2013 (12) TMI 1165 - HC - Income Tax

Whether the assessment passed u/s 144 is barred by limitation - special audit u/s 142(2A) was not completed within the stipulated period - Held that - the A.O. has issued the first letter on 08.03.2006, which was received by the assessee on 13.03.2006 - The could complete the assessment within the time if the assessee had completed the special audit within 30 days time alloted for it - It is the assessee who has delayed the matter - It was the pious duty of the assessee to get its accounts audited under section 142 (2A) of the Act or file objection, instead of that the assessee reached upto Hon ble the Supreme Court - If the accounts might have been audited as per direction of the A.O. especially when the assessee claimed that accounts were perfect and there was no requirement for getting accounts audited - The assessee never filed any objection against the letter dated 08.03.2006 - Due to non-cooperation of the assessee, the A.O. was forced to pass the ex parte assessment order under Section 144 of the Act and only after the assessment order, the assessee has filed the objections - Decided against assessee.

Summary

Issues:
1. Whether the assessment is barred by limitation.
2. Whether there were circumstances warranting the Assessing Officer to get the accounts audited under section 142 (2A) of the Act.

Analysis:

Issue 1: Whether the assessment is barred by limitation

The appellant-assessee filed an appeal under Section 260-A against the judgment of the Income-tax Appellate Tribunal. The Tribunal had dismissed the appeal regarding the time-barred assessment order for the assessment year 2003-04. The appellant argued that the assessment order should have been passed by 30.03.2006 but was passed on 09.06.2006. The Tribunal's decision was based on the exclusion of the period for getting accounts audited under section 142(2A) of the Income Tax Act. The High Court set aside the Tribunal's order, emphasizing the need for a categorical finding on whether the special audit was completed within the stipulated period or if the period was extended. The Court directed the Tribunal to examine the evidence and provide a reasonable opportunity to the assessee. The Court allowed the appeal for statistical purposes.

Issue 2: Whether there were circumstances warranting the Assessing Officer to get the accounts audited under section 142 (2A) of the Act

The Tribunal's decision against the assessee on the assessment being time-barred led to a second round of litigation. The appellant argued that the assessment was time-barred as the original period for framing the assessment had expired. The appellant contended that no further time could be given to the Assessing Officer beyond the expiration date. However, the Department argued that the period could be extended to 60 days as per the proviso to Explanation 1 of section 153. The Court analyzed the provisions of section 153 and the exclusion of the period for audit, ultimately ruling in favor of the Department. The Court noted that the Assessing Officer had sufficient time to complete the assessment within the extended period. The Court also criticized the assessee's delay and lack of cooperation, leading to the ex parte assessment order under Section 144. Consequently, the Court dismissed the appeal filed by the assessee.

This detailed analysis of the judgment from the High Court of Allahabad highlights the issues raised, the arguments presented by both parties, and the Court's reasoning leading to the final decision.