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TMI Blog2020 (6) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... ement the Income Tax Act stands clearly defined in the statute. For example, the power to approve the accounts audited u/s 142(2A) lies with CIT/PCIT/CCIT or PCCIT. The powers u/s 144A are to be exercised by the Joint Commissioner or Additional Commissioner. The powers u/s 251 are specific to the Commissioner (Appeals). Similarly, the powers u/s 263 and 264 are to be exercised by the PCIT/CIT. Further, in exercise of the powers conferred under clause (a) of sub-section (2) of section 119 of Income-tax Act, 1961, Central Board of Direct Taxes, may direct that the Chief Commissioner of Income-tax and Director General of Income- tax may reduce or waive interest charged under section 234A or section 234B. While levy of the penalty u/s 271AAB is the power of the Assessing Officer, the provisions u/s 274(2) mandates that the prior approval of the JCIT is required before levy of such penalty. Thus, we find that the statute has accorded implementation of the various provisions to specified authorities which cannot be interchanged. A power which has been given to a specified authority has to be discharged only by him. Substitution of that officer/authority by any other officer, may be of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of disallowance of brokerage expenses. 6.. The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in deleting the addition of ₹ 1. 71.979 /- made on account of disallowance of expenses u/ s 40 A(2)(b) of the I.T. Act. 7.. The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in deleting the addition of ₹ 2. 20.060 /- made on account of disallowance of depreciation. 8.. The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in deleting the addition of ₹ 96, 45, 844 /- made on account Bikaner Project." 3. In ITA No. 1849 /Del/2015, following grounds have been raised by the revenue: "The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in deleting the addition of ₹ 3. 53. 169 /- out of total addition of ₹ 4, 94, 161 /- made on account of disallowance u/s 40 (A)(3) of the I. T. Act. 2.. The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in deleting the addition of ₹ 38.65. 870 /- out of total addition of ₹ 48, 73, 752 /- made on account of disallowance of prior period expenditure. 3.. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not point out any complexity in the books of accounts of the appellant before issuing any such directions; and b) in any case, the extended time period allowed to the special auditor for furnishing audit report could not be excluded in terms of clause (ii) of Explanation under section 153B since such extension having been granted by the CIT, instead of the assessing officer as required under section 142(2C) of the Act was invalid in law. 3. That the CIT(A) erred on the facts and circumstances of the case in not appreciating that various disallowances/ additions made by the assessing officer (separately challenged infra) were beyond jurisdiction and scope of assessment under section 153 A of the Act since the same were not based on any incriminating materials/documents found in the course of search. Without prejudice: Re: Disallowance under section 40A (3) of the Act 4. That the CIT(A) erred on facts and in law in upholding disallowance of ₹ 4,260/-,20% of ₹ 21,300/- being expense paid in cash by the appellant due to business exigencies and holding the same to have been paid in contravention of provision of section 40A(3) of the Act. Re: Disallowance under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has raised the following grounds: "1. That the additions/disallowance made by the Assessing Officer by passing the assessment order under Section 143(3) are illegal, bad in law & without jurisdiction. 2. That on the facts and circumstances of the case, the CIT(A) erred in not quashing the order dated 10.08.2010 passed by the assessing officer under section 153A as barred by limitation since the same had been passed beyond time limit specified under section 153B(1) of the Income Tax Act, 1961 ('the Act') inasmuch as: a) the audit conducted by the special auditor under section 142(2A) of the Act was not required because the assessing officer did not point out any complexity in the books of accounts of the appellant before issuing any such directions; and b) in any case, the extended time period allowed to the special auditor for furnishing audit report could not be excluded in terms of clause (ii) of Explanation under section 153B since such extension having been granted by the CIT, instead of the assessing officer as required under section 142(2C) of the Act was invalid in law. Without prejudice: Re: Disallowance under section 40A (3) of the Act 3. That the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for presuming the sale value of the Bikaner Land as ₹ 201.61/- per sq. feet (Estimated) against the actual sale value for the plot to plot evidenced by proper, authentic and legal documents, wherein no defect/deficiencies/ in correctness have been found. Re: Interest under section 234B of the Act 7. That the assessing officer erred on facts and in law in charging/ computing interest under sections 234B of the Act." 6. At the outset, the assessee has raised a legal ground during the hearing that the extension of time given by the Commissioner of Income Tax, Central-II in getting the books audited u/s 142(2A) of the Income Tax Act, 1961 was illegal thus vitiating the proceedings thereof. 7. The detailed facts of case as taken up from records and submission are as under: 7.1 A search and seizure operation was carried on the assessee on 19.02.2008 and consequently, notice under section 153A was issued. During the assessment proceedings, the AO arrived to an opinion, that having regard to the nature and complexity of the accounts of the assessee and in the interest of revenue, it was necessary to get the accounts audited by an Accountant, as provided in section 142(2A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub-section (2A) is received by the assessee." 11. Against the arguments, the ld. CIT DR, made submissions and argued the case at length. For the sake of convenience and completeness, the submissions of the ld. CIT DR in the written form consisting of differentiation of the case laws quoted by the AR, case laws supported by the revenue, letter dated 11.02.2020 of ACIT- Central Circle-15 with regard to the events, letter dated 13.04.2010 of DCIT, Central Circle-17 are reproduced as under: "Sub: Written Submission in the above case- reg. All these appeals are filed by the Department and the assessee has filed cross objection. The assessee has raised legal ground through cross objection that the extension of time getting the books audited u/s 142(2A) of the Act was granted by the Commissioner of Income Tax (Central) where as the extension of time for audit u/s 142(2A) was to be given by the assessing officer as per the first proviso below section 142(2C). A. Ld. AR relied on the following decision in support of the argument that approval from higher incompetent aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts in present case are entirely different. b) Gordhandas Bhauii (Cited Supra) The issue was the power of commission vis-a vis the interference of the government. These facts are clearly distinguished in the present case. c) Anirudh Sinhji Jadeja (Cited Supra) The issue was the power of DSP for prior approval for recording information about commission of offence u/s Terrorist & Disruptive Activities (Prevention) Act, 1987. The facts are clearly distinguishable. d) Maharaja Dharamander Prasad Singh & Others. The issue was related to permission for development of land by private part under U.P. Urban Planning Development Act, 1973. These facts are not applicable in the present case. D. Ld. AR finally relied on the decision of Hon'ble ITAT, Pune bench in the case of ITO (Central), Kolhapur Vs. Vision Particle Board Industries Ltd. (2017) 88 Ta.xmann.com 889 which has been approved by the Hon'ble Bombay High Court is relying in Sahara Vs. CIT decision of Hon'ble Supreme Court. Submission Issue in the case of vision particle Board Industries Ltd. was before sending the proposal of approval to CIT, the assessing officer should give opportunity of being heard the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessing officer dated 11.02.2020(Enclosed) A perusal of the above facts reveals that issue of providing opportunity to the assessee for the extension of time period is not the requirement of law. The only condition in the satisfaction the Assessing Officer for extending the time. The assessing officer in present case has applied his mind and found the case suitable for extension as can be seen from the letter of the assessing officer dated 11.02.2020. Therefore, conditions for extending the time period under the above proviso is met expect the grant of extension by CIT for administrative reason on account of special audit pending in other group cases. Therefore, it is submitted that since on substantial basis the requirement of proviso has been met, just on account of only administrative approval of CIT for sectioning the extension should not vitiate the extension of time for special audit. Without prejudice to above submission it may be mentioned that CIT is the approving authority for special audit u/s 142(2A) and therefore his involvement for extension of time as per proviso is inherent." 12. The information received by the revenue during the arguments with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me may also be granted to M/s Dinesh Mehta & Co. if extension of time is granted by your good self to M/s Sanjay Satpal & Associates." 3. Further, the Ld.CIT, Central-11, New Delhi, vide letter No.CIT/(C)-ll/10- 11/24 dated 12.04.2010 has conveyed the extension of 60 days for the purpose of furnishing the audit report and directed ''No further extension will be allowed and the auditors may be asked to adhere to the extended time limit for the purpose". Accordingly, the assessing officer vide letter F.No.DCIT-CC-17/Special Audit/2010-11/40 dated 13.04.2010 has informed that the extension of further 60 days granted to the Special Auditors M/s Dinesh Mehta & Co., Chartered Accountants, for furnishing the audit report u/s 142(2A) in the case and also requested to the assessee to provide the requisite information immediately under information to the undersigned so the special audit may be completed in a smooth manner. 4. On perusal of relevant records, it is ascertained that the Assessing Officer has applied his mind in the letter dated 08.04.2010 therein he has given the reasons for extension for furnish the special audit report. Consequently, the Ld.CIT has considered the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l extension has been granted by the DCIT, Central Cirecle-17 vide letter dated 13.04.2010. It was also argued that while approval of the CIT, is required for ordering fresh audit u/s 142(2A), no such approval for extension it is not required. It is the administrative permission sought by the DCIT for the CIT, hence the action cannot be said to be illegal. The undisputed facts are, 1. The assessing officer has received the request from special auditor for extension of time to complete audit u/s 142(2A) which was account of delay on the part of the assessee. 2. The assessing officer was satisfied on the reason submitted by the special auditor and recommended for extension to CIT as there were other cases having inter-group transaction for special audit and extension was granted by CIT(C)-II, New Delhi. 3. CIT(C)-II, New Delhi has conveyed the extension. 4. The AO conveyed the granting of extension of 60 days by the CIT, Central-II to the assessee. 16. The Sec, 142 (2A) provides that the directions for special audit shall be given by the Assessing officer, with the previous approval of Chief Commissioner or Commissioner. In this case, there is no dispute that these directions ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer. On going through the established judgment, it cannot be disputed that the statutory powers vested with one specified authority cannot be exercised by another authority unless and until the statute provides for the same. And we find that the extension has not been given by the Assessing Officer 19. The powers and the jurisdiction of the various authorities to implement the Income Tax Act stands clearly defined in the statute. For example, the power to approve the accounts audited u/s 142(2A) lies with CIT/PCIT/CCIT or PCCIT. The powers u/s 144A are to be exercised by the Joint Commissioner or Additional Commissioner. The powers u/s 251 are specific to the Commissioner (Appeals). Similarly, the powers u/s 263 and 264 are to be exercised by the PCIT/CIT. Further, in exercise of the powers conferred under clause (a) of sub-section (2) of section 119 of Income-tax Act, 1961, Central Board of Direct Taxes, may direct that the Chief Commissioner of Income-tax and Director General of Income- tax may reduce or waive interest charged under section 234A or section 234B. Further to mention, while levy of the penalty u/s 271AAB is the power of the Assessing Officer, the prov ..... 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