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2023 (1) TMI 1031 - AT - Income TaxSpecial audit U/s. 142(2C) - time limit for submission of Special Audit Report as required u/s. 142(2C) - HELD THAT - In the instant case, the Ld. AO failed to pass such order in both the circumstances to extend the time limit. AO merely communicated the decision of the Ld. Pr. CIT (Central), Visakhapatnam on 6/6/2019 which is beyond the limitation period of the second extended time. Even assuming a moment that it is a valid extension, we find that the extension as per the Limitation Act should have been granted before the expiry of the time limit permitted in the earlier extension ie., on 25/5/2019. We find force in the arguments of the Ld. AR that mere communication of extension by the Ld. AO instead of passing an order U/s. 142(2C) is not valid in law. The case law relied on by the Ld. AR, the judgment of the Hon ble Supreme Court in the case of State of Punjab Ors vs. M/s. Shreyans Indus Ltd i 2016 (3) TMI 331 - SUPREME COURT is pertinent to mention here with respect to grant /order of extension of time limit should be given before the time for passing any order expires as prescribed under the Act or before the expiry of the original period of limitation prescribed in the original order. On this issue, the Hon ble Apex Court observed that once the period of limitation expires, the immunity against being subject to assessment sets in and the right to make assessment gets extinguished. Therefore in our considered opinion, the ratio laid down by the Hon ble Supreme Court squarely applies to the instant case also. In the instant case on hand, the Ld. AO ought to have passed an order U/s. 142(2C) of the Act on or before 25/5/2019 ie., expiry of the first extension. Case law relied on by the Ld. AR in ACIT Vs Soul Space projects Limited 2020 (6) TMI 696 - ITAT DELHI is also relevant to the issue which was also considered by the Ld. CIT(A) We find that the Ld. CIT(A) has discussed the issue at length and rightly concluded the matter and therefore we are of the considered view that no interference is required in the order of the Ld. CIT(A) on this issue.
Issues Involved:
1. Validity of the assessment order due to the extension of time for the Special Audit Report under Section 142(2C) of the Income Tax Act. 2. Validity of the notice issued under Section 153C of the Income Tax Act. 3. Quashing of the assessment completed by the Assessing Officer (AO) under Section 143(3) read with Section 153C of the Income Tax Act. 4. Whether the assessment order was barred by limitation. Issue-Wise Detailed Analysis: 1. Validity of the assessment order due to the extension of time for the Special Audit Report under Section 142(2C) of the Income Tax Act: The appellant argued that the Special Audit Report was submitted beyond the prescribed period, rendering the assessment order void-ab-initio. The AO extended the time limit for the Special Audit Report based on the Principal Commissioner of Income Tax's (Pr. CIT) permission, not by an order under Section 142(2C). The Tribunal found that the AO merely communicated the Pr. CIT's approval without independently applying his mind and passing an order under Section 142(2C). The Tribunal cited the Supreme Court's judgment in State of Punjab & Ors vs. M/s. Shreyans Indus Ltd, emphasizing that extensions must be granted before the original period of limitation expires. Consequently, the Tribunal held that the assessment order was void-ab-initio due to the invalid extension of time for the Special Audit Report. 2. Validity of the notice issued under Section 153C of the Income Tax Act: The appellant contended that the notice under Section 153C was invalid as it was issued without proper satisfaction and incriminating material. The Tribunal noted that the appellant did not argue this ground before them, considering it not pressed and dismissing it accordingly. 3. Quashing of the assessment completed by the AO under Section 143(3) read with Section 153C of the Income Tax Act: Since the Tribunal decided in favor of the appellant on the issue of the invalid extension of time for the Special Audit Report, it held that the assessment completed by the AO under Section 143(3) read with Section 153C was void-ab-initio. Therefore, no separate adjudication was required on this ground. 4. Whether the assessment order was barred by limitation: The Tribunal observed that the assessment should have been completed within 60 days from the end of the day on which the last date for submission of the Special Audit Report expired. Since the assessment was completed after the due date, it was barred by limitation and thus void-ab-initio. Conclusion: The Tribunal dismissed the Revenue's appeals, holding that the assessment orders were void-ab-initio due to the invalid extension of time for the Special Audit Report and being barred by limitation. The Tribunal's decision in the lead appeal applied mutatis mutandis to the other similar appeals, resulting in the dismissal of all the Revenue's appeals.
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