Case Note & Summary
The case involves a batch of appeals by the Commissioner of Income Tax against the judgment of the Delhi High Court, which had dismissed the Revenue's appeals and upheld the Income Tax Appellate Tribunal's decision that the Assessing Officer had no jurisdiction to extend time for submission of the special audit report under Section 142(2C) of the Income Tax Act, 1961, prior to the amendment inserting the word 'suo motu' with effect from 1 April 2008. The assessees contended that the Assessing Officer could only extend time upon an application by the assessee, and since no such application was made, the assessment under Section 153A was barred by limitation. The Revenue argued that the Assessing Officer had inherent power to extend time, and the amendment was clarificatory. The Supreme Court analyzed the language of Section 142(2C) and the legislative history, including the Finance Act, 2008, and Circular No. 1/2009. The court held that the Assessing Officer had the power to extend time suo motu even before the amendment, as the requirement of an application was not a condition precedent but a mode of exercise of power. The amendment was clarificatory, and the assessments were not barred by limitation. The court allowed the Revenue's appeals and set aside the High Court's judgment.
Headnote
A) Income Tax - Special Audit - Section 142(2C) - Time Extension - The Assessing Officer had the power to extend time for submission of the audit report under Section 142(2C) even before the 2008 amendment, and the amendment inserting 'suo motu' was clarificatory in nature. The court held that the Assessing Officer could extend time on his own motion, subject to the overall limit of 180 days, and the requirement of an application by the assessee was not mandatory for the exercise of such power. (Paras 1-11) B) Income Tax - Limitation - Section 153B - Exclusion of Time - The period from the date of direction for special audit under Section 142(2A) until the date the assessee is required to furnish the audit report is excluded in computing the limitation period for assessment under Section 153A. The court held that the Assessing Officer's power to extend time under Section 142(2C) includes the power to extend time suo motu, and such extension is valid for the purpose of exclusion of time under Section 153B. (Paras 7-11)
Issue of Consideration
Whether, prior to the insertion of the expression 'suo motu' with effect from 1 April 2008 in Section 142(2C) of the Income Tax Act, 1961, the Assessing Officer had jurisdiction to extend time for submission of the audit report under Section 142(2A) on his own motion, or only upon an application by the assessee.
Final Decision
The Supreme Court allowed the appeals filed by the Revenue, set aside the judgment of the Delhi High Court, and held that the Assessing Officer had the power to extend time for submission of the audit report under Section 142(2C) even before the 2008 amendment, and the amendment was clarificatory. The assessments under Section 153A were not barred by limitation.
Law Points
- Interpretation of statutes
- Amendment clarificatory
- Suo motu power
- Limitation period
- Special audit
