CIT vs. BISHAN SAROOP RAM KISHAN AGRO PVT LTD

@ t I I i t III I i I Ir fI .i I iI ItI I I I I II ! I I BI'HAN sARooP *"ttfl;,ffii ^fflt -rYh}ilo;.; ^fitffi,T35ilJ Advocates (L2) ITA No.2o39l2oLo % CpMMISSIONER, OF INCOME TAX .. Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates Versus BISHAN SI\ROOP RAM KISI.II\N AGR,O PVT. LTD. ... R.ESPONDEIUT Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates -' (13) ITA il1o.2o46l20l0 .! % ' COMMISSIONER, OF INCOME TAX .'. Appellant Through: . Mr. Prem Lata Bansal, Sr. Advocate . ,. with Mr. DeePak Anad, Advocates ' Versus BISHAN SAROOP RAM KISI-IAN AGRO PVT. LTD. ... R,ESPONDENT Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates (14) ITA No.2o4712oL0 % COMMISSIONER, OF INCOME TAX .. Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate ith Mr. DeePak Anad, Advocates -1 versus BISHAN SAROOP RAM KISI.IAN AGR,O PVT. LTD. ... RESPONDENT Through: Mr. K.P. Mall and Ms. Kavita Jha, Advocates CORAM: l-loN'BLE MR. JUSTICE A.K.S[KRl . HON',BLE MR. iUSTICE M.L.MEl-lTA 1. Whether the ReporLers of local papers may be allowed to see the judgment? Yes . lTAs No.I775/ zOtO,l776/2010,|-777 /2Q!0, !965/2OLO,2032/2OtO,2033/20tO,2O34/2O!O,2O35/2O1O, zoza/zoto, 2037 /2oLO, 2038/2OtO, 2039/2010, 2046/2010 & 2047 12010 Page 4 of 5

2.To be referred to RePorter or not? 3. Whether the judgment should be reported in the Digest? M.L.MEHTA, l. (Oral) 1. For orders see ITA ]-775 of 2010. Yes Yes 4. 1 ' -/) ,@" , M.[-.ME[-[TA r (jt DGE) fug'Lrc A;r.slRni May 27, rd 20LL (JTJDGE) Page 5 of 5 o I 203 6 / 2OrO, 2037 / 20 LO, 2038 / 20 10| 2039 / 2OtO, 20 45 / 20 rO & 20 47 / 20 t0 t II

t- COMMISSIONE,,R OF INCOME lAX .., Appellant Through: Mr. Prenr l_ata Bansal, Sr. Advocate with It{r. Deepak Anad, Advocates Versus BISHAN SAROOP RAM KISFIAN AGRO F'VT. LTD. ... R.ESPONDENT Througir: Mr. GPJ-4€+| and IVls. Kavita Jha, AtJvcr;ates ftlntft t*,4-* l-? fu1n (2) LTA No.1776l201t1 + % BISHAN SAR,OOP IN THE HIGI-I COUITT OF DELHI AT hIEW DELHI (1) ITA No.L77sl2oLo . Derte of Decisio n:.lvlay 27, ZOLI I RAM KISFIAhI AGRO PVT. LTD. ....RESPOT{I]FNT ^l % CO|vIMISSIONER OF tNCpME TAX .. Appeltant Througlr: Mr. Prerl Lata Bansal, Sr. Advocate with Mr Deepak Anad, Advocates Versus Through: Mr. l*44all and' Ms. Kavita Jha, Advocatet &U !btl,{ ..6n_<e;y :R Ot- INCOME 'fAX ... Appellant :,li 'Througlr: Mr. Prem Lata Bansal, Sr. Advocate rvifh Mr'. Deepak A.nad, Advocates ' Versus il ltl BISI-IAhI S;AFIObP RAN4 K.ISHAhI AGP.O PV'T" LTD: ... R.ESPONDEN'T I I . ThrouEli: t4r. leP#l{l, anql Ms..(avita .lha, Advocates U7 v r\-6.a<H- : I Q.o- | ,AA{,\ 6ltllt I i (,r) !'rA.l,t!g-,.1e.qryeo1q o/^'i I tw r I coMMtsstonlER oF lhlcoME irAX ... Appellant ; 1 1'hrougli: Mr. Prenr Lata,Bansal, Sr. Advocate i i i with Nlr. Deepdk Anad, Advocates lTAs |,to.1775 i ZOhO,:I7,761201.0, !777 /2O!(,, tiOS/ZCtO.2131',/?OtO, 2033l2OlO,2:13,1/.2O:1C,2035/2OLO, 203 6 / 20 1.0, 2037 / 20 1 0" 2Q38 / 20 IO, t-Ol I / ZC i, 20 4 6 / ?.0 LO & 20 47 | 2A LO (3) lIAiI.1.Z'!ZIZ9J- 3,, Page 1 of 23 COMMISSIONER OT. INCOMETAX \ \ \ \\ \\ t \ \ ,'\ \\ \\ \\ \i \\ \, \ \ I ['

,@ BT'HAN sARoop RAM o,u,r1",[t[i*o pvr. LrD" ... REspoNDENT Through: Mr. lCIL-Ma++ and Ms. Kavita Jha, . Advocates Nj+,6 v.Uq p\e24 (5) ITA No.2O32l2o1O &tL'r % COMMISSIONER OF INCOME TAX .., App.llant Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Andd, Advocates Versus JN\ +,r BISI.IAN SAROOP RAM KISHAN AGRO PVT. LTD" ... RESPONDENT Thiough: Mr. K-ffit and Ms. Kavita Jha, Advocales t lyv-L*94/^<.L_4 (6) ITA No.2o33/20L0 Ah,r COMMISSIONER OF INCbME TAX ... Appellant hious h : il[r'[?:ri"til,?il*, T;*1I?!3'" ,'i Versus I RAM KISHAN AGRO PVT, LTD. ... RESPONDENT Through; Mr. +eHvlall and Ms. Kavita Jha, I I BISHAN SAROOP Advocates PC^tr v"t^^t- 9,;e\,1 &q,, r (7) ITA No'2O34/2OLO I o/o ii I i coMMrSSloNE,R OF INCOMEiTAX ' Through: il,'i^ 'i , Versus ... Appellant Prem Lata Bansal, Sr. Advocate Mr. Deepak Anad, Advocates tr li r ll BTSHAN SAROOP RAM KtSHprN AGRO PVT. LTD. ... RESPoNDENT I i ' throuqh: Mr. JCP-'F4ab and Ms' 'Kavita Jha' i i Advocatet Al%!hh"( fu.*l I i \t I I ,\ ll ll tlt\ lo ll lTAs No.1775 / ZOd, tiiAlZOtO, t777 /2OLO, tges1zotO,2O32/2otO,2033/2ot}, z134l2OtO,2035/zoLO, 2o36l2oto, zoEl lzbtd,2o38l2o1o, zozglzot6,2o46/2ot0 & 2047 /201.0 :r A-/ I r 6ltrl 1' . (8) trAlNo,2O35/2010 ' Page Zof 23

tl, I;, COMMISSIONER OF INCOME TAX ... Appellant Through: Mr. Prern Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates Versus BISHAN SAROOP RAM KISI{AiI AGRO PVT. LTD. ... RESPbNDENT Through: ' Mr. K:Mt and Ms. l(avita Jha, Advocates er)Z;vtt^'tte 6-<A3 { Q An ,.> t-|zlfr (9) ITA No.2o36/2olo INCOME TAX ' ... APPellant . Through: Mr. Prem Lata Bansal, Sr. Advocate with Mr. Deepak Anad, Advocates % COMMISSIONER OF i , BISHAN SAR,OOP o/o coMMlsslo Versus RAM KISI{AN AGRO PVT. LTD. ... RESPONDENT Thiough: Mr. 1gp-p461F and Ms. Kavita Jha, , Odvocates "37'"*ffi, I I (10) l'fl\ No.203.7/2O1o NER OF INCOTUE TAX ... Appellant Through: Mr. Prem Lata Bansal, Sr. Advocate with lvlr. DeePak Anad, Advocates i I l f ll'----- BTSHAN SAdOOP RAM KISHAN AGRO PV'l', LTD. ... RESPoNDENT I I Throtrgh: Mr. K+-+4€:tl. and Ms' l(avita Jha' i,I Advocate, N^t v."W<pe@ Versus i , Versus tl: .ttl tt lTAs No.1775 | zOtO,,:r7.76/2otl, tzltlzOtb, igAS/ZOtO,2O32/20t0,2033/20tO,2034/2Ot0,2O35|2OLO'. ZO36I2OuO, ZOll lZbfi, ZO38|2otO, zOzg/zoto,20461zoto &?o47 |20to j It It i % ;i. coMMlSSloNER OF INCOMETTAX '" Appellant -i-T;- -- i Througln: Mr. prem Lata Bansal, Sr. Advocate I I - i with'Mr. Deepal< Anad, Advocates Page 3 of 23

,@ BISHAN SAROOP RAM KISFIAN AGRO PVT. LTD" ... RESPONDENT Through: Mr. K-P--F+afl and Ms. Kavita Jha, Advocates Qi-6 V-WO,_rA, ,frft,,, I (12) ITA No.2o39/2OLO o/o . coMMtsstoNER oF tNcoME TAX .,. nppeilant s .r-hroush: H[rt[,?Tr!"1T,?ilT1, il;,A*U:* ' Versus BISHAN SAROOP RAM KISHAN AGRO PVT. LTD. ... RESPONDENT Through: Mr. Kp-446-11 and M;. Kavita Jha, Acivocates , ] Wr"'P'2zn'ct1'8.h,, (13) ITA No.2o46l2010 % coMMlssloNER oF tNcoME TAX ... Appeilant Through: Vlr. Prem Lata Bansal, Sr. Advocate urith Mr. Deepal< Anad, Advocates Versus l' rl BISHAN SAROOP RAM KISHAN AGRO PVT. LTD. Through: Mr.lK-P-F4al-l-and i{s. Kavita Jha, Aclvocates | ^l-.tr Vor^,r.r, fu*^fuW,_ - t il l' REgPONDENT (14) lTA ]uo.204712o1q % COMMISSIO,NFR OF INCOME TAX ... Appeilant I i Througlt: Mr. Prem Lata Bansal, Sr. Advocate ; with Mr. Deepak Anad, Advocates ,iI ii versus tt'll BtsHAilt sAqo,op RAM KtsHAr\t AGRO pVT. LTD. ... RESPONDENT Through:' lYr'.llgpl4a{l and Ms. Kavita Jha, Advocates i I Ar'7 vo\arc h-a< gsBAlli ii, "i HON'I'LE MB. jf.USTtCE A.K.stKRt -' HON'BLE MR. iIUSTTCE M.L.MEHT/q ll'; lrl tltt I 1. Wlrether tlreiRepcrters o't local papers | .l ' ' t lTAs No.1775 / 20!q, tTtAlZOtO,1771 laOtO,1965/20!0,2O32|?-OLO,2033/2O!O,2034/2OtO,2035l25LO, 203 e / zo to, zozl / zb to,lzo3g / zo to, z-ozg / zo tb, zo 4 6 | 20 to & 20 x7 / zo to ii.: Pa1;e 4 of ?3

may be allowed to see the judgment? . 2.To be referred to RePofter or not? 3. Whether the judgment should be reported in the Digest? Y .o 'i J. I IvI.L.MEHTA, l' (Oral) 1. The above 14 appeals are directed against th.e common order of ,,. the Income Tax Appellate Tribunal (for shoft, "the Tribunal") dated 18th September 2OO9 whereby the appeals filed by the Assessee against the order of CIT(A) were allowed and the cross appeals filed'by the Revenue wbre dismissed. The following questions of law arose in all ] these appeals: L Whether the Ld. ITAT erred in law in holding that the assessment order was barred by limitation? ll. whether the amendment to the proviso to section L42(2C) of the Income Tax Act, 1961 with effect from 01.04.2008 was clarificatory and thus retrospective in nature? 2. The facts, as gathered from the impugned order, are that the Assessee had filed its returns for different assessment years. There WaS a search!conducted by the Revenue on the Assessee on 7n , -'i' October 2004. The last panchnama was drawn on 6th December 2004. , A notice under Section 1-534 of the Income Tax Act (for short, "the A9,") was issued upon the Assessee on 16th May, 2005. The adsessee lTAs No.1775l ZO1O, t776/2OtO, tzlt /ZOuO,796512010,2032/2070,2033/2070,2034/2010,2035/2070, 2036/2OtO,2037l2OtO,2038l2OrO,2O3g/20]:0,2046/2010&2047l2OrO Page 5 of 23 I,t t I I I i I ,j

filed return in response to this notice. On' 12th December 2006, the Assessing Officer' ordered for conducting special audit as per the .provisions of Section 142 (2A) of the Act and gave 90 days time'i.e. up to.12th March 2OO7 to submit the report. The Auditor made a request to the Assessing Officer for seeking extension of time for completion of audit stating that the Asses.see did not co-operate in the proceedings. Consequently, Assessing Officer extended the time from 12th March, 2OO7 to 20th April, 2OO7.The Assessing Ofticer again extended the time for completion of the special audit up to 2Oth May, 2007. The AO again, for the third time, extended the time for completion of special audit up to 5'n June, 2007. The audit report under Section 142(28) of the Act came to be subnritted by the Auditor on 4thJune, 2007. The AO passed the assessment orcler under Section 1534 ancl 143(3) of the Act on 3d August, 2007. 3. These appeals against the,rjifferent orders of the Assessing Officer came to be dispbsed of by CIT(A) vide different orders. Some of the issues on merits vvere decided by CIT(A) against the Revenue and some against the Assessee. The issue regarding limitation of finalization of assessment under Section 153A was decided against the Revenue. The cross appeals field by the.Assessee and the Revenue against the order of CIT(A) were disposed of by the Tribunal vide impugned order only on the issue of limitation. Since Lhe issue of limitation of finalization of assessment was decided against the lTAs No.17751 20]10,1776/2010,7777/2010, t96slzoto,2o32/2oto,2o33l2O7O,2O34l2OtO,2O3s/2070, 2036/20L0,2037/2010,2O38/2O7O,2A39/20L0,2046/20t0 &2047/2o7O page 6 of23 i' tl i i t t

revenue, the Tribunal did not choose to decide the other issues raised on merits. 4. The Tribunal held that the AO could not have extended the time for auditor's report on his own inasmuch as.this power of the AO to extend the time of audit report suo motu under Section 742(2C) came to be inserted by way of an amendment v,rith effect from 1't April, 2008. Consequently, he held the assessment made under Section 153A of the Act in respect oi tfre assessment years in question to be barred by limitation. lt is this impugned orcjer that has been challenged by the Revenue by way of these appeals. 5. There is no dispute with regard io tire dates. The only issue is with regard to interpretation of provisions of Section !42(2A), (2C) and 1538(1) Explanation (ii). For better understanding these Sections are reproduced herdinbelonr: 742. Enquiry'before assessment.-(7) For the ' purpose of making an assessmdnt under this Act, the. Assessing Cfficer may serve on any person who has ntadd a return under Section 775WD or Section 739 or in whose case the time allowed under sub-section (1) of section 739 fo:r furnishing the return ha's expired a notice requiring him, on a date fo be therein specified,- xxx [(2A) If, at any stage of the proceedings before him, the IAssessing Officerl, having regard to the nature and complexity of the accounts of the assessee and the interesfb of the revenue, is of the opinion that it is necess ary so' to do, he may; with the . previous lTAs 1,to.1775l zoIo, L776/2oto, 7777 /2010, t96sl21!0, ;o32/201o, 2033/2070,2o24/2oto,2035/2070, 2036/20!0, 2037 /2OrO, 2038/2070, 20391 20]:0, 2046/20t0 & ?-047 /201.0 PageT of23

Ir r I| '. lrlr I 'I l' ' I I i i i I I i II ,li I I approval of the [Chief Commissioner or Commissionerl direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, nomi.nated by the [Chiet Commissioner or ' Commissionerl 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 be prescribed and such other particulars as the fAssessing 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.l tQB) The provisions of sub-section (2A) shall have effect notwithstanding that the accounts of the assessee have been audited under any other law for ' the time being'in force or otherwise.l tQC) '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, Suo motu, or 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. L53B. (1) Notwithstanding anything contained in section 753, the Assessing Officer shall ntake an order of assessment or reassessment,- (a) in respect of each assess/nent year falling within six ' assessm ent years referred to in clause (b) ol a[sub- ' se ction (7) ofl section 753A, within a pe(od of two ' years from the end of the financial year in which the last of the authorisations for search under section 732 or for requisition under section 1-324 was executed; lTAs No.17751 2O1O,1776/2OtO,1777 lzOtO, ts6s/2o1o,2032/20:i0,2033/2OLO,2034l2OtO,203s12010' 2O36l2OtO, 2037 lz}to, 2o38l2oro, 2o3912O7O, 2O46/2OLO & 2047 /2010 Page 8 of 23 i, Il;' .l ,l I

t'I I t 0 (b) in respect of the assessme nt year relevant to the previous y1ar in which search is conducted under section 732 or requisition is made under section 732A, within a period of two years from the end of the financial 'year in which the last of the . authorisations for search under section 732 or for requisition under section 7324 was executed : I fProvided that in case of other'person referred to in section 753C, the period of limitation for making the assessme nt or reassessment shall be the period as ' referred to in clause (a) or clause (b) of this sub- section or one year from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 753C to the Assessing Officer having jurisdiction over such other person, whichever is later:l [Provided further that in the case where the last of the authorisatiens for search under section 732 or for requisition under section 732A was executed during'the financiat year commencing on the 7st'day of April, 2004 or any subsequent financial year,- (i)the provisions of clause (a) or clause (b) of this sub-section shall have effect as if for the words "two . years" the w.ords "twenty-one months" had been substituted; (ii)the period of limitation for making the assessment or reassessment in case of. other person referred to in section 753C, shall be the period of twenty-one ' months from the end of the financial year in which the last of the authorisations for search under sectian 732 or for requisition under section 7324 was executed or nine months from the end of the financial year in vthich books of account or docuntents or assets seized or requisitioned are handed over under section 753C to the Assessing '. Officer having iurisdiction over such other person, whichever is later:l Provided also that in case where the last of 'the authorisations for search under section 732 or for requisition under section 7i2A was executed during the financiat year commencing on the 7st day of Aprit, 2005 or any subsequent financial year and tTAs No.1775l 2O1]O,t776/2O7O,t777l2OtO,7g65l2OLO,2O32/2OI0,2033/ZOuO,2O34/2Ot0,2035/2O::O, 203 6 / 20 lO, 2037 / zOtO, 2033 / 2OrO, 2039 / 2070, 2Q 16 I 2O!O & 20 47 I 20 rO Page I of 23

during the course of the proceedings for the assessment or reassessmenf of btal income, a reference under sub-section (7) of section 92CA- ' (i) was made before the 7st day of June, 2007 but an order under sub-section (3) of section 92CA has not been made before such date; or (ii) is made on or after the lst day of June, 2007, the period of limitation for making the assessment or reassessment in case of such other person shall, ' notwithstanding anythirig contained in clause (ii) of ' the second proviso, be the period of thirty-three . months from the end of the financial year in which the last of the authorisations for search under section 732 or far requisition under section 732A was executed or twenty-one months from the end of the financial year in which books of account or documents or assets seized or requisitioned are . handed over under section 753C to the Assessing Officer having' jurisdiction over such other persoi, whichever is later.l Explanation.-ln c<>mputing the period of timitation for the purposes of this section,- (i) the period during which the assessment proceeding . is stayed by an order or injunction of any court; or ' (ii) the period commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of s€ction 742 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section; or xxxxx (2) The iuthorization referred to in clause (a) and clause (b) gf sub-section (7) shall be deemed to have been executed. (a) in tie case, of search, on the conclusion of search as recorded in the last panchnatna, drawn in relation to any person in nrhose case the warrant o.f authorization has been issued; (b) in the case of requisition under Section 7324, on the actual receipt of the books of account or other documents or assefs by the Authorized Officer.l lTAsNo.17751 20L0,:';776/2OtO,t777IIOLO,7gGS/20t0.2032/?-OtO,2033/2070,2034/2010,2035/2OLO, 20361 2070, 2037 /2OrO, 2O38{2O!O, 2O39/2OLO, ?.046/20t0 & 7047 l2OrO Page 10 of 23 I I I t I t

@ the Finance Act, 2008 with effect from 1" April, 2008 and the same being prospective in nature, the AO was not empowered to.extend the time for audit report of his own. The learned counsel also placed reliance upon the Memorandum explaining the provisions of finance bill, 2008. and also the circular No.1 issued by CBDT datdd 27th March, 2009. The said Memorandum and Circular shall be referred to a litter later. 7. This was not in disoute that the word 'suo motu' camd to be inserted by way of an amendment with .effect from 1't April, 2008. However, it was contendeci by learned counsel for the Revenue that the Assessing Ofticer had the porver to extend the time of audit repoft under Section I42(2C) of the Act since the word "and" appearing before the words "for any good and sufficient reaso/?s" was to be read as'of .In other words, the submissions of the learned counsel was that the Assessing Officer suo motu had the power to direct the assessee to get audit report and also to extend the.time for submission of audit report. Learned counsel relied upon cases of lagiit Sugar Mills Co. Ltd.vs. CIT, 2I0 ITR 468 (Punjab &.Haryana); CIT v Puthuthotam Esfafes Wd. I27 ITR 481 (Madras), P.V. Devassy v. CIT [1972] 84 ITR 502 (Kerala) arrd CIT v Gangaram Chapolia, 703 ITR 673 (Orissa). lTAs No.17751 20]:0,7776/20::0, t777 /2070,7965/20tO,2032/20!0,2033120L0,2034120t0,2035/2OtO, 2O36/2OilO, 2037 /20tO, 2038/2010, 2O39/2OLO, 2046/201.0 & 2047 l2OtO Page 72 of 23

Ii' I f I time, it does not contain all the particulars required, it witt not be possible for the tncome Tbx Officer to . complete the asses sment within'the pteriod specified , in the Act. ln other words, the obiect of tfie legislature . in insisting upon the assessee filing' the return within ' the'time and in the manner prescribed is to enable e lncome Tax Officer to complete the assessmenf within a period of four years as specified in the Act and that obiect wi,ll be frustrated unless the assessee . files the return within the time allowed and in the -.. manner prescribed. To carry out the object of the legislature, it is necessary to attach a sanction for the failure to fulfitt any of the two conditions. tf the obiect is clear, we do not think the use of the coniunctive word "and" in the sub section is conclusive. The word . ' "and" .has generally a cumutative sense, and is thus the antithesis of disiunctive "or"; but occasionatly it is . permissibte to read "and" as "or" if the context so requires. ln Ishwar Singh Bindra v. Stafe of U.F,' it is observed: : "And has generally a cumulative sense, requiring the futfittment of atl the conditions that it ioins together and herein it is the antithesis of or. Sometimes, lTAs No.1775l 2O7J, t776/201]0,7777/2O7O, 11965/2070,2O32/2OuO,2O33/2O1O,2034120::0,2035/20!0, 2036/2OtO, 2037 /20!O, 2O38/2O]iO, 2039/2OtO, 2046/2070 & 2047 lz0t0 Page 14 of 23 v

however, even in such a connection, it is, by force of '.a context, reads as or. Sometimes to carry out the intention of .the legistature it is founi n".Lr"u ry to ' read the coniunctions 'or' and 'and' cne for the other," . In wtaxwdll on the Interpretation of Statutes, 12th edition, at page 232, it is observed, "ln ordinary usage, '.and' is coniunctive and 'or' disiunctivb. But to . carry out t.he intention of the'legislature. it may be n"rurrury to read 'and' .in place of the coniu"nction 'or' and vice versa." 11. ln the case of CIT. vs, GanEaram Chapotia (supra), it was netO as under: "(ii) The conjunctive "and" in the seccnd clause of section ZZl(1)(a) should be consil ued as "or". Therefore, even if the return of the assessee had been filed in the manner prescribed, as it was not fited within the time allowed under section 739(7), and as such one of the'two conditions prescribed in section 271(7).(a) had not been'fulfllled, the assessee would be liable to PenaltY." ra lTAs No.17751 2Ot0,11776/2OtO,1777lzltl,1965/20::0,2032/2Ot0,2033/20]:0,2034/20!0,203512010, 2036/2010, 2037 /2OrO, 2O38l2OtO, 2}3gl2o!o, 204612010 & 2047 lz}t} Page 15 of 23

I I uc r' 12. lt is a cardinal principle for interpreting a fiscal statute that, a taxing statute has to be construed very. strictly and has to be read without amending or altering the provisions' The intention of the legislature in a taxation statute is to be gathered from the language of the provisions particulariy where the language is plain arrd unambiguous. 13. The Supreme Court irr the case of Mathuram Aggarwal v Sfate of Madhya Pradesh, S SCC 667[1999] held that, "!0 a taxing Act lt is'not possibie to assume any . intentiott or governing purpose of the statute m.ore than whatis sfatec/ in the plain language' lt is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally irnpermissible is an interpretation .which does not fotlow from the plain, unambiguous tanguage of the sfatute. Words cannot be added to or substituted so as to give a meaning of the statute which wilt serve the spirit and intention of the . tegisldture. The sfatute should clearly and unambiguousiyConveythethreecomponentsofthe ' t"" !aw, i.e., the subiect of the tax, the person v'tho is |iabtetopaythetaxandtherateatnhichthetaxis lTAs No.17751 2Oto,:r776/2o7a, !777 l']cto, Lg6s/2ot0,2032/2oto,2033/2ot},2034/zotl, ?o3!tl2OLo' 20361lOtO, 2037 /2070, 2o38l2}t}, 2O3g/2O10, 2046/217.0 & 2o+7 /2O7() Page 16 of 23 t,l I J I I i I I t'I I

@ to be paidl. lf there is any ambiguity rega'rding any of fhese in'gredients in a taxation statute then there is no tax in law. Then it is for the legislature to do the neediut in the matter." ln the case of Nasiruddin and others v Sita Ram Agarwal 2 SCC 577 (2003), it is held: -37. The court's iurisdiction to interpret a statute can be invok€d when the same is ambiguous. lt is well known that" in a given case the court can iron out the fabric, but is cannot change ,the texture of the fabric. lt cannot enlarge the scope of legislation or intention when the language of provision is plain and unambiguous. lt canncit add or subtract words to a statufe or read something into it which is not there. lt cannot re-write or recast tegislation. tt is' also necessary to determine that there exists a presumption that the legislature has not used any superfluous words. tt is well settled that the real intention of the legislation mist be gathered from the language used. It may be'true that use of the expression'"shall" or may" is not decisive for arriyring a finding as to whether stafute is directory or mandatory. But the iitention of thd tegislature must be found out front {he scheme of the Act. lt is also equatly well settled that whe'n ndgative words are used, the 'courts witl presume that the intention of lTAs No.1775l 2O!0, t776/20t0,11777 /20t0,7g65/2OtO,2O32l2O!0,2033/20t0,2034/2OtO' 2O3sl2O7O', 2O36l2OtO, 2037 /2070,2038/2010, 2O39l2OtO, 2046/2010 & 2047 /20t0 PageLT of23 14.

the tegislature "was that the provisions should be mand atory in character." @ i --, v 15: With these princip|es of interpretation, we may note, that the provisions as existing in sub section (2c) of the Act before 1't April' 2008 did not empower the Assessing officer to suo motu extend the time for submission of audit report under sub section (24)' This is also clear from the fact that the Memorandum explaining the provisions of granting power to the Assessing oflicer to extend time for completion of special audit under sub section (2A) of section 142 mentions about the reasons in the said Memo which reads as under: ,'GrantingofpowertotheAssessingofficertoextend tne tiii for completion of special audit under sub- se ction (2A) of section 742 iub-sections'(2A)7g(2D)ofsectionT42dealwith .powerofAssessingofficertoorderaspecialaudit. such power is r6quired to be exercised by the assessiig officer h'aving regEtrd to the nature and comptexity of the accoints of the assessee and the interest of the Revenue' Sub.section(2C)of.thesaidsectionspecifiest|e perioi- iitni, whicit the audit report is to be rurniinea. ii" proriso to said sub-section efftpsv/srt- , the iiiusring officer to extenil this period. .of. . furnisiing of Sudit report. Further, it is\a/so provided tnat ine-aggregate of the originally fixed peri,od and . the perioai1 so extended shatt not exceed 780 days fromthe-dateofissuanceofdirectionofspecial audit. Further, such extension can be rnade only when ai ipptii,ation is made in this behalf by the assesseea,ndtherearegoodandsufficientreason for such extension. ttisproposedtoamendthesaidprovisosoastoalso attow iie Assessing officer to. extend this period of lTAsNo.Ll75l K[to,L776/20t0,t777lz}t},!965120!0'2032/2O::O'2O33l2OtO'2034/2}t1',2O35l2OtO' zoza I zot6, 2037 / 2oto, zosa / zoto, 2o3s / 2o!0, zo 46 | zoto & 20 47 | 20ro Page 18 of 23 x

'lllf . t' III , ll. i l!ltI I furnishing of audit report suo motu. Hence, while the I i Assessin-g officer shatl continue to have power to- I I qrant exiension on an apptication made in this behalf .l I bV the assessee and when there are good and I t sufficient reasbns for such extension, he can also I i qrant such extension on his own' I I ine amendment wiy thke effect from 7't April, 2008. tlII I I 16. Further, the circular No.1. of CBDT dated 27th March, 2009 has II I I also.clarified on the issue of applicability of the aforesaid amendment n I i in sub section (2C) with efiect from 1't April, 2008. The said circular rl i reads as undel:- t i I LI "DirectTax Circutar No.7 dated 27th March, 2009 h; F-xplanatory Notes to the provisictns of the Finance ! Act,2008. 1. lntroduction: 1.1 -fhe Finance Act, 2008 (hereafter referred to as . the Act) as passed by the Parliament, received the ' assent of ihe President on the 10th day of May, 2008 'and has been enacted as act No'18 of 2008' This circular explains the substance of the provisions of the Act relating to direct taxes' 27. Granting of power of the Assessing Officer to extend the time for completion of special audit under ' sub-section (2A) of section 142.' 27.1 Sub-sections (2A) to (2D) of section 142 with powerofAssessingofficertoorderaspecia|audit. Such power if r-equired to be exercised by the nsses'sing officer lraving regard to the nature and complexily of the accounts of the assessee and the interest of the revenue. 27.2Sub-sections(2C)ofthesaidsectionspecifies theperiodwithinwhichtheauditreportistobe .turnished.Theprovisotosaidsub-sectionempowers. . the Assessing Officer to extend this period of . furnishing of Judit report. Further, it is also provided that the lggregate cf the origjinaliy fixed period and the periodGl ro extencled shall not exceed 180 days tTAs No.1775,/ zOtO, L776!2C]LO, L777 /2OIO, Lg6sl2oto, 2g3"t!201'O' 203312070' Z134/l1to', zo3slaot9', 2036/20:i0,2037/2OLO,ZO38/2O::O,2}:igl2oto,2o46l2C1}&zo17lzoto p3ge tgof?3 lr ti tl,i I '',",'.

t. 1' : fromthedateofissuanceofdirectionofspecific audit. Further, such extension can be made only ' when an application is made in this behalf by the assessee and there are good and sufficient reasons . for such extension. 2T.3.Withaviewtorationalizethesaidprovisosoas toa|soa||owtheAssessingofficertoextendthis periodoffurnishingofauditreportsuomotu,thesaid proviso has been amended. Hence, while the Assessing Officer shall continue to have powef t9- grant exiension on an application made in this behalf nV the assessee 'and when there are good and sufricient reasons for such extension, he can also grant such extension on his ourn' h ,q Applicability - This amendment has been made applicabie with -effect from 1-4-2008' Hence, from thi's date and onwards, the Assessing officer sha|| also have power to extend the period of furrrishing of audit report suo motu". (Emphasis supplied) L7. The Memo explaining the provisions of Finance Bill, 2008 and also Circular No.1 clated 27th March, 2009 of CBDT as reproduced. hereinabove would clearly bring out that sub section (2A) to (2D) of Section I42 deal with the powers of the Assessing Officer to order for special audit and the same was to be exercised by him having regard to the nature and comple>:ity of the account of the assessee and the interest of the revenue. 1g. The word ,,and,,appearing before the words "for any good and sufficient reasons" in the pi'oviso to sub section (2c) by any stretch of interpretation could not be read aS "or"' The fact that the Words'"suo motLt" have been added by way of an amendment with effect from 01.04,2008 would show the legislative intention in the proviso as existed before the amendment which is that the Assessing officer prior lrAsNo.1775l 20Lo,t776/2070,1777 2A11O,1s6s/201lo,203212070'2033/21rc'2034/2OtO'2035/2010' 203612010, 2037 /20:':0, 2038/ zOtO, 2o3s /201:0, 2046/20].;0 & 2047 l2O7O Page 20 of 23 @ Itt I I I I I I I I I II L I I I ,I r'-t li I rL i

$ to amendment had no power to extend the period of furnishing audit report of his own. 19. . lt was to rationalize the said proviso.that the word " suo motu" .came to be addecl by way of amendment with effect from 1* April 2008. As per Clause 27.3 of the Circular dated 27th March,2009.while the Assessing Officer shall ccntinue to have the power to grant extension on an application made in this behalf by the Assessee' he could .also'grant extension of his own when there are good and sufficient reasons for such extension. Thus, it is noticed that sub section (2C) before the amendment did not empower the Assessing officer to extend ilre time for submissions of special audit repott under sub Section (2A). Further, the power of extension of time for submission of special aridit report is also subject to limitation.of a period of 180 days from the date on which the directions under section 'l42.(2A) of the nct tor the audit was received by the Assessee..lt is an admitted fact that in the present case, the assessee had not made any application for extension of .period of audit report. Therefore, the extension which was granted by the Assessing Ofiicer on the request of the Auditor could be taken to be a suo motu action of the Assessing Officer which powei, as noted above, \ffas not available with the Assessing Officer prior to the amendment with eltect from 1't Apri[' 2008. Not only this, said power of extension was also further controlled lTAsNo.17751 zOtO,t776/20:10,t777/2OtO,ts65l2OrO,2O32l2O1iO'2033l2OtO'2034/2010',2035/2OtO' 2O3 6 I 20 10, 2037 / 20 tO, 2038 / 2OrO, d}3s | 2O!0, 20 46 | ZO]:l & 20 47 / 20 to Page2,l of 23 ttilllliillitiflliII i I Il. ' lf I I I I I i

in the words, "for any good and sufficient reasons". This would mean that the Assessing Officer was supposed to record reasons for granting extension on his own. Clause 27.4.of the Circular also clarifies that this amendment has been made applicable with eftect from 1.'t April, 2008 and it is from this date onwards that the Assessing Ofticer shall have power to extend the period of furnishing of special audit report suo motu. 20, ln the light of interpretation of the proviso as is existed before or after the amendment and the legislative intent behind the amendment as gathered from the memorandum and the circular noted above, we are not persuaded to agree with the interpretation as given by the Punjab and l;larybna High Court in the case of lagjit Sugar Mitts Company Limi.ted (supra). Further in vier,v of our above discussion, it comes to be concluded that the Tribunal was correct in holding that the Assessment Order was barred by limitation. That being so, we answer Question No.l in affirmative in favour of the Assessee and against the revenue. \ 2L'. ln view of fciregoing discussion that the amendment whereby the word 'suo motu' were insertecl in sub section (2C) of Section 142 of Llre Act was to be applicable with effect frorn 1't April, 2008 only, the amendment. cannot be said to be clarificatory or retrospective in lTAsNo.L775l 2OtO,t776/2070,1777/2OtO,tg65/2010,2032/2070,2033/2Ot0,2034/2070,2O3sl2OtO, 2036/2OtO, 2037 /20t0, 2038/2OrO, 2O39/20t0, 204612O]:O & 2047 lz}t' . Page22of23

-t0 No.2 nature. The amendment was prospective and effect from 1't April, 2008 only. Accordingl!, against the revenue. was to. be applicable. we answer Question 22 In view of foregoing reasons, all. the above app'eals merit dismissal and are hereby dismissed UUDGE) .K.SIKRI ur.tDGEI I I I I i -6'\<w' M. L. M EFITA May 27, ZOLL rd lTAs No.1775l 2otl, L776/2010, \777 lzotl, tg6s/2ot0,2032/20:10,2033120110,2034/2ot0,2035/2010, 203 6 / zOtO, 2037 / 2070, 2Og8 / 20 rO, 2A3s I 2OLO, 20 46 | 2J rO & ZO 47 | 20 lO Page 23 of 23 I