S. 142(2A) and S. 142(2C). The amendment to S. 142(2C) by insertion of the words ‘suo moto or’ w.e.f. 1-4-2008 is prospective and prior to this date AO could not grant extension of time except on an application by the assessee.

10. Bishan Saroop Ram Kishan Agro Pvt. Ltd. v. DCIT

ITAT ‘A’ Bench, New Delhi

Before K. G. Bhansal (AM) and

George Mathan (JM)

ITA Nos. 3413, 3415, 3416, 3459, 3068 and

3670/Del./2008

A.Ys. : 1999-2000 to 2005-06. Decided on : 18-9-2009

Counsel for assessee/revenue : Rano Jain &

V. Mohan/Pratima Kaushik

S. 142(2A) and S. 142(2C). The amendment to S. 142(2C) by insertion of the words ‘suo moto or’ w.e.f. 1-4-2008 is prospective and prior to this date AO could not grant extension of time except on an application by the assessee.

Per Bench :

Facts :

On 7-10-2004 there was a search action on the assessee. The last panchnama was drawn on 6-12-2004. As per provisions of S. 153B(i), the assessment u/s.153A could be completed upto 31-12-2006. On 12-12-2006, the AO passed an order directing the assessee to get his accounts audited u/s.142(2A) and the time given for filing audit report was 90 days. Thus, due date for furnishing audit report u/s. 142(2A) was 12-3-2007.

Due to alleged non co-operation by the assessee, the AO, at the request of the auditor, vide order dated 7-3-2007 extended time from 12-3-2007 to 20-4-2007. Subsequently, two more extensions, of one month each, were granted vide orders dated 17-4-2007 and 17-5-2007. The audit report was finally submitted on 4-6-2007 and the assessment order was passed on 3-8-2007.

The assessment order passed u/s.153A was challenged on the ground that it was barred by limitation. It was contended that since special audit had been ordered on 12-12-2006 and was to be completed on 12-3-2007 and as per the provisions as they stood at the relevant point of time the AO did not have the power to suo moto extend the time limit for completion of special audit u/s.142(2A). Extension granted by the AO at the request of the auditor resulted into a suo moto extension being granted by the AO. Consequently, as per provisions of S. 153B(1) the time limit for completion of assessment expired on 11-5-2007. Since assessment order was passed on 3-8-2007 it was barred by limitation.

On an appeal to the Tribunal,

Held :

The provisions of S. 142(2A) do not provide for any time limit for completion of the special audit. However, S. 142(2C) specifies that the AO can, at his discretion, give any time limit subject to a maximum of 180 days from the date on which the direction u/s.142(2A) is received by the assessee. The provisions of S. (2A), S. (2B), S. (2C) and S. (2D) of S. 142 are to be read together as a complete code. It cannot be held that the provisions of S. 142(2A) have a stand alone position and are unfettered by S. 142(2C).

The Tribunal noticed that the assessee had not made an application for extension of time. The extension of time granted by the AO, at the request of the auditor, was held to be suo moto action of the AO. The Tribunal on perusal of the memorandum explaining the provisions of the Finance Bill, 2008 as also Circular No. 1 dated 27-3-2008 explaining the amendment to the proviso to S. 142(2C) held that the power to suo moto extend the time limit for completion of audit u/s.142(2A) was available to the AO w.e.f. 1-4-2008 and before such date, the extension could have been made only at the request of the assessee. The extensions granted by the AO were held to be without jurisdiction and accordingly such extensions could not extend the limitation. The exclusion as provided in Explanation (ii) to S. 153B was read to be 90 days being a period between 12-12-2006 to 12-3-2007.

The Tribunal upheld the claim of the assessee that the assessment was barred by limitation.