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2017 (9) TMI 1729 - AT - Income TaxPeriod of limitation u/s 153 - AO referred the matter for the special audit - Held that:- It is seen that the proviso to Explanation 1 to Section 153(1) comes into being, when, after the receipt of the special audit report or valuation report or information from the competent authority or the rejection of application by the settlement commission, the period available to the AO is less than 60 days, then the period shall be extended to 60 days to enable him to complete the assessment. Provisions of the Act here cast an obligation on the AO that in case the matter is referred to a valuation officer or for special audit or to a competent authority, the AO is able to receive the information within the time limit prescribed under section 153(1) and in case where the remaining period to complete the assessment is less than 60 days then proviso gives a period of up to 60 days to complete the assessment. We see considerable force in the arguments advanced by the Ld. Counsel that after the exclusion of the time taken under the situations envisaged under Explanation 1, there has to be some time available with the AO, which can be extended in terms of proviso to Explanation 1. A combined reading and the intention of the legislature in above proviso clearly shows that the legislature envisaged that there would be class of cases where the special audit report is received when less than 60 days are remaining or available from the period of limitation under the normal provisions. Thus, in order to avoid hardship and give reasonable period to complete the assessment, the period of limitation is extended up to 60 days. In the present case, the AO referred the matter for the special audit at the fag end on 26.12.2011, when the date for completion of assessment was 31.12.2011. The report of the special auditor was received on 22.06.2012, which was after the date of limitation i.e. 31.12.2011. It was submitted by the Ld. Counsel that once limitation period was crossed, and the information sought by the AO under the Explanation 1 to section 153 was pending, then there was no provision in the Act, which dealt with such situation. We are of the view that the Assessing Officer has breached the period of limitation while passing the draft assessment order.
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