The Delhi High Court has held that the Commissioner of Income Tax ( Appeals ) (CIT (A)) cannot extend the time for submission of an audit report under section 142 (2C ) of the Income Tax Act, 1961.
The appellant/revenue seeks to assail the common order dated 30.09.2020 [“impugned order”] passed by the Income Tax Appellate Tribunal [“Tribunal”] which was in favour of the assessee, B L Kashyap and Sons Ltd.
The Assessing Officer has granted an extension of time under the proviso to Section 142(2C) of the Income Tax Act, 1961 (The Act’). The question was whether the power of extension of time under the proviso to Section 142(2C) of [the] Act is procedural/administrative and can be exercised by an authority superior to the Assessing Officer
The sub-section (2A), (2C) and the proviso appended to Section 142(2C), whether the power conferred on the AO can be exercised by an authority other than the AO. As long as the authority retains the power to exercise the discretion vested in it by the statute, no fault can be found if it employs ministerial means in effectuating the exercise of discretionary power by the authority in which such power is reposed.
It was found that the decision taken to get an audit conducted under Section 142(2A) of the Act is a step in the process of assessment proceedings and, therefore, is not an administrative power; as the appointment of a special auditor entails civil consequences.
It was viewed that the initial exercise of the power has been explicated as one that is not administrative, the CIT(A) could not have extended the time based on the recommendation of the AO. However, the enunciation of this legal principle does not derogate from our observation above that since the discretionary power was vested in the AO (which was non-delegable), it could not have been exercised by the CIT, irrespective of the nature of the power.
A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia answered the questions of law against the appellant/revenue and in favour of the respondent/assessee.
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