9911796707
TMI Blog2003 (1) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... er under section 142(2A), requiring the assessee to get its accounts audited by the Chartered Accountants nominated by the Commissioner of Income-tax. The order under section 142(2A) was passed on 9-9-1997. As per the said order, the assessee was required to furnish the Audit Report on or before 31-12-1997. The nominated Chartered Accountants requested the Assessing Officer through their letter dated 24-12-1997 that further time may be granted to them for completing the audit, as the volume of the business transactions were so large that they would not be in a position to complete the audit within the time originally stipulated as on 31 -12-1997. The nominated Chartered Accountants requested for the extension of time to file the Audit Report till 15-2-1998. This request put in by the Chartered Accountants was recommended by the Assessing Officer to the Commissioner of Income-tax and as directed by the Commissioner, time was granted upto 15-2-1998. This extension of time to file the Audit Report was conveyed to the nominated Chartered Accountants by the Assessing Officer through her letter dated 29-1-1998. Finally, the said Audit Report was filed on 17-2-1998 and the assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s added to the period of limitation under section 153 ending on 31-3-1998, the assessment should have been completed latest by 27-3-1998 (sic) 23-7-1998. The assessee submitted that the assessment order was, however, passed on 3-9-1998 and therefore the assessment was time barred. The assessee also submitted that section 153 is a procedural provision and therefore applies to all pending assessments. The assessment of the assessee for the impugned assessment year 1995-96 was pending on 1-4-1997, on which date clause (iii) of Explanation 1 to section 153 was amended and, therefore, the amended provisions should have been followed by the Assessing Officer. 5. The CIT (Appeals) accepted the contentions raised by the assessee on the ground of limitation and cancelled the assessment as time barred. The findings of the CIT (Appeals) are reproduced below for an easy understanding of the conclusion arrived at by him. "I have carefully considered the arguments of the Learned Representative and examined the facts of the case. It is seen from the assessment records that the assessment order was passed on 3rd September, 1998. The time limit for completion of assessment for assessment year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the fact that a further extension was provided for getting the assessee's books audited with the approval of the Commissioner of Income-tax, Central-1, Chennai. 1.3 The CIT(A) has erred in not appreciating the fact that a total period of 158 days was to be excluded in computing the period of limitation. 1.4 The CIT(A) ought to have appreciated that the assessment was finalised on 3-9-1998 well within the period of limitation which expires on 5-9-1998. 1.5 Considering the factual nature of the case, the CIT (Appeals) ought to have confirmed the assessment. 1.6 The CIT (Appeals) erred in assuming that the extension of the time limit was available only with reference to the first directions as per which the report was required to be filed by 31-12-1997. 1.7 As per the amendment to Explanation 1 (iii) of section 153 the time limit is the period to be excluded is the time given to the assessee for getting his accounts audited till the last date on which the assessee is required to furnish the audit report. 7. We heard Shri E.S. Kannan, the learned departmental representative appearing for the Revenue. Shri Kannan contended that the argument of the assessee that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 142(2A) to the date upto which the Audit report is required to be furnished. He submitted that the exclusion period cannot be extended till the date on which the assessee furnished the Audit Report, as required by the Assessing Officer. The Revenue has ignored these crucial dates in computing the period of limitation, as provided in section 153. The CIT(Appeals) has correctly appreciated the law on the subject and therefore he is justified in holding that the period to be excluded in computing the limitation period is only 114 days and not 158 days, as argued by the Revenue. The learned Chartered Accountant submitted that the view of the learned departmental representative that the old provisions of law should apply in this case is not correct. He submitted that in the copy of the Finance Act, which was filed by the learned departmental representative at the time of hearing, para 44 amendment to section 153 clearly mentions that the last date on which the assessee is required to furnish the audit report" is effective from 1-4-1997. Therefore, he contended that the amended provision is applicable in assessee's case, since the Assessing Officer has initiated the action after 1-4-199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een filed before the Assessing Officer. Secondly, the assessment is barred by limitation as the assessee has not filed the Audit Report on or before 31 -12-1997, the date on which the assessee was originally required to furnish the Audit Report. As per section 153(3), the period from the order under section 142(2A) upto the date on which the assessee furnish the Audit Report is to be excluded for reckoning whether the assessment is barred by limitation. The exclusion of this period arises only when the assessee files the Audit Report within the specified time and not in cases where the Audit Report was not submitted. If any extension of period was necessary, the application should have been made by the assessee alone and not by anybody else. In the present case, as the assessee never filed any such letter for extending the period for getting the accounts audited, the period to file the Audit Report in fact expired on 31-12-1997 and therefore the Assessing Officer could exclude only a period of 114 days in computing the period of limitation, and on this account also the assessment is barred by limitation. The learned Chartered Accountant relied on the decision of the Hon'ble Madhya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said letter is placed before us. The letter is addressed to the Asstt. Commissioner of Income-tax, Central Circle-1, Ernakulam. It is not seen in the said letter that copy of that request is endorsed to the assessee in question. Thereafter the Assessing Officer writes to the Commissioner of Income-tax on 30-12-1997 recommending to extend the time upto 15-2-1998. A copy of the said letter is seen endorsed to the Additional Commissioner of Income-tax, Central Range, Ernakulam. It is not seen that a copy of the letter is endorsed to the assessee. Thereafter, the Commissioner of Income-tax informs the Assessing Officer that the extension of time is granted upto 15-2-1998 as recommended by her. Here also, a copy of the letter is endorsed to the Addl. Commissioner of Income-tax, Central Range, Ernakulam. The assessee is not in the picture. On receipt of the communication from the Commissioner's Office, the Assessing Officer write to the Auditors on 29-1-1998 that time to file the Audit Report is extended upto 15-2-1998. No copy of this letter is endorsed to the assessee. A perusal of all these official records makes it very clear that the assessee was never in the picture in seeking ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer may, on an application made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit; however, the aggregate of the period originally fixed and the period or periods so extended shall not in any case, exceed 180 days from the date on which the direction under sub-section (2A) is received by the assessee. The Tribunal in the said case held that a plain reading of the above proviso makes it clear that the application for extension of time can be made on an application made by the assessee. Where there is no such application made by the assessee, the Tribunal held that the extension granted by the Assessing Officer would be illegal and therefore that extended period would not be considered for exclusion in computing the period of limitation under section 153. 13. In the light of the provisions contained in sections 142(2A), 142(2C), proviso thereto, and section 153, we are of the view that any request for the period of extension to file the Audit Report need to be made by the assessee and the period extended on the request of the assessee alone could be excluded in computing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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