DCIT, CHENNAI V. M/s E. Amul Prakash & Others, CHENNAI

MA 132/CHNY/2003

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 3749 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 10 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-07-2010
• Assessment Year: misc
• Appeal Filed On: 10-09-2003
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Period of limitation; Source of fund; Bad and doubtful debts; Block assessment; Time period of passing order
• Section: 43B; 132

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL: B- BENCH;CHENNA (BEFORE SHRI ABRAHAN P GEORGE AND SHRI GEORGE MATHAN) 1. M.A NO. 131/MDS/2003 ( IN IT(SS)A NO.66 & 117/MDS/2002) ( BLOCK ASSESSMENT PERIOD 1988-89 TO 1998-99) . THE D.C.I.T, VS. E.AMUL PRAKASH & ORS., CENTRAL-II(1), CHENNAI L/HEIRS OF SRI K.EA SWARAPPA, 41 NAVAL HOSPITAL RD, PERIAMET, CHENNAI-3 (PETITIONER) (RESPONDENT) AND 2. M.A NO. 132/MDS/2003 (IN IT(SS) A NO.66/MDS/2002) ( BLOCK ASSESSMENT PERIOD 1988-89 TO 1998-99) . E. AMUL PRAKASH & ORS., VS. THE D.C.I.T, L/HEIRS OF SRI K.EASWARAPPA, CENTRAL II( 1), CHENNAI 41 NAVAL HOSPITAL RD, PERIAMET, CHENNAI-3 (RESPONDENT) (PETRITIONER) . ASSESSEE BY: SRI S.SR IDHAR DEPARTMENT BY: :SHRI SHAJI P.JACOB ORDER PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER THESE ARE THE MISC. PETITIONS FILED BY REVENUE AND THE ASSESSEE R ESPECTIVELY RAISING CERTAIN GRIEVANCE AGAINST THE ORDER OF THE TRIBUNAL IN I.T. (SS) A NOS. 66 /MDS/2002 AND 117/MDS/2002. MP NOS. 131-2/MDS/2003 2 2. MISCELLANEOUS PETITION FILED BY THE REVENU E IS TAKEN UP FIRST. GRIEVANCE TAKEN BY THE REVENUE VIDE ITS GROUNDS 1 T O 6 ARE THAT DEDUCTION OF RS.1,15,26,000/- CLAIMED BY THE ASSES SEE TOWARDS ACCRUED INTEREST WHICH WAS ACCEPTED BY THE TRIBUNAL. 3. THE RELEVANT PARA OF THE ORDER OF THIS TRIBUNA L IS REPRODUCED HEREUNDER: 15. THE CIT(A) IN HIS ORDER AT PAGE 16 HAD EXTRACT ED THE DETAILS OF INTEREST FOR THE PERIOD OF TEN YEARS PENDING WITH T HE YEAR OF SEARCH. HE NOTED THAT EVEN APPLYING THE PROVISIONS OF SEC. 43B OF THE ACT, THE INTEREST PAID ON TERM LOAN, BRIDGE LOAN AND WORKING CAPITAL LOAN THAT IS ON ACTUAL PAYMENT BASIS OF RS.1,15,26,000/- WAS ALLOWABLE. THE FACT THAT THE LOAN WAS BORROWED AND UTILIZED FOR PURPOSE S OF BUSINESS AND WAS PAID DURING THE YEAR NOT HAVING BEEN CONTROVERT ED, THE DELETION MADE BY THE CIT(A) IS UPHELD. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL THAT THE INTEREST WAS FOR A PERIOD OF TEN YEARS. AS ADMITTED BY THE REVENUE THE INTEREST WAS ON LOANS RAISED BY THE ASSESSEE FROM STATE BANK OF INDIA AND THEREFORE, SU CH INTEREST WOULD DEFINITELY ACCRUE AND WOULD BE PAYABLE. THERE IS A CLEAR FINDING BY THE TRIBUNAL THAT THE LOANS WERE UTILIZED FOR THE PURPO SE OF BUSINESS. WHAT REVENUE IS NOW SEEKING IS A REVIEW OF THE ORDER OF THE TRIBUNAL IN THIS REGARD. MP NOS. 131-2/MDS/2003 3 4. SECOND GRIEVANCE OF THE REVENUE IS MENTIONED AS PARAS 7 AND 8 OF THE MISCELLANEOUS PETITION. AS PER THE REVENUE T HE BAD DEBT CLAIM WAS ACCEPTED BY THE TRIBUNAL IGNORING THE SUBMISSIONS O F DEPARTMENT AND ALSO WITHOUT CONSIDERING ASSESSEES FAILURE TO DISC LOSE THE BANK ACCOUNT FROM WHICH ADVANCES WERE GIVEN AS A PART OF ITS MON EY LENDING BUSINESS. 5. RELEVANT PARA OF THE TRIBUNALS ORDER IS REPROD UCED HEREUNDER: 17. THE LAST POINT RAISED IN THE APPEAL BY THE D EPARTMENT IS WITH REGARD TO THE DELETION OF DISALLOWANCE OF BAD DEBTS OF RS.76 LAKHS. THE LD. DEPARTMENTAL REPRESENTATIVE MR . ACHARYA CLARIFIED DURING THE COURSE OF HEARING THAT WITH RE GARD TO THE DELETION OF THE AMOUNT AS BAD DEBTS, THE FIGURE SHO ULD BE RS.7.60 LAKHS. HE CARRIED US THROUGH THE ORDER OF T HE CIT(A) AT PAGE 20 IN THIS REGARD. THE CAPTION GIVEN BY THE CI T(A) IS FIFTH ISSUE-DISALLOWANCES OF THE CLAIM OF BAD DEBT AMOUNTING TO RS.7,60,000 (GROUND 14 & 15). THE CIT(A) REFERR ED TO THE ORDER OF AO AT PAGE 9 AND PAGE 18. HE NOTED THAT T HE ASSESSEE CLAIMED BAD DEBTS TO THE TUNE OF RS.7.60 LAKHS RELE VANT TO THE ASSESSMENT YEAR 1998-99.THIS CLAIM WAS MADE ON THE BASIS OF A SUIT FILED AGAINST THE DEBTORS. CONSIDERING THE FA CT THAT THE SUITS WERE FILED IN 1998 AND NOT DURING THE BLOCK PERIOD AND CONSIDERING THAT THE BOOKS OF ACCOUNTS WERE NOT PRO PER AND COMPLETE, HE DISALLOWED THE CLAIM. THE CIT(A) REFER RED TO SEC.36(1)(VII) OF THE ACT WHICH WAS AMENDED BY DIRE CT LAWS (AMENDMENT) ACT EFFECTIVE FROM 1-489, WHICH ALLOWED DEDUCTION IN REGARD TO ANY BAD DEBT WRITTEN OFF. C ONSIDERING THE CHANGE IN LAW, THE CIT(A) UPHELD THE CLAIM. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT PLACE BEFORE US ANY EST THAT THE DEBTS HAD NOT BECOME BAD. WE, THEREFORE, DO NOT INTERFERE WITH THE ORDER OF THE CIT(A) ON THIS POIN T. 6. IT IS SEEN FROM THE ORDER OF THE TRIBUNAL THA T THE CLAIM WAS ALLOWED CONSIDERING THE FACT THAT IT WAS BASED ON SUITS FIL ED AGAINST THE DEBTORS. MP NOS. 131-2/MDS/2003 4 THE TRIBUNAL HAS CONSIDERED ALL THE RELEVANT FACTS BEFORE COMING TO THE CONCLUSION THAT THE DEDUCTION WAS RIGHTLY ALLOWED B Y THE CIT(A). HERE AGAIN WE FIND THAT THE REVENUE IS SEEKING REVIEW IN THE GUISE OF A MISC. PETITION. 7. LAST GRIEVANCE OF THE REVENUE IS REGARDING THE DIRECTION OF THE TRIBUNAL TO ALLOW TELESCOPING AND THIS IS CONTAINED IN PARAS 9 AND 10 OF THE MISC. PETITION. 8. RELEVANT PARA OF THE TRIBUNALS ORDER IS R EPRODUCED HEREUNDER: 13. THE LAST ISSUE IS WITH REGARD TO TREATING THE CASH AND BANK `BALANCES FOUND AT THE TIME OF SEARCH AS UNEXPLAINE D. IN THIS CONNECTION, WE ARE OF THE OPINION THAT THE PLEA OF THE ASSESSEE THAT TELESCOPING IS CALLED FOR WITH THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED SOURCES IS REASONABLE. WE THEREFORE, UP HOLD THE CLAIM OF THE ASSESSEE AND DIRECT THE A.O TO GIVE CREDIT TO T HE ASSESSEE TO THE EXTENT OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED S OURCES OF INCOME CONSEQUENT TO THE ADDITION MADE ON ACCOUNT OF CASH DEPOSIT IN BANK AND LOW HOUSEHOLD WITHDRAWALS . 9. IT IS CLEAR FROM THE ORDER OF THE TRIBU NAL THAT IT CONSIDERED THE PLEA OF THE ASSESSEE FOR TELESCOPING TO BE REASONAB LE. THE TRIBUNAL ONLY DIRECTED THE A.O. TO ALLOW TELESCOPING TO THE EXTEN T OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED SOURCES OF INCOME. THUS WE F IND THAT THE REVENUE IS SEEKING A REVIEW IN THE GUISE OF A MISC. PETITION HERE ALSO. MP NOS. 131-2/MDS/2003 5 10. THE SUM AND SUBSTANCE OF THE PLEADING OF THE R EVENUE IS THAT ITS ARGUMENTS WERE NOT CONSIDERED PROPERLY BY THIS TRIBUNAL AND CERTAIN DECISIONS OF NON-JURISDICTIONAL HIGH COURTS CITED B Y IT WERE NOT MENTIONED BY THE TRIBUNAL IN ITS ORDER. HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF VISWAS PROMOTERS (P) LTD. V. ACIT (2 009) 30 DTR 65 HAS HELD THAT EVEN FAILURE OF THE TRIBUNAL TO CONSIDER THE JUDGEMENT OF A NON- JURISDICTIONAL HIGH COURT CITED WOULD NOT CONSTITU TE A MISTAKE APPARENT FROM RECORD AMENABLE TO SEC. 254(2) PROCEEDINGS UND ER THE ACT. IT WAS ALSO HELD BY THEIR LORDSHIPS THAT FAILURE TO CONSID ER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSI ON WAS NOT AN ERROR APPARENT FROM RECORD, ALTHOUGH IT MIGHT BE AN ERROR OF JUDGEMENT. THUS WE FIND NO MERIT IN THE MISC. PARTITION FILED BY TH E REVENUE WHICH STANDS DISMISSED. 11. NOW WE TAKE UP THE MISC. PETITION FILED BY ASS ESSEE. GRIEVANCE BY ASSESSEE RAISED THROUGH ITS MISC. PETITION CAN B E SUMARISED AS UNDER: (A) THE AUDIT REPORT OBTAINED BEYOND 180 DAYS W AS INVALID FOR THE PURPOSE OF RECKONING THE SAID TIME IN COMPUTING THE TIME LIMIT AS PRESCRIBED IN SEC. 158BE OF THE ACT. (B) THE NON-APPLICABILITY OF PROVISO TO SEC.15 3(3) OF THE ACT TO THE BLOCK PROCEEDINGS IN VIEW OF THE SPECIAL ASSESSMENT S ENVISAGED IN CHAPTER XIV B OF THE ACT AND THE TIME LIMIT FOR CO MPLETION OF THE SAID SPECIAL ASSESSMENTS IS SPECIFICALLY DEALT IN THE SA ID CHAPTER. MP NOS. 131-2/MDS/2003 6 (C) THE NON APPLICABILITY OF THE PROVISO TO EXPLANATION (1) TO SEC. 158BE OF THE ACT ON ACCOUNT OF THE LEGAL POSITION T HAT THE EARLIER EXPLANATION WAS REPLACED BY THE PRESENT EXPLANATION WHICH INCLUDED THE SAID PROVISO SIMILAR TO THE PROVISO CONTAINED I N SEC. 153(3) OF THE ACT WITH EFFECT FROM 1-6-2002. 12. AS IS CLEAR FROM THE MISC. PETITION THE QUESTI ON IS REGARDING THE VALIDITY OF THE ASSESSMENT. ACCORDING TO THE ASSESS EE, THE ORDER WAS PASSED AFTER THE TIME LIMIT PRESCRIBED U/S 158BE OF THE ACT. ADMITTEDLY THERE WAS A SPECIAL AUDIT IN TERMS OF SEC. 142(2A) OF THE ACT. FIRST PLEADING OF THE ASSESSEE IS THAT THE SPECIAL AUDIT REPORT WAS RECEIVED BEYOND THE PERIOD OF 180 DAYS AND THEREFORE, SUCH A N AUDIT REPORT WAS INVALID AND THE AO COULD NOT TAKE REFUGE UNDER SUCH AUDIT REPORT FOR EXTENDING THE TIME LIMIT FOR PASSING THE ASSESSMENT ORDER. RELEVANT PART OF THE ORDER OF THE TRIBUNAL WHERE THE ABOVE ISSUE IS DEALT WITH APPEARS AT PARA 6 TO 8 OF THE TRIBUNALS ORDER, WHICH ARE R EPRODUCED BELOW: 6. THE LEGAL ISSUE TOUCHED UPON BY THE ASSESSEE IS WITH REGARD TO THE ASSESSMENT BEING BARRED BY TIME. THE RETURN THAT WA S FILED BY THE ASSESSEE WAS ON 6-9-99. THE SEARCH APPARENTLY WAS M ADE ON 11-12-97 AND 12-12-97. THE FURTHER SEARCHES MADE IN THE MONT H OF JAN.98 AND FEB.98 ARE CLAIMED TO BE NOT IN CONTINUATION OF THE EARLIER SEARCHES BUT WERE EXAMINATIONS. PROHIBITORY ORDERS U/S 132 OF TH E ACT HAD BEEN ISSUED RESTRAINING THE ASSESSEE FROM OPENING, OPERATING BA NK ACCOUNTS AND SO ON. THE ASSESSEE RELIED ON CERTAIN DECISIONS TO THE EFFECT THAT THE TIME TAKEN FOR EXAMINATION AT ITEMS COVERED BY THE PROHI BITORY ORDER IS NOT VALID. THE ASSESSEE FURTHER PLEADED THAT THE LAST O F THE AUTHORIZATIONS BASED ON WHICH THE LAST OF THE PANCHNAMA WAS DRAWN SHOULD BE TAKEN AS 12-12-97. THE LD. COUNSEL ACCORDINGLY PLEADED THAT IN VIEW OF THE MP NOS. 131-2/MDS/2003 7 PROVISIONS CONTAINED IN SEC.158BE OF THE ACT AND CO NSIDERING THE FACT THAT THE SEARCH WAS MADE AFTER JAN, 1997, THE AO WO ULD GET 2 YEARS FROM THE END OF THE MONTH IN WHICH LAST OF THE AUTHORIZA TION FOR SEARCH U/S 132 OF THE ACT WAS MADE. ON THIS BASIS THE AO GOT TWO Y EARS STARTING FROM 1- 1-1998 AND ENDING WITH 31-12-1999. THE LD. COUNSEL THEN SUBMITTED THAT THE A.O DESIRED AUDITING OF ACCOUNT BY REFERRING TO THE PROVISIONS OF SEC. 142(2A) OF THE ACT. THE DIRECTION OF THE A.O FOR CO NDUCTING AUDIT OF ACCOUNTS OF THE ASSESSEE U/S 142(2A) OF THE ACT WAS RECEIVED BY THE ASSESSEE ON 4-12-99. THE PLEA RAISED WAS THAT ON TH IS BASIS THE ASSESSEE SHOULD HAVE GOT THE ACCOUNTS AUDITED AND SUBMITTED ITS REPORT TO THE A.O WITHIN 100 DAYS FROM THE DATE THE DIRECTION FOR CON DUCTING THE AUDIT WAS RECEIVED BY THE ASSESSEE.. THE AUDIT REPORT WAS APP ARENTLY RECEIVED BY THE APPELLANT ON 5-6-2000 WHICH IS DATED 3-6-2000. THE A.O THEREAFTER COMPLETED THE ASSESSMENT ON 31-7-2000. THE ASSESSEE ACCORDINGLY PLEADED THAT GOING BY THE PROPOSITION THAT FOR GETT ING THE ACCOUNTS AUDITED, THE H DATED 3-6-2000, CANNOT BE TAKEN NOTE OF ALSO. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY OPPOSED THE VA RIOUS PLEAS RAISED BY THE ASSESSEE. 7. THE ASSESSEE HAS GIVEN THE VARIOUS SEQUENCES OF EVENTS WHICH ARE NOT DISPUTED. THE ASSESSEE, HOWEVER, HAD OVERLOOKED THE PROVISO THAT IS PART OF SEC.1589BE OF THE ACT, WHICH IS REPRODUCED BELOW FOR THE SAKE OF CONVENIENCE. PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSIO N OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB -SEC.(1) OR SUB- SEC.(2) AVAILABLE TO THE AO FOR MAKING AN ORDER UND ER CLAUSE (C) OF SEC.158BC IS LESS THAN SIXTY DAYS, SUCH REMAINING P ERIOD, SHALL BE EXTENDED TO SIXTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDINGLY. A READING OF THE ABOVE PROVISO SHOWS THAT CONSEQUENT TO REFERRING THE MATTER TO THE AUDITOR FOR SUBMISSION OF HIS REPORT, THE AO WOULD GET TIME FOR FRAMING OF THE ASSESSMENT WHICH WOULD BE S IX YEARS. THE AO SHALL BE DEEMED TO GET 60 DAYS FROM THE DATE OF SUB MISSION OF THE AUDIT REPORT. SEC, 142(2A) OF THE ACT INDICATES THA T THE AO IF DESIROUS OF GETTING THE ACCOUNTS AUDITED SHOULD GET THE PREVIOUS APPROVAL OF THE C.I.T. AND DIRECT THE ASSESSEE TO G ET ACCOUNTS AUDITED AND CALL FOR FILING OF THE REPORT IN THE PRESCRIBED FORM, SEC,. 142(2) OF THE ACT PROVIDES THAT THE AO SHALL EXTEND THE PERIO D FOR A TOTAL 180 DAYS FROM THE DATE OF DIRECTION GIVEN BY HIM O THE ASSESSEE. FOR THE MP NOS. 131-2/MDS/2003 8 PURPOSE OF FRAMING AN ASSESSMENT AND FOR CALCULATIN G THE TIME AVAILABLE MERELY THE LIMITATION AVAILABLE, SEC.153( 3) CONTAINS A PROVISION FOR EXCLUSION OF THE TIME TAKEN FOR SUBMI SSION OF THE AUDIT REPORT. IDENTICAL WORDINGS HAVE BEEN ADDED IN SEC. 158BE FOR EXCLUSION OF THE TIME TAKEN FOR FURNISHING OF THE A UDIT REPORT, I.E. 180 DAYS WILL BE EXCLUDED FOR CONSIDERING THE ASPECT OF LIMITATION IN REGARD TO THE ORDER. FROM THE ABOVE IT IS CLEAR THA T FROM THE TIME OF DIRECTION AS GIVEN TO THE ASSESSEE FOR GETTING THE AUDIT REPORT, THE AO WILL GET A TOTAL TIME OF 240 DAYS FOR FRAMING O THE ASSESSMENT. 8. WE HAVE TO CONSIDER THE DATES RELEVANT TO THE P OINT AT ISSUE. THE FIRST IS THE NORMAL TIME FOR FRAMING OF THE ASSESSM ENT EXPIRES ON 31- 12-2000. AUDIT OF ACCOUNTS HAVING BEEN DIRECTED ON THE ASSESSEE THAT WAS RECEIVED BY THE ASSESSEE ON 4-12-1999, 180 DAY S WOULD EXPIRE ON 1-6-2000. ACCORDING TO THE PROVISO TO SEC. 158BE OF THE ACT, THE AO WOULD GET 60 DAYS AFTER THIS DATE, I.E. FROM 2-6-20 00 ONWARDS AND ENDING WITH 31-7-2000. THIS CLEARLY SHOWS THAT THE ORDER PASSED BY THE AO ON 31-7-2000 IS WELL WITHIN THE TIME. THE PL EA OF THE ASSESSEE THAT THE ASSESSMENT IS BARRED BY TIME IS ACCORDINGL Y WITHOUT ANY MERIT AND IS REJECTED. 13. THE FINDING OF THE TRIBUNAL THUS IS THAT THE AUDIT OF ACCOUNTS WERE DIRECTED ON THE ASSESSEE ON 4-12-1999 AND 180 DAYS EXPIRED ON 1-6-2000. WE ARE OF THE OPINION THAT JUST BECAUSE THE AUDIT R EPORT WAS DATED 3-6-2000 AND RECEIVED BY THE ASSESSEE ON 5-6-2000 APPLICABIL ITY OF EXPLANATION 1 TO SEC. 158BE, MORE SPECIFICALLY CLAUSE (II) THEREOF W OULD NOT GET OBLITERATED. IT IS FOR THE REASON THAT THE SAID CLAUSE MENTIONS PERIOD COMMENCING FROM THE DATE ON WHICH THE A.O DIRECTS AN ASSESSEE TO GE T HIS ACCOUNTS AUDITED ENDING ON THE DATE ON WHICH THE ASSESSEE IS REQUIRE D TO FURNISH A REPORT OF SUCH AUDIT. SO WHAT IS RELEVANT IS THE DATE ON WHIC H ASSESSEE IS REQUIRED TO FURNISH A REPORT. ACTUAL FURNISHING OF THE REPORT IS THEREFORE, NOT RELEVANT FOR MP NOS. 131-2/MDS/2003 9 CALCULATING THE TIME LIMIT MENTIONED U/S 158BE OF T HE ACT. HERE THE ASSESSEE WAS REQUIRED TO FURNISH A REPORT BY 1-6-2000 ON WHI CH DAY THE 180 DAYS TIME PERIOD EXPIRES. THUS ITS GRIEVANCE REGARDING VALIDI TY OF THE AUDIT REPORT FURNISHED AFTER THE TIME LIMIT AND ITS EFFECT ON TH E TIME LIMIT PRESCRIBED U/S 158BE OF THE ACT, DOES NOT HOLD ANY WATER. 14. THE SECOND ISSUE RAISED BY THE ASSESSEE IS REGA RDING NON-APPLICABILITY OF THE PROVISO TO EXPLANATION 1 TO SEC. 158BE OF TH E ACT. ACCORDING TO THE ASSESSEE THE TRIBUNAL HAD CONSIDERED SUCH EXPLANATI ON AS SUBSTITUTED BY FINANCE ACT 2002 W.E.F. 1-6-2002 WHEREAS, THE ASSES SMENT HAVING BEEN COMPLETED ON 31-7-2000 THE EXPLANATION AS IT STOOD BEFORE SUCH SUBSTITUTION ONLY WOULD APPLY. IN OTHER WORDS, ACCORDING TO IT, THERE IS A MISTAKE IN THE TRIBUNALS ORDER BY CONSIDERING A SUBSTITUTED EXPLA NATION WHICH WAS NOT APPLICABLE TO IT. 15. FOR RESOLVING THIS ISSUE WE ARE REPRODUCING EXP LANATION 1TO SEC. 158BE AS IT STOOD BEFORE AND AFTER ITS SUBSTITUTION BY FINANCE ACT, 2002 W.E.F. 1-6-2002: BEFORE 1-6-2002 EXPLANATION 1 IN COMPUTING THE PERIOD OF LIMITATI ON FOR THE PURPOSE OF THIS SECTION, THE PERIOD- MP NOS. 131-2/MDS/2003 10 (I) DURING WHICH THE ASSESSMENT PROCEEDINGS IS STAYED B Y AN ORDER OR INJUNCTION OF ANY COURT, OR (II) COMMENCING FROM THE DAY ON WHICH THE A.O DIRECTED THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SUB- SEC.(2A) OF SEC.142 AND ENDING ON THE DAY ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AU DIT UNDER THAT SUB-SECTION. AFTER 1-6-2002 EXPLANATION 1 IN COMPUTING THE PERIOD OF LIMITATI ON FOR THE PURPOSES OF THIS SECTION:- (I) THE PERIOD DURING WHICH THE ASSESSMENT PROCEEDING I S STAYED BY AN ORDER OR INJUNCTION OF ANY COURT; OR (II)THE PERIOD COMMENCING FROM THE DAY ON WHICH THE A.O DIRECTS THE ASSESSEE TO GET ITS ACCOUNTS AUDITED UN DER SUB- SEC.(2A) OF SEC.142 AND ENDING ON THE DAY ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH A UDIT UNDER THAT SUB-SECTION; OR (III THE TIME TAKEN IN REOPENING THE WHOLE OR ANY PART OF THE PROCEEDING OR GIVING AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SEC. 129; OR (IV)IN A CASE WHERE AN APPLICATION MADE BEFORE THE SETTLEMENT COMMISSION U/S 245C IS REJECTED BY IT OR IS NOT ALLOWED TO BE PROCEEDED WITH BY IT, THE PERIOD COMMENCING ON THE DATE OF SUCH APPLICATION IS MADE AND ENDING WITH THE DATE O N WHICH THE ORDER UNDER SUB-SEC.(1) OF SEC.245D IS RECEIVED BY THE COMMISSIONER UNDER SUB-SEC.(2) OF THAT SECTION. SHALL BE EXCLUDED: PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD, THE PERIOD OF LIMITATION REFERRED TO IN SUB-SECTION (2) AVAILABLE TO THE A.O FOR MAKING AN ORDER UNDER CLAUSE (C) OF SEC.158BC IS LE SS THAN 60 DAYS, SUCH REMAINING PERIOD SHALL BE EXTENDED TO SIXTY DAYS AN D THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO BE EXTENDED ACCORDING LY. MP NOS. 131-2/MDS/2003 11 THE EXPLANATION CONSIDERED BY THE TRIBUNAL IN ITS O RDER AS REPRODUCED BY IT AT PARA-7 OF ITS ORDER, WAS THE ONE AFTER SUBSTITUT ION. SINCE THE SUBSTITUTED EXPLANATION CAME INTO EFFECT ONLY ON 1-6-2002, THE EXPLANATION APPLICABLE TO THE ASSESSEE WAS THE PRE-AMENDED ONE. THE PROV ISO TO THE EXPLANATION WHICH GAVE THE A.O A PERIOD EXTENDABLE UPTO 60 DAYS WAS NOT THERE PRIOR TO THE SUBSTITUTION. THUS, BY CONSIDERING A PROVISION OF LAW WHICH WAS NOT APPLICABLE, THE TRIBUNAL HAS COMMITTED A MISTAKE WH ICH IS APPARENT ON RECORD. HENCE, THE ORDER OF THIS TRIBUNAL NEEDS TO BE RECALLED FOR ADJUDICATING ON THIS LIMITED ISSUE. 16. BEFORE LEAVING THE MATTER IT WOULD BE INAPPROPR IATE IF WE DO NOT DEAL WITH TWO OBJECTIONS RAISED ONE BY THE ASSESSEE AND OTHER BY THE REVENUE. ACCORDING TO THE ASSESSEE YEAR 2000 WAS A LEAP YEAR AND THEREFORE, 180 DAYS IF RECKONED FROM 4-12-1999, DUE DATE ON WHICH SPECI AL AUDIT REPORT WAS OBTAINED, WOULD END ON 3-12-2000. HENCE AN ADDITION OF ANOTHER 60 DAYS AS PROVIDED IN THE PROVISO TO SEC.158BE, ASSUMING FOR A MOMENT THAT PROVISO APPLIED, THE LAST DATE FOR COMPLETING THE ASSESSMEN T WOULD BE 30-7-2000. THEREFORE, IT IS PLEADED THAT THE ORDER PASSED ON 3 1-7-2000 IS BEYOND THE LIMITATION PERIOD. HOWEVER, IT WAS POINTED OUT BY T HE LD. D.R. THAT 30-7-2000 WAS A SUNDAY AND THEREFORE, THE LIMITATION COULD BE DEEMED TO HAVE ENDED MP NOS. 131-2/MDS/2003 12 ONLY ON 31-7-2000. THIS WAS NOT DISPUTED BY THE LD . A.R. HENCE, THIS ARGUMENT OF THE ASSESSEE FALLS FLAT. OBJECTION RAI SED BY THE REVENUE IS THAT EVEN WITHOUT CONSIDERING THE PROVISO TO EXPLANATION 1 TO SEC. 158BE, THE ORDER PASSED WAS WITHIN LIMITATION PERIOD. ACCORDIN G TO THE LD. D.R. AS PER CLAUSE (II) OF THE EXPLANATION TO SEC.158BE THE PE RIOD COMMENCING ON THE DAY ON WHICH A.O DIRECTED THE ASSESSEE TO GET HIS A CCOUNTS AUDITED 142(2A) AND ENDING ON THE DAY ON WHICH ASSESSEE WAS REQUIRE D TO FURNISH AN AUDIT REPORT HAD TO BE EXCLUDED AND IF SO EXCLUDED, THEN THE ASSESSMENT WAS WITHIN THE LIMITATION PERIOD THEN THE ASSESSMENT WA S WITHIN THE LIMITATION PERIOD. BE THAT AS IT MAY BE, THIS TRIBUNAL HAD CO NSIDERED THE ISSUE AND RULED IN FAVOUR OF THE ASSESSEE, RELYING PROVISO TO EXPLA NATION 1 TO SEC. 158BE AND AS MENTIONED BY US AT PARA-15 SUPRA, SUCH PROVISO W AS NOT THERE IN THE STATUTE WHEN THE ASSESSMENT WAS DONE. HENCE THERE C AN BE NO DOUBT THAT ATLEAST TO THAT EXTENT THERE IS A MISTAKE APPARENT FROM RECORD. 17. IN THE RESULT, M.P FILED BY THE ASSESSEE IS ALL OWED FOR THE LIMITED PURPOSE OF ADJUDICATING WHETHER THE ORDER PASSED BY THE A.O. WAS BEYOND THE PERIOD OF LIMITATION AS SPECIFIED U/S 158BE OF THE ACT AND THE EXPLANATION 1 THEREUNDER, AS IT STOOD PRIOR TO IT S UBSTITUTION BY FINANCE ACT, 2002. REGISTRY TO FIX APPEAL OF THE ASSESSEE. MP NOS. 131-2/MDS/2003 13 .117. 18. TO SUMMARISE THE RESULT, M.P. FILED BY THE REVENUE IS DISMISSED WHEREAS M.P FILED BY THE ASSESSEE IS PARTLY ALLOWED TO THE EXTENT INDICATED. ORDER PRONOUNCED IN OPEN COURT ON 23-7-2010. SD/- (GEORGE MATHAN) SD/- (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 23RD JULY,2010 NBR CC:THE ASSESSEES 2)THE ASSESSING OFFICER 4)THE CIT (A) 4) THE CIT, 5)THE D.R 6)GUARD FILE.