TMI Blog2011 (7) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... ute - The amendment, therefore, is purely clarificatory and/or intended to limit the period for submitting a report even when the Assessing Officer suo motu extends the period - Decided against the revenue - 1739 OF 2006 - - - Dated:- 25-7-2011 - FERDINO INACIO REBELLO, PRAKASH KRISHNA, JJ. Dhruv Agrawal and Nikhil Agrawal for the Petitioner. Bharat Ji Agrawal for the Respondent. ORDER Ferdino I. Rebello, CJ. The present petition is by an Authority constituted under the U.P. Urban Planning and Development Act, 1973. 2. The assessment year involved in the present case is the assessment year 2003-04 (Finance year 2002-03). Prior to 1-4-2002, the entire income of the petitioner was exempted from the purview of the Income-tax Act, 1961 (hereinafter referred to as the 'Act') by virtue of section 10(20A) of the Act, 2003-04 is the first assessment year when the petitioner is made liable to tax under the Act. The petitioner filed its return of income for the assessment year 2003-04 on 1-12-2003 showing a loss. After taking the case in scrutiny, a notice under section 143(2) of the Act was issued on 14-10-2004. The petitioner complied with the said notice and ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an appeal under the Act. The petitioner, however, has not taken recourse to that remedy, and instead applied to this Court in the exercise of its extraordinary jurisdiction. The reasons, amongst others, for invoking the extraordinary jurisdiction are that - (1) the assessment order is barred by time and, therefore, without jurisdiction, and (2) the assessment order is made relying upon the report of the Special Auditor which is time barred, incomplete and not in accordance with the directions issued at the time of appointment of the Special Auditor and some other reasons. 5. It may be mentioned that the petitioner participated in the proceeding before the special auditor. Petition has thereafter been filed. At the hearing of this petition, the only point argued is that the order of assessment has been made beyond the time prescribed under section 153 of the Act and consequently it ought to be set aside. We may also state that we have only heard the petitioner on this point. 6. According to the petitioner, the limitation should have been counted in the following manner : "(i) the direction under section 142 (2A) was received by the petitioner on 21-3-2006 and as such th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs were not co-operating to provide the requisite details and in view of this, the period for submitting the audit was extended. The last such was by letter dated 25-8-2006. Thus, a total period of 180 days was allowed to furnish the special audit report. It is set out that sub-section (2C) of section 142 empowers the Assessing Officer to allow the period within which the special audit report should be submitted / furnished. 10. According to the respondents, the limitation should be computed in the following manner : "(i) Count from the date the direction under section 142(2A) was issued to get the accounts audited. (ii) To furnish report of such audit duly signed by auditor within 120 days from the date the assessee has received the direction under section 142(2A). (iii) The period commencing from the date (10-3-2006) on which the Assessing Officer directed the assessee to get his accounts audited - ending with the last date on which the assessee is required to furnish such audit report. (iv) Hence period from 10-3-2006 (date of issuing the direction by Assessing Officer) to 18-7-2006 i.e., 120 days from the date of 21-3-2006 has to be excluded. (v) Under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause 28 seeks to amend section 142 of the Income-tax Act, which relates to enquiry before assessment. Sub-sections (2A) to (2D) of the said section deal with power of Assessing Officer to order special audit, where the nature and complexity of the accounts requires such audit, to seek the assistance of a chartered accountant. Sub-section (2C) of the said section specifies the period within which the audit report is to be furnished. The proviso to the said sub-section provides that the Assessing Officer may extend the said period of furnishing of audit report, on an application made in this behalf, by the assessee and for any good and sufficient reason. It is proposed to amend the said proviso so as to provide that the Assessing Officer may, suo motu, or on an application made in this behalf by the assessee, and for any good and sufficient reason, extend the said period by such further period or periods as he think fit. This amendment will take effect from 1st April, 2008. Clause 29 seeks to amend section 143 of the Income-tax Act, which relates to assessment. Granting of power to the Assessing Officer to extend the time for completion of special audit under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed from 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 : (2B) The provisions of sub-section (2A) shall have effect notwithstanding that the accounts of the assessee have been audited under any other law for the time being in force or otherwise. (2C) Every report under sub-section (2A) shall be furnished by the assessee to the Assessing Officer within such period as may be specified by the Assessing Officer : Provided that the Assessing Officer, may, on an application made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit; so, however, that the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub-section (2A) is received by the assessee." As earlier set out the proviso to sub-section (2C) was amended by Finance Act, 2008 with effect from 1-4-2008 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s accounts audited under sub-section (2A) of section 142 and ending with the last date on which the assessee is required to furnish a report of such audit under that sub-section, or ( iv ) to ( vii )** ** ** shall be excluded : Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections (1), (1A), (1B), (2), (2A) and (4) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly:" 16. A perusal of section 142(2A) would therefore show the power has been conferred on the Assessing Officer with the previous approval of the Chief Commissioner or Commissioner to direct the assessee to get the accounts audited by an Accountant. No limitation or period is prescribed for submitting the report. Under sub-section (2C) again no period is prescribed though the language used is the report to be submitted within such period as may be specified by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factor of the legislative intent. If the language of the enactment is clear and unambiguous, it would not be proper for the Courts to add any words thereto and evolve some legislative intent, not found in the statute. Reference in this regard may be made to a recent decision of this Court in Ansal Properties Industries Ltd. v. State of Haryana [2009] 3 SCC 553. 180. Further, it is a well established principle of statutory interpretation that the legislature is specially precise and careful in its choice of language. Thus, if a statutory provision is enacted by the legislature, which prescribes a condition at one place but not at some other place in the same provision, the only reasonable interpretation which can be resorted to by the courts is that such was the intention of the legislature and that the provision was concisely enacted in that manner. In such cases, it will be wrong to presume that such omission was inadvertent or that by incorporating the condition at one place in the provision the legislature also intended the condition to be applied at some other place in that provision." In B. Premanand v. Mohan Koilkal [2011] 4 SCC 266, the Supreme Court, inter alia, held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended the condition to be applied at some other place in that provision. 20. In construing the statutory provision, the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g., the mischief rule, purposive interpretation, etc., can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible result or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule. B. Premanand's case (supra). 21. In S.S. Gadgil v. Lal Co. [1964] 53 ITR 231, the Supreme Court observed as under: "...The legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e., up to April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served. Their application in legal controversies has oftentimes been pushed to an extreme which has defeated the plain and manifest purpose in enacting the laws. Penal laws have sometimes had all their meaning construed away and in remedial laws, remedies have been found which the legislature never intended to give. Something akin to this has befallen the revenue laws..." 24. Dealing with the interpretation of taxing statutes, in N.B. Sanjana, Asstt. Collector of Central Excise v. Elphinstone Spg. Wvg. Mills Co. Ltd. [1971] 1 SCC 337, the Supreme Court observed as under : "20. While rejecting the said contention this Court held : "The proper way to deal with such a provision is to give it an interpretation which, to use the words of the Privy Council in Mahiram Kamjidas's case, "makes the machinery workable utres valeat potius quam pereat. We, therefore, think that we should read sub-section (6) according to the provision of which interest has to be calculated as provided in sub-section (8) in a manner which makes it workable and thereby prevent the clear intention of sub-section (8) being defeated. Now, how is that best done? As we have earlier said sub-section (6) deals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication made by the assessee and/or for any good and sufficient reasons, extend the said period which cannot extend to more than 180 days from the date on which the direction under section 142(2A) is received by the assessee..." 27. On the other hand the Madhya Pradesh High Court in CIT v. Dhariwal Sales Enterprises [1996] 221 ITR 240, while considering a case where the special audit was ordered and the audit report was not submitted and the order of the assessment was made beyond the period, held that the maximum period to submit the report is 180 days and that period stood automatically curtailed when the Income-tax Officer was informed that the report was not likely to be received and as such the Income-tax Officer could only have legitimately taken the period spent for obtaining a copy of the report up to the time when the intimation was given by the assessee that the report was not likely to come. In this view of the matter, the Court held that the assessment decided on September 3, 1985, was beyond the period of limitation. 28. As we have noted earlier a proviso is added to an enactment to qualify or create an exception to what is in the enactment and ordinarily, a provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section. Is that period governed by the proviso to section 142(2C)? 30. Let us now consider the proviso to sub-section (2C) of section 142 of the Act. The proviso enables an assessee, as the proviso stood before its amendment, to apply to extend the period for submitting the report so that such period does not exceed 180 days. A reading of the proviso in its literal sense, would mean that only when an assessee asks for grant of more time than directed by the Assessing Officer to submit the report, then such extension may be granted so that the period, in its totality, does not exceed 180 days. Can this proviso be read into sub-section (2C) to limit the suo motu power of the Assessing Officer. If it is so read, then it would be assumed that the power of the Assessing Officer to extend the period under section 142 is absent nor was it available under the proviso. This construction leads to the inference that once time has been granted, then the power to extend beyond that period no longer subsists. How does one then reconcile the power of the Assessing Officer under sub-section (2A) or sub-section (2C) with the proviso. The proviso, read literally, would mean that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise had no right or say in fixing the period by the Assessing Officer for submitting the report, to also apply for good and sufficient reason. 34. The proviso, in our opinion, therefore, will have to be read with sub-section (2C) and sub-section (2A) of section 142 of the Act at least to the extent that the period which the Assessing Officer gives to the assessee to produce the report and the extended period for submitting the report at the instance of the assessee as set out in sub-section (2C), will have to be excluded. Once the legislature has thought it fit to confer power on the Assessing Officer, then sub-section (2C) is the provision wherein the prescribed period as provided by the proviso would have to be read into. At the highest before its amendment the proviso could also be read to mean that though it is the power of the Assessing Officer to fix the period, taking into consideration the limitation provided insofar as an assessee is concerned, the same limitation shall also be read into sub-section (2C) when the Assessing Officer fixes the period for submitting the report. 35. The other way the proviso to sub-section (2C) could be interpreted is, that before the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construed. 36. We, thus, arrive at a conclusion that the power to grant time will include, within its ambit, the power to extend time. Where the assessee applies to extend the period, it is within the power of the Assessing Officer to extend the period, as provided for in section 142(2C) of the Act. After the amendment to the proviso, the suo motu power has to be exercised in such a manner that the period for submitting the report and/or extended period, should not be more than 180 days. The amendment, therefore, is purely clarificatory and/or intended to limit the period for submitting a report even when the Assessing Officer suo motu extends the period. 37. If we so read, the provision then, in our opinion, and notwithstanding what has been set out in the Explanation to the Bill which introduced the expression 'suo motu', there was always power in the Assessing Officer which is now limited by the proviso to a maximum of 180 days. 38. Insofar as the present case is concerned, if the period, as set out earlier, are excluded, then by virtue of section 153 of the Act, that period would be excluded. On excluding that period, on the facts of the present case, the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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