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TMI Blog2016 (4) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment expired on 15.9.2006. Thus the order passed u/s 143(3) of I.T. Act, 1961 passed on 14.9.2006 is within the statutory limit. 3 The ld. CIT(A) erred in law and on the facts in relying on the arguments based on incorrect submission of the assessee while ignoring the facts on records as under:- a) The date of filing audit had been extended to 17.7.2006 b) Even on that date the assessee did not file the audit report c) On that date i.e. 17.7.2006, Special Auditor filed a copy of the report before AO d) Ld. CIT(A) New Delhi did not take cognizance of provision of section 142(2C) e) Ld. First Appellate Authority has wrongly interpreted the provisions of explanation 1(iii) to section to section 153(3) of I.T. Act, 1961 in holding that the last date is one decided by AO whereas the date of compliance extends upto 180 days f) The assessee tried to take advantage of its own fault in discharging its own statutory liability in getting the accounts audited and submit the report before AO within the prescribed time g) AO had been liberal in granting extensions for filing the audit report and further in the assessment proceedings while substantially reducing the quantum of addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant company, under misconception of law had offered an income of Rs. 1,50,00,000/- on the date of survey u/s 133A of the Act erroneously and, as such he ought to have also deleted the addition of said sum, while disposing off the appeal. 10. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in not deleting the levying interest of Rs. 75,20,977/- and Rs. 3,39,889/- under section 234B and section 234D of the Act respectively." 4. The facts in brief are that return of income was filed on 2.12.2003 showing total income at Rs. 2,04,84,373/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter "the Act") on 15.3.2004. M/s Sushil Jeetpuria & Co., Chartered Accountants, New Delhi (hereinafter called Special Auditors) were allotted the task of special audit u/s 142(2A) of the Act vide order F.No. DCIT/Circle 4(1)/2005-06/142(2A)/871 dated 17.2.2006. The report dated 7.7.2006 of the special auditor was received by the AO on 17.7.2006. After receipt of the special audit report u/s 142(2A) on 17.7.2006 an order dated 14.9.2006 was passed under section 143(3) of the Act. On appeal the CIT(A) quashed the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his accounts audited under sub section (2A) of section 142 of the Act and end with the last date on which the assessee is required to furnish the report of Special Audit under that section is to be excluded. In other words, the period from the date of direction of the audit to the last date on which the assessee is required to furnish a report of such audit u/s 142(2A) of the Act is to be excluded while computing the period of limitation as provided u/s 153(1) of the Act. However, the proviso further provides that, where immediately after the exclusion of the aforesaid period, the period of limitation available to the AO for making an order of assessment is less than 60 days, such remaining period shall be extended to 60 days and the aforesaid period of limitation shall be extended accordingly. 6.3 Applying the aforesaid statutory provisions to the facts of the instant case, it is evident that, the impugned assessment for assessment year 2003-04 had to be completed by 31.3.2006. However since the AO had directed the assessee to gets its accounts audited u/s 142(2A) of the Act, the period of limitation had to be extended in view of the provisions contained in Explanation 1 to secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 i.e. within a period of two years from the end of the assessment year. The Assessing officer vide his order dated 16/17.2.2006, directed the assessee to get his accounts audited u/s 142(2A) of the Act, within a period of 35 days. He further extended this period subsequently through directions dated 24.3.2006 (for a further period of 45 days) dated 10.5.2006 (for a further period of 30 days), dated 9.6.2006 (for a further period of 10 days), dated 21.6.2006 (for a further period of 7 days) and dated 28th June' 06 (for a further period of 7 days. He stated that total period to get the accounts audited was 134 days. It was submitted that in the extension dated 28th of June' 06, the date stated for completion of audit was 7th of July' 06. Thus the assessee was to get his accounts audited by 134 days from 17.2.2006, but since the AO had stated in the extension dated 28th of June' 2006, that the audit was to be completed by 7th of July, 2006, therefore, the period from 17.2.2006 to 7.7.2006 is to be excluded in terms of Explanation to section 153 of the Act. It was submitted that period of limitation expired on 6.9.2006, whereas the instant assessment had been framed on 14.9.2006. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l auditor is to be excluded in computing period of limitation. The proviso further provides that, where immediately after the exclusion of the aforesaid period, the period of limitation available to the AO for making an order of assessment is less than 60 days, such remaining period shall be extended to 60 days and the aforesaid period of limitation shall be extended accordingly. 9. In the instant case, the AO vide order dated 16/17.2.2006 directed the assessee to get his accounts u/s 142(2A) of the Act within a period of 35 days. He further extended this period subsequently vide following directions: S No. Date of the order for extension for period of audit under Proviso to section 142(2C) of the Act Period Extend ed Date by which the assessee was required to furnish the audit report u/s 142(2A) of the Act Remarks, if any 1 24.03.2006 45 days 08.05.2006 2 10.05.2006 30 days 07.06.2006 Order was made after 08.05.2006 and, not before or 08.05.2006 3 09.06.2006 10 days 17.06.2006 Order was made after 07.06.2006 and, not before or 07.06.2006 4 21.06.2006 7 days 27.06.2006 Order was made after 17.06.2006 and, not before or 17.06.2006 5 28.06.2006 7 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending with substituted for "the date on which the assessee furnishes" by the Finance (No. 2) Act, 1956 w.e.f. 1.4.1997 [the last date on which the assessee is required to furnish] a report of such audit under the sub-section or ....... 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) and (2A) available to the Assessing officer for making an order of assessment, reassessment or re-computation, 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.]" 6.6 The conclusion is further supported from the Memorandum Explaining the Provisions of Finance Bill and Notes on Clauses reported in 220 ITR 89 (Statue) "Amendment of time limit for completion of assessments and reassessments. Under the existing provisions of Income Tax Act, the time limit for making an order of assessment is two years from the end of the assessment year in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, the time limit for making an order of assessment is two years from the end of the assessment year in which the income was first assessable. However, in certain circumstances the time is extended, or certain period are excluded from the period of limitation. 49.2 In case where special audit is ordered, the Assessing Officer is of the opinion that, having regard to the nature and complexity of the accounts of the assessee and the interests of the revenue, 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 nominated by the Chief Commissioner or the Commissioner in this behalf. The assessee is required to furnish a report of such audit in the prescribed form duly signed and verified by the prescribed form duly signed and verified by the prescribed accountant. In such cases, the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited under section 142(2A) and ending with the date on which the assessee furnishes a report of such audit is excluded while reckoning the period of limitation for completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the order of assessment is barred by limitation. 13. Apart from the above the learned DR in written submission has submitted as under: "3 It is reiterated that impugned assessment is not barred by limitation and is based on the fact that the report of Special Auditor had been received by AO on 17.7.2006 only. The AO had himself extended the last date for the submission of Special Audit Report to be to 17.7.2006 (as evident from the notings on letter dated 12.7.2006 of the assessee; page no 5 of the paper book). The said fact has been completely ignored by the ld. CIT(A). Hence 17.7.2006 is the time given by the AO to submit the audit report and not 7.7.2006. As per own admission of the assessee, the details were submitted at 5:0 PM of 7.7.2006 (page no. 6 of the paper book) i.e. the last date of submission of the report. It means that due to (mis)deed of the assessee, it became impossible to comply with the deadline set by the AO to submit the report. Hence, AO had to extend the date to make sec. 142(2C) of the Act workable. 4 Proviso to section 142(2C) empowers the AO to extend the time period to submit the audit report. Hence, the AO has rightly extended the period of submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that no such letter was addressed to the AO but was addressed to the Commissioner of Income Tax, It was further submitted that, if copy of such a letter was received by AO, then it is not known on what date and, how such a letter was received by AO. It was submitted that there is no material brought on record to state that, purported endorsement could have been made or was made on 13.07.2006 unilaterally, particularly when it is not denied that, copy of the report was received even by the Commissioner of Income Tax to whom this letter was addressed. It was also submitted that such an endorsement which had not been even communicated, as is so admitted could not be regarded as an extension u/s 142(2C) of the Act and runs contrary to earlier extensions. It was further submitted that the contention thus raised is based on non-existent material. In nutshell it was contended that aforesaid endorsement cannot be read to be an order in law under proviso to section 142(2A) of the Act for the following reasons: "a) Firstly there was no such copy of the letter was available with the AO on 13.07.2006. b) Secondly, there was no such alleged endorsement made, as there was no occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Building Co-Operative Society v ACIT 76 TTJ 948 (Bang) (iii) DCIT v. Popular Automobiles 90 ITD 333 (Coch) (iv) Mahakoshal Engineers & Contractors Co. (P.) Ltd. v ACIT 85 ITD 267 (Nag) (v) CIT v Bishan Saroop Ram Kishan Agro (P) Ltd 203 Taxman 326 (Del) 16. Having considered the judgment of Hon'ble Delhi High Court in the case of CIT v Bishan Saroop Ram Kishan Agro (P) Ltd. 203 Taxman 326 we notice that Their Lordships have held as under:- "19. It was to rationalize the said proviso that the word "suo motu" came to be added by way of amendment with effect from 1st April, 2008. As per Clause 27.3 of the Circular dated 27th March, 2009 while the Assessing Officer shall continue to have the power to grant extension on an application made in this behalf by the Assessee, he could also grant extension of his own when there are good and sufficient reasons for such extension. Thus, it is noticed that sub-section (2C) before the amendment did not empower the Assessing Officer to extend the time for submissions of special audit report under sub-Section (2A). Further, the power of extension of time for submission of special audit report is also subject to limitation of a period of 180 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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