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2019 (2) TMI 366 - AT - Income TaxValidity of assessment - Special audit u/s 142(2A) - period of limitation - whether the assessment order framed u/s 143(3) is passed within the period of limitation period prescribed under the Act or not? - Held that - In our considered opinion, for coming to such a conclusion, we can examine whether the order passed u/s 142(2A) of the Act is in accordance with law or not. It is true that the order passed u/s 142(2A) of the Act is not appealable but when an assessment order is challenged, then the different aspects, which are integral to the process and ultimate completion of the amount can be challenged in appeal and since the ground before us is challenged for assessment being barred by limitation, we are well within our rights to consider all material aspects which were considered while framing the assessment order u/s 143(3) of the Act. No hesitation to hold that the assessment order dated 25.06.2012 for the year under consideration is barred by limitation. Since the foundation is removed, the super structure i.e. the assessment order must fall.
Issues Involved:
1. Legality and jurisdiction of the assessment order dated 25.06.2012. 2. Validity of the reference and order under Section 142(2A) of the Income Tax Act. 3. Whether the assessment order is barred by time limitation. Issue-wise Detailed Analysis: 1. Legality and Jurisdiction of the Assessment Order Dated 25.06.2012: The assessee filed its return of income on 30.09.2008, which was subsequently revised on 02.07.2009 and 31.03.2010. The return was selected for scrutiny assessment, and statutory notices were issued. According to Section 153(1) of the Income Tax Act, the time period for completion of assessment was two years from the end of the assessment year or one year from the end of the financial year in which the return was filed, whichever is later. A reference to the Transfer Pricing Officer (TPO) extended this period by 12 months, making the deadline 31.12.2011. The assessment order was framed on 25.06.2012, leading the assessee to contend that the assessment was barred by limitation. 2. Validity of the Reference and Order Under Section 142(2A) of the Income Tax Act: The Department argued that the period taken for a special audit under Section 142(2A) should be excluded from the limitation period, making the assessment order timely. The assessee relied on several judgments, including Unitech Ltd and M/s Jyoti Traders, which held that the directions for a special audit were illegal and invalid, thus rendering the assessment barred by limitation. The Tribunal noted that the notice for the special audit referred to financial statements of a different assessment year (2009-10) instead of the relevant year (2008-09), indicating a lack of application of mind by the Assessing Officer. 3. Whether the Assessment Order is Barred by Time Limitation: The Tribunal examined whether the order under Section 142(2A) was in accordance with the law. It concluded that the Assessing Officer did not apply his mind properly, as the notice and subsequent order referred to the wrong assessment year. The Tribunal cited multiple cases, including Alidhara Texpro Engineering and Nilkanth Concast Pvt. Ltd, where similar issues led to the assessment being held as barred by limitation. The Tribunal emphasized that each assessment year is a separate unit, and the Assessing Officer must make out a case for the specific year in question. Conclusion: The Tribunal held that the assessment order dated 25.06.2012 was barred by limitation. Since the foundation (the special audit order) was invalid, the assessment order could not stand. Consequently, the appeal of the assessee was allowed, and the appeal of the revenue was dismissed. The order was pronounced in the open court on 05.02.2019.
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