TMI Blog2018 (3) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... ication in this context can be actual or even constructive. Service of the letter dated 30th March, 2013 with the ‘Terms of Reference’ would be effective communication in the light of the aforesaid discussion even if it is presumed that the order under Section 142(2A) was not enclosed with the letter. Further, order under Section 142(2A) of the Act was certainly dispatched and sent by speed post vide postal receipt ED86785578IN on 31st March, 2013 at 1819 hours, i.e. within the prescribed period. In view of the aforesaid discussion and after examining the entire issue from factual as well as legal position, we have come to the conclusion that the writ petition has no merit. Assessment proceedings have not abated Accordingly, the writ petition is dismissed, - Writ Petition (Civil) No. 2974/2013 - - - Dated:- 6-3-2018 - MR. SANJIV KHANNA AND MS. PRATHIBA M. SINGH JJ. Petitioner Through: Mr. Arvind Datar, Sr. Advocate with Mr. Vikas Srivastava, Mr. Jatinder Pal Singh, Mr. Sumit Mangal Ms. Kanika Jain, Advocates. Respondents Through: Mr. N.P. Sahani Mr. Rahul Chaudhary, Sr. Standing Counsel. SANJIV KHANNA, J.: Nokia India Private Limited has filed the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was neither a failure to submit details nor incorrect details were furnished. It was highlighted and stressed that adequate time and opportunity had not been given to respond to the show cause notice. 6. The petitioner asserts that at 6 p.m. on 26th March, 2013, opportunity notice was received by fax from the office of the Commissioner of Income Tax, Delhi-V, the second respondent, on the proposal given by the Assessing Officer for initiation of special audit. The petitioner was required to respond by 11.30 a.m. on 28th March, 2013. The petitioner has alleged that only five pages of the draft/proposed order of the Assessing Officer were served on 26th March, 2013. Draft order of twenty two pages was served on 28th March, 2013 at 10 a.m. By letter dated 28th March, 2013, the petitioner informed the second respondent that due to paucity of time it was not possible to submit detailed objections. Request for extension of time by 3 to 5 working days was made. The second respondent had thereupon granted time to the petitioner to submit their response by 11 a.m. on 30th March, 2013. 7. The petitioner, vide their letter dated 29th March, 2013, had reiterated that due to paucity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but they did not pick up their phones. Ultimately, partner of the firm was contacted and informed about the attempts made. Commissioner of Income Tax, Delhi-V had also contacted the Advocate representing the petitioner and informed that response was awaited. Thus, adequate and fair opportunity was given, but the petitioner had acted with malevolent intent. 10. The respondents state that Commissioner of Income Tax, Delhi-V after duly applying his mind on 30th March, 2013 had accorded approval to the draft order along with the Terms of Reference for special audit. Approval was dispatched to the office of the Assessing Officer after being recorded in the dispatch register at serial No. 3712 and received in the office of the Assessing Officer vide serial No.2681 in the receipt register. Copy of the dispatch register and receipt register has been enclosed with the counter affidavit. On the same day, i.e., 30th March, 2013, the Assessing Officer passed the order under section 142(2A) of the Act. M/s T.R. Chadha and Company was appointed as the Special Auditor to conduct audit. 11. As per the respondents, the order under Section 142(2A) dated 30th March, 2013 and the Terms of Referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal assertion is that the order under Section 142(2A) should have been physically and actually served or delivered on or before 31st March, 2013. Reference was made to proviso to Section 142(2C) asserting that as per the proviso, audit report of the special auditor has to be submitted within a maximum period of 180 days of the receipt by the assessee of the direction under Section 142(2A) of the Act. On conjoint reading of Sections 142(2A) and 142(2C), the date on which the Assessing Officer directs the assessee to get his accounts audited under Section 142(2A) of the Act used in Clause (iii) of the Explanation 1 of Section 153 have to be interpreted as the date on which the order under Section 142(2C) was received/served on the assessee. Reliance was placed on State of Punjab versus Shreyans Industries Ltd., (2016) 4 SCC 769; Kumar Jagdish Chandra Sinha versus Commissioner of Income Tax, West Bengal, AIR 1996 SC 1895; State of Punjab versus Khemi Ram, AIR 1970 SC 214; K. Joseph Jacob versus Agricultural Income Tax Officer, [1991] 190 ITR 464 (Ker); Qualimax Electronics versus Union of India, (2010) 27 STT 231 (Delhi High Court) and Government Wood Works versus State of Kerela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by hand through Tax Assistants at the office of the petitioner at Dundahera, Gurgaon, there are conflicting and opposing assertions whether the order under Section 142(2A) of the Act was enclosed and served. We are inclined to accept, though with some reservation, that the Tax Assistants had served the order under Section 142(2A) of the Act. We would record our reasons. Guards had signed the first page of the covering letter dated 30th March, 2013, the subject of which reads - Forwarding of Terms of Reference to special audit under Section 142(2A) of the Income Tax Act, 1961 for AY 2009-10-Reg . Petitioner relies on the subject and submits that the order under Section 142(2A) of the Act was not enclosed as this was not mentioned in the subject. However, the first paragraph of the said letter records that the Assessing Officer was forwarding therewith the directions to special audit under Section 142(2A) for the assessment year 2009-10 as approved by the CIT, New Delhi-V. The directions were enclosed as Annexure to the letter. The subject or heading of the said letter dated 30th March, 2013 is not to be read in isolation and has to be read with the contents, which refer to the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter dated 30th March, 2013. Fax of five pages on two occasions consisting of the covering letter and Terms of Reference is also accepted. 18. Two more aspects are highlighted and can be dealt with immediately. Affidavit of Mr. Vikram Gera, Senior Vice-President, M/s T.R. Chadha and Company, though sworn and dated 5th May, 2013, was on the stamp paper purchased on 7th May, 2013 at 1.44 p.m. Secondly, the Assessing Officer has interpolated the letter dated 2nd April, 2013 available in the assessment records and added words I am also enclosing a copy of the draft order for special audit under Section 142(2A) of the Income Tax Act, 1961, as approved by the Commissioner of Income Tax, Delhi-V, again . These words were missing in the letter dated 2nd April, 2013 sent by fax by the Assessing Officer to the petitioner. 19. It is correct that the affidavit of Mr. Vikram Gera, Senior Vice-President of M/s T.R. Chadha and Company was dated and verified on 5 th May, 2013, but it is printed on the stamp paper purchased on 7th May, 2013. Explanation of the respondents is that the affidavit was typed earlier and subsequently printed on the stamp paper. The stand of the respondents appears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for special audit was initiated right at the end, about 10 days before the limitation period for passing of the assessment order was to expire. This is an aspect for the respondents to introspect. 22. On the issue of reasonable or sufficient opportunity, the question cannot be answered by applying a strait-jacket test and would depend upon factual situation of each case. The yard-stick to judge any grievance whether reasonable opportunity was afforded or denied would be primarily a question of fact. If the view taken by the authority on opportunity is a reasonable one, a Writ Court would decline striking down the order on the precept that greater latitude or more time would have been appropriate. The authority or tribunal conducting the proceedings been in sessio is the master, and has the authority to control the proceedings. They are entitled to fix dates, grant time and opportunity in the facts of a case and totality of the circumstances, while drawing inference from conduct of the party. Unless a wrong, denial of justice and prejudice caused is perceptible, Writ Court would not accept such pleas. [See, Jagjit Singh versus State of Haryana, (2006) 11 SCC 1 , Paras. 14 to 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed 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: Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee has been given a reasonable opportunity of being heard. XXX Section 142(2C) of the Act (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 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 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. XXX Clause (iii) to Explanation 1 to Section 153 of the Act (iii) the period commencing from the date on which the Assessing Officer dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or made or even the word issue . Thus, mere passing of an order under Section 142(2A) was irrelevant and the exclusion under clause (iii) to Explanation 1 of Section 153 would only be applicable if the order was served on the assessee within the period of limitation for passing of the assessment order. 27. For the reasons elucidated, we do not find any merit in the said contention raised and the interpretation placed by the petitioner. Section 142(2A) of the Act empowers the Assessing Officer to pass an order directing special audit. Clause (iii) to Explanation 1 to Section 153 refers to the period commencing from the date when the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) to Section 142 ending with the date on which the assessee is required to furnish report of such audit, and states that this period is to be excluded. The starting point is the date on which the Assessing Officer directs the assessee to get his accounts audited and not the date on which the said order is received by the assessee. The period of exclusion under clause (iii) to Explanation 1 of Section 153 ends on the last date on which the assessee is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars a valuable right had accrued to the assessee. Reliance placed by the Revenue on Section 148 of the Code of Civil Procedure for enlargement of time when original period had expired, and on Section 139(2) of the Act, it was held, was misconceived. This decision has no relevance in the facts of the present case, as the issue and question under consideration which is to be answered, is the legal effect of the order under section 142(2A), which would have the effect of extending time for completion of assessment, when passed within the limitation period and is served subsequently. The question is whether as per the provisions of the Act service of the order within the original limitation period was mandatory requirement under the Act. Legal effect of passing of the order and its service was not examined and answered in Shreyansh Industries (supra). 31. Second decision in Kumar Jagdish Chandra Sinha (supra) interprets Section 153 (1) of the Act. The petitioner relies upon paragraph 15 of the judgment which refers to the expression 'communication' and states that the same should be understood as explained in Khemi Ram (supra). 32. Khemi Ram (supra) rather ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of the actual receipt by him that the order becomes effective. If that be the true meaning of communication, it would be possible for a government servant to effectively thwart an order by avoiding receipt of it by one method or the other till after the date of his retirement even though such an order is passed and despatched to him before such date. An officer against whom action is sought to be taken, thus, may go away from the address given by him for service of such orders or may deliberately give a wrong address and thus prevent or delay its receipt and be able to defeat its service on him. Such a meaning of the word communication ought not to be given unless the provision in question expressly so provides. Actual knowledge by him of an order where it is one of dismissal, may, perhaps, become necessary because of the consequences which the decision in The State of Punjab v. Amar Singh contemplates. But such consequences would not occur in the case of an officer who has proceeded on leave and against whom an order of suspension is passed because in his case there is no question of his doing any act or passing any order and such act or order being challenged as invalid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of the Supreme Court were referred to and examined by a Division Bench of this Court in Qualimax Electronics Private Limited (supra) and it was held as under:- 32. Of course, the is the danger that to prevent an assessee from seeking a settlement of his case, the adjudicating authority may quickly pass the adjudication order the moment he gets an inkling that the assessee is about to approach the Settlement Commission. There is also the danger that the adjudicating authority may back date an order. Adjudicating authorities are not supposed to behave in this manner and are presumed to function within the boundaries of law but, these things can happen. Would not a literal construction of the provisions then come in aid of such errant officers and run counter to the legitimate hopes of assesses who want to come clean, pay their taxes and have their cases settled by the Settlement Commission? The answer to this would lie in construing the date of adjudication to be the date on which the adjudicating authority loses his locus poenitentia, or opportunity to tear off, destroy or alter the adjudication order. In other words, when the order goes out of his control. And, that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs Private Limited (supra), reference was made to the judgment of the Supreme Court in Collector of Central Excise, Madras versus M.M. Rubber and Company, Tamil Nadu, 1992 Supp (1) SCC 471 , which decision had drawn distinction between commencement of limitation period for filing of an appeal against an order, and when an order comes into force or becomes operative. In the former case, period of limitation for filing of an appeal would normally commence when the order passed was received, published and notified. In the latter case, the order becomes operative and effective from the date it was signed and the authority ceases to have any locus poenitentiae to tear off, modify or alter the order. 36. M.M. Rubber and Company (supra) had clarified on two different principles of law relating to limitation. First principle relates to exercise of power or an act, affecting the rights of the parties within period of limitation prescribed. Order or decision of authority comes into force or becomes operative or becomes an effective order or decision on and from the date when it is signed. This happens when the order is made or passed; that is to say when the order is made public or n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved. 40. In Bacchittar Singh (supra) and other cases it has been held that decision was written out, signed and dated, it would be nothing but a decision which the officer intends to pass and not final. An order on the file till communicated, would not be an order passed or made. Communication of the order would be complete when made public or notified in some form or sent out by the authority so as to have left from his hands as explained in M.M. Rubber and Company (supra). 41. In K. Joseph Jacob versus Agricultural Income Tax Officer and Another, [1991] 190 ITR 464 (Ker) dealt with Section 35(2) of the Kerala Agricultural Income Tax Act, 1950, which had stipulated that no order of assessment, etc. shall be made after expiry of five years at the end of the year in which the agricultural income was first assessable. It was observed that communication was made on the date of communication and not on the date when the communication was received. Further, the order or assessment came into force, when it was communicated because the party must be put to notice of that order. First observation relates and states the first principle and the second observation states the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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