2003 (1) TMI 255 - AT - Income Tax

Summary

Issues Involved:
1. Limitation period for completing the assessment.
2. Extension of time for filing the audit report.
3. Applicability of amended provisions of section 153.
4. Validity of the assessment order under section 143(3) read with section 142(2A).

Detailed Analysis:

1. Limitation Period for Completing the Assessment:
The primary issue was whether the assessment for the year 1995-96 was barred by limitation. According to section 153, the assessment should have been completed by 31-3-1998. However, exceptions allow for the exclusion of certain periods. The CIT(Appeals) determined that the assessment was time-barred as it was completed on 3-9-1998, beyond the permissible period.

2. Extension of Time for Filing the Audit Report:
The assessee was initially required to submit the audit report by 31-12-1997. The nominated Chartered Accountants requested an extension until 15-2-1998, which was granted by the Commissioner of Income-tax. The CIT(Appeals) held that the extension request should have been made by the assessee, not the auditors, as per section 142(2C). The Tribunal agreed, stating that the extension granted on the auditors' request was invalid.

3. Applicability of Amended Provisions of Section 153:
The CIT(Appeals) and the Tribunal considered whether the amended provisions of section 153, effective from 1-4-1997, applied. The amendment changed the exclusion period to end on "the last date on which the assessee is required to furnish" the audit report. The Tribunal upheld the CIT(Appeals)' view that the amended provisions applied, limiting the exclusion period to 114 days (from 9-9-1997 to 31-12-1997).

4. Validity of the Assessment Order under Section 143(3) Read with Section 142(2A):
The Tribunal confirmed that the assessment was invalid due to being time-barred. It emphasized that the extension of time for filing the audit report was not valid as it was not requested by the assessee. Additionally, the Tribunal noted that even if the extended period was considered, the audit report was filed two days late, further invalidating the assessment.

Conclusion:
The Tribunal upheld the CIT(Appeals)' decision, canceling the assessment as time-barred. The Tribunal did not need to address the other grounds raised by the assessee regarding the additions made by the Assessing Officer. The appeal by the Revenue and the Cross-objection by the assessee were both dismissed. The initial return processed under section 143(1)(a) remained valid.