TaxTMI 
TaxTMI 
2004 (12) TMI 75
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.... 2000, passed by the Tribunal (the ITAT) in I.T.A. Nos. 391 to 394/Ind of 1998 in relation to the assessment years 1991-92 and 1994-95. The other appeals arise out of different assessment years. At the outset, we may mention that this appeal was admitted for final hearing on the following substantial questions of law: "1. Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was justified in annulling the assessment on the ground that the assessment was completed much after the expiry of the limitation period for framing the assessment? 2. Whether, on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was justified in holding that the perio....
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....plated under section 142(2A) of the Act to get the accounts of these assessees audited by an accountant as defined in the Explanation appended below to section 288(2) as nominated by the Commissioner. This permission was accorded by the Commissioner to appoint one M/s. Jethani and Company on March 11, 1997, for getting the audit done of these assessees. As a consequence, the auditor submitted his report on July 8, 1997. The Assessing Officer then completed the assessment on November 7, 1997. The assessee (respondent) then challenged the validity/legality of the assessment before the Commissioner of Income-tax (Appeals) in appeal contending in substance that it is barred by limitation by virtue of section 153(3), Explanation 1 (iii). Acco....
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....elal- Assistant Income-tax Commissioner (Investigation) Circle-I, Indore, is within time, or not. To decide this question, the following sections are relevant. These sections are sections 142(2A), 153(2) and section 153(3), Explanation 1(iii) as it stood at the relevant time: "Section 142.(2A)- If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts of the assessee and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, nominat....
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....essee are complex in nature. Then comes section 153. This section provides a time-limit for completion of assessment/reassessment. In a case where reassessment is to be done under section 147 then sub-section (2) of section 153 provides for a limitation of two years to be counted from the end of the financial year in which notice under section 148 was served on the assessee. Then comes clause (iii) of Explanation 1 to section 153 read with its proviso. This Explanation provides that while calculating the period of limitation of two years under section 153(2), the time spent in obtaining the audit report as directed by the Assessing Officer under section 142(2A) shall be excluded, i.e., the time spent from the date on which the Assessing Off....
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....ed or one can say added in two years while calculating the period provided in section 153(2). In this case, the assessment was made on November 7, 1997. In terms of section 153(2), the last date for completion of assessment was up to March 31, 1997, whereas in terms of section 153(3), Explanation 1(iii), one can add 119 days after March 31, 1997, by way of extension of period, i.e., the time spent in obtaining the audit report. It is clear that even after adding 119 days after March 31, 1997, the date of assessment could be at best somewhere by the end of July/August, 1997, but not beyond November 7, 1997, whereas in this case, the assessment was made on November 7, 1997. So even after applying the benefit of extension of period provi....