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TMI Blog2020 (10) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... uct of special audit under section 142(2A) and as no extension has been given by AO but by the Commissioner and the AO has only conveyed the approval, therefore, we hold that the grant of extension by the Commissioner is beyond the powers enshrined under the statute. Accordingly, the assessment completed after the due date is held to be void-ab-initio. - Decided in favour of assessee. - Ms. Sushma Chowla, VP And Sh. Anil Chaturvedi, AM For the Appellant : Sh. Rohit Jain, Adv., Ms. Meenal Goel, Adv. For the Respondent : Sh. Sanjay Goyal, CIT-DR ORDER PER SUSHMA CHOWLA, VP This bunch of cross appeals filed by the assessee as well as Revenue are against separate orders of CIT(A)-III, New Delhi, relating to assessment years 2002-03 to 2008-09 respectively against the order passed under section 153A/143(3) of the Income-tax Act, 1961 (in short the Act ). 2. This bunch of cross appeals relating to Assessment Years 2002-03 to 2008-09 were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. The Ld. AR for the assessee, at the outset, pointed out that the jurisdictional issue raised in the present bunch of appeals needed to be adjudicated fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 153A of the Act on 24.12.2008. In response thereto, the assessee filed return of income on 20.02.2009. The case of the assessee was taken up for scrutiny and notice under section 143(2) of the Act was issued on 30.09.2009. Show-cause notice were issued by the Assessing Officer dated 27.11.2009 requisitioning the assessee as to why special audit under section 142(2A) of the Act should not be directed for Assessment Years 2002-03 to 2008-09. The assessee filed its objection to the same by letter dated 04.12.2009. The said objections raised by the assessee were rejected by the Assessing Officer vide letter dated 08.12.2009. On 09.12.2009, show-cause notice was issued by the Commissioner prior to grant of approval under section 142(2A) of the Act for Assessment Years 2002-03 to 2008-09. The assessee filed reply to the same and the Commissioner vide his order dated 15.12.2009 approved special audit for the aforesaid Assessment Years under section 142(2A) of the Act, to be completed within the period of 120 days. Directions for special audit thereafter were issued by the AO for the said assessment years vide letter dated 15.12.2009. Under the provisions of the Act i.e. se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the assessee. 8. The Ld. DR for the Revenue fairly stated that the facts of the case are identical to the facts of the M/s Soul Space Projects Ltd. However, he placed reliance on his written submission. He further referred to paras 8 to 11 of his written submissions which read as under:- 8. While arguing in Soul Space Projects Ltd., Ld. AR relied on the following decision in support of the argument that approval from higher incompetent authority is improper:- 1. CIT v. SPL s Siddhartha Ltd. : 345 ITR 223 (Del.) 2. Ghanshyam K. Khabrani v. ACIT : 346 ITR 443 (Bom.) 3. CIT v. Soyuz Insdustrial Resources Ltd. : [2015] 232 Taxman 414 (Del. HC) 4. Yum Restaurants Asia Pte Ltd. v. DDIT : 397 ITR 639 (Del.) MY SUBMISSION ON THE ABOVE It is humbly submitted that all these decisions are on the subject of reopening of assessment u/s 147 and the authority who should be satisfied for on the reasons recorded by the assessing officer. Therefore, these decisions are in respect of satisfaction for initiation of reassessment proceedings. None of the decision is related for extension of time period of audit of books of accounts, where the initiatives of assessment proceedings are not challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 11. OVERALL SUMMARY OF MY SUBMISSIONS: (i) Based upon the written submissions made above, it may kindly be seen that the statute provided the only condition to be satisfied for extending the time, is the satisfaction the Assessing Officer . (ii) 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. (iii) Therefore, it is submitted that since on substantial basis the requirement of proviso has been met, just on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 153B of the Act for completion of assessment 25.03.2010 Request by special auditor for extension of time on the ground of alleged lack of cooperation by the assessee 13.04.2010 Letter issued by the assessing officer intimating/communicating that extension of 60 days has granted by CIT vide letter dated 12.04.2010 received from the office of the CIT. Most importantly, letter dated 12.04.2010 [page 84] clearly states that approval for extension has been considered and granted by the CIT in the following cases: 1. B.L. Kashyap Sons (appellant) 2. Soul Space Projects Ltd. (group company) Pertinently, extension granted by the CIT instead of assessing officer (appropriate authority) invalid in terms of proviso to section 142(2C) of the Act. Fact that extension was granted by the CIT is patently clear from letter dated 12.04.2020, letter dated 13.04.2020 and is 83-84 3 Date Particulars Page No. (PB) also expressly mentioned by the assessing officer on page 2 of the assessment order. 14.04.2010 120th day - the last day on which the Special Auditor was required to complete special audit. 11.06.2010 Special audit report filed before the assessing officer 13.06.2010 Limitation for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found that M/s Dinesh Mehta Co., Special Auditor appointed in the case of Soul Space Projects Ltd., has filed an application on 08.04.2010 related to extension of time for furnishing the special audit report. Accordingly, the then AO has forwarded a letter to Ld. CIT, Central - II, New Delhi on 08.04.2010 regarding extension of special audit in this case and stated as under:- 2. M/s Dinesh Mehta Co. has filed a request vide letter dated 25.03.2010 for granting extension of time for a further period of two months for submission of the aforesaid report because there is delay on the part of assessee to furnish details and information required by the auditors as per annexure appended by the auditors with the aforesaid letter (Copy of letter with enclosures is enclosed for ready reference). 3. In this connection, it is also informed that the auditors M/s Sanjay Satpal Associates appointed for special audit in the case of the flagship company for the group i.e. M/s B .L. Kashyap Sons Ltd. has also requested for extension of time for further 2 months for the similar reasons. The application filed by M/s Sanjay Satpal Associates has already been forwarded to your good self on 07.04.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Central Circle -17, Room No. 353, ARA Centre, Jhandewalan Extension, New Delhi Phone No. 23593441 Date: 13/04/2010 To, The Principal Officer, M/s Soul Space Projects Ltd. A-21/B-1 Extn., Mohan Co-operative Industrial Area, Mathura Road, New Delhi Sub: In the matter of M/s Soul Space Projects Ltd. - Assessment Year 2006-07 to 2008-09 - Special Audit under section 142(2A) of the Income Tax Act, 1961... regarding Sir, Please refer to the above. In this connection you are hereby informed that the Commissioner of Income Tax (Central) - II, New Delhi vide his office letter F.No. CIT/(C)- 11/10-11/24 dated 12/04/2010 has granted extension of 60 days to the special auditors M/s Dinesh Mehta Co., Chartered Accountants, for furnishing the audit report u/s 142(2A) in your case. please acknowledge the receipt of this letter, Sd/- Yours faithfully, (B.L. Sharma) Deputy Commissioner of Income Tax, Central Circle - 17, New Delhi 13. The relevant findings of the Tribunal thereafter were as under:- 14. Heard the arguments of both the parties and perused the material available on record. 15. The case laws quoted by the ld. AR as rebutted by the ld. DR have been closely perused while the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly pointed out that in Sec. 142 (2A) law mandates the prior approval of CCIT/ CIT, while in the proviso below Sec. 142 (2C), while to grant extension, the sole power is vested with the Assessing Officer. The statute u/s 142(2A) provides for special audit with the previous approval of the CIT is intended with an objective that the subject matter stands examined by the higher and more experienced officers so that it may not bring unnecessary work and equity to the assessed. Once the issue u/s 142(2A) stands examined by the higher authorities, thereafter, for the issue of extension u/s 142(2C), there is no need for the higher authorities to be involved and the law provided the circumstances, on existence of which, this decision has been left over to be taken by the concerned Assessing Officer. 17. In the present case, the extension has been given by CIT and not by the Assessing Officer, vide letter dtd. 13.04.2010, as under:- In this connection you are hereby informed that the Commissioner of Income Tax (Central) - II, New Delhi vide his office letter F.No. CIT/(C)- ll/10-11/24 dated 12/04/2010 has granted extension of 60 days to the special auditors M/s. Sanjay Satpal Associates, Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt authority. In this case, the extension has not been given by the Assessing Officer but by the CIT, Central-II and the Assessing Officer has only conveyed the approval, therefore, we hold that the extension given by the CIT, Central-II is beyond the powers vested as per the statute and accordingly the assessment completed after the due date is held to be void ab initio. 14. The issue arising before us is similar to the issue before the Tribunal in the case of M/s Soul Space Projects Ltd. (supra). Even the Punchnama for the search was issued in the name of various entities as per Annexure-1 which included names of the assessee and M/s Soul Space Projects Ltd. It may also be pointed out that the Commissioner has issued common letter for both the entities under which the so-called extension of 60 days was given for conduct of special audit. In the entirety of above facts and circumstances, where under proviso to section 142(2C) of the Act, jurisdiction was upon the Assessing Officer to examine the circumstances and after due application of mind pass an order granting extension for conduct of special audit under section 142(2A) of the Act and as no extension has been given by the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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