Income Tax Appellate Tribunal - Amritsar
The Asstt. Commissioner Of Income-Tax, ... vs M/S. Srinagar Development Authority ... on 18 January, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
ITA Nos.97 to 99(Asr)/2014
Assessment Years:2007-08 to 2009-10
M/s. Srinagar Development Vs. Income Tax Officer
Authority Ward,3(3), Srinagar
C/o Bhat Durani & Associates Kashmir, J&K.
(Chartered Accountants)
Flat No.207, 1st Floor, Yatri
Bhawan-II,
Durga Nagar, Dalgate,
Srinagar, J&K, 190001
[PAN:AAALS2033H]
(Appellant) (Respondent)
ITA Nos. 177 to 179 (Asr)/2014
Assessment Years:2007-08 to 2009-10
Asst. CIT, Vs. M/s. Srinagar Development
Circle-3, Srinagar. Authority
Benami, Bye-pass, Srinagar.
[PAN:AAALS2033H]
(Appellant) (Respondent)
Appellant by: Sh. Upender Bhat, Ld. C.A.
Respondent by: Sh. Pawan Kumar (Ld. CIT DR)
Date of hearing: 05.11.2018
Date of pronouncement: 18.01.2019
ORDER
Per Bench The assessee has preferred the appeals No.97 to 99/Asr/2014 against the order dated 06.01.2014 passed by Ld. CIT(A), Jammu for different Asst. Years i.e. 2007-08, 2008-09 and 2009-1, whereas the 2 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO Revenue Department has also filed appeals No.177 to 179/Asr/2014 against the same order dated 06.01.2014.
2. As the issues involved in all the appeals are identical and similar, therefore all the appeals are taken simultaneously for adjudication and for the sake of convenience and brevity, the facts and grounds of ITA No.97(Asr)/2014 have been taken into consideration for adjudication and the result of the same should also be applicable mutatis mutandis to the other aforesaid appeals.
3. As per Assessment Order, facts of the case are that in the instant cases, the assessee did not file its return of income voluntarily u/s 139 of the Income Tax Act (hereinafter call as 'the Act'. Accordingly notice u/s 148 of the Act was issued and served upon the Assessee on 29th April, 2010. The main business of the assessee is to develop new residential colonies, markets, malls, flats and their ancillary supports. While carrying out all these activities, the assessee charges premium on all of them and in addition to this, it also charges rent, lease rent and other maintenance charges. While fixing the premium of plots, flats and shops etc. the element of profit is always included, therefore, the assessee is not carrying out any charity by allotting the said properties at loss or at cost price, therefore, it was observed by the Assessing Officer that the assessee being a legal authority is under a statutory obligation to file its return of income/loss under the Income Tax Act, 1961. Moreover, section 44AA of the Act requires the assessee to maintain books of accounts as specified in the Act. Notice u/s 142(1) of the Act was also issued on 09.06.2010 fixing the hearing of the case for 15.06.2010 and the same was served upon the assessee and various information have been called for. The queries raised by the Assessing Officer were replied by the assessee. On finding the discrepancies in the account as reported by the A.G. J&K after conducting inspection of the Assessing Authority, the Assessing 3 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO Officer opined that in the interest of the Revenue the accounts of the assessee are required to be audited u/s 142(2A) of the Act and in pursuance to the requisite permission, M/s. K.B. Sharma & Company, Chartered Accountants, 172P/3, Trikuta Nagar, Jammu was appointed as special auditor for the purpose of conducting special audit u/s 142(2A) of the Income Tax Act, 1961. On the basis of the special audit report as well as the documents submitted by the assessee and while considering the submissions of the assessee, the Assessing Officer had framed the assessment order dated 06-07-2012 by making various additions qua premium income, rental income, interest income, miscellaneous income grant received unrecognized pension/provident fund, closing stock/WIP provision for FBT and understated income.
4. The assessment order was challenged before the Ld. CIT(A) on various grounds as mentioned in the order of ld. CIT(A) and main and foremost ground of the assessee before the Ld. CIT(A) was :-
" That the AO has erred in law and on facts in issuing an assessment order which is barred by limitation of time. That as per proviso to sub-section 4 of Sec.153 of the Income Tax Act, the Ld. AO was duty bound under law to issue the assessment order within 60 days of 25th April, 2012, the actual date of receipt of audit report u/s 142(2A) by him. The assessment order dated 6th July, 2012 has been issued after expiry of 60 days time, making barred and consequently a void, infructuous and a non enforceable order. It is an order which is bad in law and deserves to be summarily without dismissed without any further proceedings and without offering any opportunity to Ld. A.O.
5. In addition to the aforesaid ground, the assessee has also raised other 30 grounds as mentioned in para No.2 of the order impugned herein, which at this stage are not being taken into consideration as we are deciding the main legal and technical ground first.
6. In support of its grounds, the assessee also filed various written submissions before the CIT(A), as it reflects from the order. While 4 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO adjudicating the legal issue qua time barring assessment order passed after the prescribed limit i.e. 60 days from the date on which the appellant was required to submit the special audit report, the ld. CIT(A) has held as under:
4. Determination: I have consider the findings of the AO in the asst. order, submissions of the appellant, remand report form the AO and the reply to the remand report.
4.1 Ground of appeal No. 1 relates to the plea of the appellant that the order passed by the AO u/s 147 of the act is barred by time as per the provision of section 153(4) of the Act. I have gone through the submission of the appellant, assessment order and remand report. It is observed that the provisions for time limitation for passing the assessment order u/s 147 are provided under sub section 2 of the Act. Section 153(4) contains the provisions for time limitation of orders passed u/s 153A and 153B of the Act i.e. in case of search and requisition. The relevant extracts of provisions of section 153 (2) are reproduced as under:
'Section 153(2)No order of assessment, reassessment or re-
computation shall be made u/s 147 after the expiry of one year from the end of the financial year in which the notice u/s 148 was served.
Provided that where the notice u/s 148 was served on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such assessment, reassessment or re- computation may be made at any time upto the 31st Day of March, 2002.
Provided further that where the notice u/s 148 was served on or after the 1st day of April, 2005 (but before the 1st day of April, 2011), the provision of this sub-section shall have effect as if for the words "one year", the word "nine months had been substituted)' The Explanation-1 of section 153 is also relevant in deciding the issue under the relevant extract of explanation 1 to section 153, are reproduced as under:
'Explanation 1- In computing the period of limitation for the purposes of this section:-
..........5 ITA Nos.97 to 99 & 177 to 179/Asr/2014
(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO
(iii) the period commencing from the date on which the AO directs the assessee to get his accounts audited under sub-
section 2(A) of section 142 and ending the last date on which the assessee is required to furnish a report of such audit under sub section.
.........
Shall be excluded:
Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub section (1), [(1A), (1B)] [(2), (2A), and (4)] available to the AO for making an order of assessment, re-computation, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.
In the instant case, the notice u/s 148 was issued on 29/04/2010. The order u/s 142(2A) of the Act was passed on 21.12.2011 directing the appellant to get his accounts audited within 90 days i.e. on or before 21.03.2012. This period was further extended vide order of the AO by 45 days i.e., up to 05.05.2012. However, on certain issues raised by the appellant, the AO passed an another order dated 20.04.2012 whereby the extended time limit was revised to 59 days instead of 45 days, whereby the appellant was required to furnish the report by 20.05.2012. As per the proviso to section 142(2A) the AO could have extended the date by 180 days, which was 31 days more than the last extension.
The appellant, in the present appeal has argued that the special audit report was submitted on 24.04.2012 and not on 08.05.2012 and accordingly the time limit for calculation of 60 days should be computed from 24.04.2012 instead of 08.05.2012. On the perusal of the provisions of the Act on this account as also reproduced above, it is clear that the time available for the AO for making assessment where the accounts of appellant are put to special audit u/s 142(2A) is to be computed from the last date on which the audit report was required to be furnished as provided in para (iii) Explanation 1 of section 153. The date on which the audit report was submitted is not relevant, it is the date on which the appellant was required to submit the report was relevant. The appellant is overemphasizing the receipt of audit report on 24.04.2012 and counting 6o days from then. This is perhaps due to omission to consider the last extension by the AO dated 20.04.2012 for furnishing report by 20/05/2012 and absence of its mention in the assessment order 6 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO by the AO. In the present case, the appellant was required to furnish the report on 20.05.2012 and accordingly the assessment was getting time barred on 19.07.2012 i.e., 60 days from 20.05.2012. The assessment order was passed on 06/07/2012 which was within the time limit prescribed under the Act.
This ground of Appeal of the appellant is dismissed.
7. The main legal issue as raised and emphasized by the ld. AR of the assessee is that in these cases, as per office letter No. ITO-Ward- 3(3)/SGR/2011-12/1169 dated 21.12.2011, the AO directed the Assessee to get its accounts audited by special auditor and to furnish the Report within 90 days of the receipt of the order. The said report was duly acknowledged to be received vide acknowledgment No.09 dated 12.04.2012 by the Assessing Officer. However, the Assessing Officer has framed the assessment order on 06.07.2012 which is beyond the prescribed limit as specified in the relevant provisions of law applicable to the instant issue. The Ld. AR further submitted that the claim of the Revenue that vide order No. ITO-Ward- (2)/SGR/3841dated 20.04.2012, the time limit of 45 days was modified and extended to 59 days for completion of special audit, which was otherwise expiring on 20.05.2012. The assessee has claimed that once vide order dated 10.04.2012, time was extended for a period of 45 days, then there was no need for any substitution/extension of date and therefore, the order dated 20.04.2012 is forged, fabricated and tainted document, because the same was neither served upon the assessee nor upon other Addressees (The Commissioner of Income Tax, J&K, and The Jt. CIT vs. Camp at Jammu) to whom copy of the order is alleged to be sent.
8. On the contrary, it was argued by the ld. DR that the assessee had raised certain issues with regard to the conduct of the special auditor M/s. K.B. Sharma & Associates and the audit report and did not furnish the report before the AO, therefore, under the peculiar 7 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO circumstances, the Assessing Officer revised the period, i.e., 45 days to 59 days, for completion and furnishing of special audit and, consequently, the existing time for 90 days was extended to 149 days, which was to be expire on 20.05.2012. It was further submitted by the Ld. DR that as per proviso to Sec.142(2C), the Assessing Officer is empowered to extend the time for submission of report. Further in response to the objection of the assessee to the effect that the Assessing Officer cannot extend the time suo motu, it was submitted by the Ld. DR that the identical issue has been dealt by the Jurisdictional High Court in the case of M/s. Jagjit Singh Mills Co. Ltd. vs. CIT, Civil Writ Petition No.9371/1993 [1994] 74 Taxmann.com 8 (P&H), wherein, it has been held that even in the absence of application by the assessee, the Assessing Officer can extend the period for submission of special audit report.
9. In reply to the objection of the assessee to the effect that order no. ITO Ward-3/SGR/2012-13/45 dated 20-04-2012 was never been served upon the assessee as the same is forged, manufactured and tainted document and was not passed in regular course but fabricated later in order to fill the lacuna, the Ld. DR has submitted that as per the Indian Evidence Act, 1872 all the documents kept in official record are to be presumed as genuine. It was further submitted that for the sake of argument if the claim of assessee is accepted even then also the assessment proceedings cannot be held as void because extension of time is just an procedural irregularity and does not make the Assessment order invalid. In support of its arguments, the Ld. DR also relied upon the order passed by the Kolkata High in CIT Vs. Sri Shyamal Sarkar in ITA No.815/2008 decided on 22nd April, 2015.
10. Having heard the parties at length and perused the material available on record. The legal issue which is ground No.1 as raised by the assessee pertains to the legality and validity of the assessment 8 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO order, alleged to be passed beyond the time allowed as per the provisions of the act and being time barred, the same is void, infructuous and bad in law. Some chronological dates and events are important for adjudication of the issue under dispute.
Sr. No. Date Particulars
1. 29.04.2010 Notice u/s 148 of the Act was issued to the assessee for the Asst. Year2007-08, 2008-09, 2009-10.
2. 31.12.2011 As per Sec.153(2), the assessment order was supposed to be passed within 9 months from the end of the financial year in which notice u/s 148 was served. Hence, the assessment was required to be completed upto 31.12.2011.
3. 21.12.2011 Vide letter No. ITO, W-3(3)/SGR/2011-12/11-66-69, the assessee was directed to get its account audited u/s 142(2A) of the Act and to furnish the audit reports within 90 days from the date of receipt of the letter.
4. 21.03.2012 The assessee was required to file the audit report on or before 21st March, 2012. However, no such report was filed by the assessee up to that date.
5. 10.04.2012 Vide office letter no. ITO, Ward-3(3)/SGR/11-12/10, the time period of 90 days as specified in letter no.1166 dated 21.12.2011, was extended for a further period of 45 days for completion and filing of special audit.
6. In view of the order dated 10.04.2012, the audit report was to be filed on or before 05.05.2012.
7. 20.04.2012 The Assessing Officer suo moto modified the time limit given in the extension order dated 10.04.2012 and extended the time by (59 days instead of 45 days) for completion of special audit report, therefore, the assessee was supposed to file the audit report on or before 20.05.2012.
8. 08.05.2012 As per assessment order para No.10 the audit report u/s 142(2A) of the Act was received by the Assessing Officer on 08.05.2012 through registered post bearing no.SGA/Accounts/1997 dated 31.03.2012
9. 06.07.2012 The assessment was framed.
11. The main legal question raised by the assessee pertains to the invalidity and void-ness of the assessment order passed beyond the prescribed time limit u/s 153(2) of the Act. For the sake of 9 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO convenience and clarity, let us to reproduce the provisions applicable to the instant case.
Section 142. Inquiry before assessment (1) For the purpose of making an assessment under this Act, the [Assessing] Officer may serve on any person who has made a return under section 139 2 or in whose case the time allowed under sub- section (1) of that section for furnishing the return has expired] a notice requiring him, on a date to be therein specified,-
[(i)] where such person has not made a return within the time allowed under sub- section (1) of section 139, to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, or] [(ii)] to produce or cause to be produced, such accounts or documents as the Assessing Officer may require, or [(iii)] to furnish in writing and verified in the prescribed manners information in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the [Assessing] Officer may require:
Provided that-
(a) the previous approval of the 2 Deputy] Commissioner shall be obtained before requiring the assessee to furnish a statement of all assets and liabilities not included in the accounts;
(b) the 3 Assessing] Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year.
(2) For the purpose of obtaining full information in respect of the income or loss of any person, the 4Assessing] Officer may make such inquiry as he considers necessary.
(2A) If, at any stage of the proceedings before him, the Assessing] Officer, having regard to the nature and complexity of the accounts of the assessee and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner], direct the assessee to get the accounts audited by an accountant as defined in the Explanation 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 accountant and setting forth such particulars as may be prescribed and such other particulars as the 10 Assessing] Officer may require.
(2B) The provisions of sub- section (2A) shall have effect notwithstanding that the accounts of the assessee have been audited under any other law for the time being in force or otherwise.10 ITA Nos.97 to 99 & 177 to 179/Asr/2014
(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO (2C) Every report under sub- section (2A) shall be furnished by the assessee to the 12 Assessing] Officer within such period as may be specified by the 13 Assessing] Officer: Provided that the 14Assessing] Officer may, on an application made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period 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.
Section 153(2) No order of assessment, reassessment or re-
computation shall be made u/s 147 after the expiry of one year from the end of the financial year in which the notice u/s 148 was served.
Provided that where the notice u/s 148 was served on or after the 1st day of April, 1999 but before the 1st day of April, 2000, such assessment, reassessment or re-computation may be made at any time upto the 31st Day of March, 2002.
Provided further that where the notice u/s 148 was served on or after the 1st day of April, 2005 (but before the 1st day of April, 2011), the provision of this sub-section shall have effect as if for the words "one year", the word "nine months had been substituted)' 'Explanation 1- In computing the period of limitation for the purposes of this section:-
(i) ..........
(ii) .........
(iia) .........
(iii) the period commencing from the date on which the AO directs the assessee to get his accounts audited under sub-section 2(A) of section 142 and ending the last date on which the assessee is required to furnish a report of such audit under sub section.
.........
Shall be excluded:
Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub section (1), [(1A), (1B)] [(2), (2A), and (4)] available to the AO for making an order of assessment, re-computation, as the case may be, is less than sixty days, such remaining 11 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.
12. From the aforesaid provisions, it reflects that a report under sub- section 2(A) of Section 142 is required to be furnished by the assessee to the Assessing Officer within such a period as may be specified by the Assessing Officer. The provisions further provides that the Assessing Officer may, suo motu or an application made in this behalf by the assessee and for any good and sufficient reason extend the said period by such further period or periods as he thinks fit, but aggregate of the period originally fixed and the period extended shall not in any case exceed 180 days from the date on which the direction under section 142(2A) is received by the assessee.
13. The time period commencing from the date on which the AO directed the assesse to get its accounts audited under sub-section (2A) of Section 142 of the Act, was 21st December, 2011 and ending with the last date on which the assessee was required to furnish a report of such audit was 21st March, 2012 in the instant case.
As the notice u/s 148 was issued on 29.04.2010, therefore the assessment was supposed to completed within 09 months from the end of the F.Y. in which the notice u/s 148 was served which in the instant case was 31st December, 2011. However, on 21st December, 2011, the assessee was directed to get its account audited u/s 142(2A) of the Act with a direction to file audit report within 90 days i.e. on or before 21st March, 2012 and thereafter, the time gets expired. However, it is the case of the Revenue Department that the time for filing of the audit report u/s 142 (2A) was extended by the Assessing Officer on 10.04.2012 for a period of 45 days which was expiring on 05.05.2012. As per para No.10 of the Assessment Order, 12 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO the audit report u/s 142(2A) was received on 08.05.2012 through registered post bearing no.SDA/Accts/1997 dated 31.03.2012 and cognizance of which was taken by the Assessing Officer contained in para nos. IX & X of the assessment order, which are reproduced herein below for the sake of convenience and brevity.
"(IX) Accordingly vide this office letter No.ITO/W-
3(3)/Sgr/2011-12/1166-69 dated 22.12.2011, the assessee was directed to get his account audited under section 142(2A) of the Income Tax Act, 1961, for the assessment year 2006-07 from M/s K.B. Sharma & Company, Chartered Accounts, 172P/3, Trikuta Nagar Jammu who were nominated by the Worthy Commissioner of Income Tax Jammu vide above order. A copy of the letter under reference was also endorsed to M/s. K.B. Sharma & Company, Chartered Accountants, 172P/3, Trikuta Nagar Jammu for conducting the special audit of the assessee and to furnish a report of such audit in the prescribed from No.6B read with rule 14A of the Income Tax Rule,1962 duly signed and verified. The assessee was required to furnish report of the auditors within 90 days from the date of receipt of this letter. The said letter was duly served upon the assessee.
X. In compliance to above directions, the assessee was required to file the audit report by or before 21-03-2012. However, no such report(s) was filed by the assessee up to date that. However, the time was suo moto extended by the undersigned on 10.04.2012 vide office letter no.10 by further 45 days which means that the assessee was allowed to file the audit report by extended time of 135 days and the said date was expiring on 05.05.2012. Finally the audit report under section 142(2A) of M/s. K.B. Sharma & Company. Charter Accounts, 172P/3, Trikuta Nagar, Jammu for the assessment year under consideration was received on 08.05.2012 through registered post bearing No.SDA/Accts/1997 dated 31.03.2012 which is placed on record.
It is the claim of the assessee that admittedly the directions u/s 142(2A) of the Act were issued on 21-12-2011, to furnish the audit report within 90 days from the date of receipt of the said directions. The said order was received by the assessee on 22nd December, 2012 and according to directions, the assessee was supposed to file the 13 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO audit report on or before 21st March, 2012, however, up to that date, the report could not be filed as the same was not completed by the Auditor due to one or the other reason. Hence, after 21st March, 2012, the Assessing Officer had no option except to frame the assessment in accordance with the law. Even if he wanted to extend the time for filing the report, that could have been done on or before 21st March, 2012 but not later, however, in the instant case, it was claimed by the Assessing Officer that vide its order dated 10.04.2012, he suo motu extended the time for further 45 days. In fact, the further extension was void, illegal, non-est and does not give any jurisdiction to the Assessing Officer to frame the assessment on 06.07.2012 because in view of the directions dated 21.12.2011, the audit report was supposed to be filed upto 21st March, 2012 and as per Sec.153(2A) and Explanation-1 and its proviso, the Assessing Officer was supposed to frame the assessment on or before 20th May, 2012 i.e. within 60 days from the last date on which the assessee was required to furnish the report, therefore the assessment order passed on dated 06.07.2012 is void, illegal, and does not have any stand in the eyes of law.
14. On the contrary, it was argued by the Revenue Department that the Assessing Officer is empowered to extend the time up to 180 days for filing of the audit report as per proviso to Sub-section 2(c) of Sec.142 of the Act. In the instant case, as per order dated 21-12-2011 the time period of 90 days as prescribed, was expired on 21st March, 2012, therefore vide order dated 10.04.2012 which was duly served upon the assessee, the time for filing of the audit report was extended further for a period of 45 days. Further the Revenue Department also claimed that the objection was raised by the assessee on audit report, therefore, the Assessing Officer was compelled to revise the time period of 45 days (as per order dated 10.04.2012) to 59 days vide its 14 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO order dated 20.04.2012 and in view of the order, audit report was supposed to be filed on or before 20.05.2012 and consequently, the assessment order was framed on 06.07.2012 which is certainly within time limit as prescribed under law.
The ld. AR vehemently opposed the said stand of the revenue and submitted that the order dated 20.04.2012 bearing no. ITO, Ward-2/SGR/2012-13/3841 by which the time period modified to 59 days instead of 45 days for filing of the audit report is not only forged, frivolous but in fact is a tainted document, made later on without serving the same to the appellant. In response to the allegations of the assessee, the Revenue Department also filed the affidavit of the process server Mr. Brij Mohan Vaid, contents of the same are reproduced herein below:-
1. That I was posted as Inspector of Income tax Range-3, Srinagar with additional charge as inspector of Income tax Ward 3(3) Srinagar, during the financial year 2012-13
2. That I have superannuated from government Service on 31-10-2015.
3. That letter bearing no. ITOW2/SGr/2012-13/38-41 dated has been served by me upon Srinagar Development Authority, Bemina, Srinagar on 21st April 2012 as is apparent from my report dated 21st April 2012 on the order issued by the then AO Ward 3(3) Srinagar, which was duly received by the receipt clerk of SDA Office, Bemina by affixing office stamp with date and signature.
4. That I acknowledge of having received the order on behalf of the then Joint Commissioner of Income tax, Range,-3 Srinagar at Srinagar office is also seen from noting of the said order.
5. That the said letter is neither fabricated not installed later on as the said letter has been duly served by me upon the assessee as is seen from my report on the said order.
6. That I am sick, unable to travel, may kindly be exempted from personal appearance.
That whatever is stated above is true to the best of my knowledge and belief and nothing has concealed therein.
15 ITA Nos.97 to 99 & 177 to 179/Asr/2014(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO The Revenue department also filed the copy of the aforesaid letter/direction dated 20.04.2012 and daily order sheets from which it reflects that time period for filing the audit report was further extended vide order dated 20.04.2012.
15. In rejoinder, the assessee also submitted the affidavit of the Vice Chairman of the Assessing Authority to the effect that the aforesaid letter as claimed to be served by the Income Tax Department was never been received by assessee's office. Further, the assessee also filed an affidavit of Sh. Imtyaz Ahmad an employee of the assessee to the effect that he appeared before the Assessing Officer (ITO)Ward-3(3), Srinagar on 31.10.2011 on behalf of the assessee and duly signed all the order sheets of that date for A.Y.2007-08, 2008-09 and 2009-10.
16. We have perused the extension orders dated 10.04.2012 and 20-04-2012 and compared the same. The order dated 10.04.2012 was duly received by the assessee by acknowledging with assessee's seal and receipt no.09 dated 12.04.2012, however, nothing appears from order dated 20.04.2012 or its record qua receipt by the assessee. In the affidavit, the process server claimed "That letter bearing no. ITOW2/SGr/2012-13/38-41 dated has been served by me upon Srinagar Development Authority, Bemina, Srinagar on 21st April 2012 as is apparent from my report dated 21st April 2012 on the order issued by the then AO Ward 3(3) Srinagar, which was duly received by the receipt clerk of SDA Office, Bemina by affixing office stamp with date and signature" . However from the letter dated 20-4-2012, it does not reflect that the same was duly received by the receipt clerk of SDA Office, Bemina by affixing office stamp with date and signature. For clarity the remarks are reproduced herein below:-
Sir, As directed, the letter has been served upon the employee of the 'A' who was available 4.30 P.M on 21st April, 2012.
Sd/-16 ITA Nos.97 to 99 & 177 to 179/Asr/2014
(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO Even in para no. 4 of its affidavit, the process server claimed "That I acknowledge of having received the order on behalf of the then Joint Commissioner of Income tax, Range,-3 Srinagar at Srinagar office is also seen from noting of the said order" . But from the order dated 20-04-2012, it does not reflect that the same was delivered to and received by the said officers or its office.
17. We are also in agreement with the stand of the Revenue that as per the Indian Evidence Act, 1872 all the documents kept in official record are to be presumed as genuine. A rebuttable presumption is an assumption of fact accepted by the court until disproved. All presumptions can be characterized as rebuttable. It is an assumption that is made in law that will stand as a fact unless someone comes forward to contest it and prove otherwise. However where the facts are disputed and specific allegation has been made about any documents then the presumption will become rebuttable as in this case, the Asseeee has made specific allegation qua order dated 20-4- 2012 and also filed affidavit of its officers to controvert the claim of the revenue qua genuineness of the said order. Although various opportunities have been given to the Revenue Department to corroborate the service of the said extension order dated 20.04.2012 and to verify the records of the Commissioner of Income Tax, J&K and the JCIT, Range, Srinagar Camp at Jammu to whom the copy of the extension was served, but the Revenue Department failed to establish either by way of documentary proof, i.e., dispatch and receipt register and/or any authentic evidence for communicating to or receiving the said extension order dated 20.04.2012 by the aforesaid authorities. The Revenue Department submitted a letter of acknowledgment dated 27-03-2018 issued by M/s. K.B. Sharma & Co., CA, 172P/3, Trikuta Nagar, Jammu, who had audited the accounts of the assessee u/s 142(2A), acknowledging to have received the said order dated 17 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO 20.04.2012. In this regard, it was submitted by the Ld. AR that special auditor was appointed by the department and there was every possibility that he is under the influence of the Revenue Department and may have given the acknowledgment for extraneous reasons/circumstances. We have again perused the order dated 20- 04-2012 from which, nowhere reflects that the said order has duly been served upon or acknowledged to have received by the special auditor, even the department failed to bring on record the dispatch and receipt register of the special auditor, because even the acknowledgement letter issued 06 years after the issue of extension order dated 20-04-2012 does not specify the date of receipt of the said order or the record (of receipt) on the basis of which the said acknowledgement letter, at the instance of the Revenue Department, is issued. Hence, in our view, letter of the auditor is also unsupported and not reliable and therefore does serve any purpose. The Revenue Department clearly failed to establish the authenticity of extension order dated 20-04-2012, either by serving to the higher authorities and/or to the assessee and also failed to establish the genuineness of its order sheets on which the noting of order dated 20.04.2012 have been made because from the perusal of the various order sheets relevant to the A.Y. 2007-08, 2008-09 & 2009-10, it reflects that the Assessing Officer vide its order dated 20.04.2012 extended the time to 20.05.2012. However, it appears that the order dated 10.04.2012 does not find mention in the order sheets relevant to A.Y.2007-08 and 2009-10 but only appears in order sheets relevant to A.Y.2008-09. We further noted that the assessee's employee has acknowledged while signing almost each and every order sheets, however the order sheets of A.Y.2007-08, 2008-09 & 2009-10 which pertain order dated 20.04.2012, are not reflecting the acknowledgment or the signature of the assessee, which strengthen the claim of the assessee that the 18 ITA Nos.97 to 99 & 177 to 179/Asr/2014 (A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO order dated 20.04.2012 seems to be fabricated in order to cover time limit for completion of the assessment.
18. It is admitted fact that order dated 20-04-2012 does not find mention in the Assessment order and even the same was never established to be served upon the Assessee and to the other addressees. The Revenue Department even after availing various opportunities did not file any authentic document to prove the genuineness of extension order dated 20-04-2012 and tried to evade its liability by submitting that due to floods of 2004 in Kashmir, all the records inter alia dispatch register etc. had got damaged, however every effort is being made to trace the evidence regarding the dispatch of the said letter but could not get success. We observe that although the Revenue Department has brought the assessment as well as CIT(A) records, however, it has failed to bring the required documents which were necessary to establish the genuineness of the order dated 20.04.2012 by which the assessment order could have been established to be framed within the time limit as prescribed u/s 153(2) of the Act. Admittedly, the Revenue department has failed to bring any of the records such as receipt/dispatch register and/or any document maintained for dispatch of the letter dated 20.04.2012 or otherwise in normal routine . Even the remarks of the Notice Server, serving the extension order dated 20-04-2012 on 21-04-2012, does not specify the name or the initials of the Assessee's employee to whom the order was delivered/served nor, or course, carried the stamp of the Assessee, as is the practice. Consequently the Revenue department failed to establish the genuineness of its order dated 20.04.2012 by which the time of filing of the special audit report could have extended up to 20.05.2012 and therefore, the assessment order which was passed on 06.07.2012 could have been validated.
19 ITA Nos.97 to 99 & 177 to 179/Asr/2014(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO
19. We also observe that according to the order dated 10.04.2012 by which the time period for filing of the special audit report was extended up to 45 days which was expiring on 05.05.2012, however, as per the stand of the revenue, before that date itself, the said time period was modified and extended to 59 days vide order dated 20.04.2012. We realized that admittedly the order dated 20-04-2012, does not find mention in the assessment order and the Revenue Department neither established the service of the said extension order upon the assessee nor brought any of the records such as receipt and dispatch register and/or any document maintained for dispatch of the letter dated 20.04.2012 or otherwise in normal routine, by which the existence and validity of the said order could be established.
20. Although we are in agreement with the stand of the Revenue department that even in the absence of application by the assessee, the Assessing Officer can extend the period for submission of special audit report, however in the instant case, order u/s 142(2A) was passed on 21st Dec. 2011 and time limit for filing of the audit report was fixed as 90 days from the receipt of the order which was expired on 21st March, 2012 and up to 9th April, 2012, nothing happened, neither the assessee filed an application of extension of the time for filing of special audit report and/or not extended suo moto by the Assessing Officer, therefore, once the time limit gets expired by efflux of time, then the Assessing Officer is not empowered to extend it further, therefore on this reason also, the assessment order is void and cannot be acted upon. Hence under the peculiar facts and circumstances of the instant case and in view of considerations, deliberations and analyzations made above, the assessment order being void passed after the time prescribed under the law, consequently liable to be quashed and therefore quashed accordingly.
20 ITA Nos.97 to 99 & 177 to 179/Asr/2014(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO
21. The assessee has also raised one more legal ground i.e. ground No.2 to the effect that the assessment order has been passed by the Assessing Officer who was not having the jurisdiction of the subject matter of the assessee's case as per CBDT guidelines. As we have already quashed the assessment order, therefore, it would not be appropriate to travel to other grounds which will amounts to academic exercise only.
22. In the result the appeals filed by the assessee stands allowed and by the Revenue Departments stands dismissed.
Order pronounced in the open Court on 18.01.2019.
Sd/-
(N.K.CHOUDHRY) JUDICIAL MEMBER I have perused the order proposed by my ld. brother JM in the captioned appeals. The principal issue arising in these appeals is whether the extension dated 20.04.2012 by the Assessing Officer (AO) is valid, to which sanction in law could therefore be given in-as-much as, where not so, the impugned assessments become barred by time. The same stands delineated at paras 7 and 10 (read with para 6) of the proposed order. I am in agreement with my ld. brother as far as the adjudication of this issue is concerned. The extension by the AO vide order No. ITO-Ward(2)/SGR/3841 dated 20.04.2012, modifying the 45 day extension dated 10.04.2012, expiring on 05.05.2012, by extending it to 59 days, i.e., up to 20.05.2012, is not valid in law for the reasons discussed in detail in the proposed order. The same is only an afterthought by the AO to save the time limitation that would otherwise attend the assessments, i.e., 60 days beginning 06.05.2012, or 04.07.2012.
21 ITA Nos.97 to 99 & 177 to 179/Asr/2014(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO So, however, I am unable to persuade myself to accept the assailing of the first extension vide order dated 10.04.2012, in which case the time limitation of 60 days for completing the impugned assessments shall run from 22.03.2012 (and not 06.05.2012). The same has been found not valid as the earlier time limitation expired on 21.03.2012. The AO did not act thereon, i.e., up to 09.04.2012. The power of the AO for further extension, which could u/s. 142(2C) extend up to 180 days from the date of receipt of the direction u/s. 142(2A), lapsed by efflux of time. The said extension, in order to be valid, as argued before us, and which has found approval per the proposed order, could be exercised only up to 21.03.2012, and not thereafter (refer para 20 of the proposed order). In my view, no such blanket restriction could be placed where the exercise of power does not suffer from any vice of mala fides, i.e., is bona fide, and in furtherance of the object of the provision. Of course, the extended time should fall, as it does, within the 180 day time limit from the date of receipt of the direction u/s. 142(2A), available to the AO u/s. 142(2C). In the facts of the case, the AO, subsequent to the receipt of the audit report dated 21/3/2012 from the assessee (vide its' letter dated 31/3/2012/ PB pg. 14), received a letter from the assessee, addressed to the Auditor, raising serious concerns with regard to the audit report submitted. The manner in which the audit was conducted was questioned, nay, sharply criticized, alleging that no proper opportunity to explain its' case before him had been allowed by the auditor (PB pgs. 40-
41). This was in fact preceded by a letter dated 21.03.2012 by the Auditor to the AO stating that the assessee was not cooperating with the audit (PB pg.
47). It was under these circumstances that the AO extended the time (up to 05/5/2012) vide his order dated 10.04.2012 - about the passing of which on 10.04.2012, or its receipt in due course, there is clearly, as I see, no controversy. This was in fact followed by a letter dated 23.04.2012 (PB pg.
22 ITA Nos.97 to 99 & 177 to 179/Asr/2014(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO
37) by the AO to the auditor stating, with reference to the communication by the assessee to him dated 11.04.2012 and his discussion with the auditor on 20.04.2012, that the grievances of the assessee be addressed and the report submitted in compliance with the extended time limit. None of these communications are disputed. In fact, the audit report taken on record and on the basis of which the assessments stand finally framed is that furnished in pursuance to the revised time limit.
It is rather queer that the assessee, at whose instance, in effect, the time for obtaining the audit report was extended, should question the same. True, the assessee did not in as many words request for extension of the time period, and which also explains the use of words 'in effect' in the preceding sentence. That, however, only suits the assessee in-as-much as the audit report as made would stand to be rubbished for want of observance of the principles of natural justice, defeating thus the very purpose of, and the entire exercise in, invoking section 142(2A). It is the AO who is charged with the responsibility and the duty of administering the Act, and which he has to do with rectitude and fairness. As long as it does so, his competence, which is being questioned, cannot be so unless specifically prevented or forbidden by law. Section 142(2C), per proviso thereto, rather, employs an enabling language, so that the AO can either suo motu or on an application by the assessee, for good and sufficient reason/s, extend the time for obtaining the audit report u/s. 142(2A) as long as it does not breach the 180 day time limit. This position in law stands abundantly clarified by the Hon'ble High Court in Jagjit Singh Mills Co. Ltd. v. CIT (in civil writ petition no. 9371/1993 [1994] 74 taxmann.com 8 (P&H) (refer para 8/pg. 7 of the proposed order).
23 ITA Nos.97 to 99 & 177 to 179/Asr/2014(A.Ys. 2007-08 to 2009-10 ) M/s. Srinagar Development Authority vs. ITO There were therefore in my view good and sufficient reasons in the present case for the AO to have extended the time period on 10.04.2012, allowing a period up to 05.05.2012 for completion of the audit meeting the assessee's objections. Good faith marks his this action, undertaken with a view to address the assessee's concerns and obtain a report containing correct information. There is, further, no question of the AO having lost his power for extension by efflux of time; the said power being only an enabling power to effectuate his power to direct the assessee to submit an audit report u/s. 142(2A). I am therefore, with respect, not in agreement with the opinion expressed by my ld. brother, JM at para 20 of the proposed order, with which order I am otherwise, as afore-stated, in agreement. The final conclusion, i.e., of the impugned assessments being barred by time, thus, holds, and this opinion by me be therefore be regarded as an assent order. I decide accordingly.
Sd/-
Place: Amritsar (Sanjay Arora) Date: 18/1/2019 AM, Amritsar Benches /PK/ Ps. Copy of the order forwarded to: (1) M/s. Srinagar Development Authority
C/o Bhat Durani & Associates (Chartered Accountants) Flat No.207, 1st Floor, Yatri Bhawan-II, Durga Nagar, Dalgate, Srinagar, J&K, 190001 (2) Income Tax Officer Ward,3(3), Srinagar, J&K. (3) The CIT(A), Jammu, J&K. (4) The CIT concerned.
(5) The SR DR, I.T.A.T., Amritsar
True copy
By Order
Filename: Srinagar Development Authority, 97 to 99 & 177 to 179-14
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