Calcutta High Court
Commissioner Of Income Tax vs Shri Shyamal Sarkar on 22 April, 2015
Author: Girish Chandra Gupta
Bench: Girish Chandra Gupta, Arindam Sinha
ORDER SHEET
ITA NO.815 OF 2008
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction(Income Tax)
ORIGINAL SIDE
COMMISSIONER OF INCOME TAX, SILIGURI
Versus
SHRI SHYAMAL SARKAR
BEFORE:
The Hon'ble JUSTICE GIRISH CHANDRA GUPTA
The Hon'ble JUSTICE ARINDAM SINHA
Date : 22nd April, 2015.
MR.M.P.AGARWAL, MR.P.DUDHERIA,ADVOCATES FOR APPELLANT
MR.R.BHARADWAJ,ADVOCATE FOR RESPONDENT
The Court: The subject matter of challenge in the appeal is a judgment dated 11th April, 2008 pertaining to the block period 1990-1991 to 2000-2001.
The learned Tribunal held that the assessment was barred by limitation for the following reasons:-
" O n plain reading of the above section it is evident that the A.O. before exercising power u/s.142 (2A) should objectively consider the material available with him and reach a bona fide conclusion/opinion that special audit u/s.142(2A) is essential in view of complexity of accounts coupled with interest of Revenue. Before us, no such document could be produced by the Ld. Departmental Representative whereby the A.O. has formed such opinion in terms of Sec.142(2A), as stated above. In the letter issued from the office of the C.I.T. Jalpaiguri to the A.C.I.T. Cir-2, Siliguri, there was mention of two letters bearing Nos.130 & 316 dated 26.06.2000 and 10.09.2000. But copies of these two letters were not produced before us. Furthermore, those letters were written before the start of the block assessment proceedings on 15.12.2000. Therefore, it is evident that even before the first day of assessment proceeding, the A.O. had formed opinion to get the accounts audited. Secondly, there is no order u/s. 142(2A) by the A.O.. The A.O. has only forwarded the administrative approval of the C.I.T. vide his letter dated 20.09.2000 to the Auditor Sri P. C. Maskara. Thirdly, in the letter dated 20.09.2000 written by the A.O. to the auditor there is no mentioned about the time within which audit report is to be submitted. As per clause (ii) of Explanation I of below Sec.158BE (2), what is to be excluded from the period of limitation is the time given to the Auditor to conduct the audit. If there would be no specific period given to the auditor for completing the audit, then no period can be excluded. The period of limitation has to be decided only on the express provisions as contained in Chapter XIV-B of the Act relating to block assessments. In Chapter - XIV-B, Sec. 158BE(1) provides the period of limitation. As per clause (b) of Sec. 158BE(1), the assessment of the block period is to be completed within two years from the end of the month in which the last authorization for the search u/s. 132 was executed. Such period of limitation can be extended only if the conditions prescribed in various clauses of Explanation I below Sec. 158BE(2) are satisfied. It was contended by the Revenue that the conditions prescribed in clause (ii) of Explanation I below Sec. 158BE(2) are satisfied i.e. the accounts of the assessee were got audited u/s.142(2A). We have already examined this contention of the Revenue and we have noticed that there is no order for getting the accounts audited u/s. 142(2A) by the A.O.. The A.O. has simply forwarded such forwarding letter no time limit is prescribed within which the audit is to be completed. Therefore, in our opinion, the conditions prescribed in clause (ii) of Explanation I below Sec. 158BE(2) are not satisfied and, therefore, the A.O. was required to complete the audit as per Sec. 158BE(1)(b). The search has taken place at the assessee's premises on 18.08.1999. The two years from the end of the month would complete on 31.08.2001. The assessment order is passed by the A.O. on 28.01.2002, which is clearly barred by limitation. Therefore, the assessment order being barred by limitation is annulled."
Aggrieved by the order of the learned Tribunal, the revenue has come up in appeal. The following question of law was suggested;-
" a) Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that the assessment made on 28.1.2002 was time barred in terms of section 158BE(1)(b) of the Income tax Act, 1961, read with clause (ii) of Explanation below section 158BE of the Act to the effect that the period of limitation would be extended by the time taken for special audit under section 142(2A) of the Income-tax Act, 1961 conducted in accordance with the approval of the Commissioner of Income-Tax accorded on the proposal of the Assessing Officer and consent of the assessee thereto with reference to the search material in the possession of the Assessing Officer handed over to the Auditor? "
It is not in dispute that the assessment should have been completed on or before 31 August, 2001, which would be within a period of two years, as required under section 158BE (2)(b). It is also not in dispute that the period of two years shall correspondingly be extended by the time which was consumed in carrying out the special audit under Explanation (1) (ii) of section 158BE.
In this case the audit commenced on 13th November 2000 and was concluded on 24th April, 2001. Thus 163 days were consumed in the audit. Therefore, the period of 163 days has to be excluded from the period of limitation. It is not also in dispute that the delay is of 150 days under Section 158BE2 (b). If the period of audit comprising of 163 days is to be excluded, the natural consequence will be that the assessment was within time.
Mr. Bharadwaj, learned advocate, however, contended that the audit is of no consequence because the order required under section 142(2A) of the Income Tax Act was never passed. Therefore, the period consumed by audit cannot be excluded. He also relied upon the views expressed by the Tribunal quoted above.
We have not been impressed by this submission. The fact that the audit was in fact made is ample proof of the fact that an order for audit was also passed without which the audit could not have taken place. There is a presumption in law that all official and judicial acts were regularly performed. The presumption is reinforced by the fact that it is an admitted position that the assessee had paid the fees of the auditor. The defect, if any, in the proceeding which culminated into the order for audit and the submission of the audit report are mere irregularities which shall not invalidate the proceeding. Reference in this regard may be made to section 292B of the Income-Tax which provides as follows:-
" 2 92B. Return of income, etc., not to be invalid on certain grounds.- No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. "
The reasons assigned by the learned Tribunal are, according to us, not sustainable.
For the aforesaid reasons, the order under challenge is set aside. The question formulated above is answered in the negative and in favour of the revenue.
However, it appears that the Tribunal did not go into the other points raised by the assessee because the point of limitation was decided in his favour as would appear from paragraph 6.7 of the impugned judgment, which reads as follows:-
" 6 .7. The assessee has also raised various grounds against the additions sustained by the C.I.T.(A). As we have annulled the assessment, these grounds raised by the assessee against various additions do not survive. "
Since the decision of the learned Tribunal on the point of limitation has been reversed by us, the matter must go back to the Tribunal so that the assessee gets a fair opportunity of urging of all such points other than the point of limitation on merits of the order.
The appeal is thus disposed of.
(GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) sb.