TaxTMI 
TaxTMI 
2020 (10) TMI 142
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....tressed that the issue stands covered by the order of the Tribunal in the case of sister concern i.e. M/s. Soul Space Projects Ltd. in ITA Nos.193 and 1849/Del/2015 along with C.O. Nos.271 & 274/Del/2015, relating to Assessment Years 2007-08 and 2008-09. 4. The assessee has raised several grounds of appeal, but the jurisdictional issue is raised by the assessee vide ground of appeal nos. 1 to 3, which read as under:- "1. That on the facts and circumstances of the case, the CIT(A) erred in not quashing the order dated 10.08.2010 passed by the assessing officer under section 153A as barred by limitation since the same had been passed beyond time limit specified under section 153B(1) of the Income Tax Act, 1961 ('the Act') inasmuch as: a) the audit conducted by the special auditor under section 142(2A) of the Act was not required because the assessing officer did not point out any complexity in the books of accounts of the appellant before issuing any such directions; and b) in any case, the extended time period allowed to the special auditor for furnishing audit report could not be excluded in terms of clause (ii) of Explanation under section 153B since ....
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....12.2009. Under the provisions of the Act i.e. section 153B of the Act, the limitation was 21 months which expired on 31.12.2009. On 25.03.2010, request was made by the special auditor for extension of time to complete the special audit under section 142(2A) of the Act on the ground of non-cooperation by the assessee. On 13.04.2010, letter was issued by the Assessing Officer intimating communication that extension of 60 days has been granted by the Commissioner vide letter dated 12.04.2010, received from the office of Commissioner. The said letter issued by the Commissioner granted approval for extension of time in the case of the assessee before us and in the case of the group concern i.e M/s Soul Space Projects Ltd. Thereafter, special Audit Report was received and assessment order was passed on 13.06.2010. 7. The assessee is aggrieved by the extension of 60 days for completing the special audit under section 142(2A) of the Act. The case of the assessee is that the said extension had to be granted by the Assessing Officer, but in the present case, the same had been granted by the Commissioner vide letter dated 12.04.2010 and the Assessing Officer had only communicated the same ....
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.... extension of time period of audit of books of accounts, where the initiatives of assessment proceedings are not challenged. Therefore, these cases are distinguishable on the facts of the case. In all these cases, the jurisdiction was challenged on the basis of either initiation of assessment or search authorization or level of interest which is distinguishable on the facts of the case, which is only extension of time period for audit u/s 142(2A). 9. While arguing in Soul Space Projects Ltd., Ld. AR relied on the following decisions on the argument that power vested in an authority by statute to be exercised strictly by such authority. 1. CIT v. Anjum M.H. Ghaswala: 252ITR 1 (SC) 2. CIT v. Elelvinator of India Ltd.: 256 ITR 1 (Del. HC) (FB) 3. Dr. Nalini Mahajan v. DIT: 252 ITR 123 (Del. HC) MY SUBMISSION ON THE ABOVE In this regard, following submissions may be considered showing that all these case laws are distinguishable on facts. a) Anjuman M.H. Ghaswala:- This case related to Power of Settlement Commission Vs. CBDT for waiver of interest u/s 234A, 234B & 234C of IT Act. b) Kelvinator of India Ltd....
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....sessing officer dated 11.02.2020. Therefore, conditions for extending the time period under the above proviso is met expect the grant of extension by CIT for administrative reason on account of special audit pending in other group cases. (iii) Therefore, it is submitted that since on substantial basis the requirement of proviso has been met, just on account of only administrative approval of CIT for sectioning the extension should not vitiate the extension of time for special audit. (iv) Without prejudice to above submission it may be mentioned that CIT is the approving authority for special audit u/s 142(2A) and therefore his involvement for extension of time as per proviso is inherent." 9. We have heard the rival contention and perused the records. The issue which is raised in the present bunch of appeals relating to Assessment Years 2002-03 to 2008-09, where the cross appeals are filed by the assessee and the Revenue, is against the grant of extension for further period for conduct of special audit under section 142(2A) of the Act by the Commissioner and whether the same is legally valid or not. The sequence of the events is tabulated here under:- Date ....
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....in terms of proviso to section 142(2C) of the Act. Fact that extension was granted by the CIT is patently clear from letter dated 12.04.2020, letter dated 13.04.2020 and is 83-84 3 Date Particulars Page No. (PB) also expressly mentioned by the assessing officer on page 2 of the assessment order. 14.04.2010 120th day - the last day on which the Special Auditor was required to complete special audit. 11.06.2010 Special audit report filed before the assessing officer 13.06.2010 Limitation for passing assessment order, after excluding 120 days granted for completion of special audit (without considering extension granted on 13.04.2010) 10.08.2010 Assessment order passed under section 153A/143(3) of the Act 10. The issue which arises in the present appeal before us is whether where the extension for conduct of special audit had not been given by the Assessing Officer, who was the only authority to grant the same is the extension granted by the Commissioner is nullity in the eyes of law? The relevant proviso below section 142(2C) of the Act reads as under:- "Provided that the [Assessing] Officer may, [suo motu, or] on an application made in this beh....
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....special audit report. Accordingly, the then AO has forwarded a letter to Ld. CIT, Central - II, New Delhi on 08.04.2010 regarding extension of special audit in this case and stated as under:- "2. M/s Dinesh Mehta & Co. has filed a request vide letter dated 25.03.2010 for granting extension of time for a further period of two months for submission of the aforesaid report because there is delay on the part of assessee to furnish details and information required by the auditors as per annexure appended by the auditors with the aforesaid letter (Copy of letter with enclosures is enclosed for ready reference). 3. In this connection, it is also informed that the auditors M/s Sanjay Satpal & Associates appointed for special audit in the case of the flagship company for the group i.e. M/s B .L. Kashyap & Sons Ltd. has also requested for extension of time for further 2 months for the similar reasons. The application filed by M/s Sanjay Satpal & Associates has already been forwarded to your good self on 07.04.2010 for favourable consideration. Since, M/s Soul Space Projects Ltd. has large numbers of intergroup transactions with M/s B. L. Kashyap & Sons Ltd., it is necessary....
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.... Phone No. 23593441 Date: 13/04/2010 To, The Principal Officer, M/s Soul Space Projects Ltd. A-21/B-1 Extn., Mohan Co-operative Industrial Area, Mathura Road, New Delhi Sub: In the matter of M/s Soul Space Projects Ltd. - Assessment Year 2006-07 to 2008-09 - Special Audit under section 142(2A) of the Income Tax Act, 1961... regarding Sir, Please refer to the above. In this connection you are hereby informed that the Commissioner of Income Tax (Central) - II, New Delhi vide his office letter F.No. CIT/(C)- 11/10-11/24 dated 12/04/2010 has granted extension of 60 days to the special auditors M/s Dinesh Mehta & Co., Chartered Accountants, for furnishing the audit report u/s 142(2A) in your case. please acknowledge the receipt of this letter, Sd/- Yours faithfully, (B.L. Sharma) Deputy Commissioner of Income Tax, Central Circle - 17, New Delhi 13. The relevant findings of the Tribunal thereafter were as under:- "14. Heard the arguments of both the parties and perused the material available on record. 15. The case laws quoted by the ld. AR as rebutted by the ld. ....
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.... it is only the Assessing Officer who has to take a decision for extension. It is to be specifically pointed out that in Sec. 142 (2A) law mandates the prior approval of CCIT/ CIT, while in the proviso below Sec. 142 (2C), while to grant extension, the sole power is vested with the Assessing Officer. The statute u/s 142(2A) provides for special audit with the previous approval of the CIT is intended with an objective that the subject matter stands examined by the higher and more experienced officers so that it may not bring unnecessary work and equity to the assessed. Once the issue u/s 142(2A) stands examined by the higher authorities, thereafter, for the issue of extension u/s 142(2C), there is no need for the higher authorities to be involved and the law provided the circumstances, on existence of which, this decision has been left over to be taken by the concerned Assessing Officer. 17. In the present case, the extension has been given by CIT and not by the Assessing Officer, vide letter dtd. 13.04.2010, as under:- "In this connection you are hereby informed that the Commissioner of Income Tax (Central) - II, New Delhi vide his office letter F.No. CIT/(C)- ll/10-11/24 ....
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....e application of mind and after examining the existence of circumstances as provided in proviso below Sec. 142 (2C), since, it has to be given only by competent authority. In this case, the extension has not been given by the Assessing Officer but by the CIT, Central-II and the Assessing Officer has only conveyed the approval, therefore, we hold that the extension given by the CIT, Central-II is beyond the powers vested as per the statute and accordingly the assessment completed after the due date is held to be void ab initio." 14. The issue arising before us is similar to the issue before the Tribunal in the case of M/s Soul Space Projects Ltd. (supra). Even the Punchnama for the search was issued in the name of various entities as per Annexure-1 which included names of the assessee and M/s Soul Space Projects Ltd. It may also be pointed out that the Commissioner has issued common letter for both the entities under which the so-called extension of 60 days was given for conduct of special audit. In the entirety of above facts and circumstances, where under proviso to section 142(2C) of the Act, jurisdiction was upon the Assessing Officer to examine the circumstances and after du....