2020 (1) TMI 22 - HC - Income Tax

Time limit for completion of block assessment - period of limitation - date of the order under Section 142(2A) - Tribunal justification in not considering the commencement of the period as 21.04.2000 instead of 20.04.2000, which is the date of service of the order/direction under Section 142(2-A) of the Income Tax Act, 1961 - HELD THAT - Period of limitation prescribed in Section 158BE excludes the period commencing from the date on which the Assessing Officer directs the Assessee to get his accounts audited viz., the date of the order under Section 142(2A) of the Act. The date of order or direction to get the accounts audited is important and not the date on which such order or direction under Section 142(2A) of the Act is served on the Assessee or received by the Assessee. In the present case, the order under Section 142(2A) of the Act was made by the Assessing Authority on 17.04.2000 directing the Assessee to get the special audit completed and furnished the report on or before 31.07.2000. The difference between these two dates is 105 days. If these 105 days are added to the last date before which the Audit Report was furnished viz., 31.07.2000, the date of assessment will get extended upto 13.11.2000. The assessment for block period in the present case was made by the Assessing Authority admittedly on 13.11.2000 itself and therefore apparently the said assessment is within limitation. The contention of the Assessee is that the period of exclusion should be computed from the date on which the order under Section 142(2A) of the Act was served upon the Assessee viz., on 20.04.2000 till 31.07.2000 which will give the exclusion period of 102 days only and therefore, the Assessment Order passed on 13.11.2000 will be hit by the bar of limitation is misconceived and contrary to the clear and bare language of the provisions of the Act which employed the word directs the Assessee to get his accounts audited . These words are in contra distinction to the words employed in Section 142(2A) proviso where the extension of period by 180 days will become effective from the date when the order of extension is received by the Assessee. The proviso to Section 142(2A) quoted above, clearly uses the words received by the Assessee and not directs the Assessee . This distinction of two different phrases at two different places cannot be intermixed or confused with each other. - Decided against assessee.

Summary

Issues Involved:
1. Calculation of limitation period for block assessment under Section 142(2A) and Section 158BE of the Income Tax Act, 1961.
2. Commencement date for the exclusion period under Section 142(2A).

Issue-wise Detailed Analysis:

1. Calculation of Limitation Period for Block Assessment:
The primary issue in this case revolves around the calculation of the limitation period for the completion of a block assessment order under Section 142(2A) and Section 158BE of the Income Tax Act, 1961. The Tribunal held that the Block Assessment Order passed on 13.11.2000 was within the limitation period. The block assessment in question covered the period from 01.04.1988 to 01.07.1998, as per Section 158BC(c) read with Section 153 of the Act.

The Tribunal noted that the period to be excluded for computing the limitation starts from the date the Assessing Officer directs the assessee to get his accounts audited under Section 142(2A) and ends on the date the report is to be furnished. In this case, the Assessing Officer directed the assessee on 17.04.2000 to get his accounts audited and submit the report by 31.07.2000. The assessee contended that the order was served on 20.04.2000, and thus, only the period from 20.04.2000 to 31.07.2000 should be excluded, making the block assessment order due by 11.11.2000. However, since 11.11.2000 and 12.11.2000 were holidays, the Tribunal concluded that the order passed on 13.11.2000 was within the limitation period.

2. Commencement Date for the Exclusion Period:
The crux of the dispute was whether the exclusion period should commence from the date of the order/direction (17.04.2000) or from the date of service of the order (20.04.2000). The learned counsel for the assessee argued that the period should commence from the date of service, making the exclusion period 102 days and thus rendering the assessment order dated 13.11.2000 beyond the limitation period. Conversely, the Revenue argued that the period should commence from the date of the order, making the exclusion period 105 days, thereby validating the assessment order dated 13.11.2000.

The court examined the provisions of Section 158BE and Section 142(2A) of the Act. It emphasized that the period of limitation prescribed in Section 158BE excludes the period commencing from the date the Assessing Officer directs the assessee to get his accounts audited (i.e., the date of the order) and not from the date the order is served. This interpretation was supported by the clear language of the Act, which uses the term "directs the Assessee" in Section 142(2A) and "received by the Assessee" in the proviso to Section 142(2A), indicating a deliberate distinction.

The court further referenced the Delhi High Court's decision in Nokia India Pvt. Ltd. v. Additional CIT, which held that the exclusion period under Clause (iii) of Explanation 1 to Section 153 starts from the date the Assessing Officer directs the audit and ends on the date the audit report is to be furnished. The court concluded that the assessment order dated 13.11.2000 was within the limitation period as the exclusion period commenced from 17.04.2000, the date of the order.

Conclusion:
The court dismissed the appeal filed by the assessee, holding that the Block Assessment Order dated 13.11.2000 was within the limitation period. The court clarified that the exclusion period for computing the limitation starts from the date of the order directing the audit (17.04.2000) and not from the date of service of the order (20.04.2000). The court also noted that while the Tribunal's reasoning regarding the holidays was incorrect, the conclusion that the assessment was within the limitation period was legally sustainable. The question of law was answered in favor of the Revenue and against the assessee.