Dr. Satish Chandra, J. - Present appeal has been filed by the appellant-assessee under Section 260-A, against the judgment and order dated 05.01.2012, passed by the Income-tax Appellate Tribunal, Lucknow, in I.T.A. No.119/Lko/2007, for the assessment year 2003-04.
2. On 11.05.2012, a Coordinate Bench has admitted the appeal on the following substantial question of law:—
"Whether the ITAT has committed substantial illegality by not recording a finding in terms of judgment of this Court dated 28.07.2009, passed in Income Tax Appeal No.148 of 2008 whereby the Division Bench of this Court held that it is not evident as to under what circumstances the special audit was not completed within the stipulated period of 30 days or whether the period of audit was extended by the assessing authority ?"
3. The brief facts of the case are that the appellant-assessee is an apex level cooperative society registered under the Cooperative Societies Act, 1965 and is engaged in various business including the purchase and sale of agricultural products, seeds and fertilizers as a nodal agency of Government of U. P. It has several but different sections like marketing, trade, sugar projects, cold storage, seeds, fertilizers etc. It has also rental income from the godowns.
4. It appears from the record that on 08.03.2006, for the assessment year under consideration, the A.O. has asked the assessee to get its accounts audited under section 142(2A) of Act and submitted audited report within a period of 30 days. Instead of making the compliance of directions, the assessee has challenged the letter dated 08.03.2006 before the Hon'ble High Court by filing a writ petition, which was dismissed on 30.03.2006. Not being satisfied, the assessee has filed the SLP before the Hon'ble Supreme Court, which was also dismissed in limine.
5. In view of above, the A.O. wrote another letter dated 01.06.2006 and asked the assessee to do the needful. There was no response on the part of the assessee. On 09.06.2006, the A.O. has no other option except to frame the assessment order under section 144 of the Income-tax Act. In first appeal, the assessee took the plea that the assessment order is time barred. According to the assessee, the assessment order should have been passed on 30.03.2006, but it was passed on 09.06.2006. But the CIT (A) has dismissed the appeal and the Tribunal has also dismissed the appeal. On 30.04.2008, the Tribunal also dismissed the appeal I.T.A. No.119/Luc/2007 filed by the assessee and the same was assailed before this Hon'ble Court by filing an appeal bearing I.T.A.No.148 of 2008 before this Court, where this Hon'ble Court vide order dated 28.08.2009 has passed the following order:—
"Before us, the question is as to whether the assessment made by the A.O. was barred by limitation or not Section 153 of the Income Tax Act deals with time limit for completion of the assessment. As per Clause (iii) to Explanation 1 of section 153, the period commencing from the date on which the A.O. directs the assessee to get his account audited under section 142 (2A) till the last day on which assessee was required to furnish the report of such audit would be excluded for the purpose of limitation pertaining to assessment order. In the instant case, the A.O. has directed the assessee to get his account audited by his letter dated 08.03.2006 and the time given to the assessee to furnish the report within 30 days after receiving the letter. The letter was served on the assessee on 13.03.2006. Thus, special audit report was supposed to be furnished within 30 days from the said date i.e. 13.03.2006.
However, from the record, it is not evident that as to under what circumstances the special audit was not completed within the stipulated period of 30 days or whether the period is extended by the A.O. It is also not evident as to whether the assessee has cooperated with the auditor or not. As these questions of fact has not been dealt by the Tribunal in its impugned order and as such we set aside the impugned order passed by the Tribunal and remit the matter to examine the aforesaid questions of fact and record a categorical finding after examining the entire evidence as per law and pass necessary order de novo by providing a reasonable opportunity to the assessee. The Tribunal will be at liberty, in the interest of justice, to admit the fresh evidence, if need be.
In the result, the appeal filed by the assessee is allowed for statistical purpose."
6. In compliance to the direction passed by this Hon'ble Court, the Tribunal has passed the impugned order on the issues:
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whether the assessment is barred by limitation; and |
(ii) |
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whether there was circumstances which warrants the Assessing Officer to get the accounts audited under section 142 (2A) of the Act. |
7. Both the issues were decided by the Tribunal against the assessee. Still not being satisfied, again the assessee is before us in the present appeal. Thus, it is second round of litigation.
8. With this background, Sri Mudit Agrawal, learned counsel for the assessee, with the help of Section 153, Explanation 1 sub-clause (iii) and the proviso to Explanation 1, submits that since original period for framing the assessment had expired on 30.03.2006 and there was no time left out on the day when the time given in the letter dated 08.03.2006 for getting its accounts audited had expired, no further time can be given to the Assessing Officer to frame the assessment. Therefore, the assessment is barred by limitation. He further submits that when no period is left out, it can not be extended to 60 days as per proviso to Explanation 1 to the section 153 of the Act. Lastly, he made a request to set aside the impugned order.
9. On the other hand, Sri Alok Mathur, learned counsel for the Department relied on the orders of authorities below. He submits that clause (iii) of Explanation 1 to section 153 of the Act deals with the exclusion of period given in the letter for getting the accounts audited from the total period available with the Assessing Officer for completing the assessment. According to the learned counsel, the proviso to Explanation-1 speaks that whether the time left out with the A.O. after exclusion of the period given in the letter for getting the accounts audited is less than 60 days, such remaining period shall be extended to 60 days and the aforesaid period of limitation shall be deemed to be extended automatically. Lastly, he made a request for dismissal of the appeal.
10. After hearing both the parties and on perusal of the record, it appears that only dispute before us is whether the assessment was time barred or not.
11. For ready reference, we extract clause (iii) of Explanation 1 to section 153, which on reproduction, reads as under:—
"153. Time limit for completion of assessments and reassessments.— (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of—
Explanation 1.— In computing the period of limitation for the purposes of this section.
(iii) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited under subsection (2A) of section 142 and ending with the last date on which the assessee is required to furnish] a report of such audit under that sub-section, or
Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections (1), (1A), (1B) (2), (2A) and (4) available to the Assessing Officer for making an order of assessment, reassessment or recomputation, 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:"
12. It is the submission of the learned counsel for the appellant-assessee that the A.O. has issued a letter for getting the accounts audited on 31.03.2006 or on the last date of the availability period, he would get another 60 days for completing the assessment from the date on which the report is required to be furnished because as per the Limitation Act, the day on which the letter issued is to be excluded. Hence, it is evident that the A.O. was having only one day which is less than 60 days.
13. But fact remains that in the instant case, the A.O. has issued the first letter on 08.03.2006, which was received by the assessee on 13.03.2006. So, the assessee was required to get its accounts audited to 12.04.2006. In normal course, it is expected that the A.O. will complete the assessment within the assessment year in question i.e. 31.03.2006, but he wrote a letter to the assessee for getting its accounts audited. Therefore, the period from 08.03.2006 to 31.03.2006 is excluded from the computation of period for the purpose of completing the assessment. Thus, the period of 23 days was available with the A.O., but by virtue of the proviso, this period is extended to 60 days. Thus, the 60 days will start from 12.04.2006 and ends on 10.06.2006. In other words, the A.O. was having the time upto 10.06.2006. The assessment order was passed by the A.O. on 09.06.2006. Hence, the assessment order was framed within the time and it is not time barred as wrongly claimed by the assessee.
14. Further, it is the assessee who has delayed the matter. When on 08.03.2006, the A.O. has written a letter first time, it was the pious duty of the assessee to get its accounts audited under section 142 (2A) of the Act or file objection, instead of that the assessee reached upto Hon'ble the Supreme Court. It would have been better, if everything was right, the accounts might have been audited as per direction of the A.O. especially when the assessee claimed that accounts were perfect and there was no requirement for getting accounts audited. Litigation cost is much higher in comparison of the audit fee.
15. Moreover, in the instant case, the assessee never filed any objection against the letter dated 08.03.2006. Due to non-cooperation of the assessee, the A.O. was forced to pass the ex parte assessment order under Section 144 of the Act and only after the assessment order, the assessee has filed the objections. The conduct of the assessee can not be appreciated.
16. Hence, the answer to the substantial question of law is in favour of the Department and against the assessee.
In the result, appeal filed by the assessee is dismissed.