Assessments invalidated due to time limit breach & invalid special audit order

The Tribunal found that the assessments made by the Assessing Officer were time-barred due to a special audit order served after the permissible time limit. The Tribunal held the special audit order under section 142(2A) invalid as it was communicated after the due date for assessments. Additionally, the Assessing Officer's suo motu extension of time powers were deemed irrelevant as the assessments were already time-barred. Consequently, the assessments made on 24.9.2008 were declared invalid, leading to the partial allowance of the appeals in favor of the assessee.

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Issues Involved:
1. Limitation of time in completion of assessments.
2. Validity of special audit order under section 142(2A) of the Income-tax Act.
3. Powers of the Assessing Officer for suo motu extension of time under proviso to section 142(2C) of the Income-tax Act.

Detailed Analysis:

1. Limitation of Time in Completion of Assessments:
The primary issue revolves around whether the assessments made by the Assessing Officer were barred by the limitation of time. The assessee was covered under section 132 of the Income-tax Act on 26.10.2005, and notices under section 153A were issued on 10.7.2006. The due date for completing the assessments was 31.12.2007. However, the Assessing Officer ordered a special audit on 10.12.2007, which was served on the assessee on 25.1.2008, after the due date. The assessments were eventually made on 24.9.2008.

The Tribunal found that the assessments were indeed time-barred. The CIT(A) had erroneously considered the date of service as 28.1.2008 instead of 25.1.2008 and failed to account for the leap year in 2007. The Tribunal concluded that the assessments made on 24.9.2008 were invalid as they were beyond the permissible time limit.

2. Validity of Special Audit Order Under Section 142(2A):
The Tribunal examined whether the special audit order was valid considering the timeline. The special audit order dated 10.12.2007 was served on the assessee on 25.1.2008, after the due date for completing the assessments (31.12.2007). The Tribunal held that the order for a special audit was invalid as it was communicated after the due date for making assessments had expired. Even if the date of the order (10.12.2007) was considered, the assessments should have been completed by 24.9.2008, which was not the case.

3. Powers of the Assessing Officer for Suo Motu Extension of Time:
The Tribunal also addressed the issue of the Assessing Officer's powers to extend the time limit suo motu under the proviso to section 142(2C). The amendment granting these powers came into effect from 1.4.2008, which was after the relevant assessment years. The Tribunal noted that the Assessing Officer extended the period without a written application from the assessee, which was not permissible under the law at that time. The Tribunal did not delve deeply into this issue as it became academic due to the assessments being time-barred.

Conclusion:
The Tribunal concluded that the assessments made by the Assessing Officer on 24.9.2008 were barred by limitation and thus invalid. Consequently, the appeals were partly allowed in favor of the assessee, and other legal issues and merits were dismissed as academic.

Order:
The appeals were partly allowed, and the order was pronounced in the open court on 05th June 2015, at Chennai.

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