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TMI Blog2019 (3) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 18 September 2009 of the Income Tax Appellate Tribunal (Tribunal). The Tribunal came to the conclusion that prior to the insertion of the expression "suo motu" with effect from 1 April 2008 in Section 142(2C), the assessing officer had no jurisdiction to extend time for the submission of the report of an auditor appointed under sub section (2A), of his own accord. As a consequence, it was held that the assessment which was made under Section 153A, in respect of the assessment years in question, was barred by limitation. 3 In the present batch of cases, the submission of the assessees is that the assessing officer had no jurisdiction or authority under Section 142 (2C), as it stood prior to 1 April 2008, to extend time for the submission of the audit report of the auditor appointed under the provisions of sub section (2A). In essence, the submission is that the assessing officer was authorized to extend time (not exceeding 180 days) from the date on which a direction under sub section (2A) was received by the assessee, only on an application made by the assessee and for any good and sufficient reason. If the assessee made no application, the assessing officer would have no juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 7 Section 153B prescribes time limits for the completion of assessments under Section 153A. Explanation (ii), as it stood at the material time, provided that in computing the period of limitation for the purposes of the Section, "the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of Section 142 and ending on the day on which the assesse is required to furnish a report of such audit under that sub-section" shall be excluded. While issuing a direction under sub section (2A) of Section 142, the assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm "suo motu" in the provisions of Section 142(2C) by the Finance Act. Circular No 1/2009 dated 27 March 2009 contains the following explanation for the amendments made to Section 142(2C): "27. Granting of power to the Assessing Officer to extend the time for completion of special audit under sub-section (2A) of section 142 27.1 Sub-sections (2A) to (2D) of section 142 deal with power of Assessing Officer to order a special audit. Such power is required to be exercised by the Assessing Officer having regard to the nature and complexity of the accounts of the assessee and the interest of the revenue. 27.2 Sub-section (2C) of the said section specifies the period within which the audit reports is to be furnished. The proviso to said sub-section empowers the Assessing Officer to extend this period of furnishing of audit report. Further, it is also provided that the aggregate of the originally fixed period and the period(s) so extended shall not exceed 180 days from the date of issuance of direction of special audit. Further, such extension can be made only when an application is made in this behalf by the assessee and there are good and sufficient reasons for such extension. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer to extend this period of furnishing of audit report. Further, it is also provided that the aggregate of the originally fixed period and the period(s) so extended shall not exceed 180 days from the date of issuance of direction of special audit. Further, such extension can be made only when an application is made in this behalf by the assessee and there are good and sufficient reasons for such extension. It is proposed to amend the said proviso so as to also allow the Assessing Officer to extend this period of furnishing of audit report suo motu. Hence, while the Assessing Officer shall continue to have power to grant extension on an application made in this behalf by the assessee and when there are good and sufficient reasons for such extension, he can also grant such extension on his own. The amendment will take effect from 1st April, 2008." 12 In the context of the above background, it has been submitted that the purpose of the amendment was to "also allow the assessing officer to extend the period for furnishing of an audit report, suo motu". The amendment to Section 142(2C) preserves the jurisdiction of the assessing officer to grant an extension on an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpowers the assessing officer to direct the assessee to get the accounts audited by an accountant, on the formation of an opinion that the conditions specified in the provision for recourse to the power are fulfilled. The power to order an audit is vested with the assessing officer. As a necessary incident of this power, sub-section (2C) imposes an obligation on the assessee to furnish the report to the assessing officer within the period which is specified by the assessing officer. The substantive part of sub-section (2C) places an obligation on the assessee to comply with the time schedule which is prescribed by the assessing officer. The overall ceiling of time appears in the proviso to subsection (2C), which mandates that the aggregate of the time fixed and the extended period cannot exceed 180 days, after which there can be no further extension of time. 16 The submission of the assessee would have this Court interpret the proviso to mean that the assessing officer can extend the period which was originally fixed only on the request of the assessee. Besides leading to absurd consequences, such a construction of the proviso is patently contrary to its language, purpose and inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension where, for a good and sufficient reason, the audit report could not be submitted. Otherwise, the assessee may face a penalty under Section 271 apart from being subjected to a best judgment assessment under Section 144. By extending time at the behest of the assessee, the assessing officer allows the original order calling for an audit report to be duly implemented. The creation of a remedy under the proviso in favour of the assessee cannot be construed to detract from the authority which vests in the assessing officer, who has specified the time limit for the submission of an audit report in the first instance, to extend time without an application by the assessee. To hold otherwise, and to construe the proviso to sub-section (2C) as foreclosing the authority of the assessing officer to extend time without a request by the assessee, would lead to an absurd consequence. The assessee would then be in control of whether or not to seek an extension of time, where the audit report has not been finalized. Even if the auditor, for genuine reasons (not bearing on the default of the assessee), was unable to comply with the time schedule, having regard to the nature or complexity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant an extension of time, save on the application by the assessee. Circular 1/2009 dated 27 March 2009 indicates that the amendment was brought about "with a view to rationalize the said proviso". Learned counsel argued that the expression in Circular 1/2009 that the amendment was to also allow the assessing officer to extend the period for furnishing of the audit report suo motu, indicates that such a power did not exist prior to the amendment. The submission cannot be accepted. The mere fact that the amendment has been made with effect from 1 April 2008 does not detract from it being clarificatory in nature or that it was designed to obviate an ambiguity. In Justice GP Singh's Principles of Statutory Interpretation (11th Edition (2008)) the issue of whether a statutory provision is retrospective has been analysed thus: ""The presumption against retrospective operation is not applicable to declaratory statutes. As stated in Craies and approved by the Supreme Court: 'For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the purpose of the amendment was to remove this ambiguity, we are clearly of the view that by the Finance Act, Parliament essentially clarified the position as it existed prior to the amendment. 23 Moreover, there exists a presumption of retrospective application in regard to amendments which are of a procedural nature. This position was stated in Maxwell on The Interpretation of Statutes (11th Edition, Sweet and Maxwell (1962) at pg 217): "The general principle, however, seems to be that alterations in procedure are retrospective, unless there be some good reason against it." In Commissioner of Income Tax (Central - I) v Vatika Township (P) Ltd. (supra), this Court held thus: "30. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax [2005] 279 ITR 310 (SC); (2005) 12 SCC 717 on which learned counsel for the assesses relied involved a substitution of the Explanation to Section 9(1)(ii) of the IT Act, 1961 with effect from 1 April 2000. A two Judge Bench of this Court held that given the legislative history of Section 9(1)(ii), it can only be assumed that it was deliberately introduced with effect from 1 April 2000 and was therefore intended to be prospective. This was also so construed by the CBDT, and in the explanatory notes to the provisions of the Finance Act, 1999. As we have indicated, interpretation is a matter of determining the path on the basis of statutory context and legislative history. In taking the view that we have, we have also taken note of the fact that the same view was adopted by several High Courts. Among them are (i) the Punjab and Haryana High Court in Jagatjit Sugar Mills Co Ltd v Commissioner of Income Tax (1994) 74 Taxman 8 (Pun.&Har.); [1994] 210 ITR 468; (ii) the Kerala High Court in Commissioner of Income Tax, Cochin v Popular Automobiles (2011) 333 ITR 308; and (iii) the Allahabad High Court in Ghaziabad Development Authority v Commissioner of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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