Smt. ANANDIBEN B. PATEL, MUMBAI V. ACIT - CIR 14(2), MUMBAI

ITSSA 143/MUM/2006

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9213 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 26-02-2013
• Assessment Year: misc
• Appeal Filed On: 02-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RUPINDER BRAR
• Assessee Lawyers: REEPAL TRALSHAWALA; CHETAN A KARIA
• Keywords: Business income; Document seized; Principle of natural justice; Period of limitation; Block assessment; Time period of passing order; Documents seized
• Section: 132

Judgement Text

ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 1 OF 24 IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER IT(SS) NO.143/MUM/2006 (BLOCK PERIOD: 1.4.1990 TO 24.01.2001) MRS. ANANDIBEN B. PATEL, 144-146 KALBADEVI ROAD, OPP: COTTON EXCHANGE MUMBAI 400 002 PAN: ACOPA 8218 A VS. ACIT, CIRCLE 14(2), EARNEST HOUSE, 3 RD FLOOR, NARIMAN POINT, MUMBAI 400 021 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI REEPAL TRALSHAWALA AND SHRI CHETAN A. KARIA DEPARTMENT BY: MRS. RUPINDER BRAR, DR DATE OF HEARING: 26/02/2013 DATE OF PRONOUNCEMENT: 10/04/2013 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN APPEAL AGAINST THE ORDER OF THE CIT(A)- XIV, MUMBAI, DATED 19.01.2006. ASSESSEE RAISED THE FOLLO WING GROUNDS: 1. THE ASSESSMENT ORDER DATED 22.09.2003 IS INVALI D BEING PASSED BEYOHD THE PERIOD OF LIMITATION. 1.1. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORD ER DATED 22.09.2003 PASSED BY THE LEARNED AO AS VALID AND NOT BEYOND THE PERIOD OF LIMTIATION. 1.2 THE LEARNED CIT (A) FAILED TO APPRECIATE THAT T HE ASSESSMENT ORDER DATED 22.09.2003 IS INVALID BEING PASSED BEYOND THE PERIOD OF LIMITATION, THE LAST DA TE OF PASSING THE VALID ORDER BEING 31.01.2003. 1.3 THE LEARNED CIT (A) FAILED TO APPRECIATE THAT T HERE WAS NO VALID ORDER UNDER SECTION 142(2A) OF THE INC OME TAX ACT, 1961 AND THERE IS NO EXTENSION FOR THE PER IOD OF LIMITATION. 1.4 THE LEARNED CIT (A) FAILED TO APPRECIATE THAT E VEN OTHERWISE THE ORDER DATED 22.09.2003 IS BEYOND THE PERIOD OF LIMITATION AND HENCE INVALID. 2. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ADDIT ION OF ` .56,92,873 MADE BY AO AS UNDISCLOSED INCOME. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 2 OF 24 3. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ADDIT ION OF ` .1,40,000 MADE BY AO IN RESPECT OF THE DONATION RECEIPTS OF THE DIFFERENT PARTIES. 4. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ADDIT ION OF ` .27,58,178 MADE BY AO ON ESTIMATION BASIS IN RESPEC T OF THE AYS 1994-95 TO 2000-01. 5. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ADDIT ION OF ` .27,94,695 MADE BY AO OUT OF THE INCOME RETURNED AN D ASSESSED IN THE REGULAR ASSESSMENT FOR THE AY 2001- 02. 5.1 THE LEARNED CIT (A) ERRED IN UPHOLDING THE ADDI TION OF ` .81,000 OUT OF THE HOUSE PROPERTY INCOME RETURNED A ND ASSESSED IN THE REGULAR ASSESSMENT FOR THE AY 2001- 02. 5.2 LEARNED CIT (A) ERRED IN UPHOLDING THE ADDITION OF ` .27,13,695 OUT OF THE BUSINESS INCOME RETURNED AND ASSESSED IN THE REGULAR ASSESSMENT FOR THE AY 2001- 02 . 2. BRIEFLY STATED, ASSESSEE IS THE PROPRIETREX IN THE FOLLOWING CONCERNS: I) M/S SHIVSAGAR RESTAURANT & BAR, NAGIN MAHAL, VEER NARIMAN ROAD, CHURCHGATE, MUMBAI 400020. II) M/S SHIVSAGAR LODGE, 144/146 KALBADEVI ROAD, MUMBAI 400002 III) M/S SHIVSAGAR FAST FOOD, KEMPS CORNER, MUMBAI 400036 IV) M/S. SHANKA VILAS VIDEO GAMES, KALBADEVI ROAD, MUMBAI 400002. BESIDES, ASSESSEE IS A PARTNER IN M/S. SAKAR HOTEL, MUMBAI. 2.1 AN ACTION UNDER SECTION 132 OF THE I.T. ACT WAS CARRIED OUT ON 24.01.2001 IN ASSESSEES CASE. DURING THE COURSE OF SEARCH, CASH OF ` .2,50,000 WAS SEIZED FROM THE PREMISES OF M/S SHIVS AGAR RESTAURANT & BAR ALONG WITH BOOKS OF ACCOUNT AND OT HER DOCUMENTS BOTH FROM HER RESIDENCE AND FROM M/S SHIVSAGAR REST AURANT AND BAR. 2.2 PROCEEDINGS WERE INITIATED FOR MAKING THE ASSES SMENT OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD ENDED 24.01 .2001 BY ISSUING NOTICE UNDER SECTION 158BC ON 30.07.2001 AN D SERVED ON ASSESSEE ON 03.08.2001. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 3 OF 24 2.3 ASSESSEE FILED HER RETURN ON 21.11.2001 DECLARI NG NIL UNDISCLOSED INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO WITH PRIOR APPROVAL FROM CIT-XIV MUMBAI DIRECTED ASSESSEE TO GET HER ACCOUNTS AUDITED BY SHRI SHANKARLAL JAIN & ASSOCIATES, C.AS AND TO FURNISH THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM. ASSESSEE RAISED OBJECTION TO THE ABOVE SAID SPECIAL AUDIT VIDE HER COUNSELS LETTER DATED 21.02.2003. THE ISSUE HAS BE EN ADDRESSED BY THE CIT-XIV MUMBAI, VIDE HIS OFFICE LETTER NO. CIT- XIV/STATISTICAL PURPOSES. AUDIT 142(2A)2002-03/43 DATED 28.04.2003 AND SERVED ON ASSESSEE ON 30.04.2003. 2.4 SUBSEQUENTLY, AFTER GIVING OPPORTUNITIES OF B EING HEARD TO ASSESSEE AND ON THE BASIS OF EXAMINATION OF VARIOUS SEIZED DOCUMENTS, BOOKS OF ACCOUNT AND RELEVANT DETAILS AN D EXPLANATION FURNISHED BY ASSESSEE, AO COMPLETED THE ASSESSMENT FOR THE BLOCK PERIOD DETERMINING THE UNDISCLOSED INCOME AT ` .56,92,870 UNDER SECTION 158BC (C) OF THE I.T. ACT VIDE ORDER DATED 22.09.2003. 3. ASSESSEE CONTESTED THE ISSUE BEFORE THE CIT ON THE REASON THAT THE ASSESSMENT ORDER DATED 22.09.2003 IS INVAL ID BEING PASSED BEYOND THE PERIOD OF LIMITATION AND AO FAILED TO AP PRECIATE THAT THERE WAS NO VALID REASON FOR REFERRING TO SPECIAL AUDIT UNDER SECTION 142A AND THE TIME PERIOD WAS EXTENDED WITH OUT ANY REQUEST FROM ASSESSEE. THE GIST OF SUBMISSIONS BEFORE THE CIT (A ) ON THE ISSUE OF JURISDICTION ARE THAT A PANCHNAMA WAS PREPARED ON 2 4.01.2001 AND 25.01.2001. PROHIBITORY ORDERS WERE PASSED ON 24.01 .2001 IN RESPECT OF TWO LOCKERS IN THE BANK. THE LOCKERS WER E OPENED ON 16.3.2001 AND PANCHNAMA OF THE CONTENTS OF THE LOCK ERS WERE PREPARED. IN VIEW OF THE FACT THAT THE SEARCH WAS I N JANUARY, 2001 AO WAS REQUIRED TO COMPLETE THE ASSESSMENT AND PASS ASSESSMENT ORDER IN JANUARY, 2003. HOWEVER, THE ASSESSMENT ORD ER WAS NOT PASSED UPTO 31.01.2003. INSTEAD THE COMMISSIONER OF INCOME TAX HAS APPOINTED M/S. SHANKARLAL JAIN & ASSOCIATES AS SPECIAL AUDITOR IN ASSESSEES CASE. IT WAS STATED IN THE LE TTER THAT APPOINTMENT IS MADE BY VIRTUE OF THE POWER VESTED W ITH THE ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 4 OF 24 COMMISSIONER UNDER SECTION 142(2A) OF THE ACT. THE SAID LETTER ALSO SPECIFIED THE AUDITORS FEES WHICH WERE EXORBITANTL Y HIGH AND PROHIBITIVE. THE SAID LETTER IS IN THE FORM OF INFO RMATION AND THERE WAS NO DIRECTION REQUIRING ASSESSEE TO GET THE ACCO UNTS AUDITED AS CONTEMPLATED UNDER SECTION 142(2A) OF THE ACT. FURT HER, THERE WAS NO REFERENCE TO THE TIME PERIOD WITHIN WHICH THE AU DIT IS REQUIRED TO BE COMPLETED. 3.1 UNDER THE CIRCUMSTANCES, ASSESSEE VIDE HER LETT ER DATED 25.02.2003 REQUESTED AO TO FURNISH COPY OF THE REAS ONS RECORDED AND TO GIVE FAIR OPPORTUNITY OF HEARING BEFORE TAKI NG ANY FURTHER ACTION. AS THERE WAS NO RESPONSE FROM AO, ASSESSEE VIDE A LETTER DATED 21.04.2003 REQUESTED FOR AN ORDER UNDER SECTI ON 142(2A). HOWEVER, VIDE LETTER DATED 28.4.2003 THE COMMISSION ER OF INCOME TAX INFORMED ASSESSEE THAT THERE IS NO PROVISION IN SECTION 142(2A) FOR GIVING AN OPPORTUNITY OF HEARING BEFORE ACCORDI NG APPROVAL UNDER SECTION 142(2A) OF THE ACT AND THE APPROVAL G RANTED UNDER SECTION 142(2A) IS VALID AND IS IN ORDER. AS THERE WAS NO VALID ORDER UNDER SECTION 142(2A), ASSESSEE VIDE LETTER DATED 1 1.09.2003 POINTED OUT THAT THE PERIOD OF LIMITATION FOR COMPL ETING ASSESSMENT AND FOR PASSING A VALID ORDER IS ALREADY OVER AND T HEREFORE, NO VALID ORDER COULD BE PASSED. 4. THE CIT(A) SENT ASSESSEES SUBMISSIONS TO THE ACIT ON REMAND AND THE ACIT REPORTED THAT THE ASSESSMENT OR DER WAS PASSED IN TIME. SUM AND SUBSTANCE OF AOS REMAND RE PORT WAS THAT THERE WAS VALID REFERENCE UNDER SECTION 142A, THE C IT INFORMED ASSESSEE ACCORDINGLY AND THE OBJECTIONS OF ASSESSEE WERE ATTENDED TO BY THE CIT AND AS THE AUTHORIZATION WAS ISSUED O N 23.01.2001 AND EXECUTED IN JANUARY, 2001 THE TIME GETS EXTENDE D TILL THE LAST OF PANCHANAMA IN MARCH, 2003. EVEN OTHERWISE, SINCE TH ERE WAS A REFERENCE TO THE AUDIT UNDER SECTION 142(2A), THE T IME LIMIT WAS EXTENDED UPTO PERIOD OF AUDIT AND SUBSEQUENTLY 60 D AYS TO AO, THEREFORE, THE ORDER PASSED WAS VALID. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 5 OF 24 5. THE CIT(A) AFTER GOING THROUGH THE FACTS AND SUBMIS SIONS OF THE REPORT HELD THAT THE ORDER WAS PASSED WITHIN TH E TIME. HIS FINDINGS IN THIS REGARD ARE AS UNDER: FROM THIS LEGAL PROVISION THE LAST DATE OF COMPLET ION OF THIS BLOCK ASSESSMENT IS 31.3.2003 AND NOT 31.1.200 3 AS THE APPELLANT INSISTED. HOWEVER, THE LAST DATE O F COMPLETION OF BLOCK ASSESSMENT IN THIS CASE STANDS EXTENDED ON THE STRENGTH OF DIRECTION FOR SPECIAL A UDIT UNDER SECTION 142(2A) OF THE I.T. ACT READ WITH CLA USE (II) OF EXPLANATION OF SECTION 158BE AND PROVISO THERETO . IN THIS RESPECT AO IN HIS REMAND REPORT STATED ASS ESSEE HAS STATED IN PARA 3(3) OF LETTER DATED 6.4.2004 TH AT EVEN ASSUMING THAT THE SAID LETTER DATED 29.1.2003 WAS A N ORDER UNDER SECTION 142(2A), THERE WOULD BE NO EXTENSION OF TIME FOR PASSING BLOCK ASSESSMENT ORDE R. THIS WAS BECAUSE, THE PERIOD OF EXTENSION WAS THE T IME SPECIFIED IN THE ORDER UNDER SECTION 142(2A) FOR SP ECIAL AUDIT. IT MAY NOT BE OUT OF PLACE TO MENTION THAT I N THE LETTER NO.ACIT 14(2)/SPL.AUDIT/2003-04 DATED 11.4.2 003 ADDRESSED TO THE AUDITORS AND COPY MARKED TO ASSESS EE, THE AUDITORS ARE REQUIRESTED TO SUBMIT THE AUDIT RE PORT TO AO NOT LATER THAN 29.7.2003 (COPY ENCLOSED). THEREF ORE, BY VIRTUE OF SECTION 158(3)(III) READ WITH PROVISO TO SAID SUB-SECTION, THE PERIOD OF LIMITATION IN THIS CASE WAS EXTENDED TO 27.9.2003 I.E. 60 DAYS FROM 29.7.2003. THE BLOCK ASSESSMENT ORDER WAS, HOWEVER, PASSED ON 22.9.2003 DULY SERVED ON ASSESSEE ON 23.9.2003. THE MATERIALS AND EVIDENCES AVAILABLE ON RECORD IND ICATE (1) M/S SHANKARLAL JAIN & ASSOCIATES WAS APPOINTED AS SPECIAL AUDITOR VIDE LETTER NO.CIT- XIV/SPL.AUDIT/U/S.142(2A)/14(2) 89/2002-03 DATED 27.1.2003 BY CIT-XIV MUMBAI. (2) AO HAS COMMUNICATED M/S SHANKARLAL JAIN & ASSOCIATES VIDE LETTER NO.CIT-XIV/142(2A)/2002-03/9 04 DTD. 29.1.2003. (3) UNDER LETTER NO.AA/ITD/NP/2002-03 OF 4 TH FEBRUARY, 2003 M/S. SHANKARLAL JAIN & ASSOCIATES REQUESTED TH E APPELLANT SMT. ANANDIBEN B. PATEL TO MAKE AVAILABLE BOOKS OF ACCOUNT AND OTHER RECORDS SO AS TO ENABLE THEM TO COMPLETE THE AUDIT WITHIN A PERIOD OF THREE MONT HS. (4) THE APPELLANT VIDE LETTER DT. 25.2.2003 REQUEST ED AO TO FURNISH COPY OF THE REASONS RECORDED AND GIVE A FAIR OPPORTUNITY OF HEARING BEFORE TAKING FURTHER ACTION . SUBSEQUENTLY THE APPELLANT SUBMITTED ANOTHER LETTER ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 6 OF 24 DATED 21.4.2003 BEFORE AO QUESTIONING THE VALIDITY OF SPECIAL AUDIT U/S 142(2A) OF THE ACT. (5) CIT-XIV VIDE LETTER DT. 28.4.2003 COMMUNICATED TO THE APPELLANT THAT THERE IS NO PROVISION UNDER SECTION 142(2A) FOR GIVING AN OPPORTUNITY OF HEARING BEFORE ACCORDING APPROVAL UNDER SECTION 142(2A) OF THE ACT . (6) M/S.SHANKARLAL JAIN & ASSOCIATES VIDE LETTER DA TED 4.2.2003 ADDRESSED TO ACIT, CIRCLE 14(2) INTIMATED. UNDER OUR LETTER NO.AA/ITD/NP/2002-03 DATED 4 TH FEBRUARY, 2003, WE REQUESTED SMT. ANANDIBEN B. PATE L TO MAKE US AVAILABLE BOOKS OF ACCOUNT AND OTHER REC ORDS TO ENABLE US TO COMPLETE THE AUDIT. HOWEVER, TILL D ATE NO BOOKS OF ACCOUNT AND OTHER RECORDS HAVE BEEN MADE AVAILABLE TO US TO START THE AUDIT. IN VIEW OF THES E FACTS, IT WILL NOT BE POSSIBLE FOR US TO COMPLETE THE AUDIT W ITHIN THE TIME PERMITTED. (7) THE ACIT 14(2) VIDE HIS LETTER NO.ACIT/14(2)SPL.AUDIT/ 2003-04 DT. 11.4.2003 DIREC TED M/S SHANKARLAL JAIN & ASSOCIATES TO COMPLETE THE SPECIAL AUDIT UNDER SECTION 142(2A) OF THE I.T. ACT IN THE GROUP OF CASES AND SUBMIT THE REPORT NOT LATER THAN 29.7.2003. THE EXTENSION WAS GIVEN AS PER THE POWER S CONFERRED BY THE PROVISO TO SUB SECTION 2C OF SECTI ON 142 OF THE I.T. ACT. THE ABOVE MATERIALS ON RECORD SUGGEST THAT M/S SHANKARLAL JAIN & ASSOCIATES WAS APPOINTED AS SPECI AL AUDITOR TO AUDIT APPELLANTS ACCOUNT VIDE LETTER DT . 29.1.2003. FROM THE LETTER OF M/S. SHANKARLAL JAIN & ASSOCIATES DT. 4.2.2003 IT CAN WELL BE SEEN THAT TH E SPECIAL AUDIT IS TO BE COMPLETED WITHIN 3 MONTHS. A S THE APPELLANT OBJECTED TO SUCH SPECIAL AUDIT AD REFRAIN ED FROM ALLOWING THE SPECIAL AUDITOR TO EXAMINE THE ACCOUNTS, THE WORK GOT DELAYED AND SUBSEQUENTLY AO HAD TO EXTENT THE TIME FOR COMPLETION OF SPECIAL AU DIT BY 27.7.2003. FROM THESE FACTS, THE APPELLANTS OBJECTION THAT TH E ASSESSMENT IS BARRED BY LIMITATION CANNOT STAND THE TEST OF TRUTH. HE ALSO UPHELD THE VARIOUS ADDITIONS MADE AND ULTIM ATELY DISMISSED IN THE APPEAL ON ALL COUNTS. 6. ASSESSEE IS AGGRIEVED BY THE ABOVE ORDER OF THE CIT (A) AND THE ACTION OF AO AND THE GROUNDS WERE RAISED CONTESTING THE ISSUES ON JURISDICTION AND ON MERITS. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 7 OF 24 7. THE LEARNED COUNSEL SUBMITTED THE CHRONOLOGY OF EVE NTS WHICH ARE AS UNDER: 24.01.2001 A).SEARCH ACTION CONDUCTED IN BUSINESS PREMISES AS PER WARRANT OF AUTHORIZATION DATED 24.1.2001 AT SHIVSAGAR FAST FOO D, CHURCHGATE, FINALLY CONCLUDED ON 25.1.2001. B).SEARCH ACTION CONDUCTED IN BUSINESS PREMISES AS PER WARRANT OF AUTHORIZATION DATED 24.1.2001 AT SHIVSAGAR RESTAURA NT & BAR, CHURCHGATE FINALLY CONCLUDED ON 25.1.2001. C).SEARCH ACTION CONDUCTED IN BUSINESS PREMISES AS PER WARRANT OF AUTHORIZATION DATED 23.1.2001 FINALLY CONCLUDED O N 25.1.2001. 16.03.2001 SEARCH ACTION AT UNION BANK OF INDIA, LOCKER NO.A-1 80, KALBADEVI BRANCH AS PER WARRANT OF AUTHORIZATION DATED 02.02. 2001 FINALLY CONCLUDED ON 16.03.201. 16.03.2001 SEARCH ACTION AT BANK OF BARODA, LOCKER NO.25 V.P. ROAD, BRANCH AS PER WARRANT OF AUTHORIZATION DATED 02.02.2001 FINALLY CONCLUDED ON 16.3.2001. 29.01.2003 LETTER TO ASSESSEE FROM ACIT INFORMING CIT APPOINTE D AUDITOR UNDER SECTION 142(2A) RECEIVED ON 30.1.2003. 29.01.2003 LETTER TO AUDITOR FROM CIT INFORMING APPROVAL OF AU DITOR AND DETERMINATION OF REMUNERATION HOWEVER, LETTER IS TYPED ON LETTERHEAD OF CIT AND SIGNED BY ACIT. 31.01.2003 BLOCK ASSESSMENT ORDER TO BE PASSED ON OR BEFORE 31 .01.2003. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 8 OF 24 25.02.2003 LETTER REQUESTING AO TO GIVE REASONS FOR 142(2A) AU DIT (AO DID NOT RESPOND). 04.04.2003 LETTER FROM AUDITOR TO ACIT STATING THAT BOOKS OF A CCOUNT WERE NOT MADE AVAILABLE, HENCE NOT POSSIBLE TO COMPLETE AUDI T WITHIN PRESCRIBED TIME LIMIT. 11.4.2003 LETTER FROM ACIT TO AUDITOR APPOINTED UNDER SECTION 142(2A) FOR GIVING EXTENSION OF TIME LIMIT FOR FURNISHING AUDIT REPORT, NOT BEYOND 29.7.2003 AS PER PROVISO TO SECTION 142(2C). 21.04.2003 LETTER TO AO REQUESTING FOR FURNISHING COPY OF ORDE R PASSED UNDER SECTION 142(2A). 28.4.2003 LETTER FROM CIT IN RESPONSE TO LETTER OF ASSESSEE D ATED 21.4.2003 STATING THAT THERE IS NO PROVISION UNDER SECTION 14 2(2A) FOR GIVING OPPORTUNITY OF HEARING BEFORE APPROVAL. 11.9.2003 LETTER TO AO FURNISHING EXPLANATION AND DETAILS ON VARIOUS ISSUES AND CONTENDING IN PARA 3 THAT TIME LIMIT FOR PASSIN G ORDER HAS EXPIRED. 22.9.2003 AO PASSED BLOCK ASSESSMENT ORDER. 8. REFERRING TO THE ABOVE IT WAS SUBMITTED THAT THE OR DER WAS TIME BARRED AND GAVE THE FOLLOWING PROPOSITIONS AND RELIED ON VARIOUS CASE LAW: 1. APPOINTMENT OF SPECIAL AUDITORS UNDER SECTIO N 142(2A) AND COMPLETING THE ASSESSMENT BEYOND THE PERIOD OF LIMI TATION. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 9 OF 24 PROPOSITION: A) REASONS TO BE RECORDED IN WRITING FOR ISSUING DIREC TION FOR AUDIT UNDER SECTION 142(2A) AND THE REASONS SHOULD SHOW T HAT THE ACCOUNTS ARE COMPLEX AND BEFORE ISSUING SUCH DIRECT ION, THERE HAS TO BE PROPER APPLICATION OF MIND. B) IN THE CASE OF ASSESSEE, THERE IS NO ORDER PASSED U NDER SECTION 142(2A), HENCE TIME LIMIT DOES NOT GET EXTENDED AND THE BLOCK ASSESSMENT ORDER THUS PASSED IS BEYOND LIMITATION P ERIOD UNDER SECTION 158BE AND THEREFORE, BAD IN LAW AND LIABLE TO BE QUASHED. CASE LAW RELIED: I) PRATEEK RESORTS & BUILDERS (P) LTD V. ACIT (2011) 1 99 TAXMAN 140 (MAG.)(ALL. HELD ORDER BAD IN LAW IN ABSENCE OF REASONS SHOWING APPLICATION OF MIND FOR ISSUING DIRECTION F OR AUDIT UNDER SECTION 142(2A). II) HIND SAMACHAR LTD. V. ACIT (2011) 335 ITR 277 (P&H) - HELD, ORDER BAD IN LAW IN ABSENCE OF REASONS FOR AUDIT UN DER SECTION 142(2A). III) YUM RESTAURANTS INDIA PVT. LTD VS. CIT (278 ITR 401 DELHI)- NATURE & COMPLEXITY OF ACCOUNTS TO BE FIRST SATISFI ED AND WITHOUT ANY SUCH FINDING, SPECIAL AUDIT CANNOT BE D IRECTED. IV) SWADESHI COTTON MILLS CO. LTD VS. COMMISSIONER OF I NCOME TAX 9171 ITR 634 ALL.) V) MEENAKSHI SUNDARAM & A.S. RAJASHEKHAR (MUM) BENCH, ORDER DATED 29.6.2011. VI) A.S. RAJASEKHAR PROP. ASR CATERERS V. ACIT (MUM) BE NCH, ORDER DATED 4.1.2012. 2. APPOINTMENT OF AUDITOR UNDER SECTION 142(2A): ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 10 OF 24 PROPOSITION: (C) OPPORTUNITY OF HEARING BEFORE APPOINTMENT OF A UDITOR UNDER SECTION 142(2A) TO BE GIVEN, ELSE ORDER BAD IN LAW: CASE LAW : I) INDIA ALUMINIUM CO. LTD VS. DCIT 329 ITR 550 (C AL.) SECTION 142(2A) ORDER BAD IN LAW IF OPPORTUNITY OF HEARING NOT GIVEN. II) MEENAKSHI SUNDARAM & A.S. RAJASHEKHAR (MUM.) B ENCH ORDER DATED 29.6.2011. III) A.S. RAJASEKHAR PRO. ASR CATERERS V. ACIT (MUM ) BENCH, ORDER DATED 4.1.2012. PROPOSITION: (D) SPECIAL AUDIT UNDER SECTION 142(2A) ISSUED 2 DA YS PRIOR TO EXPIRY OF LIMITATION PERIOD AND HENCE, THE SAME IS ISSUED MERELY TO EXTEND THE LIMITATION PERIOD/CIRCUMVENT T HE TIME BARRING DATE. CASE LAW: I) CIT VS. BAJRANG TEXTILES (294 ITR 561 (RAJ.) HELD BLOCK ASSESSMENT BAD IN LAW SINCE DIRECTION FOR SPECIAL A UDIT ISSUED 1 DAY BEFORE LIMITATION PERIOD. II) MEENAKSHI SUNDARAM & A.S. RAJASHEKHAR (MUM.) BENCH ORDER DATED 29.6.2011. III) A.S. RAJASEKHAR PRO. ASR CATERERS V. ACIT (MUM) BEN CH, ORDER DATED 4.1.2012. PROPOSITION: (E) AO HAS NO POWER FOR EXTENSION OF TIME PERIOD FO R AUDIT ON SUO-MOTO PROVISO TO SECTION 142(2C) AMENDED GRANT ING POWER TO AO INSERTED BY FINANCE ACT 2008 W.E.F. 1.4.2008. IN THE PRESENT CASE: ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 11 OF 24 SPECIAL AUDIT ISSUED UNDER SECTION 142(2A) DATED 29 .1.2003; TIME LIMIT GIVEN AS PER LETTER OF AUDITOR DATED 4.2.2003 (PARA 7 OF CIT (A) ORDER IS 3 MONTHS. THUS, TIME PERIOD FOR AUDIT EXPI RE ON 29.4.2003 AND PLUS 60 DAYS TIME PERIOD UNDER SECTION 158BE EN DS ON 29.6.2003. THUS ORDER PASSED ON 22.9.2003 IS TIME BARRED AND L IABLE TO BE QUASHED. CASE LAW: I) CIT VS. BISHAN SAROOP RAM KISHAN AGRO (P) LTD 203 TAXMAN 326 (DEL.) HELD AMENDMENT IS PROSPECTIVE AND SUO MOTO EXTENSION, TIME LIMIT DOES NOT EXTEND AND ORDER IS THEREFORE, TIME BARRED AND QUASHED. II) DCIT VS. RAMACHANDRA DASHRATH HANDE & CO. 10 ITR (T RIB.) 117 (MUM.)- SAME AS ABOVE. PROPOSITION A MECHANICAL AND PERFUNCTORY ORDER DIRECTING SPECIA L AUDIT WOULD BE LIABLE TO BE QUASHED: (F) LOCKER IN BANKS WERE SEARCHED UNDER SEPARATE W ARRANT OF AUTHORIZATION DATED 2.2.2001 I.E. NEW WARRANT FOR NEW SEARCH ACTION ONLY ON LOCKERS TIME LIMIT FOR PASSING ORD ER REMAINS THAT OF FIRST SEARCH AND CANNOT BE EXTENDED BY SECOND SEARC H. CASE LAW: I) UP STATE HANDLOOM CORPORATION LTD VS. CIT 245 ITR 1 92 (ALL.) II) RAKESH SARIN V. DCIT (2011) 333 ITR 451 (MAD.) III) EVEN OTHERWISE, TIME LIMIT DOES NOT GET EXTENDED BY PASSING RESTRAINT ORDER CIT V. WHITE & WHITE MINERAL (P) LTD 330 ITR 172 (RAJ.). 9. ON MERITS, THE LEARNED COUNSELS SUBMISSIONS ARE AS UNDER: ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 12 OF 24 GROUND NO.3: ADDITION OF ` .1,40,000 TOWARDS DONATION RECEIPTS FOUND: I) ASSESSEE REGULARLY ATTENDS SWAMI SREE PREMPURIJI AS HRAM TRUST, MUMBAI AS A DEVOTEE, II) ASSESSEE GIVES DONATION ON HER OWN ACCOUNT FOR WHIC H ORIGINAL RECEIPT WAS FOUND IN COURSE OF SEARCH ACTI ON AND THIS IS SHOWN AS OUT OF HER WITHDRAWALS. III) ASSESSEE AS A DEVOTEE ALSO VOLUNTEERS FOR COLLECTIO N OF DONATION FROM PUBLIC ON BEHALF OF TRUST. IV) IN SEARCH, ORIGINAL RECEIPTS WERE FOUND FOR DONATIO N MADE BY OTHER PEOPLE WITH THEIR NAME AND ADDRESS ON THE DON ATION RECEIPTS. V) AO TREATED THE ENTIRE DONATION RECEIPTS STANDING ON THIRD PARTY NAMES AS IF MADE BY ASSESSEE IN THE NAME OF D IFFERENT PEOPLE. VI) ASSESSEE SUBMITS THAT WHATEVER DONATION IS MADE BY HER IS DULY REFLECTED IN HER REGULAR BOOKS OUT OF PERSONAL WITHDRAWALS. VII) THERE IS NO BENEFIT DERIVED BY ASSESSEE TO GIVE DON ATION IN ANY OTHER NAME. VIII) EVEN THOUGH THE DONATION RECEIPTS CONTAINED NAME AN D ADDRESS OF THE DONEES, AO HAS NOT VERIFIED THE SAME FROM THIRD PARTIES. IX) IF ASSESSEE WANTED TO GIVE DONATION FROM UNACCOUNTE D SOURCE WITHOUT REVEALING HER IDENTIFY, ASSESSEE COULD HAVE SIMPLY MADE SUCH DONATION IN ONE GO AND THAT TOO EITHER WI THOUT TAKING ANY RECEIPT FOR THE SAME OR EVEN IF THE RECE IPT WAS GIVEN, WOULD HAVE DESTROYED THE SAME AND NOT KEPT W ITH HER. X) ASSESSEE SUBMITS THAT THE DONATION RECEIPTS RELATE TO THE AY 1994-95 AND THE DONORS MIGHT NOT HAVE COLLECTED THE IR ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 13 OF 24 RECEIPTS AND HENCE LYING WITH ASSESSEE ELSE THERE I S NO REASON FOR ASSESSEE TO KEEP SUCH RECEIPTS WITH HER FOR SUC H A LONG PERIOD OF TIME SINCE THE SEARCH ACTION WAS CONDUCTE D ON 24.1.2001. XI) ASSESSEE SUBMITS THAT SINCE THE RECEIPTS WERE RELAT ING TO AY 1994-95, ASSESSEE WAS NOT ABLE TO REMEMBER AS TO WH Y AND HOW ONE RECEIPT OF DONATION AMOUNTING TO ` .15,000 RELATED TO HER HUSBAND THAT TOO AFTER THE DATE OF DECEASE OF H ER HUSBAND AND THE SAME COULD HAVE BEEN SAME ERROR WHI LE ISSUING THE DONATION RECEIPT. XII) HOWEVER, ASSESSEE SUBMITS THAT THE DONATION RECEIPT S DOES NOT PERTAIN TO HER AND HENCE THE ADDITION MADE IN H ER HANDS IS WITHOUT ANY JUSTIFICATION AND LIABLE TO BE DELET ED. GROUND NO.4: ADDITION OF ` .27,58,178 BEING UNDISCLOSED BUSINESS INCOME FROM AY 1994-95 TO 2000-01: IT WAS SUBMITTED THAT ADDITIONS CAN ONLY BE ON THE BASIS OF EVIDENCE FOUND AND ESTIMATED ADDITIONS NOT JUSTIFIED AND REL IED ON THE FOLLOWING CASE LAW. I) NR PAPER & BOARD LTD VS. DCIT 234 ITR 733 (GUJ.) II) CIT VS. RAVI KANT JAIN, 250 ITR 141 (DEL.) III) CIT VS. SMT. USHA TRIPATHI, 249 ITR 4 (ALL.) IV) CIT VS. CJ SHAH & CO. (2000) 246 ITR 671 (BOM.) V) CIT VS. RAJENDRA PRASAD GUPTA, 248 ITR 350 (RAJ.) VI) CIT VS. TEMPLETON ASSET MANAGEMENT (I) PVT. LTD (20 11) 337 ITR 541 (BOM.) VII) CIT VS. SMT. C. SABIRA (2011) 338 ITR 226 (KER.) VIII) (2004) 4 SOT 680 (JODHPUR) MANGILAL RAMESHWARLAL SONI HUF. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 14 OF 24 WITH REGARD TO SUPPRESSION OF SALE OF EARLIER YEARS , IT WAS SUBMITTED THAT IT CANNOT BE ESTIMATED WITHOUT ANY EVIDENCE FO UND FOR THOSE YEARS, AS PER THE FOLLOWING CASE LAW: I) CIT VS. ASHIM KRISHNA MONDAL 270 ITR 160 (CAL.) II) CIT VS. CJ SHAH & CO. (2000) 246 ITR 671 (BOM.) III) CIT VS. RAJENDRA PRASAD GUPTA 248 ITR 350 (RAJ.) IV) ACIT VS. AMBICA FOOD INDUSTRIES 110 TTJ 680 (HYD.) V) SAMRAT BEER BAR VS ACIT 75 ITD 19 (PUNE) VI) HOTEL VRINDAVAN VS. ACIT 67 TTJ 139 (PUNE) VII) BAJRANG TEXTILES V. DCIT 83 TTJ 563 (JODH.) VIII) DCIT VS. ROYAL MARWAR TOBACCO PRODUCTS PVT. LTD 29 SOT 53 WITH REGARD TO UNDISCLOSED INCOME FROM: A) M/S SHIVSAGAR FAST FOOD, KEMPS CORNER OF ` .3,64,317 ALREADY INCLUDED IN REGULAR RETURN OF INCOME FOR AY 2001-02 . B) M/S SHIVSAGAR LODGE OF ` .16,14,980 ALREADY INCLUDED IN REGULAR RETURN OF INCOME FOR AY 2001-02. C) HOUSE PROPERTY INCOME OF ` .81,000 IS NOTIONAL INCOME OFFERED TO TAX UNDER SECTION 23 AND NOT ACTUAL RENT RECEIVED A ND HENCE THIS NOTIONAL INCOME COULD NOT BE FORMING PART OF REGULA R BOOKS OF ACCOUNT, HOWEVER, THIS NOTIONAL RENTAL INCOME IS OF FERED TO TAX EVEN IN THE EARLIER YEARS BEFORE THE DATE OF SEARCH ACTION FOR EARLIER AYS AND HENCE CANNOT BE TREATED AS UNDISCL OSED INCOME. IT WAS SUBMITTED THAT SURVEY CANNOT FORM PART OF BL OCK PERIOD AND RELIED ON THE FOLLOWING CASE LAW: I) CIT VS. G.K. SENNIAPPAN 284 ITR 220 (MAD.) II) CIT VS. S. AJIT KUMAR (2008) 300 ITR 152 (MAD.) III) PRAKASH TULSIDAS V. ACIT 73 ITD 444(NAG.) IV) SMT. BOMMANA SWARNA REKHA 94 TTJ 885 (VIZAG.) ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 15 OF 24 V) GMS TECHNOLOGIES LTD V. DCIT 93 TTJ 218 (DEL.) 10. THE LEARNED CIT DR IN REPLY SUBMITTED THAT UNDER SE CTION 142(2A) NO ORDER WAS PRESCRIBED. HOWEVER, AN ORDER PASSED BY THE CIT IN THIS REGARD HAS BEEN PLACED ON RECORD DURING THE HEARING BY THE LEARNED CIT (DR). IT WAS FURTHER SUBMITTED THAT NO REASONABLE OPPORTUNITY WAS REQUIRED UNDER THE LAW BEFORE ENTRU STING THE SPECIAL AUDIT AND THIS IS BEING FOLLOWED ONLY AFTER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH KUMAR V S. DEPUTY COMMISSIONER OF INCOME-TAX 287 ITR 91 (SC). IT WAS FURTHER SUBMITTED THAT IN VIEW OF THE 2 ND WARRANT/PANCHNAMA EXECUTED, LEGALLY THE PERIOD FOR COMPLETION OF THE ASSESSMENT WAS UPTO 31.03.2003 AND SINCE THE AUDIT WAS ORDERED IN JANUA RY 2003 AND EXTENDED UPTO JULY 2003, AO GETS FURTHER SIXTY DAYS UNDER EXPLANATION TO PROVISO TO SECTION 153, WHICH EXPIRE S ON 30.09.2003, THEREFORE THE ORDER WAS PASSED WITHIN THE TIME. IT WAS FURTHER SUBMITTED THAT ASSESSEE WAS NOT COOPERATING, THEREF ORE, AO HAS NO OPTION THAN TO REFER TO THE SPECIAL AUDIT. THE LEAR NED CIT(DR) FURTHER CONTESTED THAT THE DIRECTION ISSUED UNDER S ECTION 142(2A) CANNOT BE THE SUBJECT MATTER OF APPEAL AS HELD BY T HE HON'BLE SUPREME COURT IN THE CASE OF RAJESH KUMAR VS. DEPUT Y COMMISSIONER OF INCOME-TAX 287 ITR 91 (SC). SHE ALS O REFERRED TO THE SEARCH ON ASSESSEES CASE EARLIER AND BECAUSE O F TAX EVASION, AO HAD NO OPTION THAN TO REFER TO THE SPECIAL AUDIT IN THE ABSENCE OF COOPERATION FROM ASSESSEE. SHE ALSO PLACED ON RECOR D VARIOUS NOTICES ISSUED TO ASSESSEE IN THE COURSE OF ASSESSM ENT PROCEEDINGS. 11. THE LEARNED COUNSEL IN REPLY SUBMITTED THAT THERE W AS EARLIER SEARCH IN 1993 ON THE HUSBAND OF ASSESSEE WHO EXPIR ED AND ASSESSEE AS LEGAL HEIR CONTINUED THE PROCEEDINGS AN D THERE WAS NOTHING FOUND IN EARLIER SEARCH OR ALSO IN THIS SEA RCH EXCEPT THE STATEMENT FROM ONE OF THE EMPLOYEE ON THE SUPPOSED SUPPRESSION OF SALE OF LIQUOR WHICH WAS ACCEPTED IN THE REGULAR RE TURN. THEREFORE, THERE IS NO OTHER INCRIMINATING MATERIAL WITH REFER ENCE TO THE SEARCH. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 16 OF 24 12. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE REC ORD THE FACTS ARE VERY CLEAR. THE FIRST CONTENTION WAS ABOU T THE TIME LIMIT FOR COMPLETION OF BLOCK ASSESSMENT WHETHER 31-01-03 O R 31-03-03. IF ONE CONSIDER THE LATER PANCHANAMA OF OPENING THE LO CKER, THE TIME LIMIT WAS 31-03-03. HOWEVER ONE NEED NOT CONSIDER T HIS ISSUE AS THE AO REFERRED THE MATTER FOR SPECIAL AUDIT ON 27-01-0 3 ITSELF BEFORE EXPIRY OF TIME ON 31-01-03. SO TO THAT EXTENT ISSU E BECOMES ACADEMIC IN NATURE. HOWEVER, THE CONTENTIONS OF ASS ESSEE ON REFERENCE TO SPECIAL AUDIT, EXTENSION OF TIME FOR C OMPLETION OF AUDIT SUO MOTTO BY ANOTHER THREE MONTHS AND COMPLETION OF ASSESSMENT WITH OUT AUDIT REPORT ARE VALID. FIRSTLY, IN SPITE OF REPEATED REQUESTS BY ASSESSEE, THE ORDER OF THE CIT ON SPECIAL AUDIT WAS NEVER FURNISHED TO ASSESSEE AND IT HAS BEEN PLACED ON REC ORD ONLY IN THE PRESENT APPEAL PROCEEDINGS WHICH HOWEVER INDICATE T HAT THE LEARNED CIT HAD INDEED PASSED AN ORDER FOR SPECIAL AUDIT ON THE RECOMMENDATIONS OF THE ACIT. HOWEVER, THERE IS NO R EFERENCE TO THE PERIOD UNDER WHICH THE AUDIT WAS TO BE COMPLETED EI THER IN THE ORDER OR IN THE COMMUNICATION BY AO. THIS COMES OUT ONLY FROM THE LETTER WRITTEN BY THE SAID AUDITOR TO ASSESSEE AND TO THE ACIT FOR EXTENSION OF PERIOD. IT IS A FACT THAT ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY BEFORE PREFERRING TO THE SPECIAL AUDIT, AS SEEN FROM THE NOTICES ISSUED IN THE COURSE OF BLOCK ASSESSMENT PR OCEEDINGS BEFORE REFERRING TO THE SPECIAL AUDIT BY AO, ASSESSEE/ AR WAS ATTENDING BEFORE AO AND WAS FURNISHING VARIOUS INFORMATION AS REQUIRED. 13. THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH KUM AR VS. DEPUTY COMMISSIONER OF INCOME-TAX 287 ITR 91 (SC) C ONSIDERED THE ISSUE OF GIVING OPPORTUNITY TO ASSESSEE BEFORE INVO KING SECTION 142(2A) AND HELD AS UNDER: FOLLOWING ARE THE RELEVANT FACTORS FOR INVOKING SEC TION 142(2A) : ( I )THE NATURE OF ACCOUNTS ( II )COMPLEXITY OF ACCOUNTS AND ( III )INTEREST OF THE REVENUE. ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 17 OF 24 THE FORMATION OF OPINION OF THE ASSESSING OFFICER M UST BE ON THE PREMISE THAT WHILE EXERCISING HIS POWER REGARD MUST BE HAD TO THE FACTORS ENUMERATED THEREIN. THE USE OF T HE WORD AND IN SECTION 142(2A) SHOWS THAT IT IS CONJUNCTI VE AND NOT DISJUNCTIVE. ALL THE AFOREMENTIONED FACTORS ARE CON JUNCTIVELY REQUIRED TO BE READ. THE FORMATION OF OPINION INDIS PUTABLY MUST BE BASED ON OBJECTIVE CONSIDERATION. THE EXPRESSION COMPLEXITY WOULD MEAN THE STATE OR QUALITY OF BEING INTRICATE OR COMPLEX OR THAT IT IS DIFFICU LT TO UNDERSTAND. DIFFICULTY IN UNDERSTANDING WOULD, HOWE VER, NOT LEAD TO THE CONCLUSION THAT THE ACCOUNTS ARE COMPLE X IN NATURE. NO ORDER CAN BE PASSED ON WHIMS OR CAPRICE. PRINCIPLES OF NATURAL JUSTICE ARE BASED ON TWO BASI C PILLARS: ( I )NOBODY SHALL BE CONDEMNED UNHEARD ( AUDI ALTERAM PARTEM ) ( II )NOBODY SHALL BE JUDGE OF HIS OWN CAUSE ( NEMO DEBET ESSE JUDEX IN PROPRIA SUA CAUSA ) IT IS BEYOND ANY CAVIL THAT ORDINARILY UNLESS EXCLU DED BY OPERATION OF A STATUTE, THE SUPERIOR COURTS WHILE E XERCISING POWER OF JUDICIAL REVIEW SHALL PROCEED ON THE BASIS THAT ASSIGNMENT OF REASONS IS IMPERATIVE IN CHARACTER. W HEN AN AUTHORITY, BE IT ADMINISTRATIVE OR QUASI-JUDICIAL, ADJUDICATES ON A DISPUTE AND IF ITS ORDER IS APPEALABLE OR SUBJ ECT TO JUDICIAL REVIEW, IT WOULD BE NECESSARY TO SPELL OUT THE REASONS THEREFOR. WHILE, HOWEVER, APPLYING THE PRIN CIPLES OF NATURAL JUSTICE, THE COURT MUST ALSO BEAR IN MIND T HE THEORY OF USELESS FORMALITY AND THE PREJUDICE DOCTRINE. IF AN ASSESSEE FILES A RETURN, THE SAME IS NOT PRES UMED TO BE INCORRECT. WHEN THE ASSESSING OFFICER, HOWEVER, INT ENDS TO PASS AN ORDER OF ASSESSMENT, HE MAY TAKE RECOURSE T O SUCH STEPS INCLUDING THE ONE OF ASKING THE ASSESSEE TO D ISCLOSE DOCUMENTS WHICH ARE IN HIS POWER OR POSSESSION. HE MAY ALSO ASK THIRD PARTIES TO PRODUCE DOCUMENTS. SECTIO N 136 BY REASON OF A LEGAL FICTION MAKES AN ASSESSMENT PROCE EDING A JUDICIAL PROCEEDING. THE ASSESSMENT PROCEEDING, THE REFORE, IS A PART OF JUDICIAL PROCESS. WHEN A STATUTORY POWER IS EXERCISED BY THE ASSESSING AUTHORITY IN EXERCISE OF ITS JUDICIAL FUNCTION WHICH IS DETRIMENTAL TO THE ASSES SEE, THE SAME IS NOT AND CANNOT BE ADMINISTRATIVE IN NATURE. IT STRICTO SENSU IS ALSO NOT QUASI-JUDICIAL. BY WAY OF EXAMPLE, ALTHOUGH IT MAY NOT BE VERY APPOSITE, ORDERS, PASSE D UNDER ORDER XII OF THE CODE OF CIVIL PROCEDURE BY A COURT CANNOT BE HELD TO BE ADMINISTRATIVE IN NATURE. THEY ARE JUDIC IAL ORDERS AND SUBJECT TO THE ORDER WHICH MAY BE PASSED BY HIG HER COURTS IN REGARD THERETO. INDISPUTABLY, THE PREJUDI CE OF THE ASSESSEE, IF AN ORDER IS PASSED UNDER SECTION 142(2 A), IS APPARENT ON THE FACE OF THE STATUTORY PROVISION. HE HAS TO ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 18 OF 24 UNDERGO THE PROCESS OF FURTHER ACCOUNTING DESPITE T HE FACT THAT HIS ACCOUNTS HAVE BEEN AUDITED BY A QUALIFIED AUDITOR IN TERMS OF SECTION 44AB. AN AUDITOR IS A PROFESSIONAL PERSON. HE HAS TO FUNCTION INDEPENDENTLY. HE IS NOT AN EMPL OYEE OF THE ASSESSEE. IN CASE OF A MISCONDUCT, HE MAY BECO ME LIABLE TO BE PROCEEDED AGAINST BY A STATUTORY AUTHO RITY UNDER THE CHARTERED ACCOUNTANTS ACT, 1949. IN THE INSTANT CASE, THE FEE OF THE SPECIAL AUDITOR HAD BEEN FIXED AT RS. 1.5 LAKHS. THE ASSESSEE DURING THE AUD IT OF THE ACCOUNT BY THE SPECIAL AUDITOR HAD TO ANSWER LARGE NUMBER OF QUESTIONS. WHETHER HE DEFAULTED THEREIN OR NOT I S A MATTER OF LITTLE OR NO CONSEQUENCE FOR THE PURPOSE OF CONS TRUCTION OF THE SAID PROVISION. WHEREAS, ACCORDING TO THE REVEN UE, THE ASSESSEE WAS NOT COOPERATING, ACCORDING TO THE ASSE SSEE, AS ALL THE BOOKS OF ACCOUNT HAD BEEN SEIZED, THERE WAS NOTHING IT COULD DO IN THE MATTER. IT IS AN AUTHORITY FOR THE PROPOSITION THAT WHEN BY REASON OF AN ACTION ON THE PART OF A STATUTORY AUTHORITY, CIV IL OR EVIL CONSEQUENCES ENSUE, PRINCIPLES OF NATURAL JUSTICE A RE REQUIRED TO BE FOLLOWED. IN SUCH AN EVENT, ALTHOUGH NO EXPRESS PROVISION IS LAID DOWN IN THIS BEHALF, COMP LIANCE OF THE PRINCIPLES OF NATURAL JUSTICE WOULD BE IMPLICIT . IN CASE OF DENIAL OF THE PRINCIPLES OF NATURAL JUSTICE IN A ST ATUTE, THE SAME MAY ALSO BE HELD ULTRA VIRES ARTICLE 14 OF THE CONSTITUTION. [PARA 22] THE DIVISION BENCH OF DELHI HIGH COURT IN YAM RESTAURANTS INDIA (P.) LTD. V. CIT [2005] 278 ITR 401 AND BOMBAY HIGH COURT IN ATLAS COPCO (INDIA) LTD. V. V.S. SANUEL, ASSTT. CIT [2006] 283 ITR 56 ARE NOT CORRECT IN STATING THAT A DIRECTION ISSUED UNDER SECTION 142(2A) TO BE ADMINISTRATIVE I N NOTICE. IN VIEW OF SECTION 136, THE ENTIRE PROCEEDINGS OF A SSESSMENT BEFORE THE ASSESSING OFFICER BEING JUDICIAL, IT IS DIFFICULT TO UNDERSTAND HOW A PART THEREOF, WHICH INDISPUTABLY I S RESORTED TO IN AID OF THE ULTIMATE ORDER OF ASSESSM ENT, WITHOUT ANY STATUTORY INTERDICT, WOULD BE CALLED TO BE AN ADMINISTRATIVE ORDER. WHEN THE BOOKS OF ACCOUNT HAV E BEEN PRODUCED AND EXAMINED, THE ASSESSING OFFICER WOULD BE PROCEEDING TO MAKE ULTIMATE ORDER OF ASSESSMENT. ] IN ANY EVENT, WHEN CIVIL CONSEQUENCES ENSUE, THERE IS HARDLY ANY DISTINCTION BETWEEN AN ADMINISTRATIVE ORDER AND A QUASI-JUDICIAL ORDER. THERE MIGHT HAVE BEEN DIFFERE NCE OF OPINION AT ONE POINT OF TIME, BUT IT IS NOW WELL-SE TTLED THAT A THIN DEMARCATION LINE BETWEEN AN ADMINISTRATIVE ORD ER AND QUASI-JUDICIAL ORDER NOW STANDS OBLITERATED. THE EXPRESSION 'HAVING REGARD TO' IN SECTION 142(2A ) IN THIS CONTEXT ASSUMES SOME SIGNIFICANCE. AN OPINION MUST BE FORMED STRICTLY IN TERMS OF THE FACTORS ENUMERATED THEREIN. THE EXPRESSION INDICATES THAT IN EXERCISING THE POW ER REGARD ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 19 OF 24 MUST BE HAD ALSO TO THE FACTORS ENUMERATED THEREIN TOGETHER WITH ALL FACTORS RELEVANT TO EXERCISE OF THAT POWER . THE FACTORS ENUMERATED IN SECTION 142(2A) ARE NOT EXHAUSTIVE. ONCE IT IS HELD THAT THE ASSESSEE SUFFE RS CIVIL CONSEQUENCES AND ANY ORDER PASSED BY IT WOULD BE PREJUDICIAL TO HIM, PRINCIPLES OF NATURAL JUSTICE M UST BE HELD TO BE IMPLICIT. THE PRINCIPLES OF NATURAL JUSTICE A RE REQUIRED TO BE APPLIED , INTER ALIA, TO MINIMIZE ARBITRARINESS. IT IS TRITE THAT, EVEN IF THERE IS A POSSIBILITY TH AT THE TRIBUNAL WOULD CORRECTLY FOLLOW THE STATUTORY PROVISIONS, ST ILL COMPLIANCE OF THE PRINCIPLES OF NATURAL JUSTICE WOU LD BE REQUIRED. JUSTICE, AS IS WELL KNOWN, IS NOT ONLY DONE BUT MAN IFESTLY SEEM TO BE DONE. IF THE ASSESSEE WAS PUT TO NOTICE, HE COULD SHOW THAT THE NATURE OF ACCOUNTS WAS NOT SUCH WHICH WOULD REQUIRE APPOINTMENT OF SPECIAL AUDITORS. HE COULD F URTHER SHOW THAT WHAT THE ASSESSING OFFICER CONSIDERED TO BE COMPLEX WAS IN FACT NOT SO. IT WAS ALSO OPEN TO HIM TO SHOW THAT THE SAME WOULD NOT BE IN THE INTEREST OF THE R EVENUE. IN THE INSTANT CASE ITSELF, THE ASSESSEES WERE NOT MADE KNOWN AS TO WHAT LED THE DEPUTY COMMISSIONER TO FOR M AN OPINION THAT ALL RELEVANT FACTORS INCLUDING THE ONE S MENTIONED IN SECTION 142(2A) WERE SATISFIED. IF EVE N ONE OF THEM WAS NOT SATISFIED, NO ORDER COULD BE PASSED. I F THE ATTENTION OF THE COMMISSIONER COULD BE DRAWN TO THE FACT THAT THE UNDERLINED PURPOSE FOR APPOINTMENT OF THE SPECIAL AUDITOR WAS NOT BONA FIDE HE MIGHT NOT HAVE APPROVE D THE SAME. ASSUMING THAT TWO SETS OF ACCOUNTS WERE BEING MAINT AINED, THE SAME WOULD NOT MEAN THAT THE NATURE OF ACCOUNTS WAS DIFFICULT TO UNDERSTAND. IT COULD HAVE FURTHERMORE NOT BEEN SHOWN THAT THE POWER WAS SOUGHT TO BE EXERCISED ONL Y FOR AN UNAUTHORISED PURPOSE, VIZ., FOR THE PURPOSE OF EXTENSION OF THE PERIOD OF LIMITATION AS PROVIDED FOR UNDER EXPLANATION 2 TO SECTION 158BE. AN ORDER OF APPROVAL IS ALSO NOT TO BE MECHANICALLY GRANTED. THE SAME SHOULD BE DONE HAVING REGARD TO THE MATERI ALS ON RECORD. THE EXPLANATION GIVEN BY THE ASSESSEE, IF A NY, WOULD BE A RELEVANT FACTOR. THE APPROVING AUTHORITY WAS R EQUIRED TO GO THROUGH IT. HE COULD HAVE ARRIVED AT A DIFFERENT OPINION. HE IN A SITUATION OF THAT NATURE COULD HAVE CORRECT ED THE ASSESSING OFFICER IF HE WAS FOUND TO HAVE ADOPTED A WRONG APPROACH OR POSED A WRONG QUESTION UNTO HIMSELF. HE COULD HAVE BEEN ASKED TO COMPLETE THE PROCESS OF THE ASSE SSMENT WITHIN THE SPECIFIED TIME SO AS TO SAVE THE REVENUE FROM ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 20 OF 24 SUFFERING ANY LOSS. THE SAME PURPOSE MIGHT HAVE BEE N ACHIEVED UPON PRODUCTION OF SOME MATERIALS FOR UNDERSTANDING THE BOOKS OF ACCOUNT AND/OR THE ENTRI ES MADE THEREIN. WHILE EXERCISING HIS 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 TH E COMMISSIONER, AS THE CASE MAY BE. IT IS ONLY AT THA T STAGE THAT HE IS REQUIRED TO CONSIDER THE MATTER AND NOT AT A SUBSEQUENT STAGE, VIZ., AFTER THE APPROVAL IS GIVEN. WHEREAS THE ORDER OF ASSESSMENT CAN BE SUBJECT-MATT ER OF AN APPEAL, A DIRECTION ISSUED UNDER SECTION 142(2A) IS NOT. NO INTERNAL REMEDY IS PRESCRIBED. JUDICIAL REVIEW C ANNOT BE SAID TO BE AN APPROPRIATE REMEDY IN THIS BEHALF. TH E APPELLATE POWER UNDER THE ACT DOES NOT CONTAIN ANY PROVISION LIKE SECTION 105 OF THE CODE OF CIVIL PRO CEDURE. THE POWER OF JUDICIAL REVIEW IS LIMITED. IT IS DISCRETI ONARY. THE COURT MAY NOT INTERFERE WITH A STATUTORY POWER. THE HEARING GIVEN, HOWEVER, NEED NOT BE ELABORATE. THE NOTICE ISSUED MAY ONLY CONTAIN BRIEFLY THE ISSUES W HICH THE ASSESSING OFFICER THINKS TO BE NECESSARY. THE REASO NS ASSIGNED THEREFORE NEED NOT BE DETAILED ONES. BUT, THAT WOULD NOT MEAN THAT THE PRINCIPLES OF NATURAL JUSTI CE ARE NOT REQUIRED TO BE COMPLIED WITH. ONLY BECAUSE CERTAIN CONSEQUENCES WOULD ENSUE IF THE PRINCIPLES OF NATUR AL JUSTICE ARE REQUIRED TO BE COMPLIED WITH, THE SAME BY ITSEL F WOULD NOT MEAN THAT THE COURT WOULD NOT INSIST ON COMPLYI NG WITH THE FUNDAMENTAL PRINCIPLES OF LAW. IF THE PRINCIPLE S OF NATURAL JUSTICE ARE TO BE EXCLUDED, THE PARLIAMENT COULD HA VE SAID SO EXPRESSLY. THE HEARING GIVEN IS ONLY IN TERMS OF SE CTION 142(3) WHICH IS LIMITED ONLY TO THE FINDINGS OF THE SPECIAL AUDITOR. THE ORDER OF ASSESSMENT WOULD BE BASED UPO N THE FINDINGS OF THE SPECIAL AUDITOR SUBJECT OF COURSE T O ITS ACCEPTANCE BY THE ASSESSING OFFICER. EVEN AT THAT S TAGE THE ASSESSEE CANNOT PUT FORWARD A CASE THAT POWER UNDER SECTION 142(2A) HAD WRONGLY BEEN EXERCISED AND HE H AS UNNECESSARILY BEEN SADDLED WITH A HEAVY EXPENDITURE . AN APPEAL AGAINST THE ORDER OF ASSESSMENT WOULD NOT SE RVE ANY REAL PURPOSE AS THE APPELLATE AUTHORITY WOULD NOT G O INTO SUCH A QUESTION SINCE THE DIRECTION ISSUED UNDER SE CTION 142(2A) IS NOT AN APPEALABLE ORDER. THUS, THE ORDER PASSED BY THE DEPUTY COMMISSIONER U NDER SECTION 142(2A) WITHOUT GIVING OPPORTUNITY OF HEARI NG TO THE ASSESSEE AND REFUSING THE ASSESSEES REQUEST FOR SU PPLYING REASONS FOR PASSING SUCH ORDER, COULD NOT BE SUSTAI NED. 14. THUS, ON THE ABOVE PRINCIPLES LAID DOWN BY THE HON' BLE SUPREME COURT, SINCE ASSESSEE WAS NOT GIVEN AN OPPO RTUNITY BEFORE ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 21 OF 24 REFERRING TO SPECIAL AUDIT UNDER SECTION 142(2A), T HE ENTIRE REFERENCE BECOMES INVALID IN THE EYES OF LAW. 15. NOT ONLY THAT, ONCE THE AUDIT WAS REFERRED AND TIME LIMIT WAS PRESCRIBED FOR COMPLETION OF AUDIT AND SUBMISSION O F REPORT, AO HAD NO POWER TO EXTEND THE PERIOD ORIGINALLY GRANTE D SUO MOTTO, AT THE RELEVANT POINT OF TIME, WITHOUT THE APPLICATION OR REQUEST FROM ASSESSEE. THIS ISSUE WAS CONSIDERED ELABORATELY BY THE COORDINATE BENCH IN THE CASE OF DEPUTY COMMISSIONER OF INCOME- TAX VS. RAMACHANDRA DASHRATH HANDE & CO.10 ITR (TRIB.)117 ( MUM) WHEREIN IT WAS HELD: HELD, THAT THE INCOME-TAX ACT BEING A SPECIFIC ACT , THE GENERAL CLAUSES ACT MAY NOT GENERALLY APPLY TO THE LIMITATION PERIOD. APART FROM THAT IT COULD ALSO BE SEEN THAT AO SUO MOTO EXTENDED THE PERIOD ORIGINALLY GRANTED FROM APRIL 28, 2005 W.E.F. APRIL 30,2005 TO ANOTHER 60 DAYS. FIRST OF ALL, THERE WAS ALREADY A LAPSE OF TWO DAYS BEFORE THE PERIOD WAS EXTENDED. SECONDLY, AO HAD NO SUO MOTO POWER TO EXTEND THE TIME LIMIT, UNLESS ASSESSEE APPLIED UNDER SECTION 142C. SINCE ASSESSEE HAD NOT MADE ANY REQUEST FOR EXTENSION OF TIME, THE ACTION OF AO IN EXTENDING THE PERIOD BY ANOTHER 60 DAYS WAS NOT ACCORDING TO THE PROVISIONS OF THE LAW. IF THIS PERIOD WERE EXCLUDED THE ORDER SHOULD HAVE BEEN PASSED ON OR BEFORE JUNE 27, 2005 ON WHICH DATE THE SPECIAL AUDIT REPORT WAS RECEIVED AND AO HAD TAKEN FURTHER TIME TO COMPLETE IT, WHICH ITSELF WAS BARRE D BY LIMITATION. LOOKED AT FROM ANY ANGLE, THE ORDER OF AO PASSED ON AUGUST 29, 2005 COULD NOT BE STATED TO BE WITHIN THE TIME LIMITS PROVIDED UNDER THE ACT. THE ASSESSMENT ORDER WAS BARRED BY LIMITATION. 16. THE DETAILED DISCUSSION ON THIS ISSUE IS AS UNDER V IDE PARA NOS.11, 12 & 13: 11. APART FROM THE ABOVE, IT IS ALSO SEEN THAT THE ASSESSING OFFICER SUO MOTTO EXTENDED THE PERIOD ORI GINALLY GRANTED FROM APRIL 28, 2005 WITH EFFECT FROM APRIL 30, 2005 TO ANOTHER 60 DAYS. FIRST OF ALL, THERE WAS AL READY A LAPSE OF TWO DAYS BEFORE THE PERIOD WAS EXTENDED. SECONDLY, THE ASSESSING OFFICER HAS NO SUO MOTTO PO WER TO EXTEND THE TIME LIMIT, UNLESS THE ASSESSEE APPLIES AS PER SECTION 142(2C), WHICH IS AS UNDER : ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 22 OF 24 '(2C) 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: PROVIDED THAT THE ASSESSING OFFICER MAY, ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE AND FOR ANY GOOD AND SUFFICIENT REASON, EXTEND THE SAID PER IOD BY SUCH FURTHER PERIOD OR PERIODS AS HE THINKS FIT ; SO, HOWEVER, THAT THE AGGREGATE OF THE PERIOD ORIGINALL Y FIXED AND THE PERIOD OR PERIODS SO EXTENDED SHALL N OT, IN ANY CASE, EXCEED ONE HUNDRED AND EIGHTY DAYS FROM T HE DATE ON WHICH THE DIRECTION UNDER SUB-SECTION (2A) IS RECEIVED BY THE ASSESSEE.' 12. AS CAN BE SEEN, THE ASSESSING OFFICER HAS ONLY POW ER TO EXTEND THE TIME LIMIT ORIGINALLY GRANTED ONLY WH EN THE ASSESSEE MAKES AN APPLICATION. HE HAS NO SUO MOTU POWERS WHICH WERE SUBSEQUENTLY INSERTED WITH EFFECT FROM APRIL 1, 2008. SINCE THE ASSESSEE HAS NOT SOUGHT FO R ANY EXTENSION OF TIME, THE EXTENSION OF TIME GRANTED BY THE ASSESSING OFFICER IS NOT IN ACCORDANCE WITH THE PRO VISIONS OF THE ACT. IN THE CASE OF B.N. AMARNATH V. CIT [20 03] 259 ITR 590 (KAR.) A SIMILAR ISSUE AROSE WITH REFERENCE TO EXCLUSION OF CERTAIN PERIODS REGARDING OPPORTUNITY FOR REHEARING UNDER THE PROVISO TO SECTION 129. THE HON BLE COURT HAS HELD AS UNDER : 'IT IS CLEAR FROM CLAUSE (I) OF THE EXPLANATION TO SECTION 275 THAT THE ASSESSEE IS ENTITLED TO SEEK AN OPPORT UNITY FOR REHEARING UNDER THE PROVISO TO SECTION 129. FRO M THIS IT IS CLEAR THAT IF THERE IS ANY APPLICATION OR A R EQUEST IS MADE BY THE ASSESSEE TO PROVIDE HIM AN OPPORTUNITY FOR REHEARING AND IF SUCH REHEARING IS GIVEN BY THE AUTHORITIES, THEN THE TIME TAKEN IN GIVING OPPORTUN ITY TO THE ASSESSEE CAN BE EXCLUDED FOR COMPUTING THE PERI OD OF LIMITATION FOR THE PURPOSES OF SECTION 275. WHEN THERE IS NO REQUEST BY THE PETITIONER-ASSESSEE, THE DEPAR TMENT ON ITS OWN CANNOT TAKE SHELTER TO CONDONE THE LAPSE S OF THE DEPARTMENT AND LEVY PENALTY BEYOND THE PRESCRIB ED TIME LIMIT. IN OTHER WORDS, CLAUSE (I) OF THE EXPLA NATION TO SECTION 275 CANNOT BE INVOKED BY THE DEPARTMENT UNILATERALLY TO COMPUTE THE PERIOD OF LIMITATION ON ITS OWN WITHOUT THERE BEING ANY REQUEST FOR REHEARING B Y THE ASSESSEE.' 17. THE ABOVE DECISION WILL EQUALLY APPLY TO THE FACTS OF THIS CASE. SINCE THE ASSESSEE HAD NOT MADE ANY REQUEST F OR EXTENSION OF TIME, THE ACTION OF THE ASSESSING OFFICER IN EXTEND ING THE PERIOD BY ANOTHER THREE MONTHS WAS NOT ACCORDING TO THE PROVI SIONS OF THE LAW. AO HAS NO JURISDICTION TO EXTEND THE PERIOD G RANTED ORIGINALLY ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 23 OF 24 FOR COMPLETION OF AUDIT WHICH WAS UP TO END OF APRI L 2003. THEREFORE, THE TIME PERIOD TO BE COUNTED, EVEN IF T HE REFERENCE WAS CONSIDERED VALID, FOR THE EXTENSION OF TIME BARRIN G PERIOD CAN ONLY BE UPTO 30.04.03. IN VIEW OF THESE TWO REASONS IE. ASSESSEE WAS NOT GIVEN AN OPPORTUNITY BEFORE ORDERING SPECIAL AUDIT AND FURTHER EXTENDED THE TIME FROM APRIL 03 TO JULY 03 BEING BA D IN LAW THE ORDERS SO PASSED IN SEPTEMBER 2003 IS BEYOND THE TI ME LIMIT PERMITTED UNDER THE ACT AND THEREFORE, ORDER SO PAS SED BECOMES BAD IN LAW. 18. IN ADDITION TO THE ABOVE TWO REASONS, ANOTHER FACT TO BE NOTED IS THAT THERE IS NO SPECIAL AUDIT CONDUCTED BY THE AUDITORS AND AO AFTER GIVING VARIOUS OPPORTUNITIES TO ASSESSEE IN T HE MONTHS OF AUG AND SEP 2003, AGAIN RELIED ON THE MATERIAL ALREADY AVAILABLE WITH HIM WITHOUT THERE BEING ANY SPECIAL AUDIT REPORT. I N VIEW OF THAT ALSO THE ORDER BECOMES BAD IN LAW AS THE DECISION T O REFER TO THE AUDIT ITSELF PRIMA FACIE NOT TENABLE, AS THE BLOCK ASSESSMENT WAS COMPLETED WITHOUT THERE BEING ANY SPECIAL AUDIT REP ORT. SINCE THERE IS NO COMPLEXITY OF THE ACCOUNTS, IN OUR VIEW AO MI GHT HAVE EXERCISED THE POWERS TO REFER TO THE SPECIAL AUDIT ONLY TO GAIN TIME AT THE TIME BARRING STAGE. SINCE THE PERIOD FROM FEB 2 003 TO SEP. 03 WAS TAKEN UNDER THE GUISE OF SPECIAL AUDIT, WHICH I S HELD WITHOUT PROPER JURISDICTION, THE TIME SO TAKEN CAN NOT BE C OUNTED AND THE PERIOD DOES NOT GET EXTENDED. THE ORDER AT BEST COU LD HAVE BEEN COMPLETED BY 31-01-03 OR BY 31-03-03. SINCE THE ORD ER WAS PASSED ON 22-09-03, THE SAME HAS TO CONSIDERED, AS TIME BA RRED. THEREFORE, WE ARE OF THE OPINION THAT THE ORDER PASSED BY AO S UFFERS FROM LEGAL JURISDICTION AND IS THEREFORE, BAD IN LAW. 19. EVEN ON MERITS, WHICH ARE NOT REQUIRED TO BE ADJUDI CATED, ASSESSEES CONTENTIONS SEEMS TO BE PRIMA FACIE CORR ECT. THE ADDITION OF DONATIONS, ESTIMATION OF INCOME FOR THE ENTIRE B LOCK PERIOD WITHOUT THERE BEING ANY EVIDENCE FOR THAT PERIOD ON THE LIMITED MATERIAL FOR THE YEAR OF SEARCH AND FURTHER BRINGIN G TO TAX THE ENTIRE AMOUNT WHICH WAS ALREADY OFFERED IN THE REGULAR RET URN CANNOT BE ITSS NO.143 OF 2006 ANANDIBEN B PATEL MUMBAI PAGE 24 OF 24 SUSTAINED IN THE BLOCK ASSESSMENT. IN VIEW OF THIS , THERE SEEMS TO BE PRIMA FACIE CASE EVEN ON MERITS. HOWEVER, SINCE THE ENTIRE ORDER IS CONSIDERED AS BAD IN LAW AS BARRED BY LIMITATION , THE ISSUE ON MERITS BECOMES ACADEMIC IN NATURE. THEREFORE WITHOU T EXAMINING THE CONTENTIONS IN DETAIL, WE CONSIDER THE GROUNDS 2 TO 5 AS ALLOWED FOR STATISTICAL PURPOSES. GROUND NOS.1 ON THE ISSUE OF JURISDICTION, I.E. ORDER BEING TIME BARRED IS ALLOWED. 20. IN THE RESULT APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2013 SD/- SD/- (SANJAY GARG) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 10 TH APRIL, 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI