PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-02 vs. M/S BL KASHYAP AND SONS LTD.

ITA 455/2022 & connected matters page 1 of 6

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI

Judgement reserved on: 30.10.2023 %

Judgement pronounced on : 11.12.2023

+ ITA 455/2022

P.R. COMMISSIONER OF INCOME TAX CENTRAL-02

..... Appellant Through: Mr Sanjeev Menon, Standing Counsel.

versus

B.L. KASHYAP AND SONS LTD. ..... Respondent Through: Mr Rohit Jain, Mr Abhishek Singhvi, Mr Deepesh Jain and Mr Aniket D. Agrawal, Advocates.

+ ITA 465/2022 + ITA 466/2022 + ITA 469/2022

PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-02

....Appellant Through: Mr Sanjeev Menon, Standing Counsel.

versus

M/S B.L. KASHYAP AND SONS LTD.

..... Respondent Through: Mr Rohit Jain, Mr Abhishek Singhvi, Mr Deepesh Jain and Mr Aniket D. Agrawal, Advocates.

Digitally Signed By:ATUL JAIN Signing Date:12.12.2023 18:16:56 Signature Not Verified

ITA 455/2022 & connected matters page 2 of 6

+ ITA 470/2022

PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-17

....Appellant Through: Mr Sanjeev Menon, Standing Counsel.

versus

M/S B.L. KASHYAP AND SONS LTD.

..... Respondent Through: Mr Rohit Jain, Mr Abhishek Singhvi, Mr Deepesh Jain and Mr Aniket D. Agrawal, Advocates.

CORAM: HON'BLE MR JUSTICE RAJIV SHAKDHER HON'BLE MR JUSTICE GIRISH KATHPALIA

RAJIV SHAKDHER, J.:

ITA 455/2022 & connected matters page 3 of 6

Court in all five appeals: “(A) Whether, in the present case, the Assessing Officer has granted extension of time under the proviso to Section 142(2C) of the Income Tax Act, 1961 (The Act')?

(B) Whether the power of extension of time under the proviso to Section 142(2C) of [the] Act is procedural/administrative in nature and can be exercised by an authority superior to the Assessing Officer?

(C) Whether without prejudice to the above, in light of [the] provision of Section 292B of the Act, can the act of the Assessing Officer not be said to be in substance and effect in conformity with or according to the intent and purpose of the Act, and hence valid and sustainable in law?”

Digitally Signed By:ATUL JAIN Signing Date:12.12.2023 18:16:56 Signature Not Verified

ITA 455/2022 & connected matters page 4 of 6

4.2 Via order dated 11.07.2023, we inter alia noted the following: “The moot question which arises for consideration, both in ITA 455/2022 and the above-captioned appeals is: whether the Commissioner of Income Tax (GIT) could have extended the time for submission of audit report. The proviso to Section 142(20) of the Income Tax Act, 1961 [in short, "the Act"] refers to the Assessing Officer (AO).”

4.3 As is evident, the three questions of law framed in the instant appeals veer around the issue captured at the proceedings held on 11.07.2023. 5. Thus, having regard to the aforesaid, counsel for the parties agreed that the decision the Court would take vis-à-vis the appeals qua SSPL, concerning the question of law framed, would also apply to appeals filed by the appellant/revenue in matters concerning BLK. 6. The relevant parts of the judgment dated 11.12.2023 rendered in ITA 526/2023 and 568/2023 is set forth hereafter: “16. Therefore, we are required to construe based on the construction of the provisions at hand, i.e., sub-section (2A), (2C) and the proviso appended to Section 142(2C), whether the power conferred on the AO can be exercised by an authority other than the AO. The answer to this poser, in our opinion, lies in ascertaining the authority in which the legislature has invested statutory discretion. As long as the authority retains the power to exercise the discretion vested in it by the statute, no fault can be found if it employs ministerial means in effectuating the exercise of discretionary power by the authority in which such power is reposed. In sum, the discretionary power invested in the specified authority should be exercised by that authority alone and none else, even if it causes administrative inconvenience, except in those cases where it is reasonably inferred to be a delegable power. [See Administrative Law (10th Edition) H.W.R. Wade & C.F. Farsyth, Page 259- 260.] xxx xxx xxx 20. …since the legislature vested the discretion to extend the timeframe solely in the AO, he could not have abdicated that function and confined his role to only making a recommendation to the CIT. The CIT had no role in extending the timeframe as the AO was in seisin of the assessment proceedings. 21. As has been correctly submitted on behalf of the respondent/assessee, the decision taken to get an audit conducted under Digitally Signed By:ATUL JAIN Signing Date:12.12.2023 18:16:56 Signature Not Verified

ITA 455/2022 & connected matters page 5 of 6

Section 142(2A) of the Act is a step in the process of assessment proceedings and, therefore, is clearly not an administrative power; as the appointment of a special auditor entails civil consequences. In this context, the following observations made in Rajesh Kumar’s case are extracted hereafter: “24. If an assessee files a return the same is not presumed to be incorrect. When the assessing officer, however, intends to pass an order of assessment, he may take recourse to such steps including the one of asking the assessee to disclose documents which are in his power or possession. He may also ask third parties to produce documents. Section 136 of the Act by reason of a legal fiction makes an assessment proceeding, a judicial proceeding. The assessment proceeding, therefore, is a part of judicial process. When a statutory power is exercised by the assessing authority in exercise of its judicial function which is detrimental to the assessee, the same is not and cannot be administrative in nature. It stricto sensu is also not quasi judicial. By way of example, although it may not be very apposite, we may state that orders passed under Order XII of the Code of Civil Procedure by a court cannot be held to be administrative in nature. They are judicial orders and subject to the order which may be passed by higher courts in regard thereto. Indisputably, the prejudice of the assessee, if an order is passed under Section 142(2A) of the Act, is apparent on the face of the statutory provision. He has to undergo the process of further accounting despite the fact that his accounts have been audited by a qualified auditor in terms of Section 44AB of the Act. An auditor is a professional person. He has to function independently. He is not an employee of the assessee. In case of a misconduct, he may become liable to be proceeded against by a statutory authority under the Chartered Accountants Act, 1949.”

ITA 455/2022 & connected matters page 6 of 6

which entails civil consequences, must be consistent with the rules of natural justice. (Also see: Mrs. Maneka Gandhi Vs. Union of India & Anr. and S.L. Kapoor Vs. Jagmohan & Ors. . As already noted above, the expression "civil consequences" encompasses infraction of not merely property or personal rights but of civil liberties, material deprivations and non pecuniary damages. Anything which affects a citizen in his civil life comes under its wide umbrella. Accordingly, we reject the argument and hold that since an order under Section 142 (2A) does entail civil consequences, the rule audi alteram partem is required to be observed.”

(RAJIV SHAKDHER) JUDGE

(GIRISH KATHPALIA) JUDGE DECEMBER 11, 2023 / tr Digitally Signed By:ATUL JAIN Signing Date:12.12.2023 18:16:56 Signature Not Verified