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TMI Blog2016 (2) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Ld. CIT. DR. Extension of time framed by the A.O for submission of audit report u/s 142 (2C) of the Act vide order dated 28th June, 2004 is bad in law. Consequently the Assessing Officer would not get extension of time for completion of assessment in terms of Explanation 1 (iii) to Section 153 for the purpose of computation of limits. Hence, the assessments are barred by limitation as per the table given at Para 7 of the order. The Assessment for the A.Y 1996-97 was to be complete on or before 31/3/2004 and the assessment order for the Assessment Year 1997-98 to 2000-01 had to be completed on or before 22/9/2004 and the assessment for the A. Y 2001-02 had to be completes on or before 23/8/2004, but all these assessments were completed on 27/9/2004, which is beyond the period of limitation specific in the Act. Hence they are bad in law. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... leased the lands, to work on the land on its behalf and in accordance with the agronomic procedures prescribed by the company for sowing of parent seed, cultivating, irrigation and application of fertilizer, pesticides and other modern agricultural technique for raising healthy crop of hybrid seed of cereals. For this purpose, the company employs experts for supervising the farmers and also for giving them training. The most expensive input, parent seed, is provided free of cost and the farmers are paid cost of fertilizer and pesticide on a standardized basis. Token cost of supervision is deducted from the wages for labour. The assessee has been following the custom of using the output of the quantity of parent seed as the measure for calculating the value of labour. The company pays advances periodically during the pre-harvest period. In no case does the company actually recover such advances paid to these labourer-farmers for any reason whatsoever including negligence. Such advances and the cost of inputs are expensed out by the company. 3.1 The details of original returns filed, income returned, income originally assessed and the date of assessment order and date of issue of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment for each year and assessee filed its objections which was disposed off by AO vide order dated 04.03.2004. The limitation date for completion of each assessment for each year and the actual date of completion are mentioned below:- A.Y.s Date of receipt of order u/s. 142(2A) Period specified in order in days Last date for submission of audit report Date of extension order Extended upto Date of extension order Limitation date for completion of assessment Date on which assessment was to be completed if no extension is given for submission of audit report 96- 97 none none NA 28.6.04 24.7.04 9.8.04 31.3.04 27.9.04 97- 98 15.3.04 120 days 10.7.04 26.6.04 24.7.04 9.8.04 22.9.04 27.9.04 98- 99 9.3.04 120 days 7.7.04 26.6.04 24.7.04 9.8.04 22.9.04 27.9.04 99- 00 9.3.04 120 days 7.7.04 26.6.04 24.7.04 9.8.04 22.9.04 27.9.04 00- 01 9.3.04 120 days 7.7.04 26.6.04 24.7.04 9.8.04 22.9.04 27.9.04 01- 02 26.2.04 120 days 24.6.04 28.6.04 24.7.04 9.8.04 23.8.04 27.9.04 4. The Ld. Counsel for assessee submitted that the orders passed by the Assessing Officer extending the last date of submission of the audit report on 28/6/2004 for A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in subsection (2C) of Section 142 of the Act was to be applicable with effect from 1st April, 2008 only, the amendment cannot be said to be clarificatory or retrospective in nature. The amendment was prospective and was to be applicable with effect from 1st April, 2008 only. …." Thus the Ld. Counsel for the assessee submitted that the extension granted was "suo motu" in assessee's case as assessee company has never asked for extension at any time. The letters which were addressed by the Auditor's and Advocate's or by the assessee company was not an extension application. The second case law relied upon by the Ld. AR is Asstt. CIT Vs. Sushila Milk Specialties (P) Ltd. (DEL) (SB) 126 TTJ 289 (Del.) (SB) wherein the assessee company was an intervener which is clearly set out in para 4 of the said judgment. The said para 4 of the judgment is reproduced herein below: "4. Shri S. D. Kapila represented on of the intervener in this appeal namely PHI Seeds Pvt. Ltd. The Counsel for intervener fairly admitted that since the decision of Tribunal in the case of Rajesh Kumar (supra) has been carried in further appeal before the High Court and the Hon'ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by limitation. (e) Extension of time for completion of special audit u/s 142(2A) was made u/s 142 (2C), without an application or request from the assessee and hence the extension granted "suo motu" is bad in law and consequently the assessment framed is beyond the period of limitation. The paper book coming into 76 pages was filed and detailed arguments were made which we would be taking into consideration as and when necessary during the course of our findings. 5. The Ld. DR submitted that the assessee sought extension for submission of the Audit Report. Therefore, the extension given by the Assessing Officer is not "suo moto" and was a proper extension. Therefore, the assessments are not barred by limitation. The Ld. DR further submitted that the order for Special Audit passed under Section 142 (2A) cannot be challenged before the CIT(A) and ITAT. The DR further pointed out that before CIT(A) only the second extension was challenged by the Assessee. The extension was given by the Assessing Officer for the benefit of the assessee, as the time was expiring on 24.07.2004 as hence such extension cannot be found fault with by the assessee. As per the Ld. DR, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(A) or the Tribunal (ITAT). That it is open for the assessee to question the issue by way of a writ petition before the High Court and not having done so, it is not open to take the plea in this proceedings. (b). The Ld. CIT(A) has explained and given the detailed background and circumstances in which the Assessing Officer had to extend the time granted for the submission of audit report u/s 142(2C) in the interest of Revenue and hence these orders for the extension are validly passed. (c). The Assessing Officer did not pass the order for extension u/s 142(2C) dated 9/8/2014, "suo motu" for the reason that, he had taken into account the assessee's letter dated 31/7/2004 to special auditor and the Assessing Officer 's letter dated 2/8/2004 addressed to the assessee company and the reply thereon. In fact the entire correspondence is relied upon to infer that the assessee had in fact requested an extension of time for submission of audit report. Keeping in view the intention of legislature and with a view to avoid making a best judgment assessment u/s 144(1) (b), for the benefit of the assessee, the extension was granted and hence the judgment of the Hon'ble De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prevalent in the present case. (h). The Ld. DR repeated that the Tribunal has no jurisdiction to examine the validity of the orders passed u/s 142(2A) and order u/s 142(2C). 6. The Ld. Counsel for the assessee on the other hand in his rejoinder submitted that (a) a combined reading of Clause (a) & (b) of Section 246 A (i) makes it clear that an order of assessment or reassessment can be challenged in Appeal before the Ld. CIT(A) denying an assessee's liability to be assessed to tax or disputing the amount of income tax demanded. (b) That the provisions of u/s 142(2A) and 142(2C) read with Explanation 1(iii)of Section 153 are integral to the process of making an assessment and it is open for the assessee to challenge the assessment on the ground that the period of limitation prescribed has expired on these orders were erroneous or passed without jurisdiction. (c) That the A.O as well as the Ld. CIT(A) have stated that power to grant time for submission of audit report u/s 142 (2C), "suo motu" is available to the A.O which is not the correct position of law. (d) That the assessee has not made any application seeking extension of time for submission of audit report. 6.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion of assessment u/s 143(3), or not. The assessee contends that the order u/s 142(2C), extending the period granted for completion and submission of audit report is made without an application being made for extension by the assessee and for any good and sufficient reason, and hence the extension is bad in law and hence the A.O would not get the benefit of the extended period of time to specified in Explanation 1(iii) of Section 153 of the Act. In our view, the Tribunal has jurisdiction to adjudicate the issue as to whether an order of assessment 143(3), is passed within the period of limitation prescribed under the Act or not. For coming to such a conclusion, in our view the Tribunal can examine whether the order passed u/s 142(2A) or u/s 142(2C) is in accordance with law or not. The order passed u/s 142(2A) or u/s 142(2C) cannot be appealed separately. But when an assessment order is challenged, then the different aspects which are integral to the process and ultimate completion of amount can be challenged in Appeal. For example a notice u/s 148 or reasons recorded by the A.O prior to re-opening of assessment cannot be challenged separately. But an assessment order can be chal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t;and the assessee company needs further time to comply with the directions." It is respectfully submitted that the company has at no time, as erroneously alleged in the order, made any submission, request or application to the effect that it needs further time to comply with the directions. In fact, vide letter dated June 3, 2004 duly filed in your office, it was clearly explained that the company had duly complied with the directions and fully cooperated in this regard and that the delay in the starting or completing the audit was not attributable to the company in any manner whatsoever. It is accordingly prayed that the order referred above may kindly be rectified u/s 154 of the Income Tax Act 1961 by deleting/expunging the words " and the assessee company needs further time to comply with the directions" in paragraph 2 of the said order. Thanking You, Yours faithfully, For PHI Seeds Limited. Thus from the above correspondence it is clear that the assessee company denies that it applied or regenerated for the time to comply with the order passed u/s 142(2A) 7.7 Section 142(2C), read as follows:- "(2C) Every report under sub-section (2A) shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otu. It speaks of extension being granted on an application being made by the assessee and also for good and sufficient reason. In this case, there is no specific application by the assessee for the extension of time. Hence, in our view, the order passed u/s 142(2C) dated 28th June 2004, is not in accordance with the provisions of law. The Hon'ble Jurisdictional High Court in the case of Bishan Saroop Ram Kishan Agro (P) Ltd. Supra held that the term "suo motu" inserted in the provisions of Section 142(2C) w.e.f 1/4/2008 is prospective in nature and that prior to the amendment the Assessing Officer did not have the inherent power to extend the time limit for the audit report without an application by the assessee. Recently, the Hon'ble Jurisdictional High Court in the CIT Vs. M/s Kashyap Motors Pvt. Ltd judgment dated 23rd August 2011 in ITAT 582/2011 followed the judgment of the Hon'ble High Court in the case of Bishan Saroop Ram Kishan Agro (P) Ltd. supra and held that "21. In view of foregoing discussion that the amendment whereby the word suo motu were inserted in sub section (2C) of Section 142 of the Act was to be applicable with effect from 1st April, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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