ORDER SHEET ITA NO.815 OF 2008 IN HIGH COURT AT CALCUTTA Special Jurisdiction(Income Tax) ORIGINAL SIDE COMMISSIONER OF INCOME TAX, SILIGURI Versus SHRI SHYAMAL SARKAR BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 22nd April, 2015. MR.M.P.AGARWAL, MR.P.DUDHERIA,ADVOCATES FOR APPELLANT MR.R.BHARADWAJ,ADVOCATE FOR RESPONDENT Court: subject matter of challenge in appeal is judgment dated 11th April, 2008 pertaining to block period 1990-1991 to 2000-2001. learned Tribunal held that assessment was barred by limitation for following reasons:- O n plain reading of above section it is evident that A.O. before exercising power u/s.142 (2A) should objectively consider material available with him and reach bona fide conclusion/opinion that special audit u/s.142(2A) is essential in view of complexity of accounts coupled with interest of Revenue. Before us, no such document could be produced by Ld. Departmental Representative whereby A.O. has formed such opinion in terms of Sec.142(2A), as stated above. In letter issued from office of C.I.T. Jalpaiguri to A.C.I.T. Cir-2, Siliguri, there was mention of two letters bearing Nos.130 & 316 dated 26.06.2000 and 10.09.2000. But copies of these two letters were not produced before us. Furthermore, those letters were written before start of block assessment proceedings on 15.12.2000. Therefore, it is evident that even before first day of assessment proceeding, A.O. had formed opinion to get accounts audited. Secondly, there is no order u/s. 142(2A) by A.O.. A.O. has only forwarded administrative approval of C.I.T. vide his letter dated 20.09.2000 to Auditor Sri P. C. Maskara. Thirdly, in letter dated 20.09.2000 written by A.O. to auditor there is no mentioned about time within which audit report is to be submitted. As per clause (ii) of Explanation I of below Sec.158BE (2), what is to be excluded from period of limitation is time given to Auditor to conduct audit. If there would be no specific period given to auditor for completing audit, then no period can be excluded. period of limitation has to be decided only on express provisions as contained in Chapter XIV-B of Act relating to block assessments. In Chapter XIV-B, Sec. 158BE(1) provides period of limitation. As per clause (b) of Sec. 158BE(1), assessment of block period is to be completed within two years from end of month in which last authorization for search u/s. 132 was executed. Such period of limitation can be extended only if conditions prescribed in various clauses of Explanation I below Sec. 158BE(2) are satisfied. It was contended by Revenue that conditions prescribed in clause (ii) of Explanation I below Sec. 158BE(2) are satisfied i.e. accounts of assessee were got audited u/s.142(2A). We have already examined this contention of Revenue and we have noticed that there is no order for getting accounts audited u/s. 142(2A) by A.O.. A.O. has simply forwarded such forwarding letter no time limit is prescribed within which audit is to be completed. Therefore, in our opinion, conditions prescribed in clause (ii) of Explanation I below Sec. 158BE(2) are not satisfied and, therefore, A.O. was required to complete audit as per Sec. 158BE(1)(b). search has taken place at assessee s premises on 18.08.1999. two years from end of month would complete on 31.08.2001. assessment order is passed by A.O. on 28.01.2002, which is clearly barred by limitation. Therefore, assessment order being barred by limitation is annulled. Aggrieved by order of learned Tribunal, revenue has come up in appeal. following question of law was suggested;- a) Whether on facts and in circumstances of case, Income-tax Appellate Tribunal is correct in holding that assessment made on 28.1.2002 was time barred in terms of section 158BE(1)(b) of Income tax Act, 1961, read with clause (ii) of Explanation below section 158BE of Act to effect that period of limitation would be extended by time taken for special audit under section 142(2A) of Income-tax Act, 1961 conducted in accordance with approval of Commissioner of Income-Tax accorded on proposal of Assessing Officer and consent of assessee thereto with reference to search material in possession of Assessing Officer handed over to Auditor? It is not in dispute that assessment should have been completed on or before 31 August, 2001, which would be within period of two years, as required under section 158BE (2)(b). It is also not in dispute that period of two years shall correspondingly be extended by time which was consumed in carrying out special audit under Explanation (1) (ii) of section 158BE. In this case audit commenced on 13th November 2000 and was concluded on 24th April, 2001. Thus 163 days were consumed in audit. Therefore, period of 163 days has to be excluded from period of limitation. It is not also in dispute that delay is of 150 days under Section 158BE2 (b). If period of audit comprising of 163 days is to be excluded, natural consequence will be that assessment was within time. Mr. Bharadwaj, learned advocate, however, contended that audit is of no consequence because order required under section 142(2A) of Income Tax Act was never passed. Therefore, period consumed by audit cannot be excluded. He also relied upon views expressed by Tribunal quoted above. We have not been impressed by this submission. fact that audit was in fact made is ample proof of fact that order for audit was also passed without which audit could not have taken place. There is presumption in law that all official and judicial acts were regularly performed. presumption is reinforced by fact that it is admitted position that assessee had paid fees of auditor. defect, if any, in proceeding which culminated into order for audit and submission of audit report are mere irregularities which shall not invalidate proceeding. Reference in this regard may be made to section 292B of Income-Tax which provides as follows:- 2 92B. Return of income, etc., not to be invalid on certain grounds.- No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to intent and purpose of this Act. reasons assigned by learned Tribunal are, according to us, not sustainable. For aforesaid reasons, order under challenge is set aside. question formulated above is answered in negative and in favour of revenue. However, it appears that Tribunal did not go into other points raised by assessee because point of limitation was decided in his favour as would appear from paragraph 6.7 of impugned judgment, which reads as follows:- 6 .7. assessee has also raised various grounds against additions sustained by C.I.T.(A). As we have annulled assessment, these grounds raised by assessee against various additions do not survive. Since decision of learned Tribunal on point of limitation has been reversed by us, matter must go back to Tribunal so that assessee gets fair opportunity of urging of all such points other than point of limitation on merits of order. appeal is thus disposed of. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) sb. Commissioner of Income-tax, Siliguri v. Shyamal Sarkar