2015 (12) TMI 356 - AT - Income Tax

Validity of assessment u/s 153A - whether the assessment is barred by limitation under Section 153(1B) - Held that - In the present case, there was no evidence on record suggesting that the assesse sought suo motu extension of time for submission of audit report under Section 142(2A) of the Act. It is clear from the record that the Assessing Officer had suo motu extended time for furnishing the audit report under Section 142A of the Act. Respectfully following the ratio laid down in case of BISHAN SAROOP RAM KISHAN AGRO PVT. LTD. 2011 (5) TMI 540 - DELHI HIGH COURT , we hold that the assessment framed in this case is also barred by limitation and does not survive in the eye of law. Accordingly, the assessment order is quashed, as such. - Decided in favour of assessee.

Issues Involved:
1. Validity of the assessment order under Section 153A of the Income Tax Act.
2. Addition of unsecured loans.
3. Disallowance under Section 40A(3) of the Income Tax Act.
4. Addition under Section 69 of the Income Tax Act for investment in factory building.
5. Addition under Section 69 for payments to M/s Ishwar Construction Co.
6. Addition of amount received from Shri Ram Kishan Dass.
7. Deletion of addition on account of bogus loan by CIT(A).
8. Deletion of addition on account of unexplained expenditure under Section 69C.
9. Deletion of addition on account of unexplained investment in factory building.

Detailed Analysis:

1. Validity of the Assessment Order:
The primary issue was whether the assessment order under Section 153A was barred by limitation. The assessee contended that the Assessing Officer (AO) extended the time for submission of the special audit report suo motu, which was not permissible under the law prevailing at the relevant time. The Tribunal found that the AO did not have the power to extend the time limit for the audit report suo motu before the amendment effective from 1st April 2008. This was supported by the CBDT Circular No. 7, dated 27th March 2009, and the Tribunal's decision in M/s Bishan Saroop Ram Kishan Agro Pvt. Ltd. vs. DCIT. Consequently, the Tribunal held that the assessment order was barred by limitation and quashed it.

2. Addition of Unsecured Loans:
The assessee challenged the addition of Rs. 3,80,00,000/- as unsecured loans from various concerns and Rs. 75,00,000/- from Shri Raj Pal. Since the assessment order was quashed, this issue did not survive for further adjudication.

3. Disallowance under Section 40A(3):
The assessee contested the disallowance of Rs. 9,94,380/-, which was 20% of Rs. 49,71,904/- under Section 40A(3). This issue also did not survive due to the quashing of the assessment order.

4. Addition under Section 69 for Investment in Factory Building:
The assessee disputed the addition of Rs. 92,01,500/- out of a total of Rs. 1,12,01,500/- under Section 69 for alleged investment in the factory building. This issue was not adjudicated further as the assessment order was quashed.

5. Addition under Section 69 for Payments to M/s Ishwar Construction Co.:
The assessee challenged the addition of Rs. 4,21,40,138/- under Section 69 for alleged payments to M/s Ishwar Construction Co. This issue did not survive due to the quashing of the assessment order.

6. Addition of Amount Received from Shri Ram Kishan Dass:
The assessee contested the addition of Rs. 70,00,000/- received from Shri Ram Kishan Dass. This issue was also not adjudicated further as the assessment order was quashed.

7. Deletion of Addition on Account of Bogus Loan by CIT(A):
The Revenue appealed against the deletion of Rs. 4,25,00,000/- on account of a bogus loan by the CIT(A). Since the assessment order was quashed, this issue did not survive for further adjudication.

8. Deletion of Addition on Account of Unexplained Expenditure under Section 69C:
The Revenue challenged the deletion of Rs. 68,78,346/- on account of unexplained expenditure under Section 69C by the CIT(A). This issue also did not survive due to the quashing of the assessment order.

9. Deletion of Addition on Account of Unexplained Investment in Factory Building:
The Revenue appealed against the deletion of Rs. 20,00,000/- out of the total addition of Rs. 1,21,01,500/- on account of unexplained investment in the factory building. This issue was not adjudicated further as the assessment order was quashed.

Conclusion:
The Tribunal quashed the assessment order as barred by limitation due to the improper extension of time for the special audit report by the AO. Consequently, all issues raised by both the assessee and the Revenue did not survive for further adjudication. The appeal filed by the assessee was allowed, and the appeal filed by the Revenue was dismissed.

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