In a recent decision the Delhi High Court observed that the Commissioner of Income Tax (CIT) has no role in extending timeframe as Assessing Officer (AO) was in seisin of assessment proceedings.
The record showed that the Assessment Order was framed on 10.08.2010. In the interregnum, the initial timeframe granted for completion of the audit, which was 120 days as noted above, was extended by another 60 days, i.e., up to 13.06.2010, at the request of the Special Auditor. The Special Auditor made a request in this behalf via communication dated 25.03.2010.
The AO on the very next day, conveyed to the respondent/assessee that the CIT had granted the auditor, i.e., Messrs Dinesh Mehta and co, an extension of 60 days for furnishing the audit report.Thus, the moot issue that arises for consideration is whether the extension of time for submitting the audit report was granted by thespecified authority having regard to the provisions of the proviso appended to Section 142 (2C) of the Income Tax Act.
The counsel for the assessee submitted that the power to extend the time for the conduct of audit impliedly includes the power to extend the original timeframe. This power subsisted even before the insertion of Section 142(2C) and the proviso appended to it. Therefore, if the direction for the conduct of the audit is issued with the approval of the CIT, and the subsequent amendment is only clarificatory, there can be no infirmity in seeking the approval of the same authority for an extension of time.
The counsel for the revenue submitted that pertinently, nothing has been brought on record which would suggest that an extension of time for the conduct of the audit was granted for good and sufficient reason, as mandated by the proviso appended to subsection (2C) of section 142 of the Income Tax Act. Thus, the Tribunal rightly concluded that the extension of time granted in the matter did not align with the provisions of Section 142(2C) of the Income Tax Act. Therefore, the assessment order dated 10.08.2010 was barred by limitation.
A Division Bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that “The legal tenability of the decision taken in the matter depends on which specified authority was invested with the power to extend the timeframe. As discussed above, since the legislature vested the discretion to extend the timeframe solely in the AO, he could not haveabdicated that function and confined his role to only making a recommendation to the CIT. The CIT had no role in extending the timeframe as the AO was in seisin of the assessment proceedings.”
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