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TMI Blog2024 (12) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... the Special Audit Report u/s 142(2A) - The extension of time period for furnishing the Special Audit Report u/s 142(2A) has been provided by the Assessing Officer on an application made by the Special Auditor in this regard. The extension has not been granted in terms of provisions of Sec. 142(2C) and therefore the extension so granted is beyond jurisdiction and is time barred. We are of considered view that there is no error in the findings of ld. CIT(A) that the statute demands that the extension can be granted either by the AO suo-moto or on an application made in this behalf by the assessee. Admittedly, in the present case, the AO has granted extension for conducting Special Audit vide his letter dated 27-03-2019 addressed to the Special Auditor, M/s Sanjay Satpal Associates. Such an action by the AO is certainly in disregard of the provisions of proviso to Section 142(2C) of the Act, and CIT(A) has committed no error in holding that this extension is vitiated and impugned assessment liable to be quashed. - Shri S. Rifaur Rahman, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri S.S. Nagar, Advocate And Shri Gaurav Sachdeva, CA For the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed u/s 142(2A) of the Act. Finally, the Writ petition- of the assessee was dismissed by the Hon ble High Court on 06/12/2018. Accordingly, the Special Auditor completed the special Audit as per order u/s. 142(2A) as the interim order of stay had been vacated by the Hon ble High Court. After getting the Special Audit completed, the assessee has filed the copy of Special Audit Report on 29/04/2019 in terms of section 142(2C) of the Act. Thereafter the Ld. AO completed the assessment u/s 143(3) r.w.s. 145(3) of the Act on 24-06-2019 assessing the total income of the assessee at Rs. 59,97,42,340/-, wherein the Ld. AO made various disallowances. 4. During course of appellate proceedings, before the ld. CIT(A), the assessee has filed written submissions which are summarized as under: i) That the reference to the Special Auditor was made at the very fag end of the assessment year just 1 day prior to expiry of limitation for passing the assessment order and was done in order to gain time. Reliance in this regard was placed on the decision of the jurisdictional ITAT in the case of Unitech Limited -vs.- Addl. CIT - ITA No. 5180 of 2013 (Order dated 08-04-2016). ii) That in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was after the expiry of the initial period. Extension of such period if any should have happened before the expiry of the original period. Having not done so, the extension granted is beyond jurisdiction and is time barred. (v) Without prejudice, it is also submitted that in terms of proviso to Section 142(2C), the period originally fixed and the period further extended in this case was 120 days (90 days + 30 days) and therefore the time limit to furnish the Special Audit Report in this case expired on 20-04-2019. However, the Audit Report was furnished on 29-04- 2019 and therefore is time barred. (vi) It is further submitted that in terms of proviso to Explanation 1 to Section 153, in case the time limit for passing the order u/s 153(1) after exclusions is less- than sixty days then such remaining period shall be deemed to be extended to sixty days for calculating the period of limitation. It is submitted that in the present case, the extended period of sixty days expired on 21-06-2019, however the order was passed on 27-06-2019 and is accordingly time barred. 5. Ld. CIT(A) has sustained the contentions and concluded as follows; Therefore, considering the totality of facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or through remand viii. Whether on facts and in law, Ld.CIT(A) has erred in considering only the technical issue leaving other substantial issue on which addition has been made? ix. The Appellant craves leave to add, alter, amend or withdraw any ground(s) of the appeal raised above at the time of hearing. 6. The ld. CIT(A) has sustained the contention of assessee observing that that according to section 153(1) of the Act, the limitation period for framing an assessment was 24 months from the end of the relevant assessment year and, since AY involved is assessment year 2010-11, the limitation date u/s 153(1) was expiring on 31.03.2013. In the instant case, just one day prior to that i.e. on 30.03.2013, the directions were given for special audit u/s 142(2A) of the Act. This proposition gives rise to the suspicion that the matter was referred for Special Audit just to extend the period of limitation. 6.1 Ld. CIT(A) observed that a show cause notice dated 13.03.12043 was issued asking the appellant to show cause as to why the books of accounts should not be audited u/s 142(2A) of the Act and in turn, the appellant filed his reply on 20.03.2013. The AO sent proposal to CIT, for condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailure to exercise discretion altogether. The jurisdictional Hon ble High Court of Delhi decision in the case of CIT Vs SPL'S Siddhartha Ltd.* [2012] 17 taxmann.com 138 (Delhi) was also considered by the ld, CIT(A), where the Hon ble Delhi High Court has held that where the Assessing Officer instead of taking approval from Joint Commissioner as per provisions of section 151, obtained approval from Commissioner and issued notice under section 148, said notice was invalid. The relevant portion, para8 of the above judgement is reproduced as under : 8. Thus, if authority is given expressly by affirmative words upon a defined condition the expression of that condition excludes the doing of the Act authorised under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be independent and not borrowed or dictated satisfaction. Law in this regard is now sell-settled. In Sheo Nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to a specified authority has to be discharged only by him. Substitution of that officer/authority by any other officer, may be of higher rank, cannot validate the said order/ action. The extension could have been valid only if it had been given by the Assessing Officer after due application of mind and after examining the existence of circumstances as provided in proviso below Sec. 142 (2C), since, it has to be given only by competent authority. In this case, the extension has not been given by the Assessing Officer but by the CIT, Central-ll and the Assessing Officer has only conveyed the approval, therefore, we hold that the extension given by the CIT, Central-ll 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. 6.7 Pertinent to mention is that this has now been upheld by the Hon ble Delhi High Court in PCIT Versus Soul Space Projects Ltd. (2023) 157 taxmann.com 272 (Delhi). 6.8 We are of the considered view that when the above principles are applied to the facts of the present appeal, it is noticed that in the present case, the satisfaction/opinion was initially recorded by the AO and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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