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2012 (2) TMI 156 - HC - Income TaxPeriod of limitation search & seizure conducted special audit u/s 142(2A) writ petition filed against the order u/s 142(2A) stay granted - High court held that time schedule fixed u/s 153B shall apply if the special audit was ordered - time spent in prosecuting the petition shall be excluded for the purpose of computing the time for completion of assessment assessee contending that A.O. had already availed the period of 60 days in view of the stay order passed by the court Held that - In the present case, because of the stay order passed, the period during which the stay order was in operation in the High Court has to be excluded. In terms of proviso to the Explanation to Section 153B(1), A.O. had the extended period to complete the assessment proceedings Decided in favor of Revenue.
Issues Involved:
1. Whether the Income Tax Appellate Tribunal was right in holding that the assessment orders under Section 153A dated 29th June, 2007 were barred by limitation. Issue-wise Detailed Analysis: 1. Limitation Period for Assessment Orders under Section 153A: The primary issue revolves around whether the assessment orders dated 29th June, 2007, under Section 153A of the Income Tax Act, 1961, were barred by limitation. Search and Seizure Operation and Issuance of Notice: On 16th December, 2003, a search and seizure operation under Section 132 of the Act was conducted against the respondent-assessee. Subsequently, on 30th November, 2004, a notice under Section 153A was issued to the respondent to file their returns, which they did on 1st January, 2005. Special Audit and Stay of Assessment Proceedings: On 22nd March, 2006, the Assessing Officer directed a special audit under Section 142(2A) of the Act. This order was challenged by the respondent in W.P. (C) No. 4954/2006, leading to a stay of the assessment proceedings by the High Court on 31st March, 2006. The writ petition was disposed of on 18th December, 2006, with directions to issue a show cause notice and complete the special audit within a specified timeframe. Exclusion of Time Periods: The court noted that the time limit for completing the assessment under Section 153A, excluding the periods of special audit and the stay of proceedings, expired on 31st March, 2006. The tribunal held that the assessment order dated 29th June, 2007, was barred by limitation, relying on the Supreme Court decision in Hope Textile Limited and Another versus Union of India and others. Interpretation of Section 153B and Explanation: The court examined Section 153B(1) and its Explanation, which stipulates the exclusion of certain periods when computing the limitation for assessment orders. The Explanation includes the period during which assessment proceedings are stayed and the period required for a special audit. Application of Proviso to Explanation: The court noted that the proviso to the Explanation mandates that if the remaining period for completing the assessment is less than 60 days after excluding the specified periods, it should be extended to 60 days. This proviso was applied twice: once for the stay period and once for the special audit period. Assessment Order Timeline: The court outlined the timeline of events: - Normal limitation period ended on 31st March, 2006. - Special audit order passed on 22nd March, 2006. - Stay order on 31st March, 2006, vacated on 18th December, 2006. - Special audit order passed on 19th January, 2007, to be completed within 105 days (by 4th May, 2007). - Assessment order passed on 29th June, 2007. Conclusion on Limitation Period: The court concluded that the assessment order dated 29th June, 2007, was within the extended limitation period as per the proviso to the Explanation in Section 153B. The tribunal's reliance on the Hope Textiles case was found to be inapposite. Final Judgment: The question of law was answered in favor of the Revenue and against the respondent-assessee. The tribunal was directed to hear the appeals on merits, with parties to appear before the Assistant Registrar, Tribunal, on 26th March, 2012. No costs were awarded.
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