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TMI Blog2003 (5) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... authorized officer searched the entire house in which the assessee was residing. The officer conducting the survey under s. 133A brought the gold ornaments, silver utensils and ornaments, books of accounts and documents which were found at the shop during survey, to the residence where search was being carried out and the same were seized from the residence by the Department. This fact is evidenced from p. 23 of paper book (PB) and 6 to 9 of PB. This was presumably done by the Department under s. 133A as the authorized officer had no power to seize the same. On 15th July, 1998, the authorized officer seized the gold ornaments, silver utensils, cash and books of accounts and other documents which are detailed at p. 5 of the written statment of the assessee and not disputed by the Department. On 17th July, 1998, there was nothing to be seized. In all total number of documents seized were 80 which were seized vide Annexure S on 15th July, 1998, which is seized from the assessment order. A prohibitory order under s. 132(3) of the Act was issued on 15th July, 1998 and 17th July, 1998, in respect of the search done which was withdrawn on 28th Aug., 1998, and nothing was found to be seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, considering the complexity of the accounts, the same were referred to the auditor and time of 180 days was allowed to submit the report. The report came finally on 10th Jan., 2001. So, in his opinion, the assessment passed by the learned AO is well within time. In the alternative, the learned counsel has submitted that the Finance Act, 2002, which came into effect from 1st June, 2002, has extended further period of 60 days in the circumstances mentioned therein. So, according to the learned counsel, the extended time, if applied to these provisions, which are machinery provisions, then, in that case, the last date for completion of assessment order would be 30th March, 2002, since the assessment order was passed on 13th March, 2001, and the assessment has been passed on 8th March, 2001, so it is well within time. 8. He has submitted in his arguments, the difference in between machinery provisions and charging provisions of the Act. In this regard, he has relied on the Hon ble Supreme Court in CWT vs. Sharvan Kumar Swarup Sons (1994) 122 CTR (SC) 380 : (1994) 210 ITR 886 (SC) at p. 886. But this decision is of no help to the Department as these are not applicable to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assess requisitioned after the 30th day of June, 1995, but before the first day of 1997; and (b) Two years from the end of the month in which the notice under this Chapter served on such other person in respect of search initiated or books of account or other documents or any assets as requisitioned on or after the first day of January, 1997. 158BH Save as otherwise provided in this Chapter, all other provisions of this Act, shall apply to assessment made under this Chapter. Explanation 1(iii) to s. 153(3) The period commencing from the date on which the AO directs the assessee to get his accounts audited under sub-s. (2A) of s. 142 and ending with a report of such audit under that sub-section." 11. The assessee has put forth various other facts, which have not been disputed by the Department, lucidly and succinctly before us through its PB. All these facts were placed before the lower authorities. The assessee derives income manufacturing and sale of gold ornaments. In addition to that, the assessee also derives incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment having missed the bus, manoeuvred somehow or the other to bring the assessment order passed in this case within limitation. Be it by issuing prohibitory order which was withdrawn on 28th Aug., 1998, as nothing was seized by way of Panchnama which finds place at p. 13 to 16 of PB or by resorting to the provisions of s. 142(2A) of the Act by referring the accounts to the auditor without any reasons existing as are required under the provisions of the said section. Furthermore, the learned counsel has argued that the way in which the reference under s. 142(2A) has been made in violation of the mandatory provisions of the section and the correspondence entertained between the learned CIT(A) and the auditor clearly speaks that the Department tried to enlarge the scope of limitation by any means. 15. The prohibitory order issued in respect of room in the basement was imposed on 17th July, 1998, and the same was withdrawn on 28th Aug., 1998. The Panchnama which is placed on P. 13 and 14 of the PB clearly shows that the room in question was empty, meaning thereby that the provisions was issued against vacant room, as whatever was to be seized, was already seized from the room. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department. So, there was no need for the assessee to provide any assistance regarding this audit. 17. We are also convinced that the CIT(A) may have entertained some doubts regarding the assessment order being passed by the learned AO. That is why, for the first time he resorted to the provisions of s. 142(2A) of the Act, simply stating that the accounts were complex and interest of Revenue is involved. We are also convinced by the arguments of learned counsel for the assessee that no date has been mentioned in this letter dt. 2nd Aug., 2000 regarding the completion of the audit by the auditor-firm, despite the fact that the limitation is very important in search cases. In any case, this seems to be exercise to save the assessment order from being barred by limitation. The time period, during which no books of accounts were found/maintained during the course of search and directions issued to get the accounts audited, also this fact was in the knowledge of the AO, definitely goes to show that judicial discretion was not applied to this fact. The plea by the learned counsel for the assessee is that till date, there is no approval of the CIT or Chief CIT for getting books of aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was declined. But when the learned counsel for the assessee has pointed out that for satisfaction of the assessee as well as the Tribunal, there is no document on record which could be shown to be as a reference as requested by the AO to the CIT and the granting of the approval by the CIT on that request to show that there was genuinely a requirement for referring the accounts specified. These documents seem to be of no help to the Department which can enlarge the scope of limitation for passing of the assessment order. Vide letter dt. 2nd Aug., 2000, the assessee requested the AO to supply him the copy of the note with the complexity forwarded by the learned AO to the learned CIT Jodhpur for obtaining approval and also copy of approval granted by the learned CIT Jodhpur but the same has not been replied and no information regarding the above facts was supplied to the assessee. Even when he enquired from the learned counsel, Shri Bhandawat on the date of hearing, he could not supply the same. The letter requesting the AO to supply the documents dt. 24th Aug., 2000, is placed at p. 96 of PB. A letter dt. 24th Aug., 2000, from the AO by the assessee wherein also the date by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e). He has further submitted that reference to audit by letter dt. 2nd Aug, 2000, is also of no consequences as: (a) The letter directing to get accounts audited under s. 142(2A) dt. 2nd Aug., 2000 was issued after assessment having barred by limitation on 31st July, 2000. (b) In the letter learned AO has not mentioned the time period or date on which the assessee was to obtain audit report. The date is very crucial to decide the issue of limitation. (c) There was application of mind while issuing the letter on 2nd Aug., 2000, in which the books of accounts was required to be audited for the period for which there was no books of accounts. (d) Remuneration of auditor was not settled (it was only settled on 10th Oct., 2000). (e) There was no complexity in the books found and seized. All the queries raised by learned AO were met and no assessment proceedings took place during the months of June and July, 2000 after filing of the assessee s reply and verification of seized papers in the month of May, 2000, itself. (f) Even on the basis of same books, the learned AO passed order under s. 143(3) and felt no complexity in the books (asst. yr. 1996-97). (g) That there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, that the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub-s. (2A) is received by the assessee". 21. According to this section power of extending time-limit rests with the AO and not with the CIT. This power can be exercised only in the application made by the assessee. The time cannot be extended at the request of the auditor by the CIT from 120 days to 180 days. So the extension of time from 120 days to 180 days was not legal and valid, according to this provision. So, even if we accept the original period of 120 days permitted by the learned CIT to the auditor the report was due under s. 142(2A) on 30th Nov., 2000, and the learned AO, in that case could have passed the assessment order on or before 29th Dec., 2000, as only 29 days were left with the learned AO on the date of reference under s. 142(2A). Even in case we accept the arguments of Shri Bhandawat, learned counsel for the Department, that the CIT has all the powers of the AO and that too without application of the assessee, even on the request of the auditor, the time can be ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch cases and in that eventuality, it cannot be controlled by the provisions of s. 153(3), Expln. (iii) of the Act. Moreover, the subsequent change in law or amendment in law cannot revive the dead time for limitation. Amended law applies only to surviving procedures. So, there is no merit in the Department s appeal and, therefore, the same is dismissed. 24. Now we will take up the grounds taken by the learned authorised representative of assessee in the cross-objection filed by him. 25. The assessee has raised various grounds of appeal out of which cross-objections being ground Nos. 1 to 6 are material. Ground Nos. 7 and 8 are general in nature. 26. Ground Nos. 1 to 4 are in relation to our findings supra in relation to Department s appeal. As we have already accepted these pleas which are raised by way of cross-objection in the Department s appeal so we accept these grounds of appeal. 27. So far as ground No. 5 of cross-objections are concerned, this ground relates to passing of order on merits, we are also of the opinion that when the assessment order has been held to be barred by limitation then there is no need to decide the same. Moreover, when this ground does not a ..... 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