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TMI Blog2019 (3) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... n 142(2C) would enable the assessing officer to extend the period of limitation for making an assessment under Section 153B. Explanation (iii) to Section 153B(1), as it stood at the material time, provided for the exclusion of the period commencing from the date on which the assessing officer had directed the assessee to get his accounts audited under sub-section (2A) of Section 142 and ending on the day on which the assesee is required to furnish a report under that sub-section. The day on which the assessee is required to furnish a report of the audit under sub-section (2A) marks the culmination of the period of exclusion for the purpose of limitation. Where the assessing officer had extended the time, the period, commencing from the date on which the audit was ordered and ending with the date on which the assessee is required to furnish a report, would be excluded in computing the period of limitation for framing the assessment under Section 153B. The principle governing the exclusion of time remains the same. The act on which the exclusion culminates is the date which the assessing officer fixes originally, or on extension for submission of the report. The provisions of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 142 (2C), as it stood prior to 1 April 2008, to extend time for the submission of the audit report of the auditor appointed under the provisions of sub section (2A). In essence, the submission is that the assessing officer was authorized to extend time (not exceeding 180 days) from the date on which a direction under sub section (2A) was received by the assessee, only on an application made by the assessee and for any good and sufficient reason. If the assessee made no application, the assessing officer would have no jurisdiction according to the assessees to extend time. 4 The Revenue adopted a contrary position, submitting that even before 1 April 2008, the jurisdiction of the assessing officer to extend time for the submission of the audit report was not confined to a situation in which the assessee had made an application for extension. Consequently, the incorporation of a provision for a suo motu exercise of power by the assessing officer, with effect from 1 April 2008 by the Finance Act, 2008 ( Finance Act ), was only intended to remove an ambiguity and was clarificatory in nature. 5 Section 142(2A) as it stood at the material time, provided as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limits for the completion of assessments under Section 153A. Explanation (ii), as it stood at the material time, provided that in computing the period of limitation for the purposes of the Section, the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of Section 142 and ending on the day on which the assesse is required to furnish a report of such audit under that sub-section shall be excluded. While issuing a direction under sub section (2A) of Section 142, the assessing officer was vested with the authority to require the assessee to furnish a report of the audit in the prescribed form, signed and verified by the accountant, and setting forth such particulars as may be prescribed and as may be required by him. The substantive part of sub section (2C) mandates that the report under sub section (2A) shall be furnished by the assessee to the assessing officer within the period that is specified by the assessing officer under the proviso, as it stood prior to its amendment by the Finance Act. The assessing officer was further empowered, on an application made by the assessee and for any good and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (2C) of the said section specifies the period within which the audit reports is to be furnished. The proviso to said sub-section empowers the Assessing Officer to extend this period of furnishing of audit report. Further, it is also provided that the aggregate of the originally fixed period and the period(s) so extended shall not exceed 180 days from the date of issuance of direction of special audit. Further, such extension can be made only when an application is made in this behalf by the assessee and there are good and sufficient reasons for such extension. 27.3 With a view to rationalise the said proviso so as to also allow the Assessing Officer to extend this period of furnishing of audit report suo motu, the said proviso has been amended. Hence, while the Assessing Officer shall continue to have power to grant extension on an application made in this behalf by the assessee and when there are good and sufficient reasons for such extension, he can also grant such extension on his own. 27.4 Applicability This amendment has been made applicable with effect from 1-4-2008. Hence, from this date and onwards, the Assessing Officer shall also have power to exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer shall continue to have power to grant extension on an application made in this behalf by the assessee and when there are good and sufficient reasons for such extension, he can also grant such extension on his own. The amendment will take effect from 1st April, 2008. 12 In the context of the above background, it has been submitted that the purpose of the amendment was to also allow the assessing officer to extend the period for furnishing of an audit report, suo motu . The amendment to Section 142(2C) preserves the jurisdiction of the assessing officer to grant an extension on an application made by the assessee and for any good and sufficient reasons. In addition, the amendment allows the assessing officer to extend the period suo motu. The amendment having taken effect from 1 April 2008, it has been urged on behalf of the assessees that this power was not vested in the assessing officer prior to that date. Moreover, learned counsel appearing on behalf of the assessee urged that: (i) The consequence of the exercise of the jurisdiction to extend time for submission of the audit report under the proviso to sub section (2C) is the extension of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to comply with the time schedule which is prescribed by the assessing officer. The overall ceiling of time appears in the proviso to subsection (2C), which mandates that the aggregate of the time fixed and the extended period cannot exceed 180 days, after which there can be no further extension of time. 16 The submission of the assessee would have this Court interpret the proviso to mean that the assessing officer can extend the period which was originally fixed only on the request of the assessee. Besides leading to absurd consequences, such a construction of the proviso is patently contrary to its language, purpose and intendment. 17 The proviso was intended to deal with a situation where an assessee, for valid reasons, may not be able to furnish the audit report within the period that was fixed by the assessing officer. The enactment of the proviso was necessary to give a remedy to an assessee who, for genuine reasons, is unable to comply with the direction issued in the first instance by the assessing officer. Hence, the proviso stipulates that for good and sufficient reason, the assessing officer may extend time on an application submitted by the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the time limit for the submission of an audit report in the first instance, to extend time without an application by the assessee. To hold otherwise, and to construe the proviso to sub-section (2C) as foreclosing the authority of the assessing officer to extend time without a request by the assessee, would lead to an absurd consequence. The assessee would then be in control of whether or not to seek an extension of time, where the audit report has not been finalized. Even if the auditor, for genuine reasons (not bearing on the default of the assessee), was unable to comply with the time schedule, having regard to the nature or complexity of the accounts, the assessee would then have a sole and unrestricted power to determine whether an extension should be sought. Not seeking an extension would in effect defeat the underlying purpose and object of directing the assessee to obtain a report of an auditor under sub-section (2A). The legislature could not have intended this consequence. An interpretation which would defeat the purpose underlying sub-section (2A) must be avoided. The assessing officer who has fixed the time in the first instance must necessarily, as an incident of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct from 1 April 2008 does not detract from it being clarificatory in nature or that it was designed to obviate an ambiguity. In Justice GP Singh s Principles of Statutory Interpretation (11th Edition (2008)) the issue of whether a statutory provision is retrospective has been analysed thus: The presumption against retrospective operation is not applicable to declaratory statutes. As stated in Craies and approved by the Supreme Court: For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word declared as well as the word enacted . But the use of the words it is declared is not conclusive that the Act is declaratory for these words may, at times, be used to introduce new rules of law and the Act in the latter case will only be amending the law and will not neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rospective, unless there be some good reason against it. In Commissioner of Income Tax (Central I) v Vatika Township (P) Ltd. (supra), this Court held thus: 30. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective 31 Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by outweighing factors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the provisions of the Finance Act, 1999. As we have indicated, interpretation is a matter of determining the path on the basis of statutory context and legislative history. In taking the view that we have, we have also taken note of the fact that the same view was adopted by several High Courts. Among them are (i) the Punjab and Haryana High Court in Jagatjit Sugar Mills Co Ltd v Commissioner of Income Tax (1994) 74 Taxman 8 (Pun. Har.); [1994] 210 ITR 468; (ii) the Kerala High Court in Commissioner of Income Tax, Cochin v Popular Automobiles (2011) 333 ITR 308; and (iii) the Allahabad High Court in Ghaziabad Development Authority v Commissioner of Income Tax, Ghaziabad (UP) (2011) 12 Taxman.com 334 (Allahabad); 2011 SCC On Line All 1151. The decision of the Kerala High Court in Popular Automobiles (supra) is the subject matter of Civil Appeal No 2951 of 2012 in these proceedings. 26 For the reasons we have adduced, we have come to the conclusion that the provisions of Section 142(2C) of the Income Tax Act 1961, as they stood prior to the amendment which was enacted with effect from 1 April 2008 by the Finance Act, 2008 did not preclude the exercise of jurisdiction and authori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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