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TMI Blog2024 (1) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer and further extended by the AO, from time to time within the limits available u/s 142(2C). 3. Whether on the facts and in law, ld. CIT(A) has erred in only considering the erroneous and suppressed facts put forward by the assessee and not getting it verified from the records of the Department or through remand. 4. Whether on facts and in law, Id. CIT (A) has erred in considering the technical issue leaving other substantial issue on which additions/disallowances have been made." 3. In Cross Objection 75/Del/2023, the assessee has raised following additional grounds: "1. That on the facts and circumstances of the case, the Ld. CIT-(A) has passed the order as per the provisions of tire Act and hence the appeal filed by the department is not maintainable. 2. That on the facts and circumstances of the case, ground no. 2 raised by the department is not correct and therefore liable to be quashed. Additional Ground No. 1- 3. That on the facts and circumstances of the case, that extension of time was granted by Pr. CIT in getting books audited u/s 142(2A) was illegal thus vitiating the proceedings thereof and hence order passed u/s 143(3) is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Copy of letter by Pr. CIT to Addl. CIT dated 26.12.2018 for appointment of special auditor is on record. 7. The Additional CIT then directed the Assessing Officer for the said approval received from Pr. CIT and appointment of special auditor. Copy of letter directing the Assessing Officer dated 26-12-2018 is on record. Further, the Assessing Officer has passed an order u/s 142(2A) dated 29.12.2018 of the Act for the appointment of Special Auditor. Copy of the order is on record. The same has been communicated to the special auditor by the Assessing Officer vide his letter dated 30.12.2018. Copy of the said letter is on record. 8. Thereafter, the special auditor has sought for an extension of period for furnishing the Special Audit report for a period of 90 days. The Assessing Officer upon request of the special auditor has extended the period for furnishing the special audit report for further 45 days. Copy of extension letter by AO to Special Auditor is on record. 9. After getting the Special Audit completed, the Special Auditor filed the copy of Special Audit Report on 28.05.2019 in terms of section 142(2C) of the Act with the assessee company which was later on submitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended in this case was 135 days (90 days + 45 days) and therefore the time limit to furnish the Special Audit Report in this case expired on 14.05.2019. However, the Audit Report was furnished on 28.05.2019 and therefore appears to be time barred. It was further pointed out by the Id. CIT (A) that the assessment order passed was time barred as the limitation period expired on 13.07.2019, however the order in the case of the appellant was passed on 26.07.2019. It is relevant to state that this conclusion of Id. CIT (A) is factual wrong as the same is based on erroneous and suppressed fact. In this case, the extension for time was allowed 3 times from the original time allowed in this case, The time limit in this case approved to conduct Special Audit and further extension granted from time to time, are tabulated as under: S. No. Description of proceedings Relevant date Remarks 01 Approval of Pr. CIT for Special Audit u/s 142(2A) of the Act 26.12.2018 02 Date of letter of the AO directing Special Audit u/s 142(2A) of the Act 30.12.2018 03 Due date to submit Special Audit report 30.03.2019 04 Date for granting further extension o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... void. The findings of CIT (Appeal) in both the paras are factually incorrect in view of the report of the AO submitted before the Hon'ble Bench on 01.11.2023. The report encloses letters dated 13.05.2019 & 17.05.2019 vide which the time period for submitting the report of special audit was extended by 10 days each. In view of these extensions, the due date for submission of report by the auditor was 03.06.2019. The report was actually submitted on 28.05.2019 and due date for completion of assessment was 02.08.2019. Accordingly, the assessment order passed on 26.07.2019 was within time. A copy of the report received from AO and statement of facts is enclosed herewith. In view of the same it is submitted that the findings of CIT(Appeal) are factually incorrect. During the course of hearing, the AR has also referred to the findings of CIT(Appeal) in para 4.1.10 on page 27 of his order on the issue of 'Extension of further time limit for furnishing special audit report is not made by Ld. AO suo motu or by an application made by the appellant'. The Ld CIT (A) has held the extension granted on 28.03.2019 to be void-ab-initio on the ground that the same has not been granted suo-mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention is drawn to page 29 of CIT (A) order where a copy of the letter sent to Pr CIT by Addl. CIT is enclosed. Evidently, a proposal was sent by the AO to Pr CIT for conduct of special audit, which was forwarded by the Addl. CIT. The assessment proceedings were pending with the assessing officer and the role of Addl. CIT is that of a supervisory authority. The Addl. CIT serves as a link between the approving authority, that is, the Pr. CIT and the Assessing Officer. The letter of Addl. CIT (on page 3 of the Paper Book submitted by the assessee) to the AO, conveying the approval of Pr. CIT on his proposal, confirms the genesis of the proposal to be from the AO. During the course of hearing, the AR also raised the issue of grant of approval for extension of period of special audit by Pr. CIT. It was alleged that the extension of period for audit granted by the AO was given after taking approval from Pr. CIT. In this regard, it is submitted that copy of letters granting extension were submitted before the Hon'ble Bench during the course of hearing. A perusal of these letters would show that no mention of any approval taken from Pr. CIT for extension of time was made by the AO. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 18. In the present case, the extension of time period for furnishing the Special Audit Report u/s 142(2A) has been provided by the Assessing Officer on an application made by the Special Auditor. The letter of the Assessing Officer dated 28.03.2019 granting the extension of period by 45 days is as under: Office of the Assistant Commissioner of Income Tax, Circle-19(2) Room No. 221, Central Revenue Building, I.P. Estate, New Delhi-110002 Email: delhi.dcit19.2&incometax.gov.in Ph: 011-23370790 F.No. ACIT, Circle-19(2)/Patanjali/2018-19/1017 dated: 28.03.2019 To, M/s Dhanesh Gupta & Co. Chartered Accountants. 1-1/16, Ansari Road, Shanti Mohan House, Darya Ganj, New Delhi-110002 Sub. : Approval for the extension of period for special audit u/s 142(2A) of the I.T, Act, 961 by further 45 days in the case of M/s Patanjali Ayurved Ltd., PAN: AAECP4424C for the Assessment Year 2016-17-reg Ref: This office letter dated 30.12.2018 and your letter f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposed" vide order sheet dated 16.05.2019. 23. The said approval has been intimated to the assessee by the ACIT vide letter dated 17.05.2019. Legal Proposition: 24. The question arose was "whether the approval sought by the Assessing Officer from the ld. PCIT and granting extension by the AO after receiving of the approval from the ld. PCIT is legally tenable or not"? 25. On this issue, we are guided by the judgment of Hon'ble jurisdictional High Court in the case of Pr. CIT, Central Vs. Soul Space Projects Ltd. in ITA No. 526 of 2023 dated 11.12.2023. The Hon'ble High Court held that the initial exercise of the power has been explicated as one that is not administrative, the ld. PCIT could not have extended the time for Special Audit based on recommendation of the Assessing Officer. The Hon'ble Jurisdictional High Court observed that the enunciation of the legal principle does not derogate the observation that since the discretionary power was vested with the Assessing Officer which is non-delegable, it could not have been exercised by the Pr. CIT irrespective of the nature of the power. 26. Keeping in view, the totality of facts and circumstances of the case, judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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