QB)]. 57. JUSTICE, AS IS WELL KNOWN, IS NOT ONLY TO BE DONE BUT MANIFESTLY SEEM TO BE DONE. IF THE ASSESSEE IS PUT TO NOTICE, HE COULD SHOW THAT THE NATURE OF ACCOUNTS IS NOT SUCH WHICH WOULD REQUIRE APPOINTMENT OF SPECIAL AUDITORS. HE COULD FURTHER SHOW THAT WHAT THE ASSESSING OFFICER CONSIDERS TO BE COMPLEX IS IN FACT NOT SO. IT WAS ALSO OPEN TO HIM TO SHOW THAT THE SAME WOULD NOT BE IN THE INTE REST OF THE REVENUE. 58. IN THIS CASE ITSELF THE APPELLANTS WERE NOT MADE KNOWN AS TO WHAT LED THE DEPUTY COMMISSIONER TO FORM AN OPINION THAT ALL RELEVANT FACTORS INCLUDING THE ONES MENTIONED IN SECTION 142(2A) OF THE ACT ARE SATISFIED. IF EVEN ONE OF THEM WAS NOT SATISFIED, NO ORDER COULD BE PASSED. IF THE ATTENTION OF THE COMMISSIONER COULD BE DRAWN TO THE FACT THAT THE UNDERLYING PURPOSE FOR APPOINTMENT OF THE SPECIAL AUDITOR IS NOT BONA FIDE IT MIGHT NOT HAVE APPROVED THE SAME. 27. THE HONBLE SUP REME COURT FURTHER HELD AS UNDER: - 60... WHILE EXERCISING ITS POWER, THE ASSESSING OFFICER HAS TO FORM AN OPINION. IT IS FINAL SO FAR AS HE IS CONCERNED ALBEIT SUBJECT TO APPROVAL OF THE CHIEF COMMISSIONER OR THE COMMISSIONER, AS THE CASE MAY BE. IT IS ONLY AT THAT STAGE HE IS REQUIRED TO CONSIDER THE MATTER AND NOT AT A SUBSEQUENT STAGE, VIZ., AFTER THE APPROVAL IS GIVEN. ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 13 61 62. WHEREAS THE ORDER OF ASSESSMENT CAN BE THE SUBJECT MATTER OF AN APPEAL, A DIRECTION ISSUED UNDER SECTION 142(2A) OF THE A CT IS NOT. NO INTERNAL REMEDY IS PRESCRIBED. JUDICIAL REVIEW CANNOT BE SAID TO BE AN APPROPRIATE REMEDY IN THIS BEHALF. THE APPELLATE POWER UNDER THE ACT DOES NOT CONTAIN ANY PROVISION LIKE SECTION 105 OF THE CODE OF CIVIL PROCEDURE. THE POWER OF JUDICIAL REVIEW IS LIMITED. IT IS DISCRETIONARY. THE COURT MAY NOT INTERFERE WITH A STATUTORY POWER. 28. THE THREE JUDGE DECISION OF HONBLE SUPREME COURT IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) WHILE DECIDING THE ISSUE OF SCOPE AND NATURE OF ASSESSING OFFICERS AND COMMISSIONERS RESPONSIBILITY HELD THAT THE ORDER ENTAILS CIVIL CONSEQUENCES AND THE ASSESSEE HAS TO BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSING THE ORDER. THE HONBLE SUPREME COURT TOOK NOTE OF INSERTION OF PROVISO TO S ECTION 142(2A) OF THE ACT W.E.F. 01.04.2007, UNDER WHICH IT IS PROVIDED THAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED, UNLESS THE ASSESSEE HAS BEEN GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. THE COURT OBSERVED T HAT EXERCISE OF POWER UNDER SECTION 142(2A) OF THE ACT LEADS TO SERIOUS CIVIL CONSEQUENCES AND THEREFORE, EVEN IN THE ABSENCE OF ANY EXPRESS PROVISION FOR AFFORDING AN OPPORTUNITY OF PRE - DECISIONAL HEARING TO THE ASSESSEE AND IN THE ABSENCE OF ANY EXPRESS PROVISION IN SECTION 142(2A) OF THE ACT BARRING GIVING OF REASONABLE OPPORTUNITY TO THE ASSESSEE, THE REQUIREMENT OF OBSERVANCE OF PRINCIPLES OF NATURAL JUSTICE IS TO BE READ INTO SAID PROVISIONS. THE APEX COURT RE - AFFIRMED EARLIER DECISION OF APEX COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA). IT MAY BE POINTED OUT HEREIN ITSELF THAT PURSUANT TO DECISION IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) BY THE APEX COURT, LARGER BENCH WAS AFFIRMED ON THE POINT THAT WHETHER IN EVERY CASE WHERE THE ASSESSING OFFICER ISSUED DIRECTIONS IN TERMS OF SECTION 142(2A) OF THE ACT, THE ASSESSEE HAS TO BE HEARD BEFORE SUCH ORDER IS PASSED. THE DIVISION BENCH WAS OF THE VIEW THAT IT HEARD BEFORE SUCH ORDER IS PASSED. THE DIVISION BENCH WAS OF THE VIEW THAT IT DOES NOT APPEAR TO BE CORRECT POSITION OF LAW. THE THREE JUDGE BENCH THEREAFTER, TOOK NOTE OF THE PROVISIONS OF SECTION 142(2A) TO (2D) OF THE ACT AND SECTION 142(3) OF THE ACT AND OBSERVED THAT THE TWIN CONDITIONS OF THE NATURE AND COMPLEXITY OF ACCOUNTS AND INTEREST OF REVENUE WERE THE PRE - REQUISITE FOR EXERCISE OF POWER UNDER SECTION 142 (2A) OF THE ACT. IT WAS FURTHER OBSERVED THE WORD COMPLEXITY USED IN SECTION 142(2A) OF THE ACT WAS NOT DEFINED OR EXPLAINED IN THE ACT BUT WHAT MAY BE COMPLEX TO ONE, MAY NOT BE COMPLEX AS FAR AS THE UNDERSTANDING OF OTHER. SO, THERE HAS TO BE GENUINE AND HONEST ATTEMPT ON THE PART OF ASSESSING OFFICER TO UNDERSTAND THE ACCOUNTS MAINTAINED BY THE ASSESSEE, ENTRIES AND IN THE EVENT OF ANY DOUBT, SEEK EXPLANATION FROM THE ASSESSEE. BUT OPINION REQUIRED TO BE FORMED BY THE ASSESSING OFFICER FOR EXERCISE OF POWER UNDER THE SAID PROVISION MUST BE BASED ON OBJECTIVE CRITERIA AND NOT ON THE BASIS OF SUBJECTIVE SATISFACTION, WAS THE PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT. FURTHER, EVEN THE REQUIREMENT OF PREVIOUS APPROVAL OF CHIEF COMMISSIONER OR COMMISSIONER WAS HELD TO BE AN INBUILT PROTECTION AGAINST ARBITRARY AND UNJUST EXERCISE OF POWER BY THE ASSESSING OFFICER. IT ALSO CASTED A HEAVY DUTY ON THE HIGH RANKING AUTHORITY, TO SAY THAT THE REQUIREMENT OF PREVIOUS APPROVAL, ENVISAGED IN SECTION IS NOT TURNED INTO EMPTY RITUAL. IT WAS FURTHER LAID DOWN BY THE HONBLE SUPREME COURT THAT BEFORE GRANTING THE APPROVAL, THE CHIEF COMMISSIONER OR COMMISSIONER AS THE CASE MAY, MUST HAVE BEFORE HIM THE MATERIAL ON THE BASIS WHEREOF AN OPINION IN THIS BEHAL F HAS BEEN FORMED BY THE ASSESSING OFFICER AND THE APPROVAL MUST REFLECT THE APPLICATION OF MIND TO THE FACTS OF THE CASE. THEN THE REQUIREMENT OF HEARING OR NOT BEFORE THE ORDER FOR SPECIAL AUDIT WAS TAKEN UP BY THE HONBLE SUPREME COURT AND THE CONCEPT OF NATURAL JUSTICE AND THE PRINCIPLES GOVERNING THE SAID APPLICATION WERE REFERRED TO. THE APEX COURT REFERRED TO THE EARLIER DECISION OF THE COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) OBSERVED AS UNDER: - 20. DEALING WITH THE QUESTION WHETHER THE REQUIREMENT OF AFFORDING AN OPPORTUNITY OF HEARING IS TO BE READ INTO SECTION 142(2A), IN RAJESH KUMAR(1) IT HAS BEEN HELD THAT PREJUDICE TO THE ASSESSEE IS APPARENT ON THE FACE OF THE SAID STATUTORY PROVISION. IT HAS BEEN OBSERVED THAT ON ACCOUNT OF ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 14 THE SPECIAL AUDIT, THE ASSESSEE HAS TO UNDERGO THE PROCESS OF FURTHER ACCOUNTING DESPITE THE FACT THAT HIS ACCOUNTS HAVE BEEN AUDITED BY A QUALIFIED AUDITOR IN TERMS OF SECTION 44AB OF THE ACT. AN AUDITOR IS A PROFESSIONAL PERSON. HE HAS TO FUNCTION INDEPENDEN TLY. HE IS NOT AN EMPLOYEE OF THE ASSESSEE. IN CASE OF MISCONDUCT, HE MAY BECOME LIABLE TO BE PROCEEDED AGAINST BY A STATUTORY AUTHORITY UNDER THE CHARTERED ACCOUNTANTS ACT, 1949. BESIDES, THE ASSESSEE HAS TO PAY A HEFTY AMOUNT AS FEE OF THE SPECIAL AUDITO R. MOREOVER, DURING THE AUDIT OF THE ACCOUNTS AGAIN BY THE SPECIAL AUDITOR, HE HAS TO ANSWER A LARGE NUMBER OF QUESTIONS. REFERRING TO THE DECISION OF THIS COURT IN BINAPANI DEI WHEREIN IT WAS OBSERVED THAT WHEN BY REASON OF AN ACTION ON THE PART OF A STAT UTORY AUTHORITY, CIVIL OR EVIL CONSEQUENCES ENSUE, THE PRINCIPLES OF NATURAL JUSTICE ARE REQUIRED TO BE FOLLOWED AND IN SUCH AN EVENT, ALTHOUGH NO EXPRESS PROVISION IS LAID DOWN IN THIS BEHALF, COMPLIANCE WITH THE PRINCIPLES OF NATURAL JUSTICE WOULD BE IMP LICIT, THE LEARNED JUDGES HELD {1.[2006] 287 ITR 91 (SC) 2.[1967] AIR 1967 SC 1269.} THAT BY VIRTUE OF AN ORDER UNDER SECTION 142(2A) OF THE ACT, THE ASSESSEE SUFFERS CIVIL CONSEQUENCES AND THE ORDER PASSED WOULD BE PREJUDICIAL TO HIM AND, THEREFORE, THE P RINCIPLES OF NATURAL JUSTICE MUST BE HELD TO BE IMPLICIT. THE COURT HAS FURTHER OBSERVED THAT IF THE ASSESSEE WAS PUT TO NOTICE, HE COULD SHOW THAT THE NATURE OF ACCOUNTS IS NOT SUCH WHICH WOULD REQUIRE APPOINTMENT OF SPECIAL AUDITORS. HE COULD FURTHER SHO W THAT WHAT THE ASSESSING OFFICER CONSIDERS TO BE COMPLEX IS, IN FACT, NOT SO. IT WAS ALSO OPEN TO HIM TO SHOW THAT THE SAME WOULD NOT BE IN THE INTERESTS OF THE REVENUE. 21. IN THE LIGHT OF THE AFORENOTED LEGAL POSITION, WE ARE IN RESPECTFUL AGREEMENT W ITH THE DECISION OF THIS COURT IN RAJESH KUMAR THAT AN ORDER UNDER SECTION 142(2A) DOES ENTAIL CIVIL CONSEQUENCES. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO TAKE NOTE OF THE INSERTION OF THE PROVISO TO SECTION 142(2D) WITH EFFECT FROM JUNE 1, 2007. THE PRO VISO PROVIDES THAT THE 142(2D) WITH EFFECT FROM JUNE 1, 2007. THE PRO VISO PROVIDES THAT THE EXPENSES OF THE AUDITOR APPOINTED IN TERMS OF THE SAID PROVISION SHALL, HENCEFORTH, BE PAID BY THE CENTRAL GOVERNMENT. IN VIEW OF THE SAID AMENDMENT, IT CAN BE ARGUED THAT THE MAIN PLANK OF THE JUDGMENT IN RAJESH KUMAR TO THE EFFECT THAT DIRECTION UNDER SECTION 142(2A) ENTAILS CIVIL CONSEQUENCES BECAUSE THE ASSESSEE HAS TO PAY SUBSTANTIAL FEE TO THE SPECIAL AUDITOR IS KNOCKED OFF. TRUE IT IS THAT THE PAYMENT OF AUDITOR'S FEE IS A MAJOR CIVIL CONSEQUENCE, BUT IT CANNOT BE SAID TO BE TH E SOLE CIVIL OR EVIL CONSEQUENCE FLOWING FROM DIRECTIONS UNDER SECTION 142(2A). WE ARE CONVINCED THAT SPECIAL AUDIT HAS AN ALTOGETHER DIFFERENT CONNOTATION AND IMPLICATIONS FROM THE AUDIT UNDER SECTION 44AB. UNLIKE THE COMPULSORY AUDIT UNDER SECTION 44AB, IT IS NOT LIMITED TO MERE PRODUCTION OF THE BOOKS AND VOUCHERS BEFORE AN AUDITOR AND VERIFICATION THEREOF. IT WOULD INVOLVE SUBMISSION OF EXPLANATION AND CLARIFICATION WHICH MAY BE REQUIRED BY THE SPECIAL AUDITOR ON VARIOUS ISSUES WITH RELEVANT DATA, DOCUM ENT, ETC., WHICH, IN THE NORMAL COURSE, AN ASSESSEE IS REQUIRED TO EXPLAIN BEFORE THE ASSESSING OFFICER. THEREFORE, SPECIAL AUDIT IS MORE OR LESS IN THE NATURE OF AN INVESTIGATION AND IN SOME CASES MAY EVEN TURN OUT TO BE STIGMATIC. WE ARE, THEREFORE, OF T HE VIEW THAT EVEN AFTER THE OBLIGATION TO PAY AUDITOR'S FEES AND INCIDENTAL EXPENSES HAS BEEN TAKEN OVER BY THE CENTRAL GOVERNMENT, CIVIL CONSEQUENCES WOULD STILL ENSUE ON THE PASSING OF AN ORDER FOR SPECIAL AUDIT. (EMPHASIS SUPPLIED BY US) 29. THEN DEAL ING WITH THE ISSUE AT HAND THAT WHETHER THE PRE - DECISIONAL HEARING IS REQUIRED OR NOT, THE APEX COURT HELD AS UNDER: - 22. WE SHALL NOW DEAL WITH THE SUBMISSION OF LEARNED COUNSEL APPEARING FOR THE REVENUE THAT THE ORDER OF SPECIAL AUDIT IS ONLY A STEP TO WARDS ASSESSMENT AND BEING IN THE NATURE OF AN INQUIRY BEFORE ASSESSMENT, IS PURELY AN ADMINISTRATIVE ACT GIVING RISE TO NO CIVIL CONSEQUENCE AND, THEREFORE, AT THAT STAGE A PRE - DECISIONAL HEARING IS NOT ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 15 REQUIRED. IN RAJESH KUMAR(1) IT HAS BEEN {1.[2006] 2 87 ITR 91 (SC)} HELD THAT IN VIEW OF SECTION 136 OF THE ACT, PROCEEDINGS BEFORE AN ASSESSING OFFICER ARE DEEMED TO BE JUDICIAL PROCEEDINGS. SECTION 136 OF THE ACT STIPULATES THAT ANY PROCEEDING BEFORE AN INCOME - TAX AUTHORITY SHALL BE DEEMED TO BE JUDICIAL PROCEEDING WITHIN THE MEANING OF SECTIONS 193 AND 228 OF THE INDIAN PENAL CODE, 1860, AND ALSO FOR THE PURPOSE OF SECTION 196 OF THE INDIAN PENAL CODE AND EVERY INCOME - TAX AUTHORITY IS A COURT FOR THE PURPOSE OF SECTION 195 OF THE CODE OF CRIMINAL PROCEDUR E, 1973. THOUGH HAVING REGARD TO THE LANGUAGE OF THE PROVISION, WE HAVE SOME RESERVATIONS ON THE SAID VIEW EXPRESSED IN RAJESH KUMAR'S CASE, BUT HAVING HELD THAT WHEN CIVIL CONSEQUENCES ENSUE, NO DISTINCTION BETWEEN QUASI - JUDICIAL AND ADMINISTRATIVE ORDER SURVIVES, WE DEEM IT UNNECESSARY TO DILATE ON THE SCOPE OF SECTION 136 OF THE ACT. IT IS THE CIVIL CONSEQUENCE WHICH OBLITERATES THE DISTINCTION BETWEEN QUASI - JUDICIAL AND ADMINISTRATIVE FUNCTION. MOREOVER, WITH THE GROWTH OF THE ADMINISTRATIVE LAW, THE OL D DISTINCTION BETWEEN A JUDICIAL ACT AND AN ADMINISTRATIVE ACT HAS WITHERED AWAY. THEREFORE, IT HARDLY NEEDS REITERATION THAT EVEN A PURELY ADMINISTRATIVE ORDER WHICH ENTAILS CIVIL CONSEQUENCES, MUST BE CONSISTENT WITH THE RULES OF NATURAL JUSTICE. (ALSO S EE : MRS. MANEKA GANDHI V. UNION OF INDIA AND S. L. KAPOOR V. JAGMOHAN. AS ALREADY NOTED ABOVE, THE EXPRESSION 'CIVIL CONSEQUENCES' ENCOMPASSES INFRACTION OF NOT MERELY PROPERTY OR PERSONAL RIGHTS BUT OF CIVIL LIBERTIES, MATERIAL DEPRIVATIONS AND NON - PECUN IARY DAMAGES. ANYTHING WHICH AFFECTS A CITIZEN IN HIS CIVIL LIFE COMES UNDER ITS WIDE UMBRELLA. ACCORDINGLY, WE REJECT THE ARGUMENT AND HOLD THAT SINCE AN ORDER UNDER SECTION 142(2A) DOES ENTAIL CIVIL CONSEQUENCES, THE RULE AUDI ALTERAM PARTEM IS REQUIRED TO BE OBSERVED. 23. WE ARE ALSO UNABLE TO PERSUADE OURSELVES TO AGREE WITH THE PROPOSITION CANVASSED BY LEARNED COUNSEL FOR THE REVENUE THAT SINCE A POST DECISIONAL HEARING IN TERMS OF SUB - SECTION (3) OF SECTION 142 IS POST DECISIONAL HEARING IN TERMS OF SUB - SECTION (3) OF SECTION 142 IS CONTEMPLATED, THE REQUIREMENT OF NA TURAL JUSTICE IS FULLY MET. APART FROM THE FACT THAT ORDINARILY A POST DECISIONAL HEARING IS NO SUBSTITUTE FOR PRE - DECISIONAL HEARING, EVEN FROM THE LANGUAGE OF THE SAID PROVISION IT IS PLAIN THAT THE OPPORTUNITY OF BEING HEARD IS ONLY IN RESPECT OF THE MA TERIAL GATHERED ON THE BASIS OF THE AUDIT REPORT SUBMITTED UNDER SUB - SECTION (2A) AND NOT ON THE VALIDITY OF THE ORIGINAL ORDER DIRECTING THE SPECIAL AUDIT. IT IS WELL SETTLED THAT THE PRINCIPLE OF AUDI ALTERAM PARTEM CAN BE EXCLUDED ONLY WHEN A STATUTE CO NTEMPLATES A POST DECISIONAL HEARING AMOUNTING TO A FULL REVIEW OF THE ORIGINAL ORDER ON MERIT, WHICH, AS EXPLAINED ABOVE, IS NOT THE CASE HERE. (EMPHASIS SUPPLIED BY US) 30. THE APEX COURT THUS, LAID DOWN THAT THE PRINCIPLES OF AUDI ALTERAM PARTEM COUL D BE EXCLUDED ONLY WHEN THE STATUTE CONTEMPLATES A POST DECISIONAL HEARING AMOUNTING TO A FULL REVIEW OF THE ORIGINAL ORDER ON MERIT I.E. THE DECISION TO MAKE A REFERENCE FOR GETTING SPECIAL AUDIT DONE UNDER SECTION 142(2A) OF THE ACT. WHERE THEY RECOGNIZ ED THE PROCEDURE THAT AFTER THE SPECIAL AUDIT REPORT IS SUBMITTED UNDER SECTION 142(2A) OF THE ACT, THE ASSESSMENT PROCEEDINGS WOULD GIVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE ON THE SAID FINDINGS OF THE SAID AUDITOR AND THE PRE - DECISIONAL HEARING I.E. WHETHER SAID AUDIT IS REQUIRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IS NOT OPEN FOR DISCUSSION. UPHOLDING THE VIEWS EXPRESSED IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA), THE APEX COURT HELD AS UNDER: - 24. THE UPSHOT OF THE ENTIRE DISCUSSION IS THAT THE EXERCISE OF POWER UNDER SECTION 142(2A) OF THE ACT LEADS TO SERIOUS CIVIL CONSEQUENCES AND, THEREFORE, EVEN IN THE ABSENCE OF EXPRESS PROVISION FOR AFFORDING AN OPPORTUNITY OF PRE - DECISIONAL HEARING TO AN ASSESSEE AND IN THE ABSENCE OF ANY EXPRESS PROVISION IN SECTION 142(2A) BARRING THE GIVING OF REASONABLE OPPORTUNITY TO AN ASSESSEE, THE REQUIREMENT OF OBSERVANCE OF THE PRINCIPLES ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 16 OF NATURAL JUSTICE IS TO BE READ INTO THE SAID PROVISION. ACCORDINGLY, WE REITERATE THE VIEW EXPRESSED IN RAJESH KUMA R'S (1) CASE. 31. THE APEX COURT FURTHER RECOGNIZED THE INSERTION OF PROVISO UNDER SECTION 142(2A) OF THE ACT W.E.F. 01.06.2007 WHICH PROVIDED THAT NO DIRECTION FOR SPECIAL AUDIT SHALL BE ISSUED WITHOUT AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE FACTS OF THE CASE BEFORE THE APEX COURT BEFORE PASSING THE ORDER REQUIRING THE ASSESSEE TO HAVE THEIR ACCOUNTS AUDITED BY CHARTERED ACCOUNTANT, NO SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE. THE ASSESSEE IN THE SAID CASE WAS REQUIRED TO FURNISH BY MARCH 20, 2006 THE DETAILED EXPLANATION IN RESPECT OF QUERIES RAISED VIDE ORDER SHEET ENTRIES BUT IN THE MEANTIME IMPUGNED ORDER ASKING THE ASSESSEE TO GET THE ACCOUNTS AUDITED BY THE SPECIAL AUDITOR WERE PASSED ON 14.03.2006. THE APEX COURT H ELD THAT IT IS MANIFESTLY CLEAR THAT WHEN THE IMPUGNED ORDERS WERE MADE, THE ASSESSING OFFICER HAD NO OCCASION TO HAVE EVEN A GLIMPSE OF THE ACCOUNTS MAINTAINED BY THE APPELLANTS. THEREFORE, IN THE LIGHT OF THE LEGAL POSITION NOTED ABOVE, WE HAVE NO OPTION BUT TO HOLD THAT THE IMPUGNED ORDERS DATED MARCH 14, 2006, ARE VITIATED BY THE FAILURE TO OBSERVE THE PRINCIPLE OF AUDI ALTERAM PARTEM. 32. THE NEXT QUESTION WHICH WAS DECIDED BY THE APEX COURT WAS WHETHER THE ASSESSMENT ORDER PASSED IN THE CASE IS BAR RED BY LIMITATION. THE APEX COURT ADMITTED THAT THE LAW ON SUBJECT WAS NOT CLEAR TILL THE JUDGMENT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) WAS RENDERED AND THERE WAS DIVERGENT OPINIONS AMONGST VARIOUS HIGH COURTS. THE APEX COURT HELD THAT THE LAW ON THE SUBJECT CLARIFIED BY THE APEX COURT WOULD APPLY PROSPECTIVELY AND IT WOULD BE OPEN TO THE ASSESSEE TO URGE BEFORE APPELLATE AUTHORITIES THAT THE EXTENDED PERIOD OF LIMITATION WAS NOT AVAILABLE TO THE ASSESSING OFFICER BECAUSE AN INVALID ORDER WAS PASSE D UNDER SECTION 142(2A) OF THE ACT. HOWEVER, IT WOULD BE OPEN TO THE ASSESSEE TO QUESTION BEFORE APPELLATE AUTHORITIES IF SO ADVISED THE CORRECTNESS OF MATERIAL GATHERED ON THE BASIS OF AUDIT REPORT SUBMITTED UNDER SECTION 142(2A) OF THE ACT. GATHERED ON THE BASIS OF AUDIT REPORT SUBMITTED UNDER SECTION 142(2A) OF THE ACT. 33. BOTH THE LEARNED AUTHORIZED REPRESENTATIVES HAVE RELIED ON SEVERAL DECISIONS OF DIFFERENT COURTS AND THE TRIBUNALS ON THE ISSUE WHICH HAVE BEEN TAKEN NOTE AND THE PROPOSITION LAID DOWN BY THE APEX COURT IS BEING APPLIED TO DECIDE THE PRESENT ISSUE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AND CIT(A) PLACED RELIANCE ON ACIT VS. SUSHILA MILK SPECIALTIES (P.) LTD. (SUPRA), WHICH RELATED TO PRE - AMENDED PROVISIONS AND HENCE, THE SAID ISSUE CANNOT BE APPLIED TO THE PRESENT SET OF FACTS. HOWEVER, WE FI ND THAT THE MUMBAI BENCH OF TRIBUNAL IN ACIT VS. CLARIDGES INVESTMENTS & FINANCES (P) LTD. (SUPRA) ON SIMILAR FACTS, WHEREIN THE ORDER INITIATING SPECIAL AUDIT WAS PASSED WITHOUT ALLOWING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD WAS HELD TO BE VITIATED I N LAW. IT WAS FURTHER HELD THAT THE EXTENDED TIME LIMIT LAID DOWN IN EXPLANATION (1)(III) TO SECTION 153A OF THE ACT WAS NOT AVAILABLE TO HIM FOR WANT OF VALIDITY AND PROPER REFERENCE UNDER SECTION 142(2A) OF THE ACT AND THE ASSESSMENT ORDER BEING PASSED AFTER THE STATUTORY TIME LIMIT MAKES THE ASSESSMENT TO BE BAD IN LAW AND WAS ANNULLED. 34. THE HONBLE HIGH COURT OF ALLAHABAD IN KAKA CARPETS VS. CIT (SUPRA) VIDE JUDGMENT DATED 17.01.2014 HAD ALSO HELD AS UNDER: - 23. THUS, A.O. SHOULD RECONSIDER THE ISSUE AS TO WHETHER A DIRECTION SHOULD BE ISSUED UNDER SECTION 142(2A) OF THE ACT AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE AND AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD, IN TERMS OF SECTION 142(2A) OF THE ACT. IT IS ONLY AFTER THE A.O. RE ACHES TO A FAIR CONCLUSION AFTER CONSIDERING THE REPLY GIVEN BY THE PETITIONER, AND AFFORDING AN OPPORTUNITY OF HEARING, THE CIT AS APPROVING AUTHORITY WILL CONSIDER WHETHER THE SPECIAL AUDIT IS REQUIRED TO BE CARRIED OUT FOR THE PURPOSES OF UNDERSTANDING THE ACCOUNTS MAINTAINED BY THE ASSESSEE. THE OPINION MUST BE FORMED REFLECTING THE APPLICATION OF MIND BASED ON OBJECTIVE CRITERIA AND NOT ON THE BASIS OF SUBJECTIVE SATISFACTION. ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 17 35. THE HONBLE HIGH COURT OF ALLAHABAD IN KAKA CARPETS VS. CIT (SUPRA) T HUS, HAS DISTINGUISHED BETWEEN THE ADJUDICATING AUTHORITY AND APPROVING AUTHORITY AND HELD THAT THE FIRST DECISION IS TO BE MADE BY THE ASSESSING OFFICER, THE ADJUDICATING AUTHORITY OF GIVING THE APPROVAL AFTER CONSIDERING THE OBJECTIONS OF ASSESSEE AND AF FORDING REASONABLE OPPORTUNITY OF HEARING IN TERMS OF PROVISIONS OF THE SAID SECTION. THE APPROVAL GIVEN BY THE COMMISSIONER WAS AS AN APPROVING AUTHORITY AND THAT ALSO SHOULD BE PASSED AFTER APPLICATION OF MIND TO THE FACTS OF THE CASE AND THE REPLY GIVE N BY THE ASSESSEE. 36. THE HONBLE BOMBAY HIGH COURT IN NICKUNJ EXIMP ENTERPRISES PVT. LTD. (SUPRA) TAKING NOTE OF AMENDED PROVISIONS OF INSERTION OF PROVISO TO SECTION 142(2A) OF THE ACT W.E.F. 01.06.2007 HELD THAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. WHERE THE PARLIAMENT HAD SPECIFICALLY INCORPORATED REQUIREMENT OF REASONABLE OPPORTUNITY OF BEING HEARD, THE SAID REQUIREMENT COULD NOT BE A MEANINGLESS FORMALITY AND THE WHOLE OBJECT AND PURPOSE OF SUCH OPPORTUNITY WAS TO BE APPLICABLE TO THE ASSESSEE TO DEMONSTRATE BEFORE THE ASSESSING OFFICER THAT THE INGREDIENTS OF SECTION 142(2A) OF THE ACT WERE NOT FULFILLED. IN THE FACTS OF THE CA SE BEFORE THE HONBLE BOMBAY HIGH COURT, THE ASSESSING OFFICER HAD GIVEN NOTICE TO THE ASSESSEE BUT HAD NOT DEALT WITH SUBMISSIONS MADE BY THE ASSESSEE IN THIS BEHALF AND HENCE, THE ASSESSING OFFICER WAS DIRECTED TO CONSIDER THE OBJECTIONS RAISED BY THE AS SESSEE. 37. IT MAY BE POINTED OUT HEREIN ITSELF THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN EARLIER DECISION DATED 07.03.2006 IN ATLAS COPCO (INDIA) LTD. VS. ACIT (SUPRA), WHEREIN IT WAS HELD THAT BEFORE PASSING AN ORDER UNDER SECTION 142(2A) OF THE ACT WHETHER AN OPPORTUNITY OF HEARING IS TO BE GIVEN TO THE ASSESSEE AND IT WAS HELD THAT THE SAID DECISION OF HONBLE BOMBAY HIGH COURT IS PRIOR TO THE AMENDMENT IN THE ACT AND ALSO PRIOR TO THE DECISION PASSED BY COURT IS PRIOR TO THE AMENDMENT IN THE ACT AND ALSO PRIOR TO THE DECISION PASSED BY THE APEX COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) AND THREE JUDGE DECISION IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) AND ALSO LATER DECISION OF HONBLE BOMBAY HIGH COURT IN NICKUNJ EXIMP ENTERPRISES PVT. LTD. VS. ACIT (SUPRA). 38. NOW, COMING TO THE FACTS OF THE PRESENT CASE, SEARCH AND SEIZURE ON THE PREMISES OF GROUP CONCERNS WAS CARRIED OUT ON 23.08.2006. AS PER PROVISO TO SECTION 153B OF THE ACT, THE ASSESSMENT PROCEEDINGS IN SUCH C ASE HAD TO BE COMPLETED BY 31.12.2008, WHEREAS THE ASSESSMENT ORDER IN THE PRESENT CASE WAS PASSED ON 11.06.2009. THE REVENUE EMPHASIZED THAT THE ASSESSMENT ORDER PASSED IN THE CASE IS WITHIN TIME FRAME AS REFERENCE WAS MADE FOR SPECIAL AUDIT AND TIME ALL OWED FOR GETTING THE SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT IS TO BE EXCLUDED FOR WORKING OUT THE LIMITATION PERIOD FOR PASSING THE ASSESSMENT ORDER. IN THIS REGARD, THE COMMUNICATION AND CORRESPONDENCE BEFORE PERMISSION GIVEN TO SPECIAL AUDIT NEE D TO BE LOOKED INTO. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS FILED ON RECORD COPY OF ORDER SHEET ENTRIES, WHEREIN THE ASSESSEE WAS ASKED TO FILE ENGLISH TRANSLATION OF THE SEIZED NOTE BOOKS AFTER ASSIGNMENT OF CASE UPON THE DCIT, CENTR AL CIRCLE, THE ORDER SHEET ENTRY IS DATED 16.05.2008. THEREAFTER, THERE WAS PROPOSAL TO CENTRALIZE PATEL GROUP CASES WITH ADDL. CIT, CIRCLE - 1, PUNE. VIDE ORDER SHEET ENTRY DATED 11.09.2008 ITSELF, A PROPOSAL FOR AUDIT UNDER SECTION 142(2A) OF THE ACT IN THE CASE OF PATEL WAS SUBMITTED TO CIT, CENTRAL, PUNE THROUGH PROPER CHANNEL. THE CASES OF PATEL GROUP WERE ASSIGNED TO THE ITO, CENTRAL - I, PUNE ON 13.10.2008. ON 22.10.2008, A PROPOSAL FOR AUDIT UNDER SECTION 142(2A) OF THE ACT IN THE CASE OF PATEL GROU P WAS SUBMITTED TO CIT(C), PUNE THROUGH PROPER CHANNEL. THEREAFTER, LETTER DATED 21.11.2008 IN RESPECT OF SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT WAS SERVED UPON THE ASSESSEE AS PER ORDER SHEET ENTRY DATED 25.11.2008. ON 16.12.2008, THE COUNSEL FI LED A LETTER REQUESTING FOR COPIES OF SEIZED NOTE BOOKS AND DIARIES WHICH WERE SUPPLIED TO HIM ON 17.12.2008. ON 30.03.2009, THE CASES WERE ASSIGNED TO ITO, CENTRAL, KOLHAPUR AND THE RECORDS WERE HANDED OVER ON 17.04.2009. THEREAFTER, THE ASSESSMENT PROC EEDINGS WERE TAKEN. ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 18 39. THE FIRST COMMUNICATION OF ASSESSING OFFICER TO THE ASSESSEE IS VIDE LETTER DATED 21.11.2008, UNDER WHICH REFERENCE IS MADE TO THE CIT (CENTRAL), PUNES ORDER GRANTING APPROVAL UNDER SECTION 142(2A) OF THE ACT DATED 01.11.2008, WH EREIN THE ASSESSEE WAS ASKED TO GET THE ACCOUNTS AUDITED THROUGH NOMINATED AUDITOR WITHIN PERIOD OF SIXTY DAYS AND SUBMIT THE AUDITED ACCOUNTS ALONG WITH AUDIT REPORT. HE WAS ALSO ASKED TO GET ADDITIONAL PARTICULARS AS VERIFIED BY THE NOMINATED AUDITOR AN D SUBMIT THE SAME; COPY OF THE SAID LETTER IS PLACED AT PAGES 251 TO 252 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO PLACED ON RECORD THE ORDER GRANTING PERMISSION UNDER SECTION 142(2A) OF THE ACT BY THE CIT (CENTRAL), PUNE WHICH IS DATED 04.11.2008, UNDER W HICH IT IS MENTIONED THAT PROPOSAL DATED 11.09.2008 FOR CONDUCTING SPECIAL AUDIT IN THE GROUP CASES OF PATEL GROUP WAS RECEIVED. THE DETAILED REASONS FOR SPECIAL AUDIT AS GIVEN IN THE PROPOSAL ARE MENTIONED WHICH WERE FORWARDED TO THE ADDL. CIT, PUNE. FU RTHER, SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 12.09.2008 BY THE CIT AND HE WAS ASKED TO EXPLAIN AS TO WHY SPECIAL AUDIT SHOULD NOT BE ORDERED. THE CIT IN THE SAID ORDER MENTIONS THAT ALONG WITH NOTICE OF HEARING, DETAILED PROPOSAL AS RECEIVED FRO M THE DCIT, CENTRAL, KOLHAPUR WAS ALSO ENCLOSED. THE ASSESSEE WAS AGAIN SENT ANOTHER SHOW CAUSE NOTICE AND THE ASSESSEE APPEARED THEREAFTER. THE CIT(C) NOTED THAT NOTICES WERE INADVERTENTLY ISSUED FOR COMPULSORY AUDIT FOR ASSESSMENT YEAR 2008 - 09 WHILE TH E CASES TO BE AUDITED WERE FOR ASSESSMENT YEARS 2001 - 02 TO 2007 - 08, HENCE, THEREFORE, NOTICES WERE ISSUED TO THE ASSESSEE AND THE CIT PASSED THE ORDER GRANTING PERMISSION FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT RECORDING THE REASONS FOR THE SAME . THE SAID ORDER IS PLACED AT PAGES 267 TO 273 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO ENCLOSED VARIOUS NOTICES RECEIVED FROM CIT(C) AND THE REPLIES FILED THEREIN AT PAGES 274 TO 285 OF THE PAPER BOOK. THEREAFTER, SPECIAL AUDITOR WAS APPOINTED AND HE C ONDUCTED THE SPECIAL AUDIT. 40. THE QUESTION WHICH ARISES FOR ADJUDICATION BEFORE US IS THAT IN THE PRESENT SET OF FACTS, WHERE THE ASSESSING OFFICER BEFORE SENDING A PROPOSAL FOR CONDUCTING SET OF FACTS, WHERE THE ASSESSING OFFICER BEFORE SENDING A PROPOSAL FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT HAS NOT GIVEN A N OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IN VIEW OF THE PROVISO TO SECTION 142(2A) OF THE ACT, IS THE SAID PROPOSAL MADE WITHOUT AFFORDING PRE - DECISIONAL HEARING TO THE ASSESSEE VALID AND CAN THE PROCEEDINGS CONDUCTED THEREAFTER BE HELD TO BE VITIA TED IN LAW. THE HONBLE SUPREME COURT IN THREE JUDGE DECISION IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) HAD DECIDED THE ISSUE OF SHOW CAUSE NOTICE TO BE GIVEN ON PRE - DECISIONAL STAGE AND POST - DECISIONAL STAGE OF STARTING THE PROCEEDINGS UNDER SEC TION 142(2A) OF THE ACT AND HAD ALSO REFERRED TO THE EARLIER DECISION OF APEX COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA). THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT ARE THAT THE PRINCIPLE OF AUDI ALTERAM PARTEM CANNOT BE IGNORED EVEN AT THE STAGE OF PRE - DECISIONAL HEARING. IN OTHER WORDS, IN CASE THE ASSESSING OFFICER IS OF THE VIEW THAT HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS AND INTERESTS OF REVENUE, IT IS NECESSARY TO GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT, WITH PREVIOUS APPROVAL OF PRINCIPAL CHIEF COMMISSIONER, THEN HE CAN DO SO. HOWEVER, THE PROVISO INSERTED BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007 HAS VERY CATEGORICALLY PROVIDED THAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN AN OPPORTUNITY OF BEING HEARD. IN OTHER WORDS, THE PRINCIPLES OF NATURAL JUSTICE THAT A PERSON COULD NOT BE CONDEMNED UNHEARD, HAVE BEEN INCORPORATED IN SECTION ITSELF W.E.F. 01.06.2007. THE APEX COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) HAD DELIBERATED ON THE PROVISIONS OF THE ACT BEFORE INSERTION OF SAID PROVISO BUT HAD LAID DOWN THE PROPOSITION THAT NOBODY COULD BE UNHEARD EVEN AT THE STAGE OF FORMING AN OPINION THAT IN VIEW OF THE NATURE AND COMPLEXIT Y OF ACCOUNTS AND INTEREST OF REVENUE, SPECIAL AUDIT IS TO BE CONDUCTED UNDER SECTION 142(2A) OF THE ACT. THE APEX COURT IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) HAVE UPHELD THE SAID PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT AND HAS ALS O TAKEN NOTE OF THE AMENDMENT W.E.F. 01.06.2007 AND HAVE HELD THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE TO BE FULFILLED EVEN AT THE PRE - DECISIONAL STAGE. IN CONCLUSION, THE APEX COURT DIRECTED THAT THE SAID PROPOSITION WOULD BE APPLICABLE PROSPECTIVELY. THE CASE OF THE ASSESSEE BEFORE US RELATES TO THE PERIOD WHICH IS PROSPECTIVE TO ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 19 THE DECISION OF THE APEX COURT AND IS ALSO AFTER INSERTION BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007. REASONABLE OPPORTUNITY OF BEING HEARD ON PRE - DECISIONAL STAGE TO BE A LLOWED BY THE ASSESSING OFFICER TO THE ASSESSEE WAS ON STATUTE WHEN THE PROCEEDINGS WERE TAKEN UP AGAINST THE ASSESSEE. HOWEVER, AS THE FACTS REVEAL BEFORE SUBMITTING THE PROPOSAL DATED 11.09.2008 FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT TO THE CIT(C), NO OPPORTUNITY OF HEARING WAS GIVEN TO THE ASSESSEE. THE REQUIREMENT OF THE ACT IS THAT THE ASSESSING OFFICER HAS TO GIVE FINDING THAT THERE IS COMPLEXITY OF ACCOUNTS AND THE INTERESTS OF REVENUE WOULD BE AFFECTED, AND IN SUCH CIRCUMSTA NCES, SHOW CAUSE NOTICE NEEDS TO BE GIVEN TO THE ASSESSEE TO EXPLAIN ITS CASE. WHERE THE ASSESSEE WAS ABLE TO EXPLAIN THE NATURE OF ENTRIES AND ALSO JUSTIFY THAT THE SAME ARE NOT COMPLEX, THEN THERE IS NO NEED TO PUT THE ASSESSEE TO SUCH HARDSHIP OF CONDU CTING SPECIAL AUDIT. THE ASSESSING OFFICER HAVING FAILED TO GIVE ANY OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE MAKING THE PROPOSAL FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT AT THE PRE - DECISIONAL STAGE, THEN SUCH PROPOSAL MADE BY TH E ASSESSING OFFICER TO THE CIT(C), PUNE IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND SUFFERS FROM INFIRMITY. THE CASE OF REVENUE BEFORE US IS THAT THE CIT(C), PUNE BEFORE PASSING HIS ORDER OF GIVING PERMISSION TO THE ASSESSING OFFICER TO ASK THE ASSES SEE TO GET THE SPECIAL AUDIT CONDUCTED HAD GIVEN FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ROLE OF CIT(C) IS THE ROLE OF APPROVING AUTHORITY. THE ROLE IS NOT THAT OF ADJUDICATING AUTHORITY WHICH HAD TO BE CARRIED OUT BY THE ASSESSING OFFICER. THE ADJUDICATING AUTHORITY IN THE PRESENT SET OF FACTS HAS FAILED TO GIVE ANY OPPORTUNITY TO THE ASSESSEE BEFORE MAKING PROPOSAL FOR SPECIAL AUDIT AND THE OPPORTUNITY ALLOWED BY THE APPROVING AUTHORITY, WHO IN ANY CASE IS ENSHRINED WITH THE DUTIES OF CHECKING WHETHER THERE IS NO ARBITRARINESS IN FUNCTIONING OF ADJUDICATING AUTHORITY, HAS TO BE SATISFIED BEFORE GIVING APPROVAL. HENCE, THE OPPORTUNITY ALLOWED BY THE CIT(C), PUNE AFTER PROPOSAL WAS MADE BY THE ADJUDICATING AUTHORITY DOES NOT ABSOLVE THE NON - ALLO WANCE OF REASONABLE OPPORTUNITY OF HEARING BY THE ASSESSING OFFICER. 41. APPLYING THE PRINCIPLES LAID DOWN BY THE APEX COURT IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA), WE HOLD THAT WHERE NO SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE BEFORE MAKIN G THE ORDER PROPOSING CONDUCT OF SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT, IN THE PRESENT CASE AND THE CIT HAVING APPROVED THE SAID PROPOSAL THOUGH AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE IS VITIATED BECAUSE OF NON - COMPLIANCE WITH THE PRI NCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE ASSESSMENT ORDER PASSED IN THE FACTS OF PRESENT CASE IS BEYOND THE PERIOD OF LIMITATION AND HENCE, THE SAME IS INVALID AND BAD IN LAW. 1 3 . WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVER ED BY THE RATIO LAID DOWN BY THE TRIBUNAL IN THE CASE OF ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. (SUPRA) AND IN THE ABSENCE OF ANY OPPORTUNITY GIVEN TO THE ASSESSEE TO SHOW CAUSE AS TO WHY SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT SHOULD NOT BE CARRIED OUT IN THE CASE OF ASSESSEE I.E. AT THE PRE - DECISIONAL STAGE, BY THE ASSESSING OFFICER, THE SPECIAL AUDIT CONDUCTED IN THE CASE IS WITHOUT JURISDICTION AND CONSEQUENTLY, THE ASSESSMENT ORDER PASSED IS BEYOND THE STIPULATED DATE, BECAUSE TIME TAKEN FOR SPECIAL AUDIT, IS INVALID . S INCE ASSESSMENT ORDER IS PASSED BEYOND PERIOD OF LIMITATION AND HENCE, IS INVALID AND BAD IN LAW. ACCORDINGLY, WE HOLD SO. WE ALLOW THE GROUND S OF APPEAL NO.1, 1.1 AND 1.3 RAISED ITA NO . 543 / P U N /201 4 ITA NO. 574 /P U N/201 4 ITA NOS.544 & 545/PUN/20 14 20 BY THE ASSESSEE AND THE GROUNDS OF APPEAL RAISED ON MERITS IN THIS REGARD BECOME ACADEMIC AND THE SAME ARE DISMISSED. CONSEQUENTLY, THE APPEAL OF REVENUE BECOMES INFRUCTUOUS. 1 4 . THE FACTS AND ISSUES IN ITA NOS.544/PUN/2014 & 545/PUN/2014 ARE SIMILAR TO THE FACTS AND ISSUES IN ITA NO.543/PUN/2014 AND OUR DECISION IN ITA NO.543/PUN/2014 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.544/PUN/2014 & 545/PUN/2014. 1 5 . IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 3 RD DAY OF MARCH , 2017 SD/ - SD/ - ( ANIL CHATURVEDI ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 3 RD MARCH , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE AP PELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE C I T (A) - CENTRAL , PUNE ; 4. / THE C I T - CENTRAL , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE