IN HIGH COURT OF JUDICATURE AT MADRAS DATED:18.12.2019 CORAM HON'BLE DR.JUSTICE VINEET KOTHARI AND HON'BLE MR.JUSTICE R.SURESH KUMAR Tax Case Appeal No.935 of 2009 A.P.Shanmugaraj ... Appellant Vs. Deputy Commissioner of Income Tax, Special Investigation Circle, Erode. ... Respondent Tax Case Appeal filed under Section 260A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal 'A' Bench, Chennai dated 15.12.2008 in I.T.(SS)A.No.16/Mds/01. For Appellant : Mr.P.Rajavelu For Mr.R.Senniappan For Respondent : Mr.T.R.Senthilkumar Senior Standing Counsel JUDGMENT (Judgment of Court was delivered by DR.VINEET KOTHARI,J.) Assessee - A.P.Shanmugaraj has filed this appeal under Section 260A of Income Tax Act, 1961 (in short 'Act') arising from order of learned Tribunal in I.T(SS)A.No.16/Mds/01 dated http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 2/14 15.12.2008. present appeal was admitted by Coordinate Bench of this Court on 20.10.2009 on following substantial question of law: "Whether on facts and circumstances of case and in law, Tribunal was justified in not considering commencement of period as 21.04.2000 instead of 20.04.2000, which is date of service of order/direction under Section 142(2-A) of Income Tax Act, 1961?" 2.The Tribunal in its impugned order held that Block Assessment Order passed by Assessing Authority against Assessee on 13.11.2000 was within limitation and was not hit by bar of limitation. In present case, Block Assessment in question was made against Assessee for period 01.04.1988 to 01.07.1998 in terms of provisions of Section 158BC(c) read with Section 153 of Act. observations of learned Tribunal in impugned order are quoted below for ready reference: "3.On hearing both sides in detail, we find that only issue involved in appeal is calculation of limitation period in case where reference for special audit was made by Assessing Authority under section 142(2A). issue is - what is period to be excluded http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 3/14 for purpose of computing limitation. 4.Section 153 speaks about time limit for completion of assessment and reassessment. As per Explanation 1(iii) below section 153(3), period commencing from date on which Assessing Officer directs assessee to get his accounts audited under 142(2A) and ending with date on which he is required to furnish report, is to be excluded. 5.In present case, Assessing Officer vide his order dated 17.4.2000 directed assessee to get his accounts audited and submit report by 31.7.2000. This period has to be excluded while computing limitation for passing block assessment order. 6.According to assessee, order of Assessing Officer was served on him only on 20.4.2000 and therefore, only period from 20.4.2000 to 31.7.2000 can be excluded while computing limitation period as per which block assessment order should have been passed on 11.11.2000. In fact, in present case, block assessment was passed on 13.11.2000. 7.Therefore, it is clear that while dispute is raised on basis of two days, i.e. whether 17.4.2000 is to be reckoned or 20.4.2000 is to be reckoned. If argument of assessee is to be accepted, order should have been passed on 11.11.2000. But, it is to be seen that 11.11.2000 was Saturday, which was holiday for Central Government offices. next day 12.11.2000 was http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 4/14 Sunday. immediately following working day was 13.11.2000. block assessment order has been passed on day of 13.11.2000. Therefore, case of two days relied by assessee has been undone by successive holidays on 11.11.2000 and 12.11.2000. These holidays defeat case of assessee. Therefore, there is no question of any limitation as argued by assessee. This block assessment has been passed within period of limitation framed by law. 8.In result, appeal filed by assessee on question of limitation is dismissed." 3.We have reformulated question in following manner: "Whether period of limitation prescribed under Section 153BE Explanation (iii) will commence from date of direction/order of Assessing Authority under Section 142(2A) of Act ending with date before which report of special audit under Section 142(2A) of Act is to be furnished or not?" or "Whether period of limitation to be excluded under Section 153 of Act will commence from date of receipt of order/direction by Assessee of special audit under Section 142(2A) of Act?" http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 5/14 4.The learned counsel for Assessee urged that since order under Section 142(2A) of Act was passed by Assessing Authority on 17.04.2000, but was served upon Assessee only on 20.04.2000, therefore, period commencing from 20.04.2000 till 31.07.2000 viz., 102 days only will be excluded and added to period of limitation for passing Block Assessment which otherwise required to be passed on 31.07.2000, but was actually passed on 13.11.2000 viz., beyond 102 days of excluded period of limitation and therefore, Block Assessment was hit by limitation as prescribed in Section 158BE read with Section 153 of Act and learned Tribunal has erred in holding same to be in limitation. 5.On other hand, learned counsel for Revenue has urged that terms of Section 142(2A) of Act read with Section 158BE of Act, Explanation 1 thereto, period of limitation to be excluded is period commencing from day on which Assessing Officer directs Assessee to get his accounts audited under sub- section (2A) of Section 142 and ending on day on which Assessee is required to furnish Report of such audit under that sub- section. He drew attention of this Court that Section 158BE of Act and Section 142(2A) of Act which are quoted below for ready reference. http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 6/14 Section 158BE "Time limit for completion of block assessment. 158BE. 34[(1) order under section 158BC shall be passed (a) within one year from end of month in which last of authorisations for search under section 132 or for requisition under section 132A, as case may be, was executed in cases where search is initiated or books of account or other documents or any assets are requisitioned after 30th day of June, 1995, but before 1st day of January, 1997; (b) within two years from end of month in which last of authorisations for search under section 132 or for requisition under section 132A, as case may be, was executed in cases where search is initiated or books of account or other documents or any assets are requisitioned on or after 1st day of January, 1997. (2) period of limitation for completion of block assessment in case of other person referred to in section 158BD shall be (a) one year from end of month in which notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets requisitioned after 30th day of June, 1995, but before 1st day of January, 1997; and (b) two years from end of month in which http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 7/14 notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after 1st day of January, 1997.] [Explanation 1. In computing period of limitation for purposes of this section, (i) period during which assessment proceeding is stayed by order or injunction of any court; or (ii) period commencing from day on which Assessing Officer directs assessee to get his accounts audited under sub-section (2A) of section 142 and ending on day on which assessee is required to furnish report of such audit under that sub-section; or" Section 142(2A): "142.Inquiry before assessment. ..... [(2A) If, at any stage of proceedings before him, [Assessing] Officer, having regard to [the nature and complexity of accounts, volume of accounts, doubts about correctness of accounts, multiplicity of transactions in accounts or specialised nature of business activity of assessee, and] interests of revenue, is of opinion that it is necessary so to do, he may, with previous approval of [[Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner], direct assessee to get accounts audited by accountant, as defined in http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 8/14 Explanation below sub-section (2) of section 288, nominated by [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner] in this behalf and to furnish report of such audit in prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as [Assessing] Officer may require : [Provided that Assessing Officer shall not direct assessee to get accounts so audited unless assessee has been given reasonable opportunity of being heard.] (2B) provisions of sub-section (2A) shall have effect notwithstanding that accounts of assessee have been audited under any other law for time being in force or otherwise. (2C) Every report under sub-section (2A) shall be furnished by assessee to [Assessing] Officer within such period as may be specified by [Assessing]Officer : Provided that [Assessing] Officer may, [suo motu, or] on application made in this behalf by assessee and for any good and sufficient reason, extend said period by such further period or periods as he thinks fit ; so, however, that aggregate of period originally fixed and period or periods so extended shall not, in any case, exceed one hundred and eighty days from date on which direction under sub- section (2A) is received by assessee." http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 9/14 6.On bare perusal of provisions of Act quoted above, it is very clear that period of limitation prescribed in Section 158BE of Act excludes period commencing from date on which Assessing Officer directs Assessee to get his accounts audited viz., date of order under Section 142(2A) of Act. date of order or direction to get accounts audited is important and not date on which such order or direction under Section 142(2A) of Act is served on Assessee or received by Assessee. In present case, order under Section 142(2A) of Act was made by Assessing Authority on 17.04.2000 directing Assessee to get special audit completed and furnished report on or before 31.07.2000. difference between these two dates is 105 days. If these 105 days are added to last date before which Audit Report was furnished viz., 31.07.2000, date of assessment will get extended upto 13.11.2000. assessment for block period in present case was made by Assessing Authority admittedly on 13.11.2000 itself and therefore apparently said assessment is within limitation. 7.The contention of learned counsel for Assessee is that period of exclusion should be computed from date on which http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 10/14 order under Section 142(2A) of Act was served upon Assessee viz., on 20.04.2000 till 31.07.2000 which will give exclusion period of 102 days only and therefore, Assessment Order passed on 13.11.2000 will be hit by bar of limitation. This contention in our considered opinion is misconceived and contrary to clear and bare language of provisions of Act which employed word "directs Assessee to get his accounts audited". These words are in contra distinction to words employed in Section 142(2A) proviso where extension of period by 180 days will become effective from date when order of extension is received by Assessee. proviso to Section 142(2A) quoted above, clearly uses words "received by Assessee" and not "directs Assessee". This distinction of two different phrases at two different places cannot be intermixed or confused with each other. 8.We draw support for reasons, which we have given above, from decision of Delhi High Court in case of Nokia India Pvt. Ltd. V. Additional CIT, [2018] 402 ITR 517 (Delhi), when dealing with similar controversy, Division Bench of Delhi High Court clearly held that Clause (iii) of Explanation 1 to Section 153 of Act refers to period commencing from date when http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 11/14 Assessing Officer directs Assessee to get his accounts audited under Section 142(2A) ending with date on which Assessee is required to furnish report of audit. Paragraphs 27 and 28 of Judgment of Delhi High Court are quoted below for ready reference: "For reasons elucidated, we do not find any merit in said contention raised and interpretation placed by petitioner. Section 142(2A) of Act empowers Assessing Officer to pass order directing special audit. Clause (iii) of Explanation 1 to Section 153 refers to period commencing from date when Assessing Officer directs assessee to get his accounts audited under sub-section (2A) of Section 142 ending with date on which assessee is required to furnish report of such audit, and states that this period is to be excluded. starting point is date on which Assessing Officer directs assessee to get his accounts audited and not date on which said order is received by assessee. period of exclusion under clause (iii) of Explanation 1 to section 153 ends on last date on which assessee is required to furnish his report of special audit. This is end point and not beginning. proviso to sub-section (2C) of section 142 serves different purpose and stipulates outer time limit within which special audit must be completed. It postulates and states that Assessing Officer cannot grant extension for period exceeding 180 days. This period would commence not on date when order is passed, but from date on which direction under sub-section (2A) of section 142 is received by assessee. reason is obvious. There could be some time gap between date of passing of order for special audit and date when order is communicated to assessee. time period stipulated by Assessing Officer for completion of special audit would http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 12/14 commence only from date when assessee is communicated and receives order and not date of order. outer time limit of 180 days specified in proviso has been fixed with reference to date on which direction under sub-section (2A) of section 142 is received by assessee and not from date of passing of order." 9.In view of this clear position, we are of opinion that there is no merit in appeal filed by Assessee. 10.Before we part, we may observe that reason given by learned Tribunal in para 7 of its impugned order for holding Block Assessment Order passed on 13.11.2000 to be within limitation on ground that though as per argument of Assessee, limitation would have expired on 11.11.2000 which was Saturday and following day i.e., 12.11.2000 being Sunday, order passed on 13.11.2000 would be saved, because of said two non-working days is not correct reasoning, but order passed on 13.11.2000 was even otherwise within limitation as per clear provisions of Act which excluded period of special audit from date of issuance of directions on 17.04.2000 till 31.07.2000 = 105 days which extended limitation for completing assessment upto 13.11.2000 per se. Therefore, even though reason assigned by http://www.judis.nic.in Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 13/14 learned Tribunal for holding assessment to be within limitation is incorrect, but conclusion arrived at by learned Tribunal is legally sustainable conclusion as per interpretation of provisions of Act given by us herein above. 11.In view of same, Appeal filed by Assessee is liable to be dismissed and accordingly, it is dismissed and question of law arising matter is answered in favour of Revenue and against Assessee. No order as to costs. (V.K.J.) (R.S.K.J.) 18.12.2019 Index : Yes/No Speaking Order : Yes/No Sgl To Income Tax Appellate Tribunal 'A' Bench, Chennai. Judgment dated 18.12.2019 in T.C.A.No.935/2009 [A.P.Shanmugaraj V. Deputy Commissioner of Income Tax] 14/14 DR.VINEET KOTHARI, J. And R.SURESH KUMAR, J. Sgl T.C.A.No.935 of 2009 18.12.2019 A.P. Shanmugaraj v. Deputy Commissioner of Income-tax, Special Investigation Circle, Erode