TaxTMI 
TaxTMI 
2016 (2) TMI 154
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.... Ground No. 4 That, the Commissioner of Income Tax (Appeals)-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....
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....s) 2000- 2001 22.11.2000 16980790 13.07.2001/ 16980790 21.03.2003 u/s.143)1)(a) (within four years) 2001- 2002 30.10.2001 16446094 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....
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....e he argued that all the six assessments made on 27/9/2004 are barred by limitation. The Ld. Counsel for assessee further submitted that second extension order dated 9/8/2004 passed "suo-motu" by the Assessing Officer u/s 142 (2C) of the Act, was incorrectly held to be valid by the Ld. CIT(A). The Ld. Counsel for assessee 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 availab....
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....ne distinction between the orders which are null and void and orders which are irregular, wrong or illegal. Where an authority making order lacks inherent jurisdiction, such order would be without jurisdiction, null, non est and void ab initio as defect of jurisdiction of an authority goes to the root of the matter and strikes 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. ....
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....to quash the impugned orders. Accordingly, we hold that the law on the subject, clarified by us, will apply prospectively and it will not be open to the appellants to urge before the Appellate Authority that the extended period of limitation under Explanation 1 (iii) to Section 153 (3) of the Act was not available to the Assessing Officer because of an invalid order under Section 142 (2A) of the Act. 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.....
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....uld not be open to the assessee to urge before the appellate authority that the extended period of limitation under Explanation 1 (iii) to Section 153(3) was not available to the Assessing Officer because of an invalid order u/s 142(2A). The plea of the assessee to restore the matter back to the file of the A.O in the light of the Special Bench decision in the case of Sushila Milk Specialities 126 TTJ 289 Delhi 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, ....
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....he 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. (h) 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.". 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 Ex....
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....u/s 142(2A) or u/s 142(2C) can be challenged to demonstrate that the order of assessment has been passed beyond the period of limitation. Thus, we reject this contention of the Ld. CIT. DR. 7.5. We, now consider the issue whether the order passed by the A.O extending time granted for submission of special audit report dated 28th June 2004, is in accordance with law or not. For the ready reference, we extract the order as follows: Office of the Assistant Commissioner of Income Tax, Circle 14(1), 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 t....
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....od 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 subsection (2A) is received by the assessee. (4 . Inserted by the Finance Act, 2008 w.e.f.1-4-2008) The term suo motu was inserted by the Finance Act, 2008 w.e.f. 1/4/2008. Thus prior to that, the requirement of the Act is very clear that the periods for furnishing the audit report can be extended only by an application made in this behalf by the assessee and not otherwise. The judgment 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. ....