Rajinder Kashyap, v. ACIT, Cir 12(1),

ITSSA 140/DEL/2007 | misc
Pronouncement Date: 06-08-2010 | Result: Allowed

Appeal Details

RSA Number 14020116 RSA 2007
Assessee PAN AGSPK9659H
Bench Delhi
Appeal Number ITSSA 140/DEL/2007
Duration Of Justice 3 year(s) 23 day(s)
Appellant Rajinder Kashyap,
Respondent ACIT, Cir 12(1),
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 06-08-2010
Date Of Final Hearing 29-07-2010
Next Hearing Date 29-07-2010
Assessment Year misc
Appeal Filed On 13-07-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI A.D.JAIN JM AND SHRI R.C.SHARMA AM IT(SS) A.NO.140/DEL/2007 BLOCK PERIOD : 1.4.1989 TO 22.12.1999 SHRI RAJINDER KASHYAP 502 SAINIK FARMS KHANPUR NEW DELHI. PAN NO.AGSPK9659H. VS. ASSTT.COMMISSIONER OF INCOME TAX CIRCLE-12(1) NEW DELHI. (APPELLANT) (RESPONDENT) IT(SS) A.NO.143/DEL/2007 BLOCK PERIOD : 1.4.1989 TO 22.12.1999 DY.COMMISSIONER OF INCOME TAX CIRCLE-5(1) NEW DELHI. VS. SHRI RAJINDER KASHYAP 502 SAINIK FARMS KHANPUR NEW DELHI. PAN NO.AGSPK9659H. (APPELLANT) (RESPONDENT) IT(SS) A.NO.141/DEL/2007 BLOCK PERIOD : 1.4.1989 TO 22.12.1999 M/S KASHYAP MOTORS PVT.LTD. 20 OKHLA INDUSTRIAL ESTATE NEW DELHI. PAN NO.AAACK0836B. VS. ASSTT.COMMISSIONER OF INCOME TAX CIRCLE-12(1) NEW DELHI. (APPELLANT) (RESPONDENT) IT(SS) A.NO.142/DEL/2007 BLOCK PERIOD : 1.4.1989 TO 22.12.1999 DY.COMMISSIONER OF INCOME TAX CIRCLE-5(1) NEW DELHI. VS. M/S KASHYAP MOTORS PVT.LTD. 20 OKHLA INDUSTRIAL ESTATE NEW DELHI. PAN NO.AAACK0836B. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN MS.RANO JAIN AND SHRI VENKATESH CHOURASIA CAS. REVENUE BY : SHRI ASHOK KUMAR PANDEY CIT-DR. IT(SS)-140 TO 143/D/2007 2 ORDER PER R.C.SHARMA AM : THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A ND THE REVENUE AGAINST THE ORDER DATED 27.04.2007 OF CIT(A)-XIII NEW DELHI FO R THE BLOCK PERIOD 01.04.1989 TO 22.12.1999 IN THE MATTER OF ORDER PA SSED U/S 158BC OF THE ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE THERE WAS SEARCH AND SEIZURE OPERATION U/S 132A IN THE CASE OF M/S KASHYAP MOTORS PRIVATE LIMITED ON 22.12.1999 AND SU BSEQUENT DATES. THE ASSESSEE SHRI RAJINDER KASHYAP MOTORS IS THE MANAGI NG DIRECTOR OF THE COMPANY M/S KASHYAP MOTORS PVT. LTD. AND KEY PERSON OF THE KASHYAP MOTORS GROUP. THE COMPANY IS STATED TO BE CARRYING SERVICE AND REPAIR S OF BMW CARS IN INDIA. THE COMPANY ALSO CARRIES ON PROMOTIONAL AND AFTER SALES ACTIVITIES FOR BMW. WHILE FRAMING THE ASSESSMENT U/S 158BC THE ASSESSING OFF ICER REFERRED THE MATTER FOR SPECIAL AUDIT U/S 142(2A) BOTH IN RESPECT OF KASHYA P MOTORS PVT.LTD. AND SHRI RAJINDER KASHYAP. 3. THE AO FRAMED ASSESSMENT U/S 158BC WHEREIN ADDIT IONS WERE MADE ON SUBSTANTIVE AND PROTECTIVE BASIS. ASSESSEE APPROAC HED TO THE CIT(A). TWO LEGAL GROUNDS RAISED BEFORE THE CIT(A) RELATED TO ASSESSM ENT BEING TIME BARRED FIRSTLY ON THE PLEA THAT PANCHNAMA MENTIONED IN EXPLANATION 2(A) TO SECTION 158BE IS A PANCHNAMA WHICH IS DRAWN ON THE CONCLUSION OF THE S EARCH AND WHERE THE PANCHNAMA DOES NOT REVEAL THAT THE SEARCH WAS AT AL L CARRIED OUT ON THE DATE TO WHICH IT RELATES THEN IT WOULD NOT A PANCHNAMA REL EVANT TO A SEARCH AND CONSEQUENTLY IT WOULD NOT BE A PANCHNAMA OF THE TY PE WHICH FINDS MENTION IN THE SAID EXPLANATION 2(A) TO SECTION 158BE. IT WAS CON TENDED THAT ASSESSMENTS SO FRAMED WERE TIME BARRED IN VIEW OF PANCHNAMA DRAWN ON SUBSEQUENT DATES WITHOUT ANY SEARCH OR SEIZURE OF ANY ITEM AND WHICH WERE MERELY LIFTING OF RESTRAINT ORDER U/S 132(3). THE VALIDITY OF ASSESS MENT WAS ALSO CHALLENGED ON THE PLEA THAT SUO-MOTO POWER OF THE AO TO EXTEND THE TI ME LIMIT FOR SPECIAL AUDIT WAS EFFECTIVE ONLY FROM 1.4.2008 IN VIEW OF THE AMENDME NT BROUGHT IN BY FINANCE ACT IT(SS)-140 TO 143/D/2007 3 2008 AND WHICH IS FULLY SUPPORTED BY THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL 2008 AND CIRCULAR NO.1 OF CBDT DATE D 27.3.2009 WHICH CLEARLY SHOWS THAT THE LEGISLATURE AS ALSO THE CBDT CATEGOR ICALLY WERE OF THE VIEW THAT SUB-SECTION 2A 2B 2C & 2D OF SECTION 142 DEAL WIT H POWERS OF THE AO TO ORDER A SPECIAL AUDIT FIXING THE TIME LIMIT WITHIN OVERAL L PERIOD OF 180 DAYS ETC. AND THESE PROVISIONS TO BE READ TOGETHER AS A COMPLETE CODE I N THESE MATTERS. IN THESE CIRCUMSTANCES IT CANNOT BE HELD THAT THE PROVISION S OF SECTION 142(2A) HAD A STAND ALONE POSITION AND WAS UNFETTERED BY SUB-SECTION 14 2(2C). CONTENTION OF LEARNED AR WAS ALSO THAT PROVISO TO SECTION 142(2C) CLEARLY SHOWS THAT AO DID HAVE THE POWER TO EXTEND AS HE THINKS FIT SUBJECT TO MAXIMUM PERIOD OF 180 DAYS FROM THE DATE ON WHICH DIRECTION U/S 142(2A) WAS ISSUED. SI NCE IN BOTH THE CASES THE ASSESSEE HAS NOT MADE ANY APPLICATION FOR THE EXTEN SION OF PERIOD OF SPECIAL AUDIT THEREFORE EXTENSION WHICH HAS BEEN DONE BY THE AO F OR EXTENDING THE TIME LIMIT FOR FURNISHING OF SPECIAL AUDIT REPORT MADE ON THE REQUEST OF THE AUDITOR COULD BE TAKEN ONLY AS SUO-MOTO ACTION OF THE AO. HIS FURTH ER CONTENTION WAS THAT THE MEMORANDUM EXTENDING THE PROVISIONS OF FINANCE BILL 2008 AS ALSO CIRCULAR NO.1 DATED 27.3.2008 WHICH EXPLAINS THE AMENDMENT TO THE PROVISIONS OF SECTION 142(2C) SHOWS THAT THE TERM SUO-MOTO OR HAD BEEN INSERTED ONLY W.E.F. 1.4.2008. ACCORDINGLY IN THESE CIRCUMSTANCES IT WOULD HAVE TO BE HELD THAT THE POWER TO SUO-MOTO EXTEND THE PERIOD FOR COMPLETION OF SPECIA L AUDIT WAS AVAILABLE TO THE AO ONLY W.E.F. 1.4.2008 AND BEFORE SUCH DATE THE E XTENSION COULD BE MADE ONLY ON THE REQUEST OF THE ASSESSEE ON AN APPLICATION MA DE IN THIS BEHALF. IT WAS ALSO EMPHASIZED THAT IF IT IS TO BE READ OTHERWISE THER E WAS NO REASON FOR SUCH AMENDMENT. LEARNED AR REITERATED THAT THE FACT THA T TERM SUO-MOTO HAS BEEN INSERTED W.E.F. 1.4.2008 CLEARLY SHOWS THAT BEFORE 1.4.2008 THE AO DID NOT HAVE THE INHERENT POWERS TO EXTEND THE TIME LIMIT WITHOU T AN APPLICATION FROM THE ASSESSEE. SINCE IN BOTH THE CASES UNDER CONSIDERAT ION THE PERIOD WAS EXTENDED BY THE AO BEFORE 1.4.2008 WITHOUT ANY APPLICATION BY T HE ASSESSEE FOR SUCH EXTENSION OF THE PERIOD THE EXTENSION MADE BY THE AO WAS WIT HOUT JURISDICTION AND CONSEQUENTLY SUCH EXTENSION AS MADE BY THE AO CANNO T BE SAID TO EXTEND THE LIMITATION PERIOD FOR COMPLETION OF ASSESSMENT. HO WEVER THE CIT(A) DID NOT IT(SS)-140 TO 143/D/2007 4 ACCEPT BOTH THE CONTENTIONS OF THE ASSESSEE WITH RE GARD TO PANCHNAMA AND POWER OF AO TO SUO-MOTO EXTEND THE TIME LIMIT FOR COMPLET ION OF SPECIAL AUDIT AND HELD THAT ASSESSMENT WAS FRAMED WITHIN THE STIPULATED TI ME. HOWEVER IN RESPECT OF MERITS OF THE ADDITION AFTER GIVING DETAILED FINDI NG THE CIT(A) HAS DELETED THE ADDITIONS. AGAINST THESE ORDERS OF CIT(A) BOTH TH E ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. THE ASSESSEE IS AGGRIEVED FOR NO T CANCELING THE ASSESSMENT WHICH WAS PASSED BEYOND THE LIMITATION BOTH ON THE PLEA OF PANCHNAMA AS WELL AS SUO-MOTO EXTENSION OF TIME FOR SPECIAL AUDIT BY THE AO. THE DEPARTMENT IS IN APPEAL AGAINST THE CIT(A)S ACTION FOR DELETING THE ADDITIONS MADE ON MERITS. 4. RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND RECOR D PERUSED. FROM THE RECORD WE FOUND THAT SEARCH AND SEIZURE OPERATION U/S 132 WAS CARRIED OUT ON 22.12.1999. IN CASE OF RAJINDER KASHYAP RELEVANT D ATE OF SEARCH PANCHNAMA AND ORDER FOR REFERENCE TO SPECIAL AUDIT WAS AS UNDER:- DATE OF SEARCH 22.12.1999 PANCHNAMAS I) 22.12.1999 II) 14.01.2000 III) 19.12.2000 NOTICE U/S 158BC 20.10.2000 ORDER FOR SPECIAL AUDIT U/S 142(2A) 1 8.02.2002 PERIOD GRANTED FOR AUDIT 15.07.2002 EXTENDED BY A.O. (SUO MOTTO) 16.08.20 02 ASSTT. ORDER PASSED 27.06.2003 5. ON THE BASIS OF SEARCH MATERIAL PANCHNAMA WAS P REPARED ON 22.12.1999. THERE WAS NO ACTION FROM 22.12.1999 TILL 14.1.2000 WHEN AGAIN SOME INVENTORY WAS PREPARED AFTER RELEASING SOME LIQUORS. FURTHER MORE THERE WAS NO ACTION FOR MORE THAN 11 MONTHS AND ON 19.12.2000 FOREIGN CURR ENCY AS INVENTORIZED ON 22.12.1999 WAS TAKEN AWAY. CONTENTION OF LEARNED A R WAS THAT MERE DRAWING OF PANCHNAMA AFTER 22.12.1999 WAS TO JUST PROLONG SEAR CH AND TO BUY TIME AND THERE WAS NO VALID REASON FOR THE SAME. AS PER LEARNED A R ONLY PANCHNAMA DRAWN ON 22.12.1999 AFTER COMPLETION OF SEARCH WAS A VALID P ANCHNAMA AND THE TIME LIMIT IT(SS)-140 TO 143/D/2007 5 FOR COMPLETION OF ASSESSMENT IS TO BE RECKONED FROM THIS PANCHNAMA DATED 22.12.1999. FOR THIS PURPOSE RELIANCE WAS PLACED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF S.K.KATYAL 308 ITR 168 WHEREIN IT WAS HELD THAT PANCHNAMA DRAWN ON THE BASIS OF SEARCH MA TERIAL FOUND INVENTORIZED AND VALUED ON 17.11.2000 WAS A VALID PANCHNAMA AND THE PANCHNAMA DRAWN SUBSEQUENTLY WHICH DID NOT SHOW THAT ANY SEARCH WAS CONDUCTED ON THAT DAY AND ONLY DEPICTING REVOCATION OF RESTRAINT ORDER MENTIO NED IN PANCHNAMA DATED 17.11.2000 WAS NOT A VALID PANCHNAMA. IT IS ONLY T HE PANCHNAMA DATED 17.11.2000 WHICH RELATED TO THE CONCLUSION OF SEARC H WAS RELEVANT FOR COMPUTING LIMITATION U/S 158BE(1)(B). ACCORDINGLY IT WAS HE LD THAT BLOCK ASSESSMENT MADE ON 30.1.2003 ON THE BASIS OF PANCHNAMA SUBSEQUENTLY DRAWN ON 3.1.2001 WAS BARRED BY LIMITATION. FOLLOWING WAS THE PRECISE OB SERVATION OF THE HONBLE HIGH COURT WHICH READS AS UNDER:- A SEARCH IS NECESSARILY AN INVASION OF PRIVACY AND SUCH AN INVASION CANNOT BE PERMITTED TO BE PROLONGED ON A PRETEXT. THERE MUST BE SOME COGENT PLAUSIBLE REASON FOR SPLITTING THE SEAR CH AND IN NOT CONDUCTING IT CONTINUOUSLY TILL ITS CONCLUSION. VI EWED IN THIS LIGHT EVEN IF IT WERE ASSUMED FOR THE SAKE OF ARGUMENT TH AT A SEARCH TOOK PLACE ON 3 RD JAN. 2001 THE SAME COULD NOT BE REGARDED AS LEGAL ON ACCOUNT OF THE UNEXPLAINED GAP OF ABOUT A MONTH AND A HALF (FROM 17 TH NOV. 2000 TO 3 RD JAN. 2001). JUDICIAL DECISIONS CLEARLY ESTABLISH (I) A SEARCH IS ESSENTIALLY AN INVASION O F THE PRIVACY OF THE PERSON WHOSE PROPERLY OR PERSON IS SUBJECTED TO SEA RCH; (II) NORMALLY A SEARCH MUST BE CONTINUOUS; (III) IF IT CANNOT BE CONTINUOUS FOR SOME PLAUSIBLE REASON THE HIATUS IN THE SEARCH MUST BE EXPLAINED; (IV) IF NO COGENT OR PLAUSIBLE REASON IS SHOWN FOR THE HIATUS IN THE SEARCH THE SECOND OR RESUMED SEARC H WOULD BE ILLEGAL; (V) BY MERELY MENTIONING IN THE PANCHNAMA THAT A SE ARCH HAS BEEN TEMPORARILY SUSPENDED DOES NOT IPSO FACTO CONTINU E THE SEARCH. IT WOULD HAVE TO BE SEEN AS A FACT AS TO WHETHER THE S EARCH CONTINUED OR HAD CONCLUDED; (VI) MERELY BECAUSE A PANCHNAMA IS D RAWN UP ON A PARTICULAR DATE IT DOES NOT MEAN THAT A SEARCH WAS CONDUCTED AND/OR CONCLUDED ON THAT DATE; (VII) THE PANCHNAMA MUST BE A RECORD OF A SEARCH OR SEIZURE FOR IT TO QUALIFY AS THE PANCHNAM A MENTIONED IN EXPLN.2(A) TO S.158BE. IN THE PRESENT APPEAL NO S EARCH WHATSOEVER WAS CONDUCTED ON 3 RD JAN. 2001. HENCE THE PANCHNAMA DRAWN UP ON 3 RD JAN. 2001 CANNOT BE REGARDED AS A DOCUMENT EVIDEN CING THE CONCLUSION OF A SEARCH. IF THAT BE SO 3 RD JAN. 2001 CANNOT BE IT(SS)-140 TO 143/D/2007 6 REGARDED AS THE DATE ON WHICH THE WARRANT OF AUTHOR IZATION WAS EXECUTED. THE TRIBUNAL RIGHTLY HELD THAT THE ASSES SMENT MADE ON 30 TH JAN. 2003 WAS BEYOND THE PRESCRIBED TIME-LIMIT. 6. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SARB CONSULATE MARINE PRODUCTS (P) LTD. 294 ITR 444 WHEREIN IT WAS HELD THAT SEARCH AND SEIZURE OPERATI ON STOOD CONCLUDED AGAINST THE ASSESSEE ON 6.11.1996 WHEN SOME DOCUMENTS WERE SEI ZED AND A PANCHNAMA WAS DRAWN. HOWEVER SUBSEQUENT PANCHNAMA DRAWN ON 14.9 .1998 WAS DRAWN WITHOUT ANY SEIZURE BUT ONLY REVOCATION OF RESTRAINT ORDER U/S 132(3) ACCORDINGLY LIMITATION FOR COMPLETION OF ASSESSMENT STARTED FROM 6.11.1996 AND THE ASSESSMENT ORDER PASSED ON 30.9.1998 ON THE BASIS OF PANCHNAMA DATED 14.9.98 WAS BARRED BY LIMITATION. IT WAS PRECISELY OBSERVED BY THE HONB LE HIGH COURT THAT SECOND PROVISO TO SECTION 132(1) CLEARLY LAYS DOWN THAT WH ERE IT IS NOT POSSIBLE OR PRACTICABLE TO TAKE POSSESSION OF ANY VALUABLE OR A RTICLE OR THING OR REMOVE IT TO A PLACE DUE TO ITS VOLUME WEIGHT OR OTHER PHYSICAL C HARACTERISTICS OR DUE TO ITS BEING OF A DANGEROUS NATURE THEN THE AUTHORIZED OFFICER MAY SERVE ON THE OWNER OR THE PERSON WHO IS IN POSSESSION OF THAT ARTICLE OR THIN G AND ORDER RESTRAINING HIM FROM REMOVING OR PARTING OR OTHERWISE DEALING WITH THE S AID ARTICLE OR THING EXCEPT WITH THE PERMISSION OF THE AUTHORIZED OFFICER AND SUCH A CTION SHALL BE DEEMED TO BE A SEIZURE OF SUCH VALUABLE ARTICLE OR THING. ON THE OTHER HAND SECTION 132(3) COMES INTO OPERATION WHEN IT IS NOT POSSIBLE TO SEIZE ANY ARTICLE OR THING FOR REASONS OTHER THAN THOSE MENTIONED IN THE SECOND PROVISO TO SUB-S ECTION (1) AND BY EXPLANATION ADDED TO SECTION 132(3) IT IS MADE CLEAR THAT THE SERVING OF AN ORDER U/S 132(3) SHALL NOT BE DEEMED TO BE A SEIZURE OF SUCH VALUABL E ARTICLE OR THING. IT WAS HELD THAT BY MERELY RESORTING TO RESTRAINT ORDER U/S 132 (3) THE REVENUE COULD NOT HAVE EXTENDED THE TIME LIMIT FOR PASSING AN ASSESSMENT O RDER. 7. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON' BLE DELHI HIGH COURT IN THE CASE OF DEEPAK AGGARWAL 308 ITR 116 WHEREIN IT WAS HELD THAT PROHIBITORY ORDER U/S 132(3) PASSED ON 31.10.2000 WAS MERELY FO R CONTINUING THE SEARCH POSSIBLY FOR THE PURPOSE OF EXTENDING THE LIMITATIO N THE TRIBUNAL WAS JUSTIFIED IN IT(SS)-140 TO 143/D/2007 7 HOLDING THAT SEARCH STOOD CONCLUDED ON 31.10.2000 I TSELF AND NOT ON 23.12.2000 AND THEREFORE THE ASSESSMENT ORDER PASSED ON 27.12. 2002 WAS BARRED BY LIMITATION U/S 158BE. 8. IN THE INSTANT CASE BEFORE US THERE IS NO DISPU TE WITH REGARD TO THE DATES OF SEARCH AND VARIOUS PANCHNAMAS PREPARED ON 22.12.199 9 14.1.2000 AND 19.12.2000. THE EXAMINATION OF THE PANCHNAMA PLACE D ON RECORD CLEARLY SHOWS THAT ON 22.12.1999 COMPLETE INVENTORY OF EACH ITEM WAS PREPARED WHICH IS EVIDENT FROM THE ANNEXURES ANNEXED TO THE PANCHNAMA . THERE WAS NO ACTION FROM 22.12.1999 TILL 14.1.2000 WHEN AGAIN SOME INVENTOR Y WAS PREPARED AFTER RELEASING SOME LIQUORS. FURTHER THERE WAS NO ACTION FOR MOR E THAN 11 MONTHS AND IT WAS ONLY ON 19.11.2000 THAT FOREIGN CURRENCY AS INVENTO RIZED ON 22.12.1999 WAS TAKEN AWAY AND PANCHNAMA WAS DRAWN. THE PLAIN READING OF THE RATIO LAID DOWN IN THE HON'BLE JURISDICTIONAL HIGH COURT DECISIONS AS REFE RRED ABOVE CLEARLY INDICATES THAT PANCHNAMA MENTIONED IN EXPLANATION 2(A) TO SECTION 158BE IS A PANCHNAMA WHICH IS DRAWN ON THE CONCLUSION OF THE SEARCH. IF THE PANCHNAMA DOES NOT REVEAL THAT A SEARCH WAS AT ALL CARRIED OUT ON THE DAY TO WHICH IT RELATES THEN IT WOULD NOT BE A PANCHNAMA RELATED TO A SEARCH AND CONSEQUENTLY IT WOULD NOT BE PANCHNAMA OF THE TYPE WHICH FINDS MENTION IN THE SAID EXPLANA TION 2(A) TO SECTION 158BE. IN THE INSTANT CASE BEFORE US NEITHER THE PANCHNAMA D ATED 14.1.2000 NOR DATED 19.12.2000 SHOWS THAT ANY SEARCH WAS CONDUCTED ON T HAT DAY AND ONLY DEPICTING REVOCATION OF RESTRAINT ORDER MENTIONED IN PANCHNAM A DATED 22.12.1999. THUS IT WAS THE ONLY PANCHNAMA DATED 22.12.1999 WHICH RELAT ED TO THE CONCLUSION OF SEARCH AND RELEVANT FOR COMPUTING LIMITATION U/S 15 8BE(1)(B). HENCE THE ASSESSMENT FRAMED ON 27.6.2003 WAS TIME BARRED. 9. WITH REGARD TO THE COMPUTATION OF PERIOD FOR COM PLETION OF ASSESSMENT IN CASE MATTER IS REFERRED BY AO FOR SPECIAL AUDIT LE ARNED AR HAS RELIED ON THE ORDER OF THE COORDINATE BENCH IN THE CASE OF BISHAN SAROO P RAM KISHAN AGRO PVT.LTD. ORDER DATED 18.9.2009 IN RESPECT OF ITA NO.3413 3 414 3459 3415 3416 3068 AND 3670/DEL/2008 FOR THE AY 1999-2000 TO 2005-06 A ND SUNDER EXPORTS 126 IT(SS)-140 TO 143/D/2007 8 TTJ (DEL) 853 IN SUPPORT OF THE PROPOSITION THAT A S PER CIRCULAR NO.1 DATED 27.3.2009 AND AMENDMENT MADE BY THE FINANCE ACT 20 08 IN SECTION 142(2C) EFFECTIVE FROM 1.4.2008 GRANTING OF SUO-MOTO POWER S TO THE AO TO EXTEND THE TIME FOR COMPLETION OF SPECIAL AUDIT UNDER SUB-SECTION 2 (A) OF SECTION 142 WAS EFFECTIVE W.E.F. 1.4.2008. IT WAS CONTENDED BY LEA RNED AR THAT ASSESSMENT ORDER PASSED U/S 153BC ON 27.6.2003 WAS BARRED BY LIMITAT ION INSOFAR AS THE ORDER FOR SPECIAL AUDIT WAS PASSED ON 18.2.2007 ACCORDING TO WHICH SPECIAL AUDIT WAS TO BE COMPLETED ON 15.7.2002. IT WAS CONTENDED THAT IN VI EW OF THE AMENDMENT BROUGHT OUT IN SECTION 142(2A) BY FINANCE ACT 2008 AND WHIC H WAS ALSO CLARIFIED BY CBDT CIRCULAR NO.1 DATED 27.3.2009 THE AO HAS INHE RENT POWER TO SUO-MOTO EXTEND THE LIMITATION TIME ONLY W.E.F. 1.4.2008 AN D PRIOR TO IT AO HAS NO POWER TO SUO-MOTO EXTEND THE LIMITATION PERIOD. FROM THE RE CORD WE FOUND THAT IN THIS CASE THE AO HAS PASSED ORDER FOR SPECIAL AUDIT U/S 142(2A) IN THE CASE OF RAJINDER KASHYAP ON 18.2.2002. AS PER THE ORDER THE DATE O F FURNISHING OF AUDIT REPORT U/S 142(2A) WAS 15.7.2002. THUS THE TIME ALLOWED FOR SPECIAL AUDIT WAS 148 DAYS. HOWEVER AO PASSED ORDER U/S 142(2C) ON 5.7.2002 SU O-MOTO EXTENDING THE TIME FOR FURNISHING OF SPECIAL AUDIT REPORT TO 16.8.2002 . FROM THE SAID ORDER PASSED U/S 142(2C) IT IS CLEAR THAT THE AO HAS PASSED THE SAI D ORDER ON THE REQUEST OF THE AUDITOR AND EXTENDED THE TIME FOR FURNISHING OF AUD IT REPORT FROM 15.7.2002 TO 16.8.2002 WHEREAS AS PER THE PROVISIONS OF SECTION 142(2C) AS PREVAILING DURING THE RELEVANT POINT OF TIME THE AO COULD EXTEND THE TIME LIMIT ON AN APPLICATION MADE BY THE ASSESSEE AND NOT OTHERWISE. IN THIS CA SE THE ASSESSEE HAD NOT APPLIED FOR EXTENSION OF TIME FOR FURNISHING REPORT U/S 142 (2A) OF THE IT ACT 1961 AND THE EXTENSION WAS MADE ON THE REQUEST OF THE AUDITOR H ENCE SUCH EXTENSION OF PERIOD FOR FURNISHING OF AUDIT REPORT WAS BAD IN LAW. IN THIS REGARD LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN THE CASE OF BIS HAN SAROOP RAM KISHAN AGRO PVT.LTD. (SUPRA) AS WELL AS ORDER OF THE TRIBUNAL I N THE CASE OF RAM KISHAN DASS ORDER DATED 6.11.2009 IN ITA NO.148 149 & 150/DEL/ 2009 WHEREIN EXACTLY SIMILAR ISSUE HAS BEEN DEALT WITH EXTENSIVELY. AFT ER DEALING WITH THE RELEVANT PROVISIONS OF SECTION 142(2A) 142(2C) AMENDMENT B ROUGHT IN BY FINANCE ACT 2008 IN THE PROVISO TO SECTION 142(2C) CIRCULAR NO .1 DATED 27.3.2009 AND THE IT(SS)-140 TO 143/D/2007 9 EXPLANATORY NOTES TO THE PROVISIONS OF FINANCE ACT 2008 THE TRIBUNAL HELD THAT AS PER THE MEMORANDUM EXPLAINING THE PROVISIONS OF FIN ANCE BILL 2008 AS ALSO CIRCULAR NO.1 DATED 27.3.2009 WHICH EXPLAINS THE AM ENDMENT TO THE PROVISO TO SECTION 142(2C) CLEARLY SHOWS THAT THE TERM SUO-MO TO OR HAD BEEN INSERTED W.E.F. 1.4.2008. AFTER THE AMENDMENT W.E.F. 1.4.20 08 THE POWER TO SUO-MOTO EXTEND THE PERIOD FOR COMPLETION OF SPECIAL AUDIT R EPORT WAS AVAILABLE TO THE AO ONLY W.E.F. 1.4.2008 AND BEFORE THIS DATE THE EXTEN SION COULD BE MADE ONLY AT THE REQUEST OF THE ASSESSEE ON AN APPLICATION MADE IN T HIS BEHALF BY THE ASSESSEE. IT WAS ELABORATELY DISCUSSED THAT THE TERM SUO-MOTO HAS BEEN INSERTED W.E.F. 1.4.2008 SHOWS THAT BEFORE 1.4.2008 THE AO DID NOT HAVE THE INHERENT POWERS TO EXTEND THE TIME LIMIT WITHOUT AN APPLICATION FROM T HE ASSESSEE. IT WAS FURTHER DISCUSSED THAT EVEN SUCH EXTENSION CANNOT BE CONTRO LLED IN VIEW OF THE TERM FOR ANY GOOD AND SUFFICIENT REASON. SINCE IN THE INST ANT CASE BEFORE US EXTENSION WAS BEFORE 1.4.2008 AND IT IS ONLY NOT DISPUTED THAT AS SESSEE HAS NOT MADE ANY APPLICATION FOR EXTENSION OF THE PERIOD GIVEN FOR S PECIAL AUDIT VIDE ORDER DATED 18.2.2002 EXTENSION VIDE ORDER DATED 16.8.2002 WAS WITHOUT JURISDICTION AND CONSEQUENTLY SUCH EXTENSION AS MADE BY THE AO VIDE ORDER DATED 16.8.2002 CANNOT BE SAID TO EXTEND THE LIMITATION FOR COMPLET ION OF ASSESSMENT. FOLLOWING WAS THE PRECISE OBSERVATION AND CONCLUSION OF THE T RIBUNAL IN ITS ORDER DATED 18.9.2009:- 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND TH E RIVAL SUBMISSIONS. FROM THE SUBMISSION OF BOTH THE SIDES THE QUESTION S THAT COME UP FOR CONSIDERATION ARE: (I) DOES THE A.O. HAVE THE POWERS TO GRANT ANY SPECIFIE D TIME AS THE DIRECTION OF THE A.O. FOR COMPLETING SPECIAL AUDIT U/S 142(2A) AND (II) WHETHER THE TIME PERIOD U/S 142(2A) IS CONTROLLED B Y THE PROVISIONS OF SECTION 142(2C)? FOR A BETTER APPRECIATION OF THE ISSUE IT WOULD BE WORTHWHILE TO EXTRACT THE RELEVANT PROVISIONS AS UNDER: THE PROVISIONS OF SECTION 142(2A) IS AS FOLLOWS: (2A) IF AT ANY STAGE OF THE PROCEEDINGS BEFORE H IM THE ASSESSING OFFICER HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTERESTS OF THE REVENUE IS O F THE OPINION THAT IT IS NECESSARY SO TO DO HE MAY WITH THE PREVIOUS APPRO VAL OF THE CHIEF IT(SS)-140 TO 143/D/2007 10 COMMISSIONER OR COMMISSIONER DIRECT THE ASSESSEE T O GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANA TION BELOW SUB- SECTION (2) OF SECTION 288 NOMINATED BY THE CHIEF COMMISSIONER OR COMMISSIONER IN THIS BEHALF AND TO FURNISH A REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH AC COUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED AND SUC H OTHER PARTICULARS AS THE ASSESSING OFFICER MAY REQUIRE: PROVIDED THAT THE ASSESSING OFFICER SHALL NOT DIREC T THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEE N GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. THE PROVISIONS OF SECTION 142(2C) READ AS FOLLOWS: (2C) EVERY REPORT UNDER SUB-SECTION (2A) SHALL BE FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER WITHIN SUCH PERIO D AS MAY BE SPECIFIED BY THE ASSESSING OFFICER: PROVIDED THAT THE ASSESSING OFFICER MAY SUO MOTU OR ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE AND FOR ANY GOO D AND SUFFICIENT REASON EXTEND THE SAID PERIOD BY SUCH FURTHER PERI OD OR PERIODS AS HE THINKS FIT; SO HOWEVER THAT THE AGGREGATE OF THE PERIOD ORIGINALLY FIXED AND THE PERIOD OR PERIODS SO 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. THE PROVISIONS OF EXPLANATION (II) TO SECTION 153B READ AS FOLLOWS: EXPLANATION.IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF THIS SECTION -- (I) X X X X X X X X X. (II) THE PERIOD COMMENCING FROM THE DAY ON WHICH THE ASS ESSING OFFICER DIRECTS THE ASSESSEE TO HIS ACCOUNTS AUDITE D UNDER SUB- SECTION (2A) OF SECTION 142 AND ENDING ON THE DAY O N WHICH THE ASSESSEE IS REQUIRED TO FURNISH A REPORT OF SUCH AU DIT UNDER THAT SUB-SECTION; OR (III) X X X X X X X X X SHALL BE EXCLUDED: THE PROVISO TO EXP.(II) OF SECTION 153B READS AS F OLLOWS: PROVIDED THAT WHERE IMMEDIATELY AFTER THE EXCLUSION OF THE AFORESAID PERIOD THE PERIOD OF LIMITATION REFERRED TO IN CLA USE (A) OR CLAUSE (B) OF THIS SUB-SECTION AVAILABLE TO THE ASSESSING OFFICER FOR MAKING AN ORDER IT(SS)-140 TO 143/D/2007 11 OF ASSESSMENT OR REASSESSMENT AS THE CASE MAY BE IS LESS THAN SIXTY DAYS SUCH REMAINING PERIOD SHALL BE EXTENDED TO SI XTY DAYS AND THE AFORESAID PERIOD OF LIMITATION SHALL BE DEEMED TO B E EXTENDED ACCORDINGLY. A PERUSAL OF THE MEMORANDUM EXPLANATION OF THE PRO VISIONS IN THE FINANCE BILL 2008 REGARDING THE AMENDMENT TO THE PR OVISO TO SECTION 142(2C) READS AS FOLLOWS: GRANTING OF POWER TO THE ASSESSING OFFICER TO EXTE ND THE TIME FOR COMPLETION OF SPECIAL AUDIT UNDER SUB-SECTION OF SE CTION 142. SUB-SECTION (2A) TO (2D) OF SECTION 142 DEAL W ITH THE POWER OF ASSESSING OFFICER TO ORDER A SPECIAL AUDIT. SUCH P OWER IS REQUIRED TO BE EXERCISED BY THE ASSESSING OFFICER HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTEREST OF THE REVENUE. SUB-SECTION (2L) OF THE SAID SECTION SPECIFIES THE PERIOD WITHIN WHICH THE AUDIT REPORT IS TO BE FURNISHED. THE PROVISO T O SAID SUB-SECTION EMPOWERS THE ASSESSING OFFICER TO EXTEND THIS PERIO D OF FURNISHING OF AUDIT REPORT. FURTHER IT IS ALSO PROVIDED THAT TH E AGGREGATE OF THE ORIGINALLY FIXED PERIOD AND THE PERIOD(S) SO EXTEND ED SHALL NOT EXCEED 180 DAYS FROM THE DATE OF ISSUANCE OF DIRECTION OF SPECIAL AUDIT. FURTHER SUCH EXTENSION CAN BE MADE ONLY WHEN AN AP PLICATION IS MADE IN THIS BEHALF BY THE ASSESSEE AND THERE ARE GOOD A ND SUFFICIENT REASON FOR SUCH EXTENSION. IT IS PROPOSED TO AMEND THE SAID PROVISO SO AS TO ALSO ALLOW THE ASSESSING OFFICER TO EXTEND THIS PERIOD OF FURNISHI NG OF AUDIT REPORT SUO MOTU. HENCE WHILE THE ASSESSING OFFICER SHALL CON TINUE TO HAVE POWER TO GRANT EXTENSION ON AN APPLICATION MADE IN THIS B EHALF 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 IST APRIL 2008 . {CAUSE 28}. CIRCULAR NO.1 DATED 27.03.2009 PARA 27 TO 27.4 REA DS AS FOLLOWS: DIRECT TAX CIRCULAR NO. 1DATED 27 MARCH 2009. EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT 2008. 1. INTRODUCTION IT(SS)-140 TO 143/D/2007 12 THE FINANCE ACT 2008 (HEREAFTER REFERRED TO AS TH E ACT) AS PASSED BY THE PARLIAMENT RECEIVED THE ASSENT OF THE PRESIDENT ON THE 10 TH DAY OF MAY 2008 AND HAS BEEN ENACTED AS ACT NO. 18 OF 2008. THIS CIRCU LAR EXPLAINS THE SUBSTANCE OF THE PROVISIONS OF THE ACT RELATING TO DIRECT TAXES. 27. GRANTING OF POWER TO THE ASSESSING OFFICER TO EXTEN D THE TIME FOR COMPLETION OF SPECIAL AUDIT UNDER SUB-SECTION (2A) OF SECTION 142. SUB-SECTION (2A) TO (2D) OF SECTION 142DEAL WITH TH E POWER OF ASSESSING OFFICER TO ORDER A SPECIAL AUDIT. SUCH P OWER IS REQUIRED TO BE EXERCISED BY THE ASSESSING OFFICER HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTEREST OF THE REVENUE. SUB-SECTION (2C) OF THE SAID SECTION SPECIFIED THE PERIOD WITHIN WHICH THE AUDIT REPORT IS TO BE FURNISHED. THE PRO VISION TO SAID SUB- SECTION EMPOWERS THE ASSESSING OFFICER TO EXTEND TH IS PERIOD OF FURNISHING OF AUDIT REPORT. FURTHER IT IS ALSO PR OVIDED THAT THE AGGREGATE OF THE ORIGINALLY FIXED PERIOD AND THE PE RIOD(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. WITH A VIEW TO RATIONALIZE THE SAID PROVISO SO AS T O ALSO ALLOW THE ASSESSING OFFICER TO EXTEND THIS PERIOD OF FURNISHI NG OF AUDIT REPORT SUO MOTU THE SAID PROVISO HAS BEEN AMENDED. HENCE WH ILE THE ASSESSING OFFICER SHALL CONTINUE TO HAVE POWER TO GRANT EXTEN SION ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE AND THERE ARE GOOD AND SUFFICIENT REASONS FOR SUCH EXTENSION HE CAN ALSO GRANT SUCH EXTENSION ON HIS OWN. APPLICABILITY HAS BEEN MADE APPLICABLE WITH EFFECT FROM IST APRIL 2008. HENCE FROM THIS DATE AND ONWARDS THE ASSE SSING OFFICER SHALL ALSO POWER TO EXTEND THE PERIOD OF FURNISHING OF AU DIT REPORT SUO MOTU. 5.1 THE DATES AS MENTIONED ARE NOT DISPUTED. A PERUSAL OF THE PROVISIONS OF SECTION 142(2A) SHOWS THAT AT ANY STA GE OF THE PROCEEDINGS BEFORE THE A.O. IF THE A.O. IS OF THE V IEW THAT THERE IS COMPLEXITY IN THE ACCOUNTS OF THE ASSESSEE THEN I N THE INTEREST OF JUSTICE HE MAY WITH THE PRIOR APPROVAL OF THE CHIE F COMMISSION OR THE COMMISSIONER DIRECT THAT THE ASSESSEES ACCOUN TS ARE TO BE AUDITED BY AN ACCOUNTANT AS SPECIFIED UNDER THE ACT . THE DIRECTION FOR CONDUCTING SPECIAL AUDIT IS SUBJECT TO THE ASSE SSEE HAVING BEEN GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. THE R EADING OF THE PROVISIONS OF SECTION 142(2A) CATEGORICALLY SHOWS T HAT NO TIME LIMIT IS SPECIFIED FOR THE COMPLETION OF THE SPECIAL AUDI T. A READING OF THE IT(SS)-140 TO 143/D/2007 13 PROVISIONS OF SECTION 142(2C) SHOWS THAT THE REPORT U/S 142(2A) IS TO BE FURNISHED WITHIN THE SPECIFIED PERIOD WHICH IS TO BE DETERMINED BY THE A.O. THUS IT IS NOTICED THAT SECTION 142(2 C) SPECIFIES THE TIME LIMIT AND SUCH TIME LIMIT IS GIVEN AT THE DISC RETION OF THE A.O. THIS DISCRETION OF THE A.O. IN GRANTING THE TIME LI MIT IS CONTROLLED BY THE PROVISO TO SECTION 142(2C). THE PROVISION SPEC IFIES THAT THE A.O. CAN GIVE ANY PERIOD IN HIS DISCRETION SUBJECT TO A MAXIMUM OF 180 DAYS FROM THE DATE ON WHICH THE DIRECTION U/S 142(2 A) IS RECEIVED BY THE ASSESSEE. THIS IS BECAUSE THE OPENING WORDS OF SECTION 142(2C) SPECIFY THAT IT APPLIES TO EVERY REPORT UNDER SUB-S ECTION (2A). A PERUSAL OF THE CIRCULAR NO.01 DATED 27.03.2009 AS A LSO THE MEMORANDUM EXPLAINING TO THE PROVISIONS IN THE FINA NCE BILL 2008 CLEARLY SHOWS THAT THE LEGISLATURE AS ALSO THE CBDT CATEGORICALLY WERE OF THE VIEW THAT SUB-SECTION (2A) (2B) (2C) A ND (2D) OF SECTION 142 DEAL WITH THE POWERS OF THE A.O. TO ORDER A SPE CIAL AUDIT FIX THE TIME LIMIT WITH OVERALL PERIOD OF 180 DAYS ETC. AND THESE PROVISIONS TO BE READ TOGETHER AS COMPLETE CODE IN THESE MATTE RS. IN THESE CIRCUMSTANCES IT CANNOT BE HELD THAT THE PROVISION S OF SECTION 142(2A) HAD A STAND-ALONE POSITION AND WAS UNFETTER ED BY SECTION 142(2C). 5.2 FURTHER A PERUSAL OF THE PROVISO TO SECTION 142(2C ) SHOWS THAT THE A.O. DID HAVE THE POWERS TO EXTEND THE PERIOD BY FU RTHER PERIOD OR PERIODS AS HE THINKS FIT SUBJECT TO THE MAXIMUM LIM ITATION OF A PERIOD OF 180 DAYS FROM THE DATE ON WHICH THE DIRECTION U/ S 142(2A) WAS RECEIVED BY THE ASSESSEE. ON THE FACTS OF THE PRES ENT CASE IT IS NOTICED THAT THE ASSESSEE HAS NOT MADE ANY APPLICAT ION FOR THE EXTENSION OF THE PERIOD OF SPECIAL AUDIT. THEREFOR E EXTENSION WHICH HAS BEEN DONE VIDE LETTER DATED 07.03.2007 17.04.2 007 AND 17.05.2007 MADE ON THE REQUEST OF THE AUDITOR COULD DULY BE TAKEN AS THE SUO MOTU ACTION OF THE A.O. A PERUSAL OF TH E MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE BILL 2008 AS A LSO THE CIRCULAR NO.01 DATED 27.03.2008 WHICH EXPLAINS THE AMENDMENT TO THE PROVISO TO SECTION 142(2C) SHOWS THAT THE TERM SUO MOTU OR HAD BEEN INSERTED W.E.F. 01.04.2008. IN THESE CIRCUMST ANCES IT WOULD HAVE TO BE HELD THAT THE POWER TO SUO MOTU EXTEND T HE PERIOD FOR COMPLETION OF THE SPECIAL AUDIT WAS AVAILABLE TO TH E A.O. ONLY W.E.F. 01.04.2008 AND BEFORE SUCH DATE THE EXTENSION CAN BE MADE ONLY AT THE REQUEST OF THE ASSESSEE ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE. IF IT IS TO BE READ OTHERWISE THERE WAS NO REASON FOR SUCH AMENDMENT. THE FACT THAT THE TERM SUO MOTO HAS BEEN INSERTED WITH EFFECT FROM 01.04.2008 SHOWS THAT BEF ORE 01.04.2008 THE A.O. DID NOT HAVE THE INHERENT POWERS TO EXTEND THE TIME LIMIT WITHOUT AN APPLICATION FROM THE ASSESSEE. FURTHER EVEN SUCH EXTENSION WOULD BE CONTROLLED IN VIEW OF THE TERM FOR ANY GOOD & SUFFICIENT REASON. HERE AS THE PERIOD IN THE PRES ENT CASE IS BEFORE 01.04.2008 AND AS IT IS NOTICED THAT THE ASSESSEE H AS NOT MADE ANY IT(SS)-140 TO 143/D/2007 14 APPLICATION FOR THE EXTENSION OF THE PERIOD GIVEN V IDE ORDER FOR SPECIAL ORDER DATED 12.12.2006 THE EXTENSIONS MADE BY THE A.O. VIDE HIS ORDER DATED 07.03.2007 17.04.2007 AND 17. 05.2007 ARE WITHOUT JURISDICTION AND CONSEQUENTLY SUCH EXTENSIO NS AS MADE VIDE THOSE LETTERS / ORDERS CANNOT BE SAID TO EXTEND THE LIMITATION. THE EXCLUSION AS PROVIDED IN THE EXP. (II) TO SECTION 1 53B WOULD HAVE TO BE READ TO BE 90 DAYS BEING A PERIOD BETWEEN 12.12. 2006 TO 12.03.2007. CONSEQUENTLY IT WOULD HAVE TO BE HELD THAT THE TIME PERIOD U/S 142(2A) IS CONTROLLED BY THE PROVISIONS OF SECTION 142(2C) AND THE EXCLUSION PROVIDED IN EXPLANATION ( II) TO SECTION 158B WAS FOR THE PERIOD FORM 12.12.2006 TO 12.03.20 07 AND CONSEQUENTLY THE CLAIM OF THE ASSESSEE THAT THE ASS ESSMENT IS BARRED BY LIMITATION WOULD HAVE TO BE UPHELD AND WE DO SO . 5.3 AS THIS ISSUE HAS BEEN RAISED IN GROUND NO.2(III) O F ALL THE APPEALS FILED BY THE ASSESSEE AND IN VIEW OF OUR FINDING AS ABOVE THE SAID GROUND IS HELD IN FAVOUR OF THE ASSESSEE. IN THE C IRCUMSTANCES THE OTHER GROUNDS AS RAISED IN THE APPEALS OF THE ASSES SEE DO NOT REQUIRE OUR CONSIDERATION AND CONSEQUENTLY THEY ARE NOT BEI NG ADJUDICATED UPON. 5.4 AS THE ASSESSMENTS HAVE BEEN HELD TO BE BARRED BY L IMITATION THE ISSUES AS RAISED BY THE REVENUE IN ITS APPEALS ALSO DO NOT SURVIVE FOR CONSIDERATION AND CONSEQUENTLY THE SAME ARE ALSO N OT ADJUDICATED UPON AND CONSEQUENTLY THEY ARE TREATED AS DISMISSED . 6. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE A LLOWED AND THE APPEALS OF THE REVENUE ARE DISMISSED. 10. SIMILARLY IN THE CASE OF KASHYAP MOTORS PVT.LT D. SEARCH WAS CONDUCTED ON 22.12.1999 AND THE BLOCK ASSESSMENT ORDER WAS FRAME D ON 23.1.2004. ORDER WAS PASSED AFTER FOUR YEARS AND ONE MONTH. AS PER THE PANCHNAMA/LAST PANCHNAMA WHERE SEIZURE WAS EFFECTIVE FROM 24.3.2001 ACCORDI NGLY LIMITATION FOR COMPLETION OF ASSESSMENT EXPIRES ON 26.3.2003 WHEREAS ORDER W AS PASSED ON 23.1.2004. THERE WAS NO VALID EXTENSION U/S 132(3). FROM THE RECORD AFTER VERIFICATION OF THE PANCHNAMA WE FOUND THAT LAST VALID PANCHNAMA WAS D RAWN ON 24.3.2001 AND NOT ON 11.7.2001 WHERE NO SEARCH WAS MADE AND ONLY REST RAINT ORDER PASSED U/S 132(3) WAS LIFTED. IN VIEW OF VALID PANCHNAMA DATED 24.3. 2001 THE ORDER OF ASSESSMENT SHOULD HAVE BEEN PASSED LATEST BY 26.8.2003. SINCE THE ORDER HAS BEEN PASSED ON 23.1.2004 THE SAME IS BARRED BY LIMITATION. IN VI EW OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF S.K.KATYAL (SUPRA) SARB CONSULATE MARINE PRODUCTS (P) LTD. (SUPRA) AND DEEPAK AGGARWAL (SUPR A) AS DISCUSSED HEREINABOVE IT(SS)-140 TO 143/D/2007 15 THE ASSESSMENT ORDER IN THE INSTANT CASE WAS BARRED BY LIMITATION. THE SECOND OBJECTION OF THE LEARNED AR WAS WITH RESPECT TO SUO -MOTO EXTENSION OF TIME FOR SPECIAL AUDIT U/S 142(2A). CONTENTION OF ASSESSEE BEFORE THE CIT(A) WAS THAT THE ASSESSMENT ORDER WAS BARRED BY LIMITATION AS THE TI ME PERIOD FOR THE PURPOSE OF LIMITATION IS TO BE COMPUTED WITH RESPECT TO THE PO WER ORIGINALLY ALLOWED FOR CARRYING OUT THE SPECIAL AUDIT U/S 142(2A) AND NOT THE PERIOD SUO-MOTO EXTENDED BY THE AO. WITH RESPECT OF DECISION OF PUNJAB & HA RYANA HIGH COURT IN CASE OF JAGJIT SUGAR MILLS CO. LTD. 210 ITR 468 AS RELIED ON BY LD. CIT(A) IT WAS CONTENDED BY LD. AR THAT THE DECISION WAS RENDERED ON 14 TH SEPTEMBER 1993 THEREAFTER AN AMENDMENT WAS BROUGHT IN THE PROVISO TO SEC. 142(2A) BY FINANCE ACT 2008 THEREFORE THE POSITION OF LAW WAS ELABORA TELY AMENDED AND CLARIFIED ACCORDING TO WHICH BEFORE 1.4.2008 I.E. BEFORE AMEN DMENT THE AO DOES NOT HAVE THE POWER TO EXTEND THE TIME PERIOD SUO-MOTO AND LI MITATION HAS TO BE COMPUTED WITH REFERENCE TO THE ORIGINAL PERIOD GRANTED FOR S PECIAL AUDIT. 11. IN VIEW OF THE DETAILED DISCUSSION MADE HEREINA BOVE BY REFERRING TO THE ORDER OF THE TRIBUNAL IN THE CASE OF BISHAN SAROOP RAM KISHAN AGRO PVT.LTD. THE ISSUE IS NOW COVERED IN FAVOUR OF ASSESSEE IN VIEW OF THE AMENDMENT CARRIED OUT TO SECTION 142(2A) AND THE CBDT CIRCULAR NO.1 DATED 27 .3.2009. THESE AMENDMENTS AND CIRCULAR WERE ELABORATELY CONSIDERED IN THE CASE OF BISHAN SAROOP RAM KISHAN AGRO PVT.LTD. BY THE DELHI TRIBUN AL IN ITS ORDER DATED 18.9.2009 WHEREIN IT WAS HELD THAT BEFORE 1.4.2008 I.E. BEFORE AMENDMENT THE AO DOES NOT HAVE THE POWER TO EXTEND THE TIME PERIOD S UO-MOTO AND LIMITATION HAS TO BE COMPUTED WITH REFERENCE TO THE ORIGINAL PERIOD G RANTED FOR SPECIAL AUDIT. THE FACTS OF THESE CASES ARE IDENTICAL TO THE FACTS DIS CUSSED BY THE TRIBUNAL IN THE ABOVE ORDERS. ACCORDINGLY WE HOLD THAT ASSESSMENT ORDER PASSED BY THE AO IN BOTH THE CASES ARE BARRED BY LIMITATION ON BOTH THE COUNTS. 12. AS THE FACTS AND CIRCUMSTANCES BOTH IN THE CASE OF RAJINDER KASHYAP AND M/S KASHYAP MOTORS PVT.LTD. ARE IN PARI-MATERIA WIT H THE CASES DISCUSSED ABOVE RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW AS LA ID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT WITH RESPECT TO LIMITATIO N FOR PASSING OF ASSESSMENT IT(SS)-140 TO 143/D/2007 16 ORDER ON THE BASIS OF PANCHNAMA AND THE ORDERS OF T RIBUNAL WITH REGARD TO AOS POWER TO SUO-MOTO EXTENSION OF TIME LIMIT FOR FURNI SHING THE SPECIAL AUDIT REPORT WE HOLD THAT ASSESSMENT ORDERS IN BOTH THESE CASES ARE BARRED BY LIMITATION AND THEREFORE THE SAME ARE CANCELLED. 13. WITH RESPECT TO MERITS OF THE ADDITIONS MADE BY THE AO AND WHICH HAS BEEN DELETED BY THE CIT(A) IT WAS CONTENDED BY THE LEAR NED AR THAT THE CIT(A) HAS DELETED THE ADDITIONS AFTER RECORDING DETAILED FINDINGS WH ICH ARE AS PER MATERIAL ON RECORD. AS AN ALTERNATE HE ALSO CONTENDED THAT IF THE ISSUE ON LEGAL GROUND IS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE THERE IS NO NEED TO GO ON THE MERITS OF THE ADDITIONS. FOR THIS PURPOSE RELIANCE WAS PLACED ON THE ITAT S PECIAL BENCH ORDER IN THE CASE OF RAHUL KUMAR BAJAJ 69 ITD 1 WHEREIN IT WAS HELD T HAT THE TRIBUNAL HAVING DECIDED THE PRELIMINARY ISSUE I.E. VALIDITY OF REOPENING OF AS SESSMENT IN FAVOUR OF THE ASSESSEE HAD COMMITTED A PATENT MISTAKE IN DECIDING THE SUBSIDIA RY ISSUE ON MERITS THEREFORE THE LATER PART OF THE ORDER NEEDS TO BE RECTIFIED AND PARAS D EALING WITH THE SUBSIDIARY ISSUES ARE REQUIRED TO BE DELETED. 14. AS THE LEGAL ISSUE WITH REGARD TO LIMITATION PERIO D FOR PASSING THE ASSESSMENT ORDER HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASS ESSEE WE ARE NOT GOING ON MERIT OF THE ADDITION WHICH HAS BEEN DELETED BY THE CIT(A ) AFTER RECORDING DETAILED FINDINGS AS PER MATERIAL ON RECORDS. 15. IN THE RESULT THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED AND THE APPEALS OF THE REVENUE ARE DISPOSED OFF IN TERMS INDICATED HEREINABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON AUGUST 2010. (A.D.JAIN) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : .08.2010. VK. IT(SS)-140 TO 143/D/2007 17 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR