The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that as the special audit reference was illegal, the assessment order is barred by time limitation and hence, liable to be quashed.
The return filed by the assessee on 30.09.2008, was subsequently revised on 02.07.2009 and finally on 31.03.2010. The return was selected for scrutiny assessment and accordingly, statutory notices were issued and served upon the assessee. As per the provisions of section 153(1) of the Act, the time period for completion of assessment was two years from the end of the A.Y in which the income was first assessable or one year from the end of the F.Y. in which a return or revised return relating to the assessment is filed under sub-sec. (4) or (5) of section 139, whichever is later. However, where a reference under subsection (1) of section 92CA is made during the course of proceedings for the assessment or reassessment, the period available for completion of assessment or reassessment as the case may be under sub-section shall be extended by 12 months.
The question before the Tribunal was whether the assessment order framed u/s 143(3) is passed within the period of limitation period prescribed under the Act or not.
The department contended that the information regarding conducting a special audit under section 142(2A) of the Act was intimated to the assessee. It was, therefore, said that the period taken for special audit u/s 142(2A) of the Act should also be excluded and if done so, then the assessment order so framed is well within the period of limitation.
Allowing the contentions of the assessee, the Tribunal said that “It is true that noticed dated 21.11.2011 was for both the A.Ys i.e. 2008-09 and 2009-10. However, each A.Y is considered to be a separate unit and, therefore, for each A.Y, the Assessing Officer must bring out his case. A perusal of the said notice, which is exhibited at pages 67 to 70 of the paper book, clearly reveals that though the notice pertained to accounts of A.Y 2008-09, but entire financial details referred to therein pertain to A.Y 2009-10. Even the order u/s 142(2A) of the Act dated 27.12.2011 which is exhibited at pages 91 to 98 of the paper, the ACIT has specifically mentioned that “the special audit u/s 142(2A) of the Act in the case of captioned assessee for A.Y 2009-10 is ordered accordingly”. This clearly proves that while making a reference u/s 142(2A) of the Act and thereafter passing the order u/s 142(2A) of the Act, the Assessing Officer did not apply his mind and mechanically adopted the figure of A.Y 2009-10 and passed the order u/s 142(2A) of the Act for A.Y 2009-10 without realising that he is dealing with A.Y 2008-09.”To Read the full text of the Order CLICK HERE