TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 154
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....-XVII, erred in law and on the facts of the case, by holding that the extensions of time for completion of audit under Section 142(2A) of the Act and for submission of the Special Audit Report were proper and valid and that the Assessment was not barred by limitation or without jurisdiction on account of such illegal, unlawful and invalid extension of time. Ground No. 5 That order of the Ld. CIT(A) has been passed in violation of the Rule against Bias which is a principle of Natural Justice which requires that the Appellate order is impartial, judicious and fair, and as the order suffers from pro-Revenue mind-set, it violates Natural Justice and hence needs to be setaside." 3. The assessee is an Indian Company [earlier a joint venture of Southern Petro Chemicals India Ltd., SPIC and Pioneer Overseas Corporation, USA (POC)]. Since 1993 it is a hundred percent subsidiary of POC. It is engaged in the business of growing and marketing 'truthfully labeled' commercial hybrid seed under the Seed Act, 1966. For producing the seed in commercial quantities, the assessee purchases the basic input of parent seed from the Indian Branch of POC in large quantities. The assessee company claims ....
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....94 27.09.2004/ 150261571 (within four years 3.2 For reopening the assessment for 1996-97 assessment year the AO has recorded following reasons: "On perusal of notes of the activities of the company submitted on behalf of the company on 26.10.1998 during the course of assessment proceedings for the A.Y 1996-97 it is noticed that the company is engaged solely in multiplication production and sale of hybrid seeds. The company is claiming exemption u/s 10(1) of the I. T Act in respect of income derived from production and sales of hybrid seeds in the A.Y 1996-97. The Ld. ITAT in its judgment dated 3.1.2003 in the case of M/s Proagro seeds P. Ltd for the A.Y 1994-95 and 1997-98 have upheld the addition made by the AO on a/c of income from hybrid seeds, which the assessee has claimed as exemption as agricultural income. In view of the above judgment I have reason to believe that income from production and the sale of hybrid seeds chargeable to tax has escaped assessment." For A.Y 1997-98 to 2000-01 the reasons recorded are similar except the change in the assessment year, the date of filing the return, the figures of income declared and the letters filed by the assessee....
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....ssessee also made supplementary submission that in absence of any order u/s 142(2A) for either the Assessment Year 1996-97 or the Assessment Year 1998-99 depending on the validity of corrigendum order dated 9/8/2004 passed by the assessing officer, are without jurisdiction and barred by limitation. This is because if the order u/s 142(2A) for assessment year 1996-97 is valid, then there is no order u/s 142 (2A) subsisting for the Financial Year 1997-98, and the reassessment order for Assessment Year 1998-99 is barred by limitation. He further submitted that there is breach of principle of natural justice because all the order u/s 142 (2A) have been passed by the Assessing Officer without giving the assessee an opportunity of being heard. Hence on this ground also he submits that the extended period provided under Clause (iii) to explanation 1 of Section 153 is not available o the A.O for computation the period of limitation. 4.1. The Ld. Counsel for the assessee submitted the case law of CIT Vs. Bishan Saroop Ram Kishan Agro (P.) Ltd. [2011] 15 taxmann.com 221 (Delhi), the Hon'ble Delhi High Court held that (para 15) "...the provisions as existing in sub-section (2C) of Section 14....
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....s at its very authority to pass any order and such a defect cannot be cured even by consent of the parties." Thus the AR submitted that the Assessing Officer does not have any jurisdiction/power to grant extension on his own, the suo motu extension order are not legal for these assessment years. Thus the order is null, non-est and void ab initio. 4.2. The submissions of Shri S.D. Kapila, Ld. Counsel for the assessee can be summarized as below:- (a) Ground No. 10, 11 of the assessment year1996-97 not pressed. (b) Ground No. 11 & 10 A. Y 1996-97 not pressed. (c) Ground No. 11 & 12 A.Y 1997-98 not pressed. (d) Ground . 11 & 12 A.Y 1998-99 not pressed. (e) Ground 11 & 12 A. Y 1999-2000 not pressed. (f) Ground No. 11 & 13 A. Y 2000-01 not pressed. (g) Ground No. 7 & 9 A. Y 2001-02 not pressed. And Ground No. 3 (A. Y 1996-97) Ground No. 8 (A. Y 1997-98, 98-99, 99-2000) Ground No. 9 (A. Y 2000-01) Ground Nos. 5 (A. Y 2001-02) is modified as under "the order of the Ld. CIT(A) has been passed in violation of the principle of natural justice." (b) The Additional ground filed by the assessee for the assessment years 1996-97 to the Assessment Year 2001-02 under Rule 11 of t....
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....However, it will be open to the appellants to question before the appellate authority, if so advised, the correctness of the material gathered on the basis of the audit report submitted under sub-section 2A of Section 142 of the Act." The Ld.CIT(A) DR submitted that hence the validity of the order passed u/s 142(2A) of the Act on the ground of Natural Justice cannot be questioned by the assessee as the Hon'ble Supreme Court held that the prepositions in the judgment apply separately. The Ld. DR submitted that in this case the extension was granted only for the benefit of the assessee which had, the duty cast on it, for submission of a special audit report. The Ld. DR further relied upon the case of Rajesh Kumar Vs. CIT, Central (3) New Delhi of the Hon'ble Delhi High Court. The Ld. DR submitted that the question of validity of the order of the assessing officer should have been contested before the Ld. CIT(A) by the assessee, but was not done by the Assessee. Hence, in light of these two judgments, the Ld. DR submitted that the Assessment Orders were rightly passed and Ld. CIT(A) is correct in upholding the same. 5.1. The submissions of the Ld. DR can be summarized as follows:....
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.... Special Bench, cannot be considered as sufficient opportunity was granted to the assessee and the Assessing Officer has issued numerous show cause letters for which the Assessee has submitted his replies. (e). The technical meaning of term "suo motu" is "on his own motion" meaning thereby that no other external influence should be there on the A.O in taking a decision. The plea that the A.O has "suo motu" extended the time of special audit is factually incorrect and that this is clear from the various communications between the auditor, the assessee, as well as the Assessing Officer. The wording in the order dated 28/6/2004 extending the time limit for submission of special audit was relied upon and submitted that it was because of the difficulties faced by the assessee, which is evident from the correspondence, that the extension was granted and this cannot be termed as "suo motu" action of the A.O (f). The A.O had extended the time of special audit for the second time, based only on the circumstances which the assessee company made him aware of, from time to time, by way of correspondence and this is a good and sufficient reason for grant of extension of time for special audit....
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....000-01) Ground Nos. 5 (A. Y 2001-02) is modified as under "the order of the Ld. CIT(A) has been passed in violation of the principle of natural justice.". These grounds are also dismissed as not pressed. 7.1. The additional grounds by the assessee under Rule 11 of the ITAT Rules for the A.Y 1996-97 to 2000-01 stands dismissed as withdrawn. Similarly, the additional ground filed for the A. Y 1998-99, with respect to passing of an order u/s 142(2A) is also dismissed as withdrawn. 7.2. The only question which we adjudicate in this order is "whether the assessment orders for all the six assessment years are barred by limitation, in view of provisions of Section u/s 142(2A) 142(2C) read with Explanation 1 (iii) of Section 153 of the Act." In other words the issue which is to be adjudicated is, "whether on the facts and circumstances of this case, the extended period of limitation is available to the Assessing Officer as for the provisions of Explanation 1 (iii) of Section 153. 7.3. We first consider the argument of the Ld. DR that issue as to whether the order u/s 142 (2A) is valid or not it cannot be appealed before the Tribunal and that the Tribunal has no jurisdiction to adjudi....
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....), C.R. Building, I.P. Estate, New Delhi Pin: 110002 Date: June 28, 2004 Order Whereas, in exercise of the powers conferred in terms of the provisions of Section u/s 142(2A) of the Income Tax Act, 1961, the assessee M/s PHI Seeds Ltd., B-4, G. K. Enclave Part II, New Delhi was directed vide order dated 21/2/2004 to 2000- 01 audited by the Accountant M/s S. K. Mittal & C., E-29, South Extension, Part-II, New Delhi and to furnish a report of such audit in prescribed form setting forth required particulars with in 120 days. Now, since, it is understood that the audit work is yet to be completed and assessee company needs further time to comply with the directions, the time limit for submission of the required audit report for the assessment years 1996-97 to 2001-02 is being extended to 24/7/2004. 7.6 In response to the above order, the assessee on 5th July 2004, has written to the Assessing Officer on the above issue seeking rectification u/s 154. This letter is extracted for ready reference:- July 5, 2004 The Assistant Commissioner of Income Tax Circle 14(1), New Delhi Ref: Audit u/s 142(2A) your order No. F No/ACIT Cir 14(1)/2004-05 u/s 142(2A)/362 dated June 28,....
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....ent in the case of Bishan Saroop Ram Kishan Agro (P) Ltd. (supra) in this regard is clear. 7.8. Inference drawn by the Assessing Officer, while extending the period granted vide order dated 28th July 2004 cannot in our view replace an application made by the assessee for grant of extension of time, which is a requirement of the Act. When the assessee has not made a specific application for extents or sought for the time to set the audit completes, the A.O cannot based on correspondence draw an inference and grant an extension of time. He should write to the assessee in case of doubt. 7.9. Even otherwise, the assessee has specifically in its letter dated 5th July 2004, submitted before the Assessing Officer that he is factually wrong in coming to a conclusion that the assessee needs further time to comply with the directions. Thus the inference or presumption drawn by the A.O has been rebutted by the assessee. Under such circumstances, the Assessing Officer was duty bound to complete the assessment, without granting further time to the assessee for furnishing of audit report, even if he had to invoke the provisions of Section 144 of the Act. When the assessee does not ask for time....