Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (12) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (12) TMI 740 - HC - Income TaxSpecial audit of accounts u/s 142A for the purpose of assessment u/s 153A - Power (Jurisdiction) to grant Extension lies with AO or CIT - Extension given for submission of the audit report to Chartered Accountant appointed u/s 142(2A) - HELD THAT:- It was the respondent/assessee's stand that both cooperation and information was furnished as sought by the concerned auditor. Regarding the interconnection of transactions, two separate auditors appointed in the matter had enough time to coordinate. That said, according to the respondent/assessee, without prejudice to the contention made on its behalf, one way or the other, the AO had to decide as to whether the extension of time for conducting the audit was mandated. The letter dated 08.04.2010, the extract of which was embedded in the letter dated 11.02.2020, needed to demonstrate that there was good and sufficient cause for extending the timeframe. Having noted the diametrically opposite assertions made on the aspect of delay, in our opinion, the legal tenability of the decision taken in the matter depends on which specified authority was invested with the power to extend the timeframe. As discussed above, since the legislature vested the discretion to extend the timeframe solely in the AO, he could not have abdicated that function and confined his role to only making a recommendation to the CIT. CIT had no role in extending the timeframe as the AO was in seisin of the assessment proceedings. As has been correctly submitted on behalf of the respondent/assessee, the decision taken to get an audit conducted u/s 142(2A) of the Act is a step in the process of assessment proceedings and, therefore, is clearly not an administrative power; as the appointment of a special auditor entails civil consequences. We may note that the decision relied upon on behalf of the appellant/revenue in the matter of Yum Restaurant [2005 (5) TMI 55 - DELHI HIGH COURT] has been disapproved in Rajesh Kumar’s case [2006 (11) TMI 135 - SUPREME COURT]. Furthermore, the judgment in Rajesh Kumar’s case has been reaffirmed by the Supreme Court in the Sahara India Firm case [2008 (4) TMI 4 - SUPREME COURT] with some moderation with regard to the Court’s exposition concerning the scope and impact of Section 136 of the Act. Given that the initial exercise of the power has been explicated as one that is not administrative, the CIT(A) could not have extended the time based on the recommendation of the AO. However, the enunciation of this legal principle does not derogate from our observation above that since the discretionary power was vested in the AO (which was non-delegable), it could not have been exercised by the CIT, irrespective of the nature of the power. Decided in favour of assessee.
|