THE COMMISSIONER OF INCOME TAX, NEW DELHI versus RAM KISHAN DASS

Citation: [2019] 5 S.C.R. 25 · Decided: 26-03-2019 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

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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) – Jurisdiction 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 jurisdiction
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 jurisdiction 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 .
Allowing the appeals, the Court
HELD: 1.1 Sub-section (2A) of Section 142 of the Income
Tax Act, 1961 empowers the assessing officer to direct the
assessee to get the accounts audited by an accountant, on the
formation of an opinion that the conditions specified in the
provision for recourse to the power are fulfilled. The power to
order an audit is vested with the assessing officer. As a
necessary incident of this power, sub-section (2C) imposes an
obligation on the assessee to furnish the report to the assessing
officer within the period which is specified by the assessing
officer. The substantive part of sub-section (2C) places an
obligation on the assessee to comply with the time schedule which
      [2019] 5 S.C.R. 25
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SUPREME COURT REPORTS
[2019] 5 S.C.R.
is prescribed by the assessing officer. The overall ceiling of time
appears in the proviso to sub-section (2C), which mandates that
the aggregate of the time fixed and the extended period cannot
exceed 180 days, after which there can be no further extension
of time. [Para 15] [38-C-E]
1.2 The proviso was intended to deal with a situation where
an assessee, for valid reasons, may not be able to furnish the
audit report within the period that was fixed by the assessing
officer. The enactment of the proviso was necessary to give a
remedy to an assessee who, for genuine reasons, is unable to
comply with the direction issued in the first instance by the
assessing officer. Hence, the proviso stipulates that for good and
sufficient reason, the assessing officer may extend time on an
application submitted by the assessee. The “good and sufficient
reason” requirement is intended to ensure that an extension of
time cannot be demanded by the assessee as a matter of right.
Indeed, the use of the expression ‘may’ indicates that whether
or not time should be extended is discretionary. [Para 17]
[38-G-H; 39-A-B]
1.3 In determining whether the power to extend time vests
in the assessing officer in a situation where the assessee has not
made an application for extension, it is well to remember that
under the substantive part of sub-section (2C), the assessing
officer can fix time for the submission of the audit report. Subject
to an overall limit of 180 days, the assessing officer is fully clothed
with the authority to determine the time within which the audit
report should be submitted. For instance, the assessing officer
may in a given case consider the grant of 90 days as adequate for
the completion of the exercise. Though the assessing officer has
the power, in the first instance, to fix an even longer period
subject to the overall ceiling of time, she may fix a particular
period within the limit. To then postulate that while the
assessing officer could in the first instance have fixed a longer
time limit but, having fixed a limit of time, is precluded from
extending time thereafter would be an absurd course of
interpretation. The assessing officer while fixing time in the first
instance will do so on an estimate of the reasonable time which is
likely to be taken in completing the exercise and submitting an
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audit report. The exigencies of the situation may however
require an extension of time for genuine reasons or, as the
statute calls it, “for any good and sufficient re

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