The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench held that the assessment order passed barred by limitation cannot be extended under guise of special audit referred by AO.
The assessee, M/s Chet Ram Ravi Kumar pointed out that in the case of M/s Sunder Msal Satpal, the ITAT had held the reference of the AO u/s 142(2A) of the Act as not in accordance with law and accordingly the assessment order passed was held to be barred by limitation since the extended period taken under the guise of special audit could not have been counted.
The department on the other hand, vehemently contested the stand of the Counsel for the assessee. The primary contention being that the ITAT had no jurisdiction to decide the validity of the order for special audit.
The Counsel for the assessee stated that the issue raised therein stood covered in favour of the assessee by the decision of the ITAT in the case of Sunder Mal Satpal Vs. DCIT in ITA Nos.154 to 157/Chd/2013 vide order dated 15.06.2018. The Counsel for the assessee pointed out that the facts in the case of M/s Sunder Mal Satpal were identical to the case of the assessee. He stated that the assessee had been subjected to search proceedings u/s 132 of the Act on 24.10.2007 and during search certain incriminating documents relating to M/s Sunder Mal Satpal, who was a sister concern of the assessee, were found and seized. Accordingly proceedings u/s 153C of the Act were initiated and assessment completed on M/s Sunder Mal Satpal. He contended that during assessment proceedings of both the assessee and M/s Sunder Mal, a reference for special audit u/s 142(2A) of the Act was made by a common letter and the reasons for making the reference was identical. Our attention was drawn to the letter of the AO dated 13.01.2010 directing the assessee and M/s Sunder Mal Satpal to get their accounts audited u/s 142(2A) of the Act.
The coram of Judicial Member, Sanjay Garg and Accountant Member, Annapurna gupta held that it is well within the jurisdiction of the ITAT to entertain the grounds relating to validity of reference to special audit, after noting that the observation to the contrary by the apex court in the case of Sahara India was specific to those cases.
The ITAT further ruled that since undisputedly the issue raised before us, of the assessment order passed being barred by limitation on account of an invalid reference made for special audit, arises in the background of facts which are identical to that in the case of M/s Sunder Mal Satpal it stands covered by the decision of the ITAT in the said case, following which it is held that the reference for special audit in the present cases, u/s 142(A) of the Act, is invalid and the assessment orders so passed in the extended time are held to be barred by limitation.
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