THE COMMISSIONER OF INCOME TAX, NEW DELHI vs. RAM KISHAN DASS

CIVIL APPEAL No. 3211/2019Supreme Court[2019] 5 S.C.R. 2526 March 2019Bench: 2 JudgesAuthor: D.Y. CHANDRACHUD, HEMANT GUPTA COMMISSIONER OF21 pages
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What were the facts?

The Commissioner of Income Tax (Revenue) appealed against the Delhi High Court's decision, which upheld the Tribunal's order. The Tribunal had ruled that prior to the insertion of 'suo motu' in Section 142(2C) of the Income Tax Act, 1961, effective April 1, 2008, the Assessing Officer (AO) lacked the jurisdiction to suo motu extend the time for submitting a special audit report under Section 142(2A). Consequently, assessments made under Section 153A for the relevant assessment years were considered time-barred. The dispute centers on whether the AO could extend the audit report submission deadline without an assessee's application before the amendment.

What did the Supreme Court hold?

The Supreme Court held that the provisions of Section 142(2C), as they stood prior to the amendment effective April 1, 2008, did not preclude the Assessing Officer (AO) from exercising jurisdiction and authority to extend the time for the submission of an audit report directed under Section 142(2A), without an application from the assessee. The Court reasoned that the power to direct an audit under Section 142(2A) necessarily includes the incident of power under Section 142(2C) to fix and extend time for submission. The proviso to Section 142(2C) was intended to provide a remedy for the assessee but not to restrict the AO's inherent authority to extend time for good and sufficient reasons, even without an application. The amendment was considered clarificatory in nature, intended to remove ambiguity. The Court overruled the Delhi High Court's decision in Commissioner of Income Tax v Bishan Swaroop Ram Kishan Agro Pvt. Ltd. The principle established is that the AO's authority to fix time for audit report submission includes the authority to extend it suo motu, subject to the overall 180-day limit, and this principle was operative even before the 2008 amendment. The appeals were allowed, and related matters were restored to the respective authorities for decision on merits.

What were the issues?

1. Whether, prior to the insertion of the expression ‘suo motu’ in Section 142(2C) w.e.f. 01.04.2008, the Assessing Officer had the jurisdiction to extend the time for submission of an audit report appointed under Section 142(2A) of his own accord, thereby impacting the limitation period for assessments under Section 153A. Assessee's Contention: The assessee argued that the assessment made under Section 153A was barred by limitation because the AO had no jurisdiction to extend the time for the audit report submission suo motu prior to the amendment. They relied on the Delhi High Court's decision in Commissioner of Income Tax v Bishan Swaroop Ram Kishan Agro Pvt. Ltd. Revenue's Contention: The Revenue contended that the AO's power to extend time for the audit report submission was inherent and did not require an assessee's application, even before the amendment. They argued that the amendment was clarificatory and the AO's actions were valid. They cited various High Court decisions supporting their view, including Jagatjit Sugar Mills Co Ltd v Commissioner of Income Tax, Commissioner of Income Tax, Cochin v Popular Automobiles, and Ghaziabad Development Authority v Commissioner of Income Tax, Ghaziabad (UP).

Which sections of the Income-tax Act were involved?

Section 142(2A),Section 142(2C),Section 153A,Section 271,Section 144,Section 153B

AI-generated summary — verify with the full judgment below

A B C D E F G H 25 THE COMMISSIONER OF INCOME TAX, NEW DELHI v. RAM KISHAN DASS (Civil Appeal No. 3211 of 2019) MARCH 26, 2019 [DR. DHANANJAYA Y CHANDRACHUD AND HEMANT GUPTA, JJ.] Income Tax Act, 1961 – s. 142(2A) – Inquiry before assessment – Special audit – Extension of time for submission of the audit report of the auditor appointed under the provisions of s. 142(2A) – Juri iction of the assessing officer – Order by the tribunal that prior to the insertion of the expression ‘suo motu’ w.e.f. 01.04.2008 in s. 142(2C), the assessing officer had no juri iction to extend time for the submission of the report of an auditor appointed u/s.142(2A), of his own accord, and as a result, the assessment made u/s. 153A, in respect of the assessment years was barred by limitation – Upheld by the High Court – On appeal, held: Provisions of s. 142(2C), as they stood prior to the amendment did not preclude the exercise of juri iction and authority by the assessing officer to extend time for the submission of the audit report directed under sub-section (2A), without an application by the assessee – Amendment was intended to remove ambiguity and is clarificatory in nature .

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