ACIT, Circle, Panchkula V. M/s Haryana State Industrial & Infrastructure Dev. Corp. Ltd., Panchkula

MA 2/CHANDI/2022

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5126 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-08-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Chandigarh
• Next Hearing Date: 16-05-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 03-01-2022

Judgement Text

1 आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “ए” , च᭛डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: HYBRID MODE ᮰ी आकाश दीप जैन, उपा᭟यᭃ एवं ᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM Miscellaneous Application No. 2/Chd/2022 In (आयकर अपील सं./ ITA NO. 1369/Chd/2019) िनधाᭅरण वषᭅ / Assessment Year : 2014-15 The ACIT Circle, Panchkula बनाम M/s Haryana State Industrial & Infrastructure Dev. Corpn. Ltd. Panchkula ˕ायी लेखा सं./PAN NO: AAACH4114R अपीलाथᱮ/Appellant ᮧ᭜यथᱮ/Respondent िनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri A.K. Jindal & Smt. Rattan Kaur, C.A’s राज᭭व कᳱ ओर से/ Revenue by : Smt. Amanpreet Kaur, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 17/05/2024 उदघोषणा कᳱ तारीख/Date of Pronouncement : 09/08/2024 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : The present Miscellaneous Application has been filed by the Revenue against the order passed by the Coordinate Bench dt. 26/10/2021 in ITA No. 1369/Chd/2019 for Assessment Year 2014-15. 2. In the present Misc. Application, it has been submitted by the Revenue as under: “3. Now, the Hon’ble ITAT, Chandigarh has passed the order on 26.10.2021 in ITA No. 1369/Chd/2019 and allowed the appeal of the assessee. While adjudicating on the additional ground of appeal as given above, the Hon’ble ITAT in its order dated 26.10.2021 in ITA No. 1369/Chd/2019 pronounced as under:- “ .........33. The only inference which can possibly be drawn in the fact of the present case as narrated above, is that the reference to special audit was made only to buy further time for completing the assessment, having been made at the fag end of the period for completion of assessment that too merely for obtaining further details and information and not because any complexity was noted in the accounts of the assessee. The reference to special audit, therefore we hold, is an invalid reference, contrary to law. 34. The assessment order passed therefore in the extended period, as a consequence of the invalid reference, we hold, is barred by limitation and hence void. 2 35. Since we have held the assessment order to be void on account of an invalid reference to special audit for the aforesaid reasons, the remaining arguments with respect to the same are not being dealt with by us. The additional ground of appeal raised by the assessee is, therefore, allowed. 36. Both the parties were heard only on the additional ground raised which has been allowed, by us and the assessment, order passed has been held to be void. The remaining grounds, relating to merits of the case, therefore, are rendered academic in nature. 37. In the result the appeal of the assessee is, therefore allowed in above terms" 4. With regard to the above, it is submitted that the assessee played fraud with the revenue as well as the Appellate Authorities by suppressing/ concealing the material information with regard to filing of the Civil Writ Petition bearing CWP No. 12434 of 2017 before the Hon'ble Jurisdictional High Court questioning the Special Audit Report inter alia on the ground that the reference to special audit was only to extend the period of limitation. The Hon'ble High Court declined to interfere with the report of the special auditor, however, left it open to the assessee to impugn the order, if adverse and dismissed the Civil Writ Petition vide order dated 01.06.2017 (Copy of CWP filed by the assessee before the Hon'ble Punjab & Haryana High Court alongwith Copy of order of Hon'ble High Court is being enclosed). The report of the special auditor has thus become final as no further challenge to the order of the Hon'ble High Court dated 01.06.2017 was laid before the Hon'ble Supreme Court, the official website of the Hon'ble Supreme Court does not show any results in this regard. The order of the Hon'ble High Court came to the notice while searching the law on the issue. The ground of limitation for passing the assessment order under the guise of reference to special audit was also raised before the Hon'ble High Court and the said ground of limitation deemed to have been rejected in the wake of dismissal of the Civil Writ Petition. The assessee without disclosing the fact of dismissal of the Civil Writ Petition by the Hon'ble High Court before the Commissioner of Income Tax (Appeals) and before the Ld. Income Tax Appellate Tribunal, challenged the reference made for special audit under Section 142(2A) of the Income Tax Act, 1961 and the additions made thereon in Appeal. Therefore, the order of Hon'ble ITAT dated 26.10.2021 is based oh-incorrect submissions made by the assessee. Therefore, the same order is liable to be corrected under Section 254 (2) for rectifying mistake apparent from record as the assessee has not made true and full disclosure during proceedings before the Hon'ble ITAT. 5. In view of the above, it is prayed that the Hon'ble ITAT may kindly consider the above mistakes which are apparent from record and admit the Miscellaneous Application u/s 254(2) of the Act and withdraw the impugned order and pass an appropriate order rectifying such mistake. Further, Revenue prays that the aforesaid submissions may kindly be considered and even if these are not acceptable, these may be rejected on merits by explicit findings. 6. The grounds of appeal before the Hon'ble ITAT are annexed as Annexure-B. 3 3. The various grounds as per Annexure B raised by the Revenue in the present Misc. Application read as under: “i) Whether on the facts and in the circumstances of the case, the order passed by the Hon'ble Income Tax Appellate Tribunal is vitiated being obtained fraudulently by the Assessee by suppressing the order of the Hon'ble jurisdictional High Court dated 01.06.2017 dismissing the Civil Writ Petition No. 12434 of 2017 wherein the challenge to the special audit report including the ground of limitation etc. was upheld? ii) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is right in law in holding the reference under Section 142(2A) of the Income Tax Act, 1961 as appealable before the Appellate Authorities ignoring the scheme of the fiscal statute wherein the legislature consciously has not provided any Appeal and Appellate Tribunal, being a creature of statute with powers conferred by the statute is statutorily obligated to pass an order within the confines of statute? iii) Whether on the facts and in circumstances of the case, the Hon'ble Income Tax Appellate. Tribunal is right in law in adjudicating and holding the reference under Section 142, (2A) of the Income Tax Act, 1 961 invalid and examined the veracity of the same as if the right of appeal is Inherent? iv) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is right in law in admitting the additional ground of Appeal after the expiry of period of limitation under Section 253 of the Income Tax Act, 1961 without there being any application for condonation of delay by the Assessee? v) Whether on the facts and in the circumstances of the case, the Hon'ble. Income Tax Appellate Tribunal is right in law in adjudicating the reference under Section 142(2A) of the Income Tax Act, 1961 under the guise of limitation for passing an order of assessment whereas the Hon'ble High Court declined to interfere in the challenge laid to the special auditor report, limitation etc. and the adjudication suffers from, the vice of principal of estopple, waiver, acquiescence etc. ? vi ) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is right in adjudicating the issue in Appeal which issue was not adjudicated by the Commissioner of Income Tax (Appeals) being not appealable? vii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is right in holding that the reference to special audit is an integral part of process ignoring the scheme of the statute and the title of Section 142 of the Income Tax Act, 1961 i.e., enquiry before assessment? viii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is competent to assume jurisdiction as a Court of Appeal and re- examine the veracity of reference to the special audit despite dismissal of Civil Writ Petition by the Hon'ble High Court declining to interfere with the report of the special auditor? ix) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal misdirected itself in misconstruing the provisions of 4 the Income Tax Act, 1961, due to suppression of facts by assessee, resulting into incorrect order which is contrary to the scheme of the statute and material on record? .” 4. In support of the misc. application, the written submissions filed by the Revenue dt. 15/11/2022 read as under: “1. That the Applicant - Income Tax Department craves the indulgence of this Hon'ble Tribunal to file the Written Submissions for the fair and proper disposal of the Misc. Application filed under Sub-Section (2) of Section 254 of the Income Tax Act, 1961 read with Rule 35A of the Income Tax (Appellate Tribunal) Rules, 1963 for rectification of mistakes apparent from record in the order dated 26.10.2021 passed in ITA No. 1369/Chd/2019. The facts in brief are stated hereunder for ready reference and kind consideration: (a) The Assessee initially e-filed the return of income for the Assessment Year 2014-15 on 30.11.2014 by declaring income of Rs. 1145,43,69,614/-, which was subsequently revised on 31.07.2015 wherein income of Rs.1161,71,60,619/- was declared. The Assessee again revised the return on 26.03.2016 and declared income of Rs.l 11,31,85,070/-. (b) The Assessing Officer issued Notice under Section 143(2) of the Income Tax Act, 1961 on 31.08.2015 and fixed the case for hearing on 14.09.2015. The statutory Notice under Section 142(1) of the Income Tax Act, 1961 along with questionnaire dated 26.10.2015 were issued wherein the Financial Statement, documentary evidence for capital receipt in form of grant contribution, Income from Industrial Area Activity and detail of rental income etc. was sought. The Assessing Officer specifically called upon the Assessee to explain the method of accounting and fixed the hearing on 06.11.2015. (c) The Assessee filed part reply on 04.11.2015 wherein Financial Statement (Balance Sheet, Computation of Income etc.) was furnished. The detailed reply was later-on filed on 26.11.2015. The Assessing Officer thereafter issued Notice under Section 143(2) of the Income Tax Act, 1961 on 08.06.2016. The Notice under Section 142(1) of the Income Tax Act, 1961 was issued on 21.06.2016 for furnishing the information, as called for vide questionnaire dated 26.10.2015, in writing, and verified in the prescribed manner. (d) The Assessee filed the reply on 28.06.2016 and furnished the reasons for revising the return and vide reply dated 11.07.2016, furnished the details of income from industrial activity and working of units. The Assessing Officer issued another notice under Section 142(1) of the Income Tax Act, 1961 on 14.10.2016 and fixed the hearing on 26.10.2016. The Assessee did not comply with the notice. The Assessing Officer again called upon the Assessee vide noting sheet entry dated 16.12.2016 to furnish the reply and supply the information. In response thereto, the Assessee furnished the detailed reply or) 20.12.2016. (e) The Assessing Officer found the reply of the Assessee bereft of any merit, and considering the nature and complexity of accounts, volumes of account, multiplicity of transactions and interests of the Revenue, invoked tin- provision of Section 142(2A) of the Income Tax Act, 1961 and issued show cause notice on 20.12.2016 for proposing special audit. (f) The Assessee filed its reply to the show cause notice issued under Section 142(2A) of the Income Tax Act, 1961 on 26.12.2016. The Assessee appeared before the Assessing Officer through Authorized Representative and discussed the reply. The Assessing Officer gave- the hearing and considered the 5 reply of the Assessee and found the same to be without any substance and keeping in view the nature of accounts, complexity of accounts, volumes of account, multiplicity of transactions and interests of the Revenue, submitted the proposal to the Pr. Commissioner of Income Tax, Panchkula for approval of Special Audit under Section 142(2A) of the Income Tax Act, 1961 vide letter dated 26.12.2016. (g) The Pr. Commissioner of Income Tax, Panchkula granted the approval for special audit under Section 142(2A) of the Income Tax Act, 1961 on 29.12.2016 and appointed M/s Kansal Singla and Associates as special auditor. The intimation in this regard was also given to the Assessee on 29.12.2016 itself. (h) The special auditor, so appointed, consented for the same on 30.12.2016. The Assessee appeared before the special auditor and participated without any demur. The special auditor finalized the special audit on 28.04.2017 and the said report was communicated to the Assessee on 16.05.2017 for its comments. (i) The Assessee participated in the proceedings without there being any challenge to the Reference. The Assessing Officer after considering the material, framed the Assessment vide order dated 21.06.2017 passed under Section 143(3) of the Income Tax Act, 1961. The Assessing Officer while framing the assessment also recorded its satisfaction for initiation of penalty proceedings under Section 271(l)(c) of the Income Tax Act, 1961. (j) The Assessee challenged the order of assessment in Appeal before the Commissioner of Income Tax (Appeals), Panchkula bearing Appeal No. 58/PKL/17-18 on 20.07.2017 and also challenged the validity of reference to the special audit. However, no ground with regard to limitation was raised. (k) The Commissioner of Income Tax (Appeals) vide order dated 27.08.2019 partly allowed the Appeal of the Assessee, however, declined to adjudicate the issue of validity of reference to special audit on the ground that the statute has not provided any remedy of Appeal and the same cannot be the subject matter of Appeal as the reference made under Section 142(2A) of the Income Tax Act, 1961 is not appealable within the ambit of Section 246A of the Income Tax Act, 1961. (l) The Assessee assailed the order of the Commissioner of Income Tax (Appeals) dated 27.08.2019 before the Hon'ble Income Tax Appellate Tribunal by filing Appeal on 18.10.2019 bearing ITA No. 1369/CHD/2019. In the grounds of Appeal, no ground with regard to reference to the special audit and the Assessment Order barred by limitation was raised in Form No. 36. (m) The Assessee vide letter dated 07.12.2020 raised the additional ground which reads as under: "That the assessment order passed u/s 143(3) is prima facie illegal, bad in law, without jurisdiction, void ab-initio and is thus barred by time limitation as the very reference to the special audit u/s 142(2A) of the act is illegal and bad in law" The admission of aforesaid additional ground was opposed by the Revenue. The Hon'ble Tribunal admitted the additional ground and held that the validity of reference under Section 142(2A) of the Income Tax Act, 1961 is appealable when it has been so challenged for the purpose that the assessment order so passed, in consequence to the extended time available on account of the said reference, was time barred. As a consequence thereof, the reference has been held to be 6 invalid and the Assessment framed as a consequence of invalid reference has also been held to be barred by limitation. 2. That this Hon'ble Tribunal could not have admitted the additional ground raised after expiry of the limitation period available for filing the appeal before the Tribunal nor could have admitted being administrative action for which no remedy of appeal is provided under the statute, for the said proposition of law the reliance is being placed on the judgment of the Hon'ble Apex Court in the case of Rajesh Kumar and Others Vs. The Commissioner of Income Tax and Others, reported as [2006] 287 ITR 91 (SC). 3. That the Hon'ble Tribunal in view of the aforesaid could not have adjudicated the additional ground of Appeal nor could have adjudicated upon the reference made to the Special Auditor under Section 142(2A) of the Income Tax Act, 1961 for more than one reason, i.e. firstly, the statute has not provided any remedy of Appeal in the hierarchy of Appeals; secondly, the first Appellate Authority declined to adjudicate this issue and in absence of any such adjudication, the issue not decided cannot be made subject matter of Appeal before the Hon'ble Tribunal; thirdly, there is suppression of material fact qua the issue / order of the Hon'ble Jurisdictional High Court in the case of the Assessee itself dated 01.06.2017, upholding the challenge laid to the Special Auditor Report and limitation. The aforesaid error(s) apparent have crept in while delivering the order which are rectifiable under Sub-Section (2) of Section 254 of the Income Tax Act, 1961, which empowers the Hon'ble Tribunal to rectify a mistake apparent from record. Sub-Section (2) of Section 254 of the Income Tax Act, 1961 reads as under: "Orders of Appellate Tribunal." (2) The Appellate Tribunal may, at any time within six months from the end of the month in which the order was passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer: Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard" The phrase "apparent from record" inherently weighs any possibility of extracting a mistake which is apparent from record and warrants rectification. Sub-Section (2) of Section 254 of the Income Tax Act, 1961 has limited application i.e., rectification of "any mistake apparent from the record". As per scheme of Sub- Section (2) of Section 254 of the Income Tax Act, 1961, there should be a mistake and the said mistake should be apparent / patent from record and would not require determination through a long drawn process of reasoning. Rectification under Sub-Section (2) of Section 254 of the Income Tax Act, 1961 can only be made when glaring mistake of fact or law has been committed while passing the order and it becomes apparent from record. 4. That the Assessee, a Government of Haryana undertaking, carrying out its activities for the industrial development of the State, played fraud with the Revenue as well as the Appellate Authorities including this Hon'ble Tribunal by suppressing / concealing the material information with regard to filing of the Civil Writ Petition bearing CWP No. 12434 of 2017 before the Hon'ble Jurisdictional High Court questioning the Special Audit Report intcr-alia on the ground that the reference to Special Audit was only to extend the period of limitation. The Hon'ble High Court declined to interfere with the report of the Special Auditor, however, left it open to the Assessee to impugn the order, if 7 adverse, and dismissed the Civil Writ Petition vide order dated 01.06.2017. The report of the Special Auditor has thus become final as no further challenge to the order of the Hon'ble High Court dated 01.06.2017 was laid before the Hon'ble Supreme Court. The ground of limitation for passing the Assessment Order under the guise of reference to special audit was also raised before the Hon'ble High Court and the said ground of limitation is deemed to have been rejected in the wake of dismissal of the Civil Writ Petition. The Assessee without disclosing the factum of dismissal of the Civil Writ Petition by the Hon'ble High Court, challenged the reference made for special audit under Section 142(2A) of the Income Tax Act, 1961 and the additions made thereon in Appeal before the Commissioner of Income Tax (Appeals) and before this Hon'ble Tribunal. The Assessee mislead this Hon'ble Tribunal and obtained an order without disclosing the dismissal of the Civil Writ Petition No. 12434 of 2017. It is trite law that a party approaching the Court must come with clean hands, and any order obtained by fraud is a nullity and non-est in the eye of law as fraud vitiates everything and makes it void-ab-initio. The Hon'ble Apex Court in the case titled as Dalip Singh Vs. State of U.P. and Others, reported as (2010) 2 SCC 114, held as under: "It is now well settled that a litigant who attempts to pollute the stream of justice or who touches pure fountain of justice with tainted hands, is not entitled to any relief, interim or final". The Hon'ble Supreme Court in the case titled as S.P. Chengalvaraya Naida (Dead) By LRs. Vs. Jagannath (Dead) by LRs and Others, reported as (1994) 1 SCC 1 has held that nondisclosure of the relevant and material documents with a view to obtain an undue advantage would amount to fraud, and a judgment or decree obtained by fraud is to be treated as a nullity. The judgment in the case of S.P. Chengalvaraya Naida (supra) has been reiterated by the Hon'ble Apex Court in its recent decision in the case of Ram Kumar Vs. State of Uttar Pradesh and Others, bearing Civil Appeal No. 4258 of 2022, decided on 28.09.2022. 5. That undisputedly, the reference made to Special Audit under Section 142(2A) of the Income Tax Act, 1961 is not appealable either under Section 246A of the Income Tax Act, 1961 before the Commissioner of Income Tax (Appeals) or under Section 253 of the Income Tax Act, 1961 before the Hon'ble Tribunal. The Hon'ble Tribunal exceeded its jurisdiction in holding the reference to Special Audit under Section 142(2A) of the Income Tax Act, 1961 as invalid and further erred in holding the Assessment framed by the Assessing Officer barred by limitation and void. It is relevant to mention here that the Assessee mislead this Hon'ble Tribunal and obtained an order without disclosing the dismissal of CWP No. 12434 of 2017 vide order dated 01.06.2017, wherein the Hon'ble High Court declined to interfere with the challenge to the Special Auditors Report, and the ground of limitation etc. The issue thus could not have been examined and examining the issue afresh would amount to sitting over the decision of the Hon'ble Jurisdictional High Court dated 01.06.2017 as a court of appeal, which is unconstitutional. 6. That it is well settled that "what cannot be done directly cannot be permitted to be done indirectly" as held by the Hon'ble Apex Court in the case titled as Delhi Administration Vs. Gurdip Singh Uban and Others, reported as 2000 (7) SCC 296. In the present case, since no appeal lies against the reference made under Section 142(2A) of the Income Tax Act, 1961, the question of adjudicating the same would not arise. Thus, the order passed by this Hon'ble Tribunal tantamounts to usurping the jurisdiction not conferred upon it. 7. That Chapter XXII of the Income Tax Act, 1961 deals with the Appeals, and Revisions, and Appeals to Tribunal. Section 252 of 8 the Income Tax Act, 1961 empowers the Central Government to constitute an Appellate Tribunal to exercise the powers and discharging the functions conferred on the Appellate Tribunal by the Income Tax Act, 1961. Further, Section 253 of the Income Tax Act, 1961 envisage the appealable orders and Section 254 of the Income Tax Act, 1961 empowers the Appellate Tribunal to pass orders thereon and to decide the Appeal filed against the appealable orders, as contained under Section 253 of the Income Tax Act, 1961. Thus, the Appellate Tribunal is empowered to adjudicate an Appeal qua the appealable orders only and no appeal lies against the reference made under Section 142(2A) of the Income Tax Act, 1961 as the same is outside the purview of the adjudication by the Appellate Tribunal. 8. That the order passed suffer from the inherent vice of jurisdiction in as much as, no appeal lies against the reference made under Section 142(2A) of the Income Tax Act, 1961 and the same is against the spirit and scheme of the statute. The proceedings relating to an appeal would only mean the appeal against an appealable order in terms of Sub-Section (1) to Section 253 of the Income Tax Act, 1961. 9. That though there is no express provision in the Constitution of India like Article 141 in respect of the High Courts, however, the Tribunals within the jurisdiction of a High Court are bound to follow its judgements as the High Court has the power of superintendence over them under Article 227 of the Constitution of India. The decision of a High Court is binding on all the courts below it within its jurisdiction. It is not open for the Tribunal to disregard the binding decision of jurisdictional High Court. In the case in hand, the Assessee has obtained the order without disclosing the decision dated 01.06.2017 of the Hon'ble Jurisdictional High Court. Once there is a binding decision of the Hon'ble jurisdictional High Court, the same continues to be binding on all within the State till such time it is stayed and / or set aside by the Hon'ble Apex Court or the same very Court takes a different view on an identical factual matrix or larger bench of the same Court takes a view different from the one already taken. Thus, the law declared in the decision(s) of the High Court will be binding upon all authorities and Tribunals functioning within the State. Consequently, the decisions of the Hon'ble High Court would be binding upon all Authorities, Tribunals and Courts subordinate to the High Court within its jurisdiction. Moreover, non-application of decision(s) of the Hon'ble jurisdictional High Court by this Hon'ble Tribunal is a rectifiable mistake within the mischief of Sub-Section (2) of Section 254 of the Income Tax. Act, 1961. The Hon'ble Supreme Court in the case titled as Assistant Commissioner of Income Tax vs. Saurashtra Kutch Stock Exchange Limited, reported as (2008) 219 CTR (SC) 90 held that that non-consideration of the decision of the Hon'ble jurisdictional High Court / Hon'ble Supreme Court would constitute a mistake apparent from record and rectifiable. 10. That even otherwise, the limitation to file an Appeal before this Hon'ble Tribunal lapsed in October, 2019. The Appeal was filed in Form No. 36 by the Assessee on 18.10.2019 without any challenge to the order of assessment being barred by limitation as a consequence of invalid reference to the special audit. The additional ground was raised through letter dated 07.12.2020 without there being any application for condonation of delay. Hence, the additional ground could not have been entertained. That thus, in view of the aforesaid, apparent mistakes have crept in, which cannot be allowed to perpetuate. The present Misc. Application filed under Sub- Section"(2) of Section 254 of the Income Tax Act, 1961 may kindly be allowed, and the order obtained by playing fraud is a nullity, being inconsistent and contrary to the powers conferred under the provisions of the statute, be rectified. 9 5. In his submissions, the ld AR has submitted and has relied on the written submissions and the contents thereof read as under: “The DCIT, Panchkula has filed an application for MA for the AY 2014-15 alleging that the order of Hon'ble ITAT dated 26.10.2021 is based on incorrect submissions made by the assessee. Therefore, the same order is liable to be corrected under Section 254 (2) for rectifying mistake apparent from record as the assessee has not made true and full disclosure during proceedings before the Hon'ble ITAT. At the very outset we would like to bring to the kind notice of the Honorable Bench that the Income Tax Department has already preferred an appeal before the High Court against the order of ITAT challenging the issue of additional ground accepted by the Honorable Bench and the power of the tribunal to adjudicate the validity of assessment. The grounds of appeal raised in MA by the AO are exactly the same as the substantial questions of law raised before the high court. (The copy of appeal filed before High Court is enclosed). In this regard it is submitted that the Honorable ITAT has passed very clear and speaking order discussing the power to adjudicate and acceptance of additional ground after referring to the judicial pronouncements referred by the AO in MA. Thus, the issue raised in the miscellaneous application against the detailed speaking order would not qualify under the mistake apparent from record, therefore it is requested that the same is not maintainable. The assessee officer in the miscellaneous application has raised the following grounds of appeal, for which we make our ground wise submissions as under:- i. Whether on the facts and in the circumstances of the case, the order passed by the Hon'ble Income Tax Appellate Tribunal is vitiated being obtained fraudulently by the Assessee by suppressing the order of the Hon'ble jurisdictional High Court dated 01.06.2017 dismissing the Civil Writ Petition No. 12434 of 2017 wherein the challenge to the special audit report including the ground of limitation etc. was upheld? (Ground No. 1) ii. Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal misdirected itself in misconstruing the provisions of the Income Tax Act, 1961, due to suppression of facts by assessee, resulting into incorrect order which is contrary to the scheme of the statute and material on record?(Ground No. 9) Through this ground of appeal the AO has challenged that the assessee has obtained the order of ITAT fraudulently by suppressing the order of Jurisdictional High Court alleging that ground of limitation has already been upheld in the writ petition. The relevant extract of the Miscellaneous Application is as under:- Para 4. With regard to the above, it is submitted that the assessee played fraud with the revenue as well as the Appellate Authorities by suppressing/ concealing the material information with regard to filing of the Civil Writ Petition bearing CWP No. 12434 of 2017 before the Hon'ble Jurisdictional High Court questioning the Special Audit Report inter-alis on the ground that the reference to special audit was only to extend the period of limitation. The Hon'ble High Court declined to interfere with the report of the special auditor, however, left it open to the assessee to''impugn the order, if adverse and dismissed the Civil Writ Petition vide order dated 01.06.2017 (Copy of CWP filed by the assessee before the Hon'ble Punjab & Haryana High Court alongwith Copy of order of Hon'ble High Court is 10 being enclosed). The report of the special auditor has thus become final as no father challenge to the order of the Hon'ble High Court dated 01.06.2017 was laid before the Hon'ble Supreme Court, the official website of the Hon'ble Supreme Court does not show any results in this regard. The order of the Hon'ble High Court came to the notice while searching the law on the issue. The ground of limitation for passing the assessment order under the guise of reference to special audit was also raised before the Hon'ble High Court and the said ground of limitation deem to have been rejected in the wake of dismissal of the Civil Writ Petition. The assessee without disclosing the fact of dismissal of the Civil Writ Petition by the Hon'ble High Court before the Commissioner of Income Tax (Appeals) and before the Ld. Income Tax Appellate Tribunal, challenged the reference made for special audit under Section 142(2A) of the Income Tax Act, 1961 and the additions made thereon in Appeal. In this regard we would like to bring on record the facts of the case which are :- The AO referred the case of the assessee for special audit on 29 th Dec 2016 to M/s Kansal Singla & Associates. The Special audit was commenced, and special auditor finalized the special audit report on 28 th April 2017 proposing the addition of Rs.6,99,49,681,598/-. The assessee aggrieved by the special audit report and the addition proposed therein, filed a writ before the High Court challenging that the Special Auditor has exceeded his jurisdiction in the Special Audit report. To substantiate this fact, reference is drawn to Para 4 of Writ Petition filed by the assessee containing the substantial questions of law raised before High Court which are as under: - 4. That the following substantial question of law arises for the kind consideration of this Hon'ble court 1) Whether in the facts & circumstances of the case, the Special Auditor having exceeded his jurisdiction, the audit report deserves to be set aside by this Hon'ble court. 2) Wliether in the facts & circumstances of the case, the Report of the special auditor is solely motivated by Revenue Collection through arbitrary proposed addition of Rs. 6994,96,81,598/- and is contrary to the provisions of the Act. On perusal of the above, it will be seen that the assessee has not challenged the period of limitation before the High Court as has been alleged by the AO. Even otherwise, the assessee could not have challenged the same before the High Court as the assessment order was not passed/was pending at the time of filing the writ petition. To substantiate this fact further, reference is made to the findings of the High Court in the writ petition which are as under:- 1. The petitioner has brought this petition under Article 226 of the Constitution of India seeking quashing of the special audit report dated 16.05.2017 (Annexure P- 13), which has been submitted by the Special Auditor, under Section 142(2A) of the Income Tax Act, 1961. 2. On a careful perusal, we find that assessment order for the Assessment year 2014-15 is yet to be passed by the Assessing Officer and it shall be open for the petitioner to take all the pleas before the assessing Officer at the time of framing assessment. 3. In view of the above, we find no ground to interfere in the report of the Special Auditor submitted under Section 142(2A) of the Income Tax Act, 1961 4. Needless to say that in case, any adverse order is passed against the petitioner, it shall be open for the petitioner to impugn the same in accordance with law 11 From the above, it can be seen that the High Court has not adjudicated the issue with regard to the validity of assessment or period of limitation rather has observed that the assessment order is yet to be passed therefore it shall be open for the petitioner to take all the pleas before the AO. Also, in Para 4, the High Court has held that it shall be open for the petitioner to impugn the adverse order in accordance with law. Therefore, the argument of the AO that the ground of limitation is deemed to be rejected by the High Court and since the assessee has not preferred an appeal before Supreme Court, the issue has attained finality is totally wrong &baseless. To sum up, the validity of assessment order was never challenged by the assessee before the High Court as • Firstly, the assessment was not completed/assessment order wasn't passed at the time of filing of writ before the High Court. • Secondly, the copy of writ petition and the High Court order makes it amply clear and apparent that the issue of validity of assessment was not challenged in writ petition filed before the High Court but was stated only in the facts of the case. • Thirdly, the issue of validity has been challenged for the first time before the ITAT by the way of additional ground. Thus, it is wrong to contend that the order of High Court has attained finality on the issue of validity of assessment when the same was riot even challenged in the writ petition. Therefore, the argument that the order of High Court has not been challenged in Supreme Court is of no relevance. As regards the issue that the assessee has played fraud by suppressing the fact/concealing the particulars we submit as under:- Firstly, the order of High Court though has dismissed the writ but is not against the assessee. The order of High Court in fact is in favour of the assessee as it has been observed by the Hon'able Court that it shall be open for the petitioner to impugn the same in accordance with law, which implies that the assessee is entitled to raise the issue in accordance with law before the ITAT. Since, the finding of the High Court is in favour of the assessee, there is no reason that the assessee would intentionally conceal/hide/deceive the ITAT or income tax authorities. The assessee under the bonafide belief has raised the issue of limitation before the CIT(A) in written arguments though the specific ground challenging the validity of assessment was not raised before CIT(A). Therefore, the assessee raised the issue of period of limitation by way of additional ground of appeal before ITAT. Mere omission to file the order of High Court which is in the favour of assessee himself cannot be treated as fraud. Secondly, without prejudice to the above, the AO cannot conclude that the facts have been fraudulently suppressed / concealed by the assessee until and unless he has the evidence to prove and substantiate the fraudulent act. The allegation has been wrongly levelled by the AO without any evidence to allege the fraud which is proved from the last line of Para 4 of MA wherein the AO states that- "The order of Hon'ble High Court came to the notice while searching the law on the issue" This fact makes it amply clear that there is no evidence with the assessing authority to show/ prove that the fraud has been committed by the corporation as alleged by the AO in MA. 12 in this regard we would like to first refer to the definition of "fraudulently" as defined in Section 25 of the Indian Penal Code which is as under:- 25. "Fraudulently". —A person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise. The term Fraud has been defined by the Supreme Court in the case of Kamlaben Punjabhai Solanki Daughter of deceased Punjabhai vs. Stensile Stree Ltd. Special leave petition No. 3105 of 1998, as: 1. Normally, the meaning of fraud is to cheat the person with a view to gain something. 2. Fraud is an act of deliberate deception with a design to secure something, which is otherwise not true. 3. The expression fraud involves txvo elements, deceit and injury to the person deceived. 4. It is a cheating intended to get an advantage. 5. Word Fraud means deliberate deception, treachery or cheating which is intended to gain certain advantage. Thus, in view of the above, the term fraud means to cheat, deceit, deliberate deception to gain advantage. Mere omission to file the order of High Court which is in the favour of assessee himself cannot be treated as fraud as the assessee would not be a beneficiary or gained any advantage by concealing the order of the High Court in any manner, as the High Court has simply relegated the assessee to the appellate authorities and has not decided any issue against it. In case of allegation of fraud, the complainant has to prove with evidence that fraud has been committed by the accused. The allegation of fraud merely on suspicion is highly unjustified and uncalled for. The Assessing Officer, as a representative of the tax authority, holds a significant responsibility must exercise their powers judiciously and based on concrete evidence. It is imperative to understand that mere suspicion, without substantial proof or corroborative evidence, cannot be the foundation for levying allegations of fraud. Such allegations have serious implications and can tarnish the reputation of the taxpayer. Therefore, it is of paramount importance that any claim or allegation of fraud is backed by tangible evidence and not merely on conjectures or unfounded suspicions. An evidence-based approach ensures fairness, transparency, and upholds the principles of natural justice and taxpayers are protected from undue and baseless accusations. The assessee is a statutory body(100% state government company) and works in the most transparent manner, so there being no vested interest in concealing any fact from the authorities. Where the assessee in accordance with law has challenged the issue of validity of assessment before the ITAT, considering the fact that the same has not been adjudicated by the High Court and ITAT having been passed the speaking order, the AO is not correct in alleging that assessee has obtained the order of ITAT fraudulently. Also, considering the fact that ITAT has passed a very clear and speaking order, the miscellenous application filed on the issue is thus not maintainable. 13 iii. Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is right in law in holding the reference under Section 142(2A) of the Income Tax Act, 1961 as appealable before the Appellate Authorities ignoring the scheme of the fiscal statute wherein the legislature consciously has not provided any Appeal and Appellate Tribunal being a creature of statute with powers conferred by the statute is statutorily obligated to pass an order within the confines of statute!{Ground No. 2) iv. Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is right in law in adjudicating and holding the reference under Section 142/2A) of the Income Tax Act, 1961 invalid and examined the veracity of the same as if the right of appeal is Inherent?(Ground No. 3) v. Whether on the facts and in the circumstances of the case, the Hon'ble. Income Tax Appellate Tribunal is right in law in adjudicating the reference under Section 142(2A) of the Income Tax Act, 1961 under the guise of limitation for passing an order of assessment whereas the Hon'ble High Court declined to interfere in the challenge laid to the special auditor report, limitation etc, and the adjudication suffers from the vice of principal of estopple, waiver, acquiescence etc. ?(Ground No. 5) vi. Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is right in holding that the reference to special audit is an integral part of process ignoring the scheme of the statute and the title of Section 142 of the Income Tax Act, 1961 i.e., enquiry before assessments'(Ground No. 7) vii. Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is competent to assume jurisdiction as a Court of Appeal and re- examine the veracity of reference to the special audit despite dismissal of Civil Writ Petition by the Hon'ble High Court declining to interfere with the report of the special auditor!(Ground No. 8) Through these grounds of appeal the AO has challenged the power of the Tribunal to adjudicate the reference under Section 142(2A) of the Income Tax Act as appealable before the Appellate Authority. In this regard, it is submitted that the issue with regard to whether the validity of an order u/s 142(2A) can be challenged before the Honorable IT AT and once reference to special audit is found to be invalid then the order of assessment is barred by limitation has been dealt by various courts and tribunals. For this reliance is placed on the following judicial pronouncements:- Shri Rajiv Kumar vs ACIT, Central Circle, Chandigarh I.T.A. No.l325/CHANDI/2010 dated 30.12.2022 where in it has been held as under:- The decision in the case of Hon'ble Supreme Court in Sahara India (Firm) in no way has restricted the right of an assessee to contest such an order of reference to the Special Auditor under section 142(2A) of the Act, rather, the Hon'ble Supreme Court in clear terms has recognized such right of the assessee to contest the validity of such an order. We may add here that though, the order directing for appointment of Special Auditor u/s 142(2A) of the Act passed by the AO is not appealable per se, however, since the very appointment of Special Auditor and subsequent proceedings and consequential aspects thereof are integral part of the final assessment order and the fact that such an appointment gives the AO 14 the extended time period to frame the assessment, hence, is capable of being challenged in an appeal filed against such an assessment order. As held by the Hon'ble Supreme Court in the case of Sahara India (Firm) (Supra), the Special Audit is an investigative process ensuing civil consequences and the same being integral part of the assessment proceedings, hence, determinative of the very validity of such an assessment order passed in the extended period availed by the AO. Hence, the assessee, in our view, can very well challenge in appeal the validity of such an assessment order pleading with reference to the Special Auditor was bad in law and that the extended period of limitation in such circumstances was not available to the AO. M/s Chet Ram Ravi Kumar vs. DCIT (ITA No. 696 to 698/Chd/2013) dated 04.10.2021where in the 1TAT has held that there is no doubt that vis a vis the issue before us of validity of reference made by the AO for special audit u/s 142(2A) of the Act. The revenue's contention questioning the jurisdiction of the 1TAT to adjudicate the validity of the reference for special audit u/s 142(2 A) of the Act also stands rejected. M/s Bronze Logistics Pvt. Limited, Ludhiana vs DCIt (ITA 611/Chandi/2011) dated 29.06.2018 wherein the issue raised in Ground No. 1 of the appeal was that the CIT(A) was not justified to hold that the assessment was not barred by limitation as the very reference to the special audit u/s 142(2A) was bad in law. The Honorable Bench has dealt with the issue and has held that the assessment proceedings were barred by limitation. Consulting Engineering Services (India) Ltd. vs ITAT WP No. 7734/2017 dated. 01.09.2017 has directed the Tribunal to admit the issue of expiry of limitation to pass assessment order since based on illegal appointment of Special Auditor. Consulting Engineering Services India Pvt Limited vs ACIT (ITA No. 1443/Del/2014) Held 17. The quarrel before us is as to whether the assessment order framed u/s 143(3) is passed within the period of limitation period prescribed under the Act or not. In our considered opinion, for coming to such a conclusion, we can examine whether the order passed u/s 142(2A) of the Act is in accordance with law or not. It is true that the order passed u/s 142(2A) of the Act is not appealable but when an assessment order is challenged, then the different aspects, which are integral to the process and ultimate completion of the amount can be challenged in appeal and since the ground before us is challenged for assessment being barred by limitation, we are well within our rights to consider all material aspects which were considered while framing the assessment order u/s 143(3) of the Act. 18. Considering the facts of the case in totality, we have no hesitation to hold that the assessment order dated 25.06.2012 for the year under consideration is barred by limitation. Since the foundation is removed, the super structure i.e. the assessment order must fall. Unitech Limited (ITA 5180/del/2013) 44. Furthermore, the judgments relied upon by the revenue also do not lead lis to take different view of the matter. The first judgment relied upon is the case of Rajesh Kumar and Ors v CIT (supra). In this case the Hon'ble Court has held in para 34 that the order of assessment can be subject matter of an appeal; and not, a direction issued u/s 142 (2A) of the Act. In this appeal there is no challenge 15 to the directions u/s 142(2 A) of the Act. The challenge is that order of assessment is barred by limitation which is a valid contention supported by the judgment of Hon'ble Supreme Court in the case of Sahara India (Firm) v CIT (supra). The challenging to the validity of order u/s 142(2A) of the Act is confined to the extent that order is barred by limitation and not to the extent of refunding the fees or any other consequence flowing out of the order u/s 142(2A) of the Act. Further observation of Hon'ble Court that principles of natural justice are required to be complied with has also been reaffirmed in the case of Sahara India (Firm) (supra). ... 45 In view of the above discussion and conclusion we hold that directions dated 9.12.2011 by the learned Addl. CIT, Range-18, New Delhi for special audit u/s 142(2A) of the Act were illegal, invalid and not in accordance with law and thus the assessment so made is barred by limitation and is thus quashed as such. The judgment of Unitech has attained finality as the income tax department has not preferred an appeal against the order of IT AT before the High Court. Reference is also made to following Judicial Pronouncements:- • Bal Krishan Sood vs. ITO (2021) 125 taxmann.com 276(Chandigarh Trib.) • Sunder Mai Sat Pal vs. DCIT ITA No. 154 to 157/Chd/2013 (Chd I.T.A.T.) dtd. 15.6.2018. • Ms. Meenakshi R. Sundaram Proprietor, M/s. R.M. Sundram Caterers & Decorators vs. ITO. (ITA NO. 3196 TO 3202/MUM./2008) • Peerless General Finance & Inv Co. Ltd. vs. DCIT (Cal.) (1999) 236 ITR 0671. • ITO vs. Vilsons Particle Board industries Ltd. ( I.T.A.T. Pune Bench) (2017) 88 taxmann.com 889. • Hind Samachar Ltd. vs. ACIT (High Court of P& H (2010) 45 DTR 0057 • CIT vs. Bajrang Textiles (2007) 294 ITR 0561 In view of the aforesaid judicial pronouncements, it is submitted that the issue relating to the jurisdiction of the Tribunal to go into the question of validity of the appointment of Special Auditor, so as to decide the validity of assessment order passed in extended period availed by the Assessing officer is no longer res- integra, having already been decided in favour of the assessee by various Tribunals including Chandigarh Tribunal after placing reliance on various High Courts as enumerated above. Thus, the AO has erred in questioning the power of the Tribunal to adjudicate the issue of validity of assessment by way of filing a Miscellaneous Application which is not maintainable, especially when even before the date of order of the ITAT in the case of the assessee, the issue already stood adjudicated in favour of the assessee by the ITAT in the aforesaid judgments passed on 01.06.2019, 29.06.2018 and 04.10.2021 holding that the orders passed were time barred wherein the reference to special auditor was bad in law. Therefore, the assessee would not gain any advantage by concealing the factum of the order passed by the Hon'ble Court relegating the assessee to appellate authorities as these precedents on the issue were already in its favour and the fact is even admitted by ITAT in Para 8 of the order. It is pertinent to mention further that the AO has raised the issue of power of Tribunal to adjudicate the issue in the MA by placing reliance in the case of Rajesh Kumar & Others vs DCIt 287 ITR 91 (SC).In this regard we would like to state that the DR has raised the same issue during the course of hearing as well as can be seen from Para 6 of the Order and the Honorable Bench after discussing the issue has categorically given the finding in Para 9.1 of the order which is reiterated as under:- 16 "It is therefore, evident from the above that the validity of reference u/s 142(2A) of the Act is appealable when it has been so challenged for the purpose that the assessment order so passed, in consequence to the extended time available on account of the said reference, was time barred. In the present case the additional ground raised is to this effect only that the assessment order was barred by limitation, on account of the reference to special audit being illegal. The objection of the Ld. DR are dismissed." Thus, where the Tribunal in the order itself has given a clear finding about the power to adjudicate the validity of assessment, the same cannot be called a mistake apparent on record and the miscellaneous application filed by the AO on the issue is non maintainable. For this reliance is also placed in the case of:- ACIT vs M/s Sunder Mai Sat Pat MA No. 6 to 9/Chd/2019 dated 19.03.202 copy at page no. 22 to 25 fwhereirftfie Income Tax Department has filed an Misc Application on the issue that the ITAT had acted beyond its jurisdiction while adjudicating the validity of the reference made by the AO for special audit. The Tribunal has dismissed Miscellaneous Application holding that there is no mistake in the order of the ITAT by holding that adjudication of the reference to the special audit by the ITAT has been held to be well within the jurisdiction by the Honorable High Court of Delhi in the case of Considting Engineering Services Private Limited vs ITAT & Another (supra), that too after considering the decision of the Honorable Apex Court in Sahara India. In view of the above, the issue No. 3 to 7 raised in MA needs to be dismissed. viii. Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is right in law in admitting the additional ground of Appeal after the expiry of period of limitation under Section 253 of the Income Tax Act,1961 without there being any application for condonation of delay by the Assessed (Ground No. 4) ix. ix. Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is right in adjudicating the issue in Appeal which issue was not adjudicated by the Commissioner of Income Tax (Appeals) being not appealable?(Ground No. 6) The AO through the aforesaid ground has questioned the power of the Tribunal to admit additional ground of appeal alleging that the additional ground has been admitted after the expiry of period of limitation u/s 253 of the Income Tax Act without any application for condonation of delay. In this regard we would like to refer to the judgement of VMT Spinning Co. Ltd. Vs. CIT (Punjab & Haryana High Court) IT Appeal No. 445 of 2015 in which the various provisions of Income Tax Act and Income Tax Rules governing the powers of Tribunal are discussed as under:- The Appeals to the Tribunal are preferred under section 254(1) of the Act which provides that after hearing the contesting parties the Tribunal may pass such orders that it thinks fit. Section 254(1) of the Act, reads as under — "254. (1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit." In the afore- quoted provision the usage of the words "pass such orders thereon as it thinks fit" gives very wide powers to the Tribunal and according to us such powers are not limited to adjudicate upon only the issues arising from the order appealed from. Any interpretation to the contrary would go against the basic 17 purpose for which the appellate powers are given to the Tribunal under section 254 of the Act which is to determine the correct tax liability of the assessee. Rules 11 of the Income Tax (Appellate Tribunal) Rules, 1963 is also indicative that the powers of the Tribunal, while considering an appeal under section 254(1) are not restricted only to the issues raised before it. Rules 11 read as under — "11. Grounds which may be taken in appeal. The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule: Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground. Rule 11 of the Rules provides that the appellant, with the leave of the Tribunal can urge before it any ground not taken in the memorandum of appeal and that the Tribunal while deciding the appeal is not confined only to the grounds taken in the memorandum of appeal or taken by leave of the Tribunal under rule 11. A harmonious reading of section 254(1) of the Act and rules 11 of the rules coupled with basic purpose underlying the appellate powers of the Tribunal which is to ascertain the correct tax liability of the assessee leaves no manner of doubt that the Tribunal while exercising its appellate jurisdiction would have the discretion to allow to be raised before it new or additional questions of law arising out of the record before it. The Apex Court in National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383, while considering the question whether the Tribunal has jurisdiction to examine a question of law, which was earlier not raised before the authorities, but which would have a bearing on the determination of tax liability of the assessee, held as under — “5. Under section 254 of the Income Tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the. Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the lax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non- taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 6. In the case of Jute Corporation of India Ltd. v. CIT this Court, while dealing with the powers of the Appellate Assistant Commissioner observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory proinsions. In the absence of any statutory provision, the appellate authority is vested with all the plenary poxoers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by Hie assessee in seeking modification of the order of assessment 18 passed by the Income Tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. 7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income Tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal [vide e.g., CIT v. Anand Prasad (Delhi), CIT v. Karamchand Prem chand (P) Ltd. and CIT v. Cellulose Products of India Ltd. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 8. The re framed question, therefore, is answered in the affirmative, i.e., the Tribunal has 'jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee. We remand the proceedings to the Tribunal for consideration of the new grounds raised by the assessee on the merits." A perusal of the above shows that the Apex Court has clearly held that the Tribunal, while exercising appellate jurisdiction under section 254 of the Act, can consider questions of law arising from the assessment proceedings, which had not been raised earlier. The view that the Tribunal would be confined to decide only the issues arising out of the appeal before the Commissioner was a view, which was considered to be too narrow and thus, the Tribunal was held to have powers to allow or not to allow a new ground to be raised before it for adjudication. It further held that where the Tribunal was only required to consider a question of law arising from the facts, which were already on record in the assessment proceedings, such question of law should be allowed to be raised to correctly assess the tax liability of an assessee. In view of the above, the AO has erred in alleging that the Hon'ble Income Tax Appellate Tribunal cannot adjudicate the issue in Appeal which issue was not adjudicated by the Commissioner of Income Tax (Appeals) being not appealable. The observations in paragraph 6 that the Appellate Assistant Commissioner must be satisfied that the ground raised could not have been raised earlier for good reasons, are obviously in respect of cases where some factual aspect is also involved and not where only a pure question of law is involved. This is clear from the observation in paragraph 7 that where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, it is necessary to consider that a question in order to correctly assess the tax liability of an assessee. The reason is obvious. Where disputed questions of facts are involved, it would unnecessarily delay the assessment proceedings and may in certain circumstances place an unfair burden upon the Revenue such as when the proceedings have been pending for a long period of time and it is difficult to ascertain the facts. Such cases would deprive the Revenue an opportunity of meeting the case on facts effectively.(VMT Spinning Co. Ltd. Vs. CIT (Punjab & Haryana High Court) IT Appeal No. 445 of 2015 19 The judgment of the Apex Court in National Thermal's Power Co. Ltd.'s case (supra) was considered and followed by P & H Court in Avery Cycle Industries Ltd. v. CIT (2007) 292 ITR 493, wherein it was held as under – "4. When the facts raised in the instant appeal are examined in the light of the principle laid down by the Hon'ble Supreme Court, then no doubt it felt that all the facts relevant to the additional ground seeking depreciation allowance are on record. The Tribunal is only to decide the claim of depreciation made by the assessee as per the Income Tax Act, 1961. The additional ground could be raised by the assessee in appeal before the Tribunal under rule 11 of the Appellate Tribunal Rules, 1963. In the present case, the following additional ground has been raised, as is evident from the perusal of the additional ground of appeal, date 9-4-2004 (Annexure A-6): That the W.D.V. of the assets in respect of old as well as new units of Pahwa Steel and Tube Mills (P.S.T.M.), a unit of Avery Cycle Industries Ltd., has not been brought forward correctly from the preceding assessment year. 5. In view of the above, the impugned order dated 29-10-2004, (annexure A-l) passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, is hereby set aside and the Tribunal is directed to deal with the aforementioned additional ground in accordance with law." To the same effect is a Full Bench decision of the Bombay High Court in Ahmedabad Electricity Co. Ltd/Godavari Sugar Mills Ltd. v. CIT (1993) 199 ITR 351, wherein it was held as under — "In view of the above decisions, it is quite clear that the Appellate Tribunal has jurisdiction to permit additional grounds to be raised before it even though these may not arise from the order of the Appellant Assistant Commissioner, so long as these grounds are in respect of the subject-matter of the entire tax proceedings." In view of the aforesaid provisions of Income Tax Act, Income Tax Rules and judicial pronouncements, the observations of the AO in the MA are contrary to the judgment of the Supreme Court in National Thermal Power Co. Ltd.'s case (supra). In fact the Full Bench of the Bombay High Court in Godavari Sugar Mills Ltd.'s case (supra) dealing with rule 11 observed as under — "19. In this connection a reference may also be made to the Income Tax (Appellate Tribunal) Rules, 1963 which have been framed under section 255(5) of the Income Tax Act, 1961. Under rule 11 of the Appellate Tribunal Rules the appellant shall not, except by leave of the Tribunal urge or be beard in support of any ground not set forth in the memorandum of appeal but the Tribunal in deciding an appeal shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule; (underlining ours); provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being beard on that ground. So that in deciding the appeal the Tribunal is not restricted to the grounds which are taken or which have been allowed to be taken in the memorandum of appeal." Thus, Rule 11 confers wide powers on the Tribunal, it requires a party to seek the leave of the Tribunal. lt merely states that the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal which has duly been done by the assessee by filing an application requesting for admission of additional evidence vide letter dated 07.12.2020. It is always open to the Tribunal to permit an appellant to raise an additional ground not set forth in the memorandum of appeal. The safeguard is in the proviso to rule 11 itself. The proviso states that the Tribunal shall not rest its 20 decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground. Thus, to comply with the same ,the Tribunal gave opportunity both to the assessee and the DR before admitting the additional ground of appeal. The same can be verified from Para 5 & Para 6 of the order of the Tribunal which are as under:- 5.The Ld.Counsel for the assessee pleaded that the ground raised being a legal ground and the entire facts and details required for adjudicating the same being a matter of record and no further investigation being required, the same be admitted for adjudication. He relied upon the order of the Hon'ble Supreme Court in the case of National Thermal Power Corporation Vs. CIT, 229 ITR 383 (SC). 6. The Revenue on the other vehemently opposed the prayer for admission of the additional ground contending that the additional grounds challenged the reference to special audit which it xvas settled law was not appealable. In this regard Ld.DR relied heavily on the decision of the Hon'ble Apex Court in the case of Rajesh Kumar & Others Vs. DCIT 287 ITR 91 (SC). Thereafter Reliance is also placed on Para 7 to 9 wherein the Tribunal had admitted the additional Ground of appeal on application filed by the "applicant" on 07.12.2020 after considering various objections of the department for non- admittance of the additional ground of appeal which are as under:- 7. To this the Ld.Counsel for the assessee countered by placing before us 'various decisions of the Tribunal and High Courts holding to the contrary. The submissions in writing to this effect were also filed along with the copies of the case laws relied upon by the Ld.Counsel for the assessee. 8. We have heard both the parties. We have also gone through the various case laws relied upon by them. We find that the decision of the Hon'ble Apex Court in the case of Rajesh Kumar (supra), relied upon by the Ld.DR to support her contention that the reference to special audit is not appealable, has been considered in various decisions of the Tribunal and High Courts where the Revenue had identically opposed the adjudication of this issue. We find that taking note of the said decision this argument of the Revenue has been dismissed by the IT AT, holding that though order directing special audit is otherwise not appealable but while challenging the assessment order as being barred by limitation, the validity of the order directing special audit u/s 142(2A) can be challenged, albeit for this limited purpose alone. It has been held that for coming to a conclusion that the assessment order is barred by limitation, all aspects integral to the process and ultimate completion of assessment can be challenged and considered for deciding the same. 9. Further, the Hon'ble Delhi High Court in the case of Consulting Engineering Services Private Limited Vs. IT AT & Another in WP(C)7734/2017 dated 01.09.2017, has categorically held that it is well within the jurisdiction of the IT AT to entertain the grounds relating to validity of reference to special audit, after noting that the observation to the contrary by the Apex Court in the case of Sahara India (supra) was specific to those cases. 9.1 It is, therefore, evident from the above that the validity of reference u/s 142(2A) of the Act is appealable when it has been so challenged for the purpose that the assessment order so passed, in consequence to the extended time available on account of the said reference, was time barred. In the present case the additional ground raised before us is to this effect only that the assessment order was barred by limitation, on account of the reference to special audit being illegal. The objection of the Ld.DR therefore to the admission of the additional grounds raised by the assessee, are dismissed. 21 10. Further considering that the additional ground raised before us challenges the validity of the assessment order passed on account of it being barred by limitation, the said additional ground is a legal ground and considering the decision of the Hon'ble Apex Court in the case of National Thermal Power Corporation (supra) the same is being admitted for adjudication. On perusal of the above it can be seen that the Tribunal has passed a very clear and a speaking order admitting additional ground of appeal after according due opportunity of being heard to both the parties. The additional ground has been admitted after detailed discussion about the power of ITAT to admit the additional ground as well as the power of Tribunal to adjudicate the issue regarding validity of Assessment with reference to Special Audit after referring the judgement of Supreme Court in case of Rajesh Kumar. Considering the facts that the case law relied upon by the department in MA has been discussed by ITAT in detail and additional ground of appeal has been admitted after due consideration, therefore, the application filed by the department in this case is liable to be dismissed because an issue which has adjudicated upon after detailed discussion cannot be called a mistake apparent from record . With regard to the issue of admission of additional ground after the expiry of period of limitation, it is submitted that the rule 11 makes it amply clear that the tribunal has the power to adjudicate on any ground of appeal without mentioning any time limit which means that the GOA can be admitted at any time till the disposal of appeal. The provisions of the Income Tax Act and judicial pronouncements referred above make it ply clear that the powers of Tribunal are very wide and Tribunal can even admit additional ground of appeal taken orally during the course of hearing even though not applied for in writing. Reference is drawn to VMT Spinning Co. Ltd. Vs. CIT (Punjab & Haryana High Court) IT Appeal No. 445 of 2015 wherein HC directs tribunal to accept additional ground even if raised by way of oral request. The above implies that the Tribunal has the powers to admit the additional ground of appeal raised even by way of oral request which shows that the assessee can file an application for admission of additional ground at any time during pendency of appeal/ during the course of hearing before the Tribunal. So, the allegation of the AO that the additional ground has been admitted after the expiry of period of limitation does not hold good as the period of limitation for filing the appeal before Tribunal does not have any relevance with the filing of application for additional ground before the Tribunal. The Tribunal can at any time during the pendency of appeal admit the additional ground of appeal. Thus, the AO has wrongly alleged that the assessee has raised an additional ground of appeal without the application for condonation of delay. There is no requirement to file the application of condonation of delay as there is no time limit prescribed in the Act to raise the additional ground of appeal. So where the period of limitation has not expired, there was no lapse on the part of the assessee in not filing the application of condonation of delay. The argument of the Assessing Officer on the issue is devoid of any merit and is baseless. Moreover, even though rule 11 requires an appellant to seek the leave of the Tribunal, it does not confine the Tribunal to a consideration of the grounds set forth in the memorandum of appeal or even the grounds taken by the leave of the Tribunal. In other words, the Tribunal can decide the appeal on a ground neither taken in the memorandum of appeal nor by its leave. The only requirement is that the Tribunal cannot rest its decision on any other ground unless the party who may be affected has had sufficient opportunity of being heard on that ground. Thus, the allegation of the AO questioning the powers of Tribunal to admit additional ground of appeal after the expiry of period of limitation in Miscellaneous Application is not viable as it is neither a mistake apparent on 22 record nor there is any period of limitation before which the assessee has to file an application for additional evidence. The only course of action available to the department is to file an appeal before High Court which has already been done in this case. In view of the aforesaid submissions we pray that the MA filed by the department be dismissed. To sum up:- • The period of limitation has never been challenged by the assessee before the High Court. • The High Court has not decided the issue of validity of assessment as is evident from copy of order of High Court& substantial questions of law raised in the writ petition. • The High Court has observed in Para 2 of the order that that the assessment order is yet to be passed therefore it shall be open for the petitioner to take all the pleas before the AO and in Para 4 of the High Court Judgement, the High Court has held that it shall be open for the petitioner to impugn the adverse order in accordance with law. • The order of High Court in fact is in favour of the assessee. Thus, there is no reason that the assessee would intentionally conceal/hide/deceive the ITAT or income tax authorities. • The assessee raised the issue of period of limitation by way of additional ground of appeal before ITAT. • The AO cannot conclude that the facts have been fraudulently suppressed / concealed by the assessee until and unless he has the evidence to prove and substantiate the fraudulent act. • The allegation has been wrongly levelled by the AO merely on the basis of suspicion without any evidence to prove that whether the assessee has raised the issue before the ITAT or not. • The issue relating to the jurisdiction of the Tribunal to go into the question of validity of the appointment of Special Auditor, so as to decide the validity of assessment order passed in extended period availed by the Assessing officer is no longer res-integra, having already been decided in favour of the assessee by the Chandigarh Tribunal after placing reliance on various High Courts and different benches of the Tribunal. • The AO has raised the issue of power of Tribunal to adjudicate the issue in the MA by placing reliance in the case of Rajesh Kumar & Others vs DCIt 287 ITR 91 (SC) which was also raised during the course of hearing as well, as can be seen from Para 6 of the Order and the Honorable Bench after discussing the issue has categorically given the finding in Para 9.1 of the order. T • The Tribunal in the order itself has given a clear finding about the power to adjudicate the validity of assessment, the same cannot be called a mistake apparent on record and the miscellaneous application filed by the AO on the issue is non maintainable. • Reliance is placed in the case of ACIT vs M/s Sunder Mai Sat Pat MA No. 6 to 9/Chd/2019 dated 19.03.2021 wherein the Income Tax Department has filed an Misc Application on the issue that the ITAT had acted beyond its jurisdiction while adjudicating the validity of the reference made by the AO for special audit. The Tribunal has dismissed Miscellaneous Application holding that there is no mistake in the order of the ITAT by holding that adjudication of the reference to the special audit by the ITAT has been held to be well within the jurisdiction by the Honorable High Court of Delhi in the case of Consulting Engineering Services Private Limited vs ITAT & Another (supra), that too after considering the decision of the Honorable Apex Court in Sahara India. As regards the issue of admission of additional ground we submit as under:-  Rule 11 confers wide powers on the Tribunal, it requires a party to seek the leave of the Tribunal. It merely states that the appellant shall not, except by leave 23 of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal which has duly been done by the assessee by filing an application requesting for admission of additional evidence vide letter dated 07.12.2020.  The Tribunal gave opportunity both to the assessee and the DR before admitting the additional ground of appeal. The same can be verified from Para 5 & Para 6 of the order of the Tribunal.  The Tribunal has passed a very clear and a speaSlng order admitting additional ground of appeal after according due opportunity of being heard to both the parties. The additional ground has been admitted after detailed discussion about the power of ITAT to admit the additional ground as well as the power of Tribunal to adjudicate the issue regarding validity of Assessment with reference to Special Audit after referring the judgement of Supreme Court in case of Rajesh Kumar.  Considering the facts that the case law relied upon by the department in MA has been discussed by ITAT in detail and additional ground of appeal has been admitted after due consideration, therefore, the application filed by the department in this case is liable to be dismissed because an issue which has adjudicated upon after detailed discussion cannot be called a mistake apparent from record. • The Apex Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 has clearly held that the Tribunal, while exercising appellate jurisdiction under section 254 of the Act, can consider questions of law arising from the assessment proceedings, which had not been raised earlier. • The view that the Tribunal would be confined to decide only the issues arising out of the appeal before the Commissioner was a view, which was considered to be too narrow and thus, the Tribunal was held to have powers to allow or not to allow a new ground to be raised before it for adjudication. • Thus, the AO has erred in alleging that the Hon'ble Income Tax Appellate Tribunal cannot adjudicate the issue in Appeal which issue was not adjudicated by the Commissioner of Income Tax (Appeals) being not appealable. • With regard to the issue of admission of additional ground after the expiry of period of limitation, it is submitted that the rule 11 makes it amply clear that the tribunal has the power to adjudicate on any ground of appeal without mentioning any time limit which means that the GOA can be admitted at any time till the disposal of appeal. • The provisions of the Income Tax Act and judicial pronouncements referred above make it amply clear that the powers of Tribunal are very wide and Tribunal can even admit additional ground of appeal taken orally during the course of hearing even though not applied for in writing. Reference is drawn to VMT Spinning Co. Ltd. Vs. CIT (Punjab & Haryana High Court) IT Appeal No. 445 of 2015 wherein HC directs tribunal to accept additional ground even if raised by way of oral request. • In view of the above, the allegation of the AO that the additional ground has been admitted after the expiry of period of limitation does not hold good as the period of limitation for filing the appeal before Tribunal does not have any relevance with the filing of application for additional ground before the Tribunal. • The Tribunal can at any time during the pendenqrof appeal admit the additional ground of appeal. Thus, the AO has wrongly alleged that the assessee has raised an additional ground of appeal without the application for condonation of delay. • There is no requirement to file the application of condonation of delay as there is no time limit prescribed in the Act to raise the additional ground of appeal. So where the period of limitation has not expired, there was no lapse on the part of the assessee in not filing the application of condonation of delay. • The argument of the Assessing Officer on the issue is devoid of any merit and is baseless. 24 • Thus, the allegation of the AO questioning the powers of Tribunal to admit additional ground of appeal after the expiry of period of limitation in Miscellaneous Application is not viable as it is neither a mistake apparent on record nor there is any period of limitation before which the assessee has to file an application for additional evidence. The only course of action available to the department is to file an appeal before High Court which has already been done in this case. In view of the aforesaid submissions, we pray that the MA filed by the department be dismissed. 6. In order to appreciate the rival contentions, it would be appropriate to refer to the order so passed by the Coordinate Bench in ITA No. 1369/Chd/2019 dt. 26/10/2021 and the contents thereof read as under: “2. Brief background of the case is that assessment for the impugned year was completed u/s 143(3) of the Act . During assessment proceedings a reference was made by the Assessing Officer (AO) for audit of accounts of the assessee u/s 142(2A)of the Act (hereinafter referred to as “special audit” )and after obtaining the report of the special auditor, assessment was framed by making various additions under different heads amounting in al l to Rs.6889,06,69,100/- , as detailed in para 2 of the CIT(A) ’s order. 3. The assessee challenged the order of the AO before the Ld.CIT(A) on various grounds, including challenging the reference made by the AO to special audit . The Ld.CIT(A) thereafter adjudicated the various grounds raised and partly allowed the assessee’s appeal . The grounds raised regarding the challenge to the reference to special audit was dismissed by the Ld.CIT(A) holding that the said reference was not appealable before him. 4. Aggrieved by the order of the Ld.CIT(A) the assessee has now come up in appeal before us. Besides the grounds raised in its appeal filed before us in Form No.36, the assessee also raised an additional ground vide its letter dated 07.12.2020, which reads as under: "That the assessment order passed u/s 143(3) is prima face illegal, bad in law, without jurisdiction, void ab-initio and is thus barred by time limitation as the very reference to the special audit u/s 142(2A) of the act is illegal and bad in law." 5. The Ld.Counsel for the assessee pleaded that the ground raised being a legal ground and the entire facts and details required for adjudicating the same being a matter of record and no further investigation being required, the same be admitted for adjudication. He relied upon the order of the Hon'ble Supreme Court in the case of National Thermal Power Corporation Vs. CIT, 229 ITR 383 (SC) . 6. The Revenue on the other vehemently opposed the prayer for admission of the additional ground contending that the additional grounds challenged the reference to special audit which it was set t led law was not appealable. In this regard Ld.DR relied heavily on the decision of the Hon'ble Apex Court in the case of Rajesh Kumar & Others Vs. DCIT 287 ITR 91(SC) . 7. To this the Ld.Counsel for the assessee countered by placing before us various decisions of the Tribunal and High Courts holding to the contrary. The submissions 25 in writing to this effect were also filed alongwith the copies of the case laws relied upon by the Ld.Counsel for the assessee. 8. We have heard both the parties. We have also gone through the various case laws relied upon by them. We find that the decision of the Hon’ble Apex Court in the case of Rajesh Kumar(supra) , relied upon by the Ld.DR to support her content ion that the reference to special audit is not appealable, has been considered in various decisions of the Tribunal and High Courts where the Revenue had identically opposed the adjudication of this issue. We find that taking note of the said decision this argument of the Revenue has been dismissed by the ITAT, holding that though order directing special audit is otherwise not appealable but while challenging the assessment order as being barred by limitation, the validity of the order directing special audit u/s 142(2A) can be challenged, albeit for this limited purpose alone. I t has been held that for coming to a conclusion that the assessment order is barred by limitation, all aspects integral to the process and ultimate completion of assessment can be challenged and considered for deciding the same. The relevant decisions are: 1) Unitech Limited Vs ACIT in ITA No.5180 /Del/2013 dated 08.04.2016: “Furthermore, the judgments relied upon by the revenue also do not lead us to take different view of the matter The first judgment relied upon is the case of Rajesh Kumar and Ors v CIT (supra). In this case the Hon'ble Court has held in para 34 that the order of assessment can be subject matter of an appeal; and not, a direction issued u/s I42(2A) of the Act. In this appeal there is no challenge to the directions u/s 142(2A) of the Act. The challenge is that order of assessment is barred by limitation which is a valid contention supported by the judgment of Hon'ble Supreme Court in the case of Sahara India (Firm) v CIT (supra). The challenging to the validity of order u/s 142(2A) of the Act is confined to the extent that order is barred by limitation and not to the extent of refunding the fees or any other consequence flowing out of the order u/s 142(2A) o f the Act. Further observation of Hon'ble Court that principles of natural justice arc required to be complied with has also been reaffirmed in the case of Sahara India (Firm) (supra). The judgment of AT&T Communication Services India (P) Ltd. v CIT (supra) is on facts and has no application to the case of appellant company. Also the judgment in the case of DLF Ltd. v Addl. CIT (supra), has no application as hereto none of the contentions raised before us have been decided to the contrary. The learned counsel for the revenue has not been able to point out any material so as to arrive at different view of the matter.” 2) Consulting Engineering Services India Pvt. Limited vs ACIT (2019) 198 TTJ 0121 (Del ) : “17. The quarrel before us is as to whether the assessment order framed u/s 143(3) is passed within the period of limitation period prescribed under the Act or not. In our considered opinion, for coming to such a conclusion, we can examine whether the order passed u/s 142(2A) of the Act is in accordance with law or not. It is true that the order passed u/s 142(2A) of the Act is not appealable but when an assessment order is challenged, then the different aspects, which are integral to the process and ultimate completion of the amount can be challenged in appeal and since the ground before us is challenged for assessment being barred by limitation, we are well within our rights to consider all material aspects which were considered while framing the assessment order u/s 143(3) of the Act.” 26 9. Further, the Hon’ble Delhi High Court in the case of Consulting Engineering Service s Private Limited Vs. ITAT & Another in WP(C)7734/2017 dated 01.09.2017, has categorically held that it is well within the jurisdiction of the ITAT to entertain the grounds relating to validity of reference to special audit , after noting that the observation t o the contrary by the Apex Court in the case of Sahara India ( supra) was specific to those cases. The relevant findings are as under : “ 4. The Petitioner challenges an interim order dated 8 th August, 2017 passed by the Income Tax Appellate Tribunal (‘ITAT’) in Petitioner’s appeal being ITA No.1443/Del/2014 for the Assessment Year (‘AY’) 2008 – 2009. By the said impugned order, the ITAT has declined to permit the Petitioner to raise additional ground ‘22’ which reads as under: "22. That the assessment order passed on 25.06.2012 is illegal, bad in law, without jurisdiction & barred by time limitation as the reference & order under section 142(2A) of the Act is illegal and bad in law." 5. According to the ITAT in view of the decision in Sahara India (Firm) v CIT (2008) 169 Taxmann 328 (SC), it was impermissible to permit the ITAT to examine the validity of order passed under Section 142(2A) of the Income Tax Act, 1961 (‘the Act’) in order to hold that the assessment has been barred by limitation. In other words, the said decision of the Supreme Court was understood by the ITAT as holding that the challenge to the order under Section 142(2A) of the Act cannot be raised before the ITAT while examining whether the assessment order has been barred by limitation. 6. The Court finds that the ITAT itself has been taking a different position in many other cases, the orders in which have been enclosed with the present petition. For instance, in its order dated 9th December, 2015 passed in ITA No. 2256/Del/2005 (PHI Seeds Ltd. New Delhi v. Dy. Commissioner of Income Tax, Circle 14(1), New Delhi), the ITAT after noticing the aforementioned decision of the Supreme Court in Sahara India (Firm) v CIT (supra) held: “7.4. In the present proceedings what we are examining, is whether the extended period of limitation as provided under Explanation l (iii) of Section 153 is available to the Assessing Officer for completion of assessment u/s 143(3), or not. The assessee contends that the order u/s 142(2C), extending the period granted for completion and submission of audit report is made without an application being made for W.P.(C) 7734/2017 extension by the assessee and for any good and sufficient reason, and hence the extension is bad in law and hence the AO would not get the benefit of the extended period of time to specified in Explanation l(iii) of Section 153 of the Act. In our view, the Tribunal has jurisdiction to adjudicate the issue as to whether an order of assessment 143(3), is passed within the period of limitation prescribed under the Act or not. For coming to such a conclusion, in our view the Tribunal can examine whether the order passed u/s 142(2A) or u/s 142(2C) is in accordance with law or not. The order passed u/s 142(2A) or u/s 142(2C) cannot be appealed separately. But when an assessment order is challenged, then the different aspects which are integral to the process and ultimate completion of amount can be challenged in Appeal. For example a notice u/s 148 or reasons recorded by the A.0 prior to re-opening of assessment cannot be challenged separately. But an assessment order can be challenged in an Appeal before the Ld. CIT(A) or the ITAT on the ground that the re-opening itself is bad in law, as the notice is illegal or not served or that there is no material based on which reasons were recorded 27 etc. Every facet of an assessment can be challenged in appeal to deny once liability to be charged to tax or to challenge the quantum of tax demanded. In the case of hand, the legality of the orders passed u/s 142(2A) or u/s 142(2C) can be challenged to demonstrate that the order of assessment has been passed beyond the period of limitation. Thus, we reject this contention of the Ld. CIT. DR.” 7. A similar view was taken by the ITAT in Unitech Ltd. v. Additional Commissioner of Income-tax, Range- [2016] 74 taxmann.com 121 (Delhi- Trib.). The order of the ITAT on the same lines was upheld by this Court in Principal Commissioner of Income-tax v. Nilkanth Concast (P.) Ltd. [2016] 70 taxmann.com 157 (Del). 8. The Court notices that the observation in Sahara India (Firm) v CIT (supra) was in the peculiar facts of that case and was not meant to be a general observation applicable across the board for all cases. This is W.P.(C) apparent from the observations in the following paras: “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 principles of natural justice is to be read into the said provision. Accordingly, we reiterate the view expressed in Rajesh Kumar's case (supra). ...... 29. There is no denying the fact that the law on the subject was in a flux in the sense that till the judgment in Rajesh Kumar (supra) was rendered, there was divergence of opinion amongst various High Courts. Additionally, even after the said judgment, another two-Judge Bench of this Court had expressed reservation about its correctness. Having regard to all these peculiar circumstances and the fact that on 14th December, 2006, this Court had declined to stay the assessment proceedings, we are of the opinion that this Court should be loathe to quash the impugned orders. Accordingly, we hold that the law on the subject, clarified by us, will apply prospectively and it will not be open to the appellants to urge before the Appellate Authority that the extended period of limitation under Explanation 1 (iii) to Section 153 (3) of the Act was not available to the Assessing Officer because of an invalid order under Section 142 (2A) of the Act. However, it will be open to the appellants to question before the appellate authority, if so advised, the correctness of the material gathered on the basis of the audit report submitted under sub-section 2A of Section 142 of the Act.” 9. In the considered view of the Court, the ITAT ought to have permitted the Petitioner to raise the aforementioned additional ground and ought to have decided the said additional ground on its merits in accordance with law. 10. The writ petition is allowed and the impugned order dated 8th August, 2017 passed by the ITAT is set aside. The petitioner is permitted to urge the additional ground no.22 before the ITAT, which would decide the Petitioner’s appeal including the above additional ground, in accordance with law, while passing the final order.” 28 9.1 It is, therefore, evident from the above that the validity of reference u/s 142(2A) of the Act is appealable when it has been so challenged for the purpose that the assessment order so passed, in consequence to the extended time available on account of the said reference, was time barred. In the present case the additional ground raised before us is to this effect only that the assessment order was barred by limitation, on account of the reference to special audit being illegal . The object ion of the Ld.DR therefore to the admission of the additional grounds raised by the assessee, are dismissed. 10. Further considering that the additional ground raised before us challenges the validity of the assessment order passed on account of it being barred by limitation, the said additional ground is a legal ground and considering the decision of the Hon'ble Apex Court in the case of National Thermal Power Corporation (supra) the same is being admitted for adjudication. 11. We shall now proceed to adjudicate the additional ground raised, more specifically whether reference made for special audit u/s 142(2A) of the Act was in accordance with law or not . Detailed arguments were made by the assessee both orally and in writing before us on the additional ground raised, referring to various documents placed before us in a paper book compilation of 444 pages and also relying upon various case laws. The Ld.Counsel for the assessee contended that the ingredients /preconditions for invoking the provisions of section 142(2A) were not satisfied, no complexity in the accounts was pointed out , order was passed without giving due opportunity of hearing to the assessee, the approval of the PCIT to the special audit was mechanical, that the entire effort was only with the motive to extend the period of limitation. 12. The Ld.DR vehemently contested al l the charges and content ions of the Ld.Counsel for the assessee. 13. We have heard both the parties and have also carefully gone through the documents referred to before us as also the case laws relied upon 14. As per the provisions of law relating to reference by AO to special audit of accounts of an assessee, as part of the process of inquiry conducted during assessment , contained u/s 142(2A) of the Act , the same can be referred only if the AO is of the opinion that the special audit is necessary after taking into consideration the nature and complexity of the accounts and the interest of the Revenue. This is evident from a bare perusal of sect ion 142(2A) of the Act itself which is being reproduced hereunder: “Section 142(2A) (2A) If, at any stage of the proceedings before him, the Assessing] 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], direct 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 form 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.” 15. The Hon’ble Apex Court has interpreted the said provision in two decisions, repeatedly emphasizing therein that the AO’s opinion has to be based on fulfillment of the twin conditions of the( i )nature and complexity of accounts, and ( ii ) the interest of Revenue, and has interpreted the term “complexity” to mean 29 state of being intricate or complex. I t went on to hold that what is complex depends on each persons understanding and what is complex for one may be simple for another. It was held therefore, that the opinion of the AO must be based on objective criteria and not just a subjective satisfaction. That the reference cannot be made merely for shifting his responsibility of scrutinizing the accounts to a special auditor. In the case of Sahara India(Firm) vs CIT 300 ITR 403(SC) the Apex Court analyzed and interpreted the provisions of sect ion 142(2A) to the above effect as under: “A bare perusal of the provisions of sub-s. (2A) of the Act would show that the opinion of the AO that it is necessary to get the accounts of assessee audited by an Accountant has to be formed only by having regard to : (i) the nature and complexity of the accounts of the assessee; and (ii) the interests of the Revenue. The word "and" signifies conjunction and not disjunction. In other words, the twin conditions of "nature and complexity of the accounts" and "the interests of the Revenue" are the prerequisites for exercise of power under s. 142(2A) of the Act. Undoubtedly, the object behind enacting the said provision is to assist the AO in framing a correct and proper assessment based on the accounts maintained by the assessee and when he finds the accounts of the assessee to be complex, in order to protect the interests of the Revenue, recourse to the said provision can be had. The word "complexity" used in s. 142(2A) is not defined or explained in the Act. As observed in Swadeshi Cotton Mills Co. Ltd. vs. CIT (1987) 63 CTR (All) 335 : (1988) 171 ITR 634 (All), it is a nebulous word. Its dictionary meaning is : "The state or quality of being intricate or complex or that is difficult to understand. However, all that is difficult to understand should not be regarded as complex. What is complex to one may be simple to another. It depends upon one’s level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully." Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the AO to understand accounts maintained by the assessee; appreciate the entries made therein and in the event of any doubt, seek explanation from the assessee. But opinion required to be formed by the AO for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. There is no gainsaying that recourse to the said provision cannot be had by the AO merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief CIT or the CIT in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the AO, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the Section is not turned into an empty ritual. Needless to emphasise that before granting approval, the Chief CIT or the CIT, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the AO. The approval must reflect the application of mind to the facts of the case.” 16. In the case of Rajesh Kumar & Ors vs DCIT & ors 287 ITR 91(SC) , the sect ion was interpreted likewise as under: “Interpretation and application of s. 142(2A) of the Act, thus, falls for our consideration. 10. We may at the outset notice that the following are the relevant factors for invoking s. 142(2A) of the Act : 30 (i) The nature of accounts (ii) Complexity of accounts and (iii) Interest of the Revenue. The formation of opinion of the AO must be on the premise that while exercising his power regard must be had to the factors enumerated therein. The use of the word 'and’ shows that it is conjunctive and not disjunctive. All the aforementioned factors are conjunctively required to be read. The formation of opinion indisputably must be based on objective consideration. 11. The expression "complexity" would mean the state or quality of being intricate or complex or that it is difficult to understand. Difficulty in understanding would, however, not lead to the conclusion that the accounts are complex in nature. No order can be passed on whims or caprice.” 17. In the facts of the present case, after perusing al l the documents referred to before us, we are in agreement with the Ld.Counsel for the assessee that the AO has not pointed out any complexity in the accounts of the assessee while referring for special audit and the sole purpose of the AO for the reference was only to buy extended time to cover up his short coming of commencing inquiry at the fag end of the time period statutorily provided for completing assessment , and shift his responsibility of scrutinizing the accounts to the special auditor. The facts of the case clearly bring out the aforesaid. 18. The impugned assessment year before us is A.Y. 2014-15. As per sect ion 153 of the Act , the limitation for passing assessment order in this case was 31.12.2016. There is no quarrel with respect to the aforesaid. The order sheet entries made by the AO during assessment proceedings, filed before us at P.B 254-279, reveal that while the assessment proceedings commenced on 31.08.2015 with the issuance of notice u/s 143(2) of the Act, except for a standard questionnaire issued to the assessee on 26.10.2015, to which due reply was f i led by ,no substantial queries were raised t i l l 16.12.2016, i .e. almost the fag end of the period for passing assessment order u/s 143(3) of the Act , i .e. 31.12.2016.The assessee in the intervening period, we have noted from the order sheet ,was asked to furnish reasons for revising his return and furnish details of computation of income from industrial and finance activity, which reply was filed on 11.07.2016. On 16.12.2016,when the assessment was getting time barred on 31.12.2016 the assessee was asked to answer a slew of queries, in al l 9 as under, the reply being required to be f i led within 4 days by 20/12/16. The queries raised, as noted in the order sheet are as under: 16/12/16 Sh.AK Jindal , CA/AR at tended. He is asked to furnish following details: - (1) Explain how figures of Industrial area activity shown till 31/3/13 have been incorporated in Balance Sheet & P/L Ac for 31/3/14. (2) Detailed calculation with year wise bifurcation of expenses and recoveries on Industrial area activity. (3) Why company from Industrial area activity should not be computed in a manner adopted in earlier Asst years. (4) Detailed of unclaimed refunds and why same be not disallowed. 31 (5) Why profit on sale of shares may not be treated as business income. (6) Details of how inventory determined as on 31/3/14 vis-a-vis previous year . (7) How POCM method appealable to assessee on meets criteria under POCM. (8) Bais of ascertaining revenue from operations. (9) Show cause why not an amount of Rs.1050.40 cr be added back to the returned income as same has been reduced in revised return. Adjourned to 20/12/16 at A.M. Sd/- 19. On the said date the assessee filed reply and the order sheet entry notes “case adjourned to 23/12/16” . But another entry on the same date subsequently records issuance of show cause not ice to the assessee u/s 142(2A) of the Act . On 26/12/2016 the assessee files reply to the show cause not ice which, the order sheet entry notes as “discussed with the counsel ” and thereafter on 29/12/2016 the special auditor is issued letter of appointment . Subsequently the proceedings are completed after considering the report of the special auditor, on 21/06/2017, i .e. the extended time period statutorily provided on account of reference made of the accounts of the assessee to special audit . 20. The above facts reveal that i t was only at the fag end of the limitation period for framing the assessment that substantial queries were raised for the assessee to respond to. And after the assessee had responded to the same, proceedings for initiating reference for special audit of accounts were commenced beginning with issuance of show cause notice . 21. Going further, A perusal of this show cause notice(P.B 214-221) reveals that there is no complexity worth its while pointed out by the AO in the accounts of the assessee but on the contrary points out certain deficiency /shortcomings in the reply of the assessee to the queries raised on 16.12.2016, which we find are primarily to the effect that certain information/explanation remained to be filed by the assessee. 22. The contents of the not ice clearly revealing the said facts as under: “GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT Office of the Deputy Commissioner of Income-tax Panchkula Circle, Aayakar Bhawan, Sector 2, Panchkula – 134 112 F.No.DCIT/Pkl/Cir/PKL/2016-17/ Dated: 20/12/2016 To M/s Haryana State Infrastructure Development Corporation Ltd., C-13 & 14, Sector 06, Panchkula. Sub:- Notice u/s 142(2A) OF THE I t Act 1961 for the assessment for the A.Y. 2014-15 – reg. – 32 Please refer to the assessment proceedings for the A.Y. 2014-15 pending in this office. 2. In this regard, during the course of assessment proceedings you were asked to provide the information as per noting sheet entry dated 16.12.2016 vide your reply dated 20.12.2016 you have provide the following explanation:- Sr.No. Information Desired Reply / Explanation 1. Explain how figures of IA Activity shown till 31.03.2013 have been incorporated in the Balance Sheet and Statement of Profit & Loss for 31.03.2014. It is submitted that the Corporation has changed its system of accounting from cash to accrual w.e.f. Financial Year 2013-14 relevant to the Assessment Year 2014-15 and the cumulative effect of all the heads of revenue, expenditure, inventories, fixed assets etc., have been accounted for in the said assessment year. It is stated as under: The books of the accounts of the Corporation were being maintained under "Cash System of Accounting" and all the cost of the Project & other expenditure incurred thereon were accounted for in one control account i.e. infrastructure and Industrial Area Development Expenses Recoverable" and recoveries from the allottees were netted in said control account. Said control account reflects excess of developmental expenditure over recoveries and is disclosed in the financial statements under "Other Current Assets". A sum of Rs.5671.59 Crore (net of recoveries] was parked in the control account as at 31 st March, 2013. After review of the control account i.e. "Infrastructure and Industrial Area Development Exp. Recoverable", it has been bifurcated into various functional heads of accounting e.g. - Inventories in the form of unsold land/plots -Cost of the land acquired for existing projects as well as future projects. -Developmental expenditure of the site e.g. Road construction, electrification cost, public utilities work, sewerage treatment plant, CETP and other direct capital expenditure. -Cost of the Unsold plots i.e. Inventories. -Enhancement cost paid to land owners. -Annuity payment to land owner. -Fixed Assets like office building, furniture & fixture, office equipment etc. -Expenditures incurred on developmental activities out of matching grant received from State Govt. -Recoveries from Allottees netted in control account bifurcated into relevant heads of accounting e.g. O Recoveries of the cost of the plot, enhancement cost and maintenance charges. O Interest received on deferred installment of cost of lot/enhancement cost 33 etc. O Other recoveries e.g. Processing fees Transfer fees. Extension charges, Leasing fees, Surrender/resumption charges Water and sewerage charges, Misc. Income etc. 2. Detailed calculation with year-wise bifurcation of expenses and recoveries of IA Activity The bifurcation of expenses and recoveries of IA Activity as on 31.03.,2013 is given as per Annexure-1. 3. Why income from IA Activity should not be computed in a manner adopted in earlier Assessment Year(s). We submit that the Corporation was following cash system of accounting for maintaining its accounts till F.Y. 2012-13 and had been showing certain income from Industrial Area Activity by allocating expenses between Industrial Area Activity and Finance Activity. However, the Corporation has changed its system of accounting from cash basis to accrual basis w.e.f. 01.04.2013 i.e. F.Y.2013-14. Accordingly, - the Finance Statements for the F.Y. 2013-14 have been prepared on Accrual Basis, in accordance with the generally accepted accounting principles in India and to comply with the Accounting Standards prescribed in the Companies Act and also in accordance with the Government Notification No. GSR 550 (E) dated 16.05.1989 and 770 (E) dated 10.09.1990 which provide for accounting of interest income on loans financed to industrial projects and interest on instalments due on the cost of industrial plots/sheds etc., on cash basis. In Assessment Year 2014-15, the Corporation has computed the income from Industrial Area Activity earned till 31.03.2014 in A.Y. 2014-15. Due to change in the system of accounting from cash basis to accrual basis, the income from IA Activity should not be computed in a manner adopted in earlier Assessment Year(s). 4. Detail of how inventory determined as on 31.03.2014 viz-a-viz 31.03.2013. We submit that the Corporation was following cash system of accounting for maintaining its accounts till F.Y. 2012-13, therefore, no inventory was recognized in the books of accounts till 31.03.2013. However,, the Corporation changed its system of accounting from cash basis to accrual basis w.e.f. 01.04.2013 i.e. F.Y. 2013-14 and accordingly, inventory has been determined and accounted for in the books of accounts on the basis of "Percentage of Completion Method" (POCM) read with Guidance Note on "Accounting for Real Estate Transactions" issued by Institute of Chartered Accountants of India (ICAI). Closing stock of land/work in progress is valued at lower of cost (Weighted Average Method) or net realizable value. Cost 34 includes acquisition cost, enhancement compensation cost, annuity cost and internal and external development expenditure etc. incurred and other directly identified attributable expenses pertaining to projects. 5. How POCM is applicable to Assessee i.e. how meets criteria under POCM. The Corporation is a wholly owned Government Company (as defined under section 617 of the Companies Act, 1956) and was incorporated in 1967 with an objective of promoting industries in the State of Haryana Government. The Corporation has been given the mandate to develop industrial infrastructure and thereby facilitate development and growth of industry in the State of Haryana. The Corporation has developed industrial estates/IMTs throughout the State in this process. The process of development of industrial infrastructure necessarily involves acquisition of land, planning, exclusion of development works e.g. roads, water supply and electrical infrastructure. This is followed by provision of secondary level of facilities such as the STP/CETP, development of plantation/green belts, commercial and institutional sites common parking facilities, etc. The Income from Industrial Area Activity has been computed in accordance with the Guidance Note on "Accounting for Real Estate Transactions" issued by ICAI which covers all forms of transactions in real estate. The transactions which are covered by this Guidance Note are as under: (a) Sale of plots of land (including long term sale type leases) without any development (b) Sale of plots of land (including long term sale type leases) with development in the form of common facilities like laying of roads, drainage lines and water pipelines, electrical lines, sewage tanks, water storage tanks, sports facilities, gymnasium, club house, landscaping etc. (c) Development and sale of residential and commercial units, row houses, independent houses, with or without an undivided share in land. (d) Acquisition, utilisation and transfer of development rights, (e) Redevelopment of existing buildings and structures, (f) Joint development agreements for any of the above activities. Since the activities undertaken by the Corporation fall under the scope of transactions covered under the Guidance Note on "Accounting for Real Estate Transactions", therefore, the POCM is applicable to the Corporation. 6. Basis of ascertaining revenue from operations. Revenue from Industrial Infrastructure activities is recognized in accordance with the provisions of Accounting Standard (AS) 9 on Revenue Recognition, read with Guidance Note on "Recognition of Revenue by Real Estate Developers (Revised 2012)". Revenue is computed based on the "Percentage of Completion Method (POCM)" when following conditions 35 are satisfied: - All critical approvals such as environmental clearances, approvals of plan and design, title to land or other development right have been obtained. - The stage of completion of the project has reached reasonable level. A reasonable level of development is achieved if expenditure incurred on construction and development cost (excluding cost of land cost) is not less than 25% of the estimated construction and development cost and - At least 25% of the saleable project area is secured by the agreement or the allotment letter and - At lease 10% of the total revenue as per per agreement/allotment letter are realized in respect of these cases. In case of sale/auction of sites of non- industrial area/infrastructure activity, the revenue is recognized when al the significant risks and rewards are transferred and also when all the requisite approvals are obtained by the Corporation as required under the agreement. Interest on non-industrial area projects is accounted for on accrual basis. 7. Show cause why not an amount of Rs.1050 crore be not added as the same has been reduced in Revised Return of Income. It is submitted that the accounts of the Corporation were being maintained on cash basis till Assessment Year 2013-14. The Corporation had been showing certain income from Industrial Area Activity by allocating expenses between Industrial Area Activity and Finance Activity. The method of accounting had been accepted by the Income Tax Department till A.Y. 2004-05. After that, the Department has computed income from Industrial Area Activity, the detail of which as under: Assessment Year Amount(Rs.) 2005-06 354587944/- 2006-07 329359489/- 2007-08 1187882027/- 2008-09 2548011251/- 2009-10 1525532251/- 2010-11 1801666232/- 2011-12 1364170957/- 2012-13 351339526/- 2013-14 1041425872/- Total 10503975549/- Thus, the Department has already imposed tax on income of Rs. 1050.40 crore between A.Y.2005-06 to A.Y. 2013-14. The appeals of the Corporation have been dismissed by CIT(A) and the Corporation is in appeal before ITAT. In Assessment Year 2014-15, the Corporation has changed its method of accounting from cash to accrual and has computed the income from Industrial Area Activity earned since inception till 31.03.2014 (including the years during which income has been computed at Rs. 36 1,050.40 Crore) in Assessment Year 2014-15 and the original return was filed showing entire income of Industrial Area Activity earned till 31.03.2014. The Corporation has revised the return by reducing income of Rs. 1,050.40 Crore out of total income for Assessment Year 2014-15 because tax has already been levied by the Department on the amount of Rs. 1,050.40 Crore. In case, the said income is not reduced out of taxable income of Assessment Year 2014-15 it would amount to double taxation i.e. once paying tax in Assessment Year 2005-06 to Assessment Year 2013-14 on the basis of assessment made by the Department and again paying tax in Assessment Year 2014-15 on the basis of income declared in accounts. In case at a later stage, the appeals of the assessee are allowed by ITAT and income assessed from Industrial Area Activity is deleted, in that case, assessee Corporation agrees to pay the tax in Assessment Year 2014-15 as the same can be done u/s 154/155 while giving appeal effect to the orders of ITAT for years in appeal. The above explanation has been considered and examined and is discussed as under: Regarding explanation No.1&2, i) You have explained that cumulative effect of all head of revenue, expenditure, inventories, fixed assets etc. have been accounted for A.Y.2014- 15. But no explanation was given as to how cumulative calculations were made ii) You have shown a sum of Rs.5671.59 crore was parked in the control account as on 31.03.2016, further for determination of this amount various heads/details of expenditure and recovery upto 31.03.2013 has been shown as under: Details of Expenditure upto 31.03.2013 Table S.No. Particulars Amounts 1. Land Cost (including Enhanced Compensation 1,11,66,13,67,007.00 2. IA Development Expenditure 23,52,39,15,541.00 3. Development works(old) 7,77,90,292.00 4. Village development 7,46,08,195.00 5. Development Udyog Kund 2,92,68,338.00 6. Details of fixed assets 11,95,92,404.00 7. Deposit works 44,33,66,599.00 8. Annuity Land 76,73,92,038.00 9. Details of contribution 1,97,11,26,275.00 10. Details of incentive to allottees 11,34,21980.00 37 11. Expenses to be allocated 67,69,79,591.00 12. Advances to Parties 12,96,95,537.00 13. Details of SME R/Funds Accounts 1,00,00,000.00 Grand Total(A) 1,39,59,85,23,797.00 Details of Recovery upto 31.03.2013 S.No. Particulars Amounts 1. Allottees Account 65,23,39,11,006.00 2. Enhanced cost recovery 5,26,99,81,180.00 3. Interest on allottees 5,39,94,85,248.00 4. Rent 10,08,845.00 5. Misc. Income 5,87,50,28,173.00 6. Surrender / Re sumption 21,67,66,905.00 7. Lease Rent 49,19,306.00 8. Processing Charges 17,13,22,463.00 9. EDC Charges (DATED 8s P-HR) 680935032 10. Internal Development Charges 19351482 11. Licence fee Karnal 6092.00 12. Contractor Accounts 98,81,231.00 13. Grand Total 1,00,00,000.00 Grand Total(A) 82,88,25,96,963.00 A Total Expenditure Control Account 1,39,59,85,23,797.00 Recovery from allottees 82,88,25,96,963.00 Net Expenditure as on 31.03.2013 (A-B) No detailed breakup of Expenses recoverable and recoveries from allottees is proved. However no working/calculation of these amounts have been explained. Such as Rs.1,11,66,13, 67,007. 00/- Land cost, year when the land was acquired, amount of enhanced compensation, year- wise, site-wise breakup of the same is not furnished. Infrastructure and Industrial Area Development Expenses recoverable has been bifurcated into various head of accounting eg. Cost of land acquired for existing projects as well as future projects, Infrastructure and industrial area development expenses recoverable. The bifurcation of expenses and recoveries of Ind. Area activity was given as annexure-i. But no yearwise, site-wise, head wise breakup is given e.g as per details of expenditure of Gurgaon site the cost of land is shown as 529,242, 907/-, but from this amount it is not verifiable that when the land was acquired, when the construction was begun and how much work is pending. No working and breakup has been provided on this point also. Regarding explanation No. 3, no tenable reply regarding the reason of change of method of accounting by HSIIDC has been provided. Regarding explanation No. 4, you have replied that valuation of closing stock/work in progress is valued at lower of cost or net relizable value. No detailed calculation/working has been given in support of amounts shown and where shown it is not substantive. For example the work in progress, the explanation of the same was not provided. Regarding explanation No. 5, As the corporation was established in 1967 and it is developing Indl. Estates and IMTs throughout the State and the activities have been computed in accordance with the guidance note, then why the same method was not applied in the earlier years. You have also not explained treatment of books of previous years under POCM. 38 Regarding explanation No. 6, revenue from operations is not verifiable as the projects passes from various stages and no specific information/no detailed working in this regard is provided. Regarding explanation No. 7, you have replied that the corporation revised its return by reducing income of Rs.1050.40 Cr. because tax has already been levied by the department on this amount it would be double taxation. In case at later stage the appeals of the assessee are allowed by ITAT the assessee agrees to pay tax in A.Y.2014-15, The explanation provide by you not seems to be contradictory On one side you are reducing the amount and other side the appeals also being contested. In view of the above facts and circumstances of your case and considering the nature and complexity of accounts, volumes of accounts and multiplicity of transactions, your case is proposed for audit u/s 142(2A) of the IT Act, 1961. You are hereby given an opportunity of being heard in this regard and your case is fixed for 26.12.2016 at 11.00 AM.” 23. A perusal of the above show cause notice reveals that on the query raised asking explanation of how figures of Industrial activity upto 31.03.2013 were incorporated in the impugned years balance sheet , the assessee had explained that it had switched over from cash system of accounting done upto 31/03/13 to accrual system and had also explained the manner of doing so as also furnishing year wise bifurcation of expenses and recoveries in the IA account as on 31.03.2013. To this the AO notes that no explanation has been furnished as to how cumulative calculations were made no break up of certain details provided and site wise break also not provided. 24. Similarly the assessee explanation regarding why income be not computed as in earlier years the assessee justified the change in system of accounting as being in compliance with accounting standard issued by the ICAI and also in accordance with government notifications, to which the AO merely brushes aside the explanation as not being tenable without assigning any reason for stating so. 25. On the query regarding method valuation of closing stock for year ending 31/03/2013 and 31/03/2014 the assessee replied that upto 31/03/13 since it was following cash system of accounting no stock was accounted for while thereafter it followed the Percentage Completion Method (PCOM) for accounting for inventory, valuing it at cost or net realizable value which ever was less. To this the AO notes that no calculation of working of inventory has been provided by the assessee. 26. To the query raised regarding how PCOM method was applicable to the assessee, the assessee replied that its activities fell under the scope of transact ions covered By the guidance note issued by ICAI on Accounting for real estate transact ions which recommended PCOM method. It was also explained as to how its activities fell under the said guidance note. To this the AO noted that why this method was not adopted in earlier years also. 27. On being asked to explain basis of ascertaining revenue from operations, due reply explaining the same was filed. To this the AO notes simply that it is not verifiable since assessee passes through various stages and no specific information/no detailed working has been provided by the assessee. 28. To the query as to why Rs.1050 crores has been reduced from the income of the assessee in the revised return filed . the assessee explained in detail that 39 the department had already collected taxes on the same in earlier years when it had rejected its cash basis of accounting and taxed income on accrual basis. To this the AO notes that the assessee has filed appeal against the said additions made by the department and therefore by reversing the income in the impugned year it was taking a contradictory stand. 29. After so stating the AO notes that considering the facts and circumstances and the nature and complexity of accounts of the assessee, volume of transact ions and multiplicity of transact ions, special audit u/s 142(2A) of the Act is proposed. 30. As is evident from the above the reason for referring the accounts of the assessee to special audit , highlighted above in italics by us, by the AO does not point out a single complexity in the accounts of the assessee. On the contrary he has only pointed out certain information still lacking in the reply submit ted by the assessee. With regard to each explanation he has stated that the assessee has either not given certain explanation required by him or certain working or calculations had not been explained. It is not coming out from the notice, therefore, that there was any complexity in the nature of the accounts of the assessee which had come to the notice of the AO. Nor has the Ld.DR been able to enlighten us as to what complexity was pointed out by the AO in the accounts of the assessee for enabling reference to a special audit . 31. What is clearly evident is that the reference for special audit was merely made for obtaining certain explanation and information which were further required by the AO for the purposes of assessment of income of the assessee. In effect , the AO ,was shifting his responsibility to the special auditor. This is surely not the purpose for which special audit can be referred to under law. 32. Further, we find, the assessee filed a detailed reply to the show cause notice explaining at length al l doubts and queries raised by the AO in its previous reply and furnishing all information which he found lacking (P.B 222- 252) , but despite the same, the AO sought approval of the PCIT for special audit on the same day the reply was filed by the assessee and after obtaining the same ordered special audit on the very same day. 33. The only inference which can possibly be drawn in the facts of the present case as narrated above, is that the reference to special audit was made only to buy further time for completing the assessment , having been made at the fag end of the period for completion of assessment that too merely for obtaining further details and information and not because any complexity was noted in the accounts of the assessee. The reference to special audit , therefore we hold, is an invalid reference, contrary to law. 34. The assessment order passed therefore in the extended period, as a consequence of the invalid reference, we hold, is barred by limitation and hence void. 35. Since we have held the assessment order to be void on account of an invalid reference to special audit for the aforesaid reasons, the remaining arguments with respect to the same are not being dealt with by us. 40 7. We have heard the rival contentions and carefully pursued the misc. application filed by the Revenue as well as written submissions filed by both the parties. Having carefully gone through the misc. application filed by the Revenue, the written submissions filed by both the parties, the order so passed by the Coordinate Bench and the decision of the Hon’ble Punjab and Haryana High Court, we are of the considered view that there is no mistake apparent from the record and the present misc. application filed by the Revenue u/s 254(2) is misconceived and doesn’t call for any action as far as the order passed by the Coordinate Bench dated 26/10/2021 in ITA No. 1369/Chd/2019 and the reasoning for arriving at such a conclusion is as discussed in the succeeding paragraphs. 8. The case which the Revenue has sought to build by virtue of the present misc. application is that the assessee corporation has suppressed and concealed the material information with regard to filing of the civil writ petition being CWP No. 12434 of 2017 before the Hon’ble Punjab and Haryana High Court. It has been submitted on behalf of the Revenue that the fact of filing of the said writ petition and subsequent dismissal thereof vide order dated 01/06/2017, at the motion stage itself without issuing notice to the Revenue by the Hon’ble Punjab and Haryana High Court, was not disclosed by the assessee corporation before the Coordinate Bench and in view of same, the additional ground of appeal so taken by the assessee corporation has been decided and adjudicated upon by the Coordinate Bench without taking the said fact into account which has a material bearing on the case and thus, there is a mistake apparent from record. 9. In this regard, we refer to the order of the Hon’ble Punjab & Haryana High Court in CWP No. 12434 of 2017 (O&M) dt. 01/06/2017 and the contents thereof read as under: “1. The petitioner has brought this petition under Article 226 of the Constitution of India seeking quashing of ht especial audit report dated 16.05.2017 (Annexure P-13), which has been submitted by the Special Auditor, under Section 142(2A) of the Income Tax Act, 1961. 2. On a careful perusal, we find that assessment order for the Assessment year 2014-15 is yet to be passed by the Assessing Officer and it shall be open for 41 the petitioner to take all the pleas before the assessing officer at the time of framing assessment. 3. In view of the above, we find no ground to interfere in the report of the Special Auditor submitted under Section 142(2A) of the Income Tax Act, 1961. 4. Needless to say that in case, any adverse order is passed against the petitioner, it shall be open for the petitioner to impugn the same in accordance with law. 4. Accordingly, the present writ petition is dismissed. “ 10. On careful perusal of the order so passed by the Hon’ble Punjab and Haryana High Court, it is noted that the assessee corporation in its writ petition has sought quashing the special audit report dated 16/05/2017 u/s 142(2A) of the Act. While dismissing the writ petition, the Hon’ble Punjab and Haryana High Court has held that the assessment order for A.Y 2014-15 is yet to be passed by the Assessing officer and it shall be open for the petitioner to take all the pleas before the Assessing officer at the time of framing the assessment. In view of the same, it was held that there was no ground to interfere in the report of the Special Auditor submitted under Section 142(2A) of the Income Tax Act, 1961. At the same time, liberty was given to the assessee corporation that in case, any adverse order is passed against the assessee, it shall be open for the assessee to impugn the same in accordance with law. We therefore find that the writ petition was filed by the assessee corporation during the pendency of the assessment proceedings, and in order to avoid causing any prejudice to the Revenue, it was held by the Hon’ble High Court that let the assessment proceedings be completed by the Assessing officer and at the same, the assessee was allowed to raise all the pleas as available under law both during the course of assessment proceedings and even subsequently, during the appellate proceedings, should any adverse view is taken against the assessee. The Hon’ble Punjab and Haryana Court has therefore not given any findings on merits of the case and in view of the alternate remedy available in terms of regular appellate proceedings, the writ petition so filed by the assessee was dismissed. There is no finding on merit by Hon’ble Punjab and Haryana Court whereby the 42 assessee has challenged the special audit report and it was left open to the assessee to challenge the same during the regular appellate proceedings. We therefore find that it is incorrect on part of the Revenue to read and interpret the said order so passed by the Hon’ble Punjab and Haryana High Court to hold that the report of the special auditor has become final including the matter relating to limitation. In view of the liberty so granted by the Hon’ble High Court to challenge the adverse view so taken by the Assessing officer and matters connected therewith, where the assessee corporation has taken the additional ground of appeal in its appeal filed before the Tribunal whereby the assessment order passed u/s 143(3) has been challenged by way of additional ground of jurisdiction and bared by limitation as reference to special audit u/s 142(2A) has been claimed to be illegal and bad in law and where the same has been admitted by the Coordinate Bench and adjudicated upon, we find that there is no mistake apparent from record and any action can be contemplated or sought within the provisions of section 254(2) of the Act. Infact, the assessee has availed the remedy as available under the regular appellate proceedings and the necessary liberty has been granted by the Hon’ble High Court. Should the Revenue is aggrieved with the order so passed by the Coordinate Bench, the necessary remedy lies in filing appeal before the Hon’ble High Court which as we have noted supra, the Revenue has already moved an appeal against the order so passed by the Coordinate Bench and no action is permissible or can be acted upon by the Tribunal within the limited domain of section 254(2) of the Act. 11. In view of the aforesaid discussions and considering the entirety of facts and circumstances of the case, the various grounds of appeal taken in the present misc. application are disposed off as under: Grounds of Misc. application Findings i) Whether on the facts and in the circumstances of the case, the order passed by the Hon'ble Income Tax Appellate Tribunal is vitiated being obtained fraudulently by the Assessee by suppressing the order of the Hon'ble The order so passed by the Tribunal cannot be held to be vitiated as no findings on merits of the special audit report 43 jurisdictional High Court dated 01.06.2017 dismissing the Civil Writ Petition No. 12434 of 2017 wherein the challenge to the special audit report including the ground of limitation etc. was upheld? including the ground of limitation has been given by the Hon’ble High Court in view of the alternate remedy available to the assessee under law. ii) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is right in law in holding the reference under Section 142(2A) of the Income Tax Act, 1961 as appealable before the Appellate Authorities ignoring the scheme of the fiscal statute wherein the legislature consciously has not provided any Appeal and Appellate Tribunal, being a creature of statute with powers conferred by the statute is statutorily obligated to pass an order within the confines of statute? Should the Revenue is aggrieved with the said findings of the Coordinate Bench, the appropriate action lies in filing appeal before the Hon’ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the same will amount to review of the decision already taken by the Coordinate Bench. iii) Whether on the facts and in circumstances of the case, the Hon'ble Income Tax Appellate. Tribunal is right in law in adjudicating and holding the reference under Section 142, (2A) of the Income Tax Act, 1 961 invalid and examined the veracity of the same as if the right of appeal is Inherent? Should the Revenue is aggrieved with the said findings of the Coordinate Bench, the appropriate action lies in filing appeal before the Hon’ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the same will amount to review of the decision already taken by the Coordinate Bench. iv) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is right in law in admitting the additional ground of Appeal after the expiry of period of limitation under Section 253 of the Income Tax Act, 1961 without there being any application for condonation of delay by the Assessee? Should the Revenue is aggrieved with the said findings of the Coordinate Bench, the appropriate action lies in filing appeal before the Hon’ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the same will amount to review of the decision already taken by the Coordinate Bench. 44 v) Whether on the facts and in the circumstances of the case, the Hon'ble. Income Tax Appellate Tribunal is right in law in adjudicating the reference under Section 142(2A) of the Income Tax Act, 1961 under the guise of limitation for passing an order of assessment whereas the Hon'ble High Court declined to interfere in the challenge laid to the special auditor report, limitation etc. and the adjudication suffers from, the vice of principal of estopple, waiver, acquiescence etc ? Should the Revenue is aggrieved with the said findings of the Coordinate Bench, the appropriate action lies in filing appeal before the Hon’ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the same will amount to review of the decision already taken by the Coordinate Bench. vi) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is right in adjudicating the issue in Appeal which issue was not adjudicated by the Commissioner of Income Tax (Appeals) being not appealable? Should the Revenue is aggrieved with the said findings of the Coordinate Bench, the appropriate action lies in filing appeal before the Hon’ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the same will amount to review of the decision already taken by the Coordinate Bench. vii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is right in holding that the reference to special audit is an integral part of process ignoring the scheme of the statute and the title of Section 142 of the Income Tax Act, 1961 i.e., enquiry before assessment? Should the Revenue is aggrieved with the said findings of the Coordinate Bench, the appropriate action lies in filing appeal before the Hon’ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the same will amount to review of the decision already taken by the Coordinate Bench. viii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal is competent to assume jurisdiction as a Court of Appeal and re- examine the veracity of reference to the special audit despite dismissal of Civil Writ Petition by the Hon'ble High Court declining to interfere with the report of the special auditor? Should the Revenue is aggrieved with the said findings of the Coordinate Bench, the appropriate action lies in filing appeal before the Hon’ble High Court and the said ground cannot be decided within the limited domain of section 254(2) as the 45 same will amount to review of the decision already taken by the Coordinate Bench. ix) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal misdirected itself in misconstruing the provisions of the Income Tax Act, 1961, due to suppression of facts by assessee, resulting into incorrect order which is contrary to the scheme of the statute and material on record? .” The order so passed by the Tribunal cannot be held to be vitiated as no findings on merits of the special audit report including the ground of limitation has been given by the Hon’ble High Court in view of the alternate remedy available to the assessee under law. 12. In view of the same, the misc. application so filed by the Revenue is dismissed. (Order pronounced in the open Court on 09/08/2024 ) Sd/- Sd/- आकाश दीप जैन िवᮓम ᳲसह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा᭟यᭃ / VICE PRESIDENT लेखा सद᭭य/ ACCOUNTANT MEMBER AG आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : 1. अपीलाथᱮ/ The Appellant / 2. ᮧ᭜यथᱮ/ The Respondent 3. आयकर आयुᲦ/ CIT 4. आयकर आयुᲦ (अपील)/ The CIT(A) 5. िवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH 6. गाडᭅ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar