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2021 (10) TMI 788 - AT - Income TaxAssessment u/s 153A - assessment framed on the basis of audit report u/s. 142(2A) - HELD THAT - Since undisputedly the issue raised before us, of the assessment order passed being barred by limitation on account of an invalid reference made for special audit, arises in the background of facts which are identical to that in the case of M/s. Sunder Mal Satpal 2018 (6) TMI 963 - ITAT CHANDIGARH it stands covered by the decision of the ITAT in the said case, following which we hold that the reference for special audit in the present cases, u/s. 142(A) of the Act, is invalid and the assessment orders so passed in the extended time are held to be barred by limitation. - Decided in favour of assessee.
Issues Involved:
1. Validity of assessment made under section 153A read with section 143(3) of the Income Tax Act, 1961. 2. Validity of the reference for special audit under section 142(2A) of the Income Tax Act, 1961. Detailed Analysis: Issue 1: Validity of Assessment Made Under Section 153A Read with Section 143(3) The appellant challenged the assessments for the years 2003-04 to 2005-06, arguing that the assessments were time-barred. The assessments were completed under section 153A read with section 143(3) of the Income Tax Act, 1961, following a search operation under section 132 of the Act. The appellant contended that the extended time limit for completing the assessments was unwarranted as the reference for special audit under section 142(2A) was not in accordance with the law. The Tribunal noted that the appellant's case was similar to the case of M/s. Sunder Mal Satpal, where the ITAT had previously held that the reference for special audit was not justified and the assessments were time-barred. Issue 2: Validity of the Reference for Special Audit Under Section 142(2A)The appellant argued that the special audit reference was invalid as it did not meet the requirements of section 142(2A). The Tribunal examined the reasons for the special audit, which included translating books from Mahajani to English, bifurcating transactions, and reconciling accounts. These reasons were identical to those in the case of M/s. Sunder Mal Satpal, where the ITAT had found no complexity in the accounts that would justify a special audit. The Tribunal also addressed the jurisdictional issue raised by the Revenue, noting that the ITAT had the authority to adjudicate the validity of the special audit reference when determining if the assessment was time-barred. The Tribunal cited various decisions, including those of the Hon'ble Delhi High Court and the Hon'ble Supreme Court, supporting its jurisdiction to consider such issues. Conclusion:The Tribunal concluded that the reference for special audit under section 142(2A) was invalid as it did not meet the statutory requirements. Consequently, the assessments made in the extended time period were held to be time-barred. The appeals were allowed in favor of the appellant, and the assessments were quashed. Order:All the captioned appeals of the assessee were allowed. The order was pronounced on 4th October, 2021.
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