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2019 Supreme(SC) 362

SUPREME COURT OF INDIA
DHANANJAYA Y CHANDRACHUD, HEMANT GUPTA, JJ.
The Commissioner of Income Tax, New Delhi – Appellants
Versus
Ram Kishan Dass – Respondents
Civil Appeal No 3211 of 2019 (Arising out of SLP (C) No 2810 of 2012) WITH Civil Appeal No(s). 3214, 3212, 3213, 3228, 3230, 3215, 3229, 3216, 3219, 3220, 3217, 3221, 3218, 3222, 3223, 3225, 3226, 3224, 3227 of 2019 @SLP (C) No. 6082, 2808, 2811, 27681, 36495, 6680, 36496, 7573, 8761, 9463, 7660, 9720, 8512, 10191, 10190, 12026, 12027, 11869, 16130 of 2012, Civil Appeal No 2951 of 2012, Civil Appeal Nos.4334, 4599, 5305 of 2017, Civil Appeal Nos.3231, 3232, 3233 of 2019 @ SLP (C) Nos. 10248, 10247, 17500 of 2017 and Civil Appeal No 7076 of 2017
Decided on : 26-03-2019

Advocates Appeared:
For Petitioner(s): Ms. Pinky Anand,ASG Mr. Arijit Prasad,Adv. Mr. Pranay Ranjan,Adv. Ms. Kirti Dua,Adv. Mr. T.M. Singh,Adv. Mrs. Anil Katiyar, AOR Mr. V. Giri,Sr.Adv. Mr. V. Balaji,Adv. Mr. C. Kannan,Adv. Mr. Rakesh K. Sharma, AOR
For Respondent(s): Mr. Ajay Vohra,Sr.Adv. Ms. Kavita Jha, AOR Mr. Vaibhav Kulkarni,Adv. Mr. Udit Naresh,Adv. Rr-ex-parte, AOR Mr. Vikas Mehta, AOR Mrs. Anil Katiyar, AOR Mr. Ved Jain,Adv. Ms. Kislaya Parashar,Adv. Mr. Subodh S. Patil, AOR Mr. Praveen Swarup, AOR

IMPORTANT POINTS
This batch of appeals involves the interpretation of a cluster of provisions of the Income Tax Act 1961, particularly Section 142(2C). A Division Bench of the Delhi High Court dismissed a batch of appeals filed by the Revenue against an order dated 18 September 2009 of the Income Tax Appellate Tribunal. The Tribunal came to the conclusion that prior to the insertion of the expression “suo motu” with effect from 1 April 2008 in Section 142(2C), the assessing officer had no jurisdiction to extend time for the submission of the report of an auditor appointed under sub section (2A), of his own accord. As a consequence, it was held that the assessment which was made under Section 153A, in respect of the assessment years in question, was barred by limitation.

Headnote:(a) Income Tax Act, 1961 – Section 142(2C) – Extension of period of report of auditor – Assessing officer empowered to fix any reasonable time for submission of audit report within overall limit of 180 days – Assessing officer, in his judgment, initially fixing a lesser period as being reasonable and sufficient – Assessee entitled to apply for extension of period – Power of the Assessing officer to extend the same within the overall limit of 180 days without application by assessee cannot be foreclosed - However such extension must be for genuine reasons or, as the statute calls it, “for any good and sufficient reason”. (Para 18)
       (b) Income Tax Act, 1961 – Section 142(2C) – If the report cannot be submitted within time fixed by Assessing officer for good and sufficient reasons, assessee has remedy of applying for extension of the period – However, if assessee does not seek extension and the auditor could not finalise the report then it would be absurd to denude Assessing officer of power to extend the period without an application – The extension would however be within the overall limit of 180 days. (Para 19)
       (c) Income Tax Act, 1961 – Section 142(2C) – Word ‘and’ in the expression “and for any good and sufficient reason” should be read to mean ‘or’ – Interpretation of a word or expression would be based on the context in which it is used – ‘And’ has been held to conjunctive while delineating the circumstances on the basis of which an opinion can be arrived at by the assessing officer – However, it cannot be interpreted as such in the context of the formation of an opinion for ordering a special audit. (Para 20)
       (1969) 1 SCR 219 : AIR 1968 SC 1450 – Relied upon
       (2008) 14 SCC 151 – Referred
       (d) Interpretation of statute – Amendment of a procedural law – Made effective from 1 April 2008 – Does not mean it is not clarificatory – Held, the amendment being clarificatory, is retrospective – Moreover, amendments of procedural nature are presumed to have retrospective application. (Para 21, 23, 25)
       (2008) 9 SCC 622; [2014] 31 ITR 466 (SC); (2015) 1 SCC 1 – Relied upon
       (1994) 74 Taxman 8 (Pun.&Har.): [1994] 210 ITR 468; (2011) 333 ITR 308; (2011) 12 Taxman.com 334 (Allahabad); 2011 SCC OnLine All 1151 – Cited with approval
       (2004) 8 SCC 1; [2005] 279 ITR 310 (SC); (2005) 12 SCC 717 – Distinguished
       [2011] 203 TAXMAN 326 (Delhi) – ITA No. 1775/2010 - 2011 SCC Online Del 2463 – Overruled
       (e) Income Tax Act, 1961 – Section 142(2C) and 153B – Section 153B providing for exclusion of the period commencing from the date on which the assessing officer had directed the assessee to get his accounts audited under Section 142(2A) and ending on the day on which the assesee is required to furnish a report under that sub-section – Held, the principle governing exclusion of time remains the same with or without extension. (Para 24)
       Facts of the case:
       This batch of appeals involves the interpretation of a cluster of provisions of the Income Tax Act 1961, particularly Section 142(2C). A Division Bench of the Delhi High Court dismissed a batch of appeals filed by the Revenue against an order dated 18 September 2009 of the Income Tax Appellate Tribunal. The Tribunal came to the conclusion that prior to the insertion of the expression “suo motu” with effect from 1 April 2008 in Section 142(2C), the assessing officer had no jurisdiction to extend time for the submission of the report of an auditor appointed under sub section (2A), of his own accord. As a consequence, it was held that the assessment which was made under Section 153A, in respect of the assessment years in question, was barred by limitation.
       Finding of the Court:
       Provisions of Section 142(2C) of the Income Tax Act 1961, as they stood prior to the amendment which was enacted with effect from 1 April 2008 by the Finance Act, 2008 did not preclude the exercise of jurisdiction and authority by the assessing officer to extend time for the submission of the audit report directed under subsection (2A), without an application by the assessee. The amendment was intended to remove an ambiguity and is clarificatory in nature.
       Result: Civil Appeals @ SLP (C) Nos. 6082, 7573, 8761 and C.A. No. 2951 of 2012 restored to the file of the Commissioner of Income Tax (Appeals) for decision on merits. Civil Appeals @ SLP(C) Nos. 2808, 2811, 36496, 6680, 36495, 11869, 12026, 12027, 10191, 10190, 9720, 8512, 2810, 7660, 9463, 16130, 27681 of 2012; Civil Appeal Nos. 4599, 4334, 7076 of 2017; Civil Appeals @ SLP(C) Nos. 17500, 10248, 10247 of 2017 and C.A. No. 5305 of 2017 restored to the file of the Income Tax Appellate Tribunal for decision on merits.

JUDGMENT :

DHANANJAYA Y CHANDRACHUD, J.

1. Leave granted in the Special Leave Petitions.

2. This batch of appeals involves the interpretation of a cluster of provisions of the Income Tax Act 1961[“IT Act 1961”], particularly Section 142(2C). A Division Bench of the Delhi High Court by its judgment dated 27 May 2011 dismissed a batch of appeals filed by the Revenue against an order dated 18 September 2009 of the Income Tax Appellate Tribunal[“Tribunal”]. The Tribunal came to the conclusion that prior to the insertion of the expression “suo motu” with effect from 1 April 2008 in Section 142(2C), the assessing officer had no jurisdiction to extend time for the submission of the report of an auditor appointed under sub section (2A), of his own accord. As a consequence, it was held that the assessment which was made under Section 153A, in respect of the assessment years in question, was barred by limitation.

3. In the present batch of cases, the submission of the assessees is that the assessing officer had no jurisdiction or authority under Section 142 (2C), as it stood prior to 1 April 2008, to extend time for the submission of the audit report of the auditor appointed under the provisions of sub section (2A). In essence, the submission is that the assessing officer was authorized to extend time (not exceeding 180 days) from the date on which a direction under sub section (2A) was received by the assessee, only on an application made by the assessee and for any good and sufficient reason. If the assessee made no application, the assessing officer would have no jurisdiction – according to the assessees – to extend time.

4. The Revenue adopted a contrary position, submitting that even before 1 April 2008, the jurisdiction of the assessing officer to extend time for the submission of the audit report was not confined to a situation in which the assessee had made an application for extension. Consequently, the incorporation of a provision for a suo motu exercise of power by the assessing officer, with effect from 1 April 2008 by the Finance Act, 2008[“Finance Act”], was only intended to remove an ambiguity and was clarificatory in nature.

5. Section 142(2A) as it stood at the material time, provided as follows:

“(2A) – If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts of the assessee and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner of Commissioner, direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, nominated by the Chief Commissioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed form -duly signed and verified by such accountant and setting forth such particulars as may prescribed and such other particulars as the Assessing Officer may require:
Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee has been given a reasonable opportunity of being heard.”
Sub section (2C) of Section 142 was in the following terms:
“(2C) Every report under sub-section (2A) shall be furnished by the assessee to the Assessing Officer within such period as may be specified by the Assessing Officer:
Provided that the Assessing Officer may, on an application made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit; so, however, that the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub-section (2A) is received by the assessee.”

6. Consequent to the Finance Act, sub section (2C) was amended to read as follows:

“(2C) Every report under sub-section (2A) shall be furnished by the assessee to the As

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2019 Supreme(SC) 362

Cases Referred (6)