TaxTMI 
TaxTMI 
2023 (1) TMI 1081
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....l these appeals are similar in nature, for the sake of convenience, these appeals are clubbed, heard together and disposed off in this consolidated order. Further, considering the similarity of the issue involved in these appeals, we shall take up the ITA No.13/Viz/2021 as a lead appeal. 3. Brief facts pertaining to the Revenue's appeal in ITA No. 13/Viz/2021 (AY: 2012-13) are that the assessee is a firm carrying out the business of trading of Fish Feeds and Prawn Feeds filed its return of income for the AY 2012-13 [wrongly mentioned in the assessment order as AY 2011-12] on 7/10/2014 admitting a loss of Rs. 24,09,551/-. Subsequently, a search and seizure operation u/s. 132 of the Act was undertaken on 18/1/2017 in the case of Nexus Group. Order U/s. 127 for centralization of the case was passed by the Ld. Principal Commissioner of Income Tax, Rajahmundry vide his order in F.No. 62/Juris.CIT/RJY/2017-18, dated 28/8/2017. During the course of search proceedings in the case of M/s. Nexus Feeds Limited, the Ld.AO claimed that certain incriminating documents were found and seized pertaining to the assessee-firm. As per the materials found and seized, the Ld. AO contended that the asse....
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....crued in these term deposits has been disclosed in the P & L Account of the assessee. The Ld. AO considering the cash deposits which would not have been routed through the books of account of the assessee considered the entire amount of Rs. 13,16,25,595/- to be added to the total income of the assessee in the respective assessment years as mentioned in the assessment order. The Ld. AO issued a letter dated 12/7/2019 for which the assessee has replied not up to the satisfaction of the Ld. AO. The Ld. AO therefore proceeded to add an amount of Rs. 9,10,15,000/- being the cash deposits made during the impugned assessment year and added it to the income returned by the assessee for the AY 2012-13. Further, the Ld. AO as per the Special Audit Report added a sum of Rs. 6,88,974/- U/s. 40A(3) of the Act. Further, the Ld. AO observed from the Special Audit Report that the assessee sold machinery and has not disclosed the profit of Rs. 1,49,75,823/- arrived at by the Special Auditor and added the same to the total income of the assessee. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee challenged the issue of noti....
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....l limitation period. The Ld. AR submitted that the Ld. AO issued the order U/s. 142(2A) of the Act instead of passing the order U/s. 142(2C) of the Act. The Ld. AR further also submitted that the Ld. AO merely conveyed to the assessee on 06/06/2019, the permission accorded by the Ld. Pr. CIT (Central), Visakhapatnam but has not passed any order U/s. 142(2C) of the Act for extending the time for another 30 days. The Ld. AR argued that the Special Auditor submitted an undated report to the Ld. AO. The Ld. AO on 12/7/2019 communicated the receipt of Special Audit Report to the assessee. The Ld. AR further submitted that since the report of the Special Auditor is submitted beyond the period of 180 days as specified U/s. 142(2A) of the Act, it is non-est and hence the assessment order passed based on the Special Audit Report is void-ab-initio. The Ld. AR relied on the Coordinate Bench of Delhi in ACIT Vs Soul Space projects Limited [2020] 117 Taxmann.com 395 (Delhi) (Trib.). The Ld. AR also relied on the judgment of the Hon'ble Supreme Court in the case of State of Punjab & Ors vs. M/s. Shreyans Indus Ltd in Civil Appeal Nos. 2506 to 2511 of 2016 arising out of SLP Nos. 21712 - 21717 of....
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....ain merely communicated the permission accorded to him by the Ld. Pr. CIT (Central), Visakhapatnam. Even though it is not required to obtain the permission from the Ld. Pr. CIT under the provisions of the Act, since the permission to grant extension time for the purpose of Special Audit Report are vested with the Ld. AO and accordingly the Ld. AO is mandated to pass an order U/s. 142(2C) of the Act with respect to the extension of time limit sought by the Special Auditor. In the instant case, the Ld. AO failed to pass such order in both the circumstances to extend the time limit. The Ld. AO merely communicated the decision of the Ld. Pr. CIT (Central), Visakhapatnam on 6/6/2019 which is beyond the limitation period of the second extended time. Even assuming a moment that it is a valid extension, we find that the extension as per the Limitation Act should have been granted before the expiry of the time limit permitted in the earlier extension ie., on 25/5/2019. We find force in the arguments of the Ld. AR that mere communication of extension by the Ld. AO instead of passing an order U/s. 142(2C) is not valid in law. The case law relied on by the Ld. AR, the judgment of the Hon'ble S....
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....utted by the Id. DR have been closely perused while the Id. DR argued that the relevance of the case laws with regard to the Sections for which the case laws emanated, the ld. AR stressed on the ratio of the case laws as to the statutory discretion of the powers of the various authorities. The Id. DR's contention was that the "administrative approval" of the CIT for sanctioning extension of the period should not vitiate the conduct of special audit. It was argued that the letter of the CIT, Central-II should construed only as an administrative direction whereas the real extension has been granted by the DCIT, Central Cirecle-17 vide letter dated 13-4-2010. It was also argued that while approval of the CIT, is required for ordering fresh audit u/s 142(2A), no such approval for extension it is not required. It is the administrative permission sought by the DCIT for the CIT, hence the action cannot be said to be illegal. The undisputed facts are, 1. The assessing officer has received the request from special auditor for extension of time to complete audit u/s 142(2A) which was account of delay on the part of the assessee. 2. The assessing officer was satisfied on the reason su....
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....nsion of 60 days to the special auditors M/s. Sanjay Satpal & Associates, Chartered Accountants, for furnishing the audit report u/s. 142 (2A) in your case." 18. We have carefully gone through the entire events and the verbatim of the letters. We also tried to dwell whether the intention of the Assessing Officer is to "extend the period" or conveying the "approval of the CIT". While it may be an administrative phenomenon to intimate, inform the CIT about the fact of the special audit party appointed seeking extension, but statutorily that power is vested with the Assessing Officer. On going through the established judgment, it cannot be disputed that the statutory powers vested with one specified authority cannot be exercised by another authority unless and until the statute provides for the same. And we find that the extension has not been given by the Assessing Officer. 19. The powers and the jurisdiction of the various authorities to implement the Income-tax Act stands clearly defined in the statute. For example, the power to approve the accounts audited w/s 142(2A) lies with CIT/PCIT/CCIT or PCCIT. The powers w/: 144A are to be exercised by the Joint Commissioner or Additio....
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....tension of time lies with the Assessing Officer. As per Section 2(7A) under the definition of Assessing Officer, Includes only ACIT/DCIT or Income Tax Officer and not Principal Commissioner of Income Tax. Hence, In the instant case under appeal, the approval for extension was given by Principal Commissioner of Income Tax, which was against the statute. On a careful examination of the letter given by the Assessing Officer to the appellant, it can be seen that the extension of time limit for submission of Special Audit report has not given by the Assessing Officer as enunciated in the Act. Instead it was given by the Principal Commissioner of Income Tax (Central) and the same was conveyed to the appellant through a letter, which is beyond the powers vested as per the statute. The extension could have been valid only if it had been given by the assessing Officer himself as stipulated in the proviso to section 142(2C) of the Act. Hence, the Assessing Officer has not utilized the powers as prescribed in the statute for extension of time for submission of special Audit report. Under the circumstances, it can be clearly construed that the Assessing Officer has not extended the time limit ....