REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No   3211     of 2019 (Arising out of SLP (C) No 2810 of 2012)

The Commissioner of Income Tax, New Delhi           …Appellant(s)

VERSUS

Ram Kishan Dass    …Respondent(s)

WITH  

Civil Appeal  No(s).  3214, 3212, 3213, 3228, 3230, 3215, 3229, 3216, 3219, 3220, 3217,  3221,  3218,  3222,  3223,  3225,  3226,  3224,  3227 of 2019 @SLP (C) No.   6082, 2808, 2811, 27681, 36495, 6680, 36496, 7573, 8761, 9463, 7660, 9720, 8512, 10191, 10190, 12026, 12027, 11869, 16130 of 2012, Civil Appeal  No 2951 of  2012,  Civil  Appeal  Nos.4334, 4599,  5305 of  2017,       Civil Appeal Nos.3231, 3232, 3233 of 2019 @ SLP (C) Nos 10248, 10247, 17500 of 2017 and Civil Appeal No 7076 of 2017

J U D G M E N T

Dr Dhananjaya Y Chandrachud, J.

1  Leave granted in the Special Leave Petitions.  

2 This batch of appeals involves the interpretation of a cluster of provisions of

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the Income Tax Act  19611,  particularly  Section 142(2C).  A Division Bench of  the

Delhi High Court by its judgment dated 27 May 2011 dismissed a batch of appeals

filed by the Revenue against an order dated 18 September 2009 of the Income Tax

Appellate Tribunal2. The Tribunal came to the conclusion that prior to the insertion of

the expression “suo motu”  with effect  from 1 April  2008 in Section 142(2C),  the

assessing officer had no jurisdiction to extend time for the submission of the report

of  an  auditor  appointed  under  sub  section  (2A),  of  his  own  accord.  As  a

consequence,  it  was  held  that  the  assessment  which  was  made  under  Section

153A, in respect of the assessment years in question, was barred by limitation.  

3 In the present batch of cases, the submission of the assessees is that the

assessing officer had no jurisdiction or authority under Section 142 (2C), as it stood

prior to 1 April 2008, to extend time for the submission of the audit report of the

auditor  appointed  under  the  provisions  of  sub  section  (2A).  In  essence,  the

submission  is  that  the  assessing  officer  was  authorized  to  extend  time  (not

exceeding 180 days) from the date on which a direction under sub section (2A) was

received by the assessee, only on an application made by the assessee and for any

good and sufficient  reason.  If  the  assessee made no application,  the  assessing

officer would have no jurisdiction – according to the assessees – to extend time.

1 “IT Act 1961” 2 “Tribunal”  

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4 The Revenue adopted a contrary position, submitting that even before 1 April

2008, the jurisdiction of the assessing officer to extend time for the submission of the

audit report was not confined to a situation in which the assessee had made an

application for extension. Consequently, the incorporation of a provision for a  suo

motu exercise of power by the assessing officer, with effect from 1 April 2008 by the

Finance Act, 20083, was only intended to remove an ambiguity and was clarificatory

in nature.  

5 Section 142(2A) as it stood at the material time, provided as follows:  “(2A)  –  If,  at  any  stage  of  the  proceedings  before  him,  the Assessing Officer, having regard to the nature and complexity  of the accounts of the assessee and the interests of the revenue, is of  the opinion  that  it  is  necessary  so to  do,  he  may,  with  the previous approval of the Chief Commissioner of Commissioner, direct the assessee to get the accounts audited by an accountant, as defined in  the  Explanation  below sub-section (2)  of  section 288, nominated by the Chief Commissioner or Commissioner 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  prescribed  and  such  other particulars as the Assessing 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.”

Sub section (2C) of Section 142 was in the following terms: “(2C) 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, 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.”

6 Consequent to the Finance Act, sub section (2C) was amended to read as

3 “Finance Act”

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follows: “(2C) 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.”

7 Section 153B prescribes time limits for the completion of assessments under

Section  153A.  Explanation  (ii),  as  it  stood  at  the material  time,  provided that  in

computing  the  period  of  limitation  for  the  purposes  of  the  Section,  “the  period

commencing from the day on which the Assessing Officer directs the assessee to

get his accounts audited under sub-section (2A) of Section 142 and ending on the

day on which the assesse is required to furnish a report of such audit under that

sub-section” shall be excluded. While issuing a direction under sub section (2A) of

Section  142,  the  assessing  officer  was  vested  with  the  authority  to  require  the

assessee to furnish a report of the audit in the prescribed form, signed and verified

by the accountant, and setting forth such particulars as may be prescribed and as

may be required by him. The substantive part of sub section (2C) mandates that the

report under sub section (2A) shall be furnished by the assessee to the assessing

officer within the period that is specified by the assessing officer under the proviso,

as it stood prior to its amendment by the Finance Act. The assessing officer was

further empowered, on an application made by the assessee and for any good and

sufficient reason, to extend the period further, subject to the stipulation that it shall

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not exceed an aggregate of 180 days from the date on which the direction under sub

section (2A) has been received by the assessee.  

8 The crucial words which fall for interpretation are “On an application made in

this behalf by the assessee and for any good and sufficient reason…”  

9 Simply  stated,  the  contention  of  the  assessees  is  that  the  above  words

indicate that the assessing officer may extend the period, which has been specified

under the substantive part of sub section (2C), only on an application made by the

assessee  and  for  good  and  sufficient  reason.  Contrariwise,  according  to  the

Revenue, the assessing officer, who issues a direction to the assessee under sub

section (2A) to get his accounts audited, is vested with the authority to specify the

period for the submission of the report, and within the overall limit of 180 days it is

open to the assessing officer to extend the time which has been fixed in the first

instance. The Revenue posits that the authority conferred upon the assessing officer

to extend time, on an application made by the assessee, does not take away the

authority of the assessing officer, who has prescribed the time for the submission of

the report in the first instance, to extend time without an application for extension

being  made by the  assessee,  subject  to  the overall  ceiling  of  180  days.  In  the

submission of the Revenue, the expression “and for any good and sufficient reason”

must be construed logically to mean “or for any good and sufficient reason”.  

10 The submission which has been urged on behalf of the assessees is sought

to be buttressed by adverting to the legislative intent behind the insertion of the term

“suo motu”  in the provisions of Section 142(2C) by the Finance Act.  Circular No

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1/2009 dated 27 March 2009 contains the following explanation for the amendments

made to Section 142(2C): “27. Granting of power to 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 deal  with power of Assessing Officer to order a special audit. Such power is required to be exercised by the Assessing Officer having regard to the nature and complexity of the accounts of the assessee and the interest of the revenue. 27.2 Sub-section  (2C)  of  the  said  section  specifies  the period  within  which  the  audit  reports  is  to  be  furnished.  The proviso to said sub-section empowers the Assessing Officer  to extend this period of furnishing of audit report.  Further, it is also provided that the aggregate of the originally fixed period and the period(s) so extended shall not exceed 180 days from the date of issuance of direction of special 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. 27.3 With a view to rationalise the said proviso so as to also allow the Assessing Officer to extend this period of furnishing of audit  report  suo motu, the said proviso has been amended. Hence, while the Assessing Officer shall continue to have power to grant extension on an application made in this behalf by the assessee and when there are good and sufficient  reasons for such extension, he can also grant such extension on his own. 27.4 Applicability  –  This  amendment  has  been  made applicable with effect from 1-4-2008.  Hence, from this date and onwards, the Assessing Officer shall also have power to extend the period of furnishing of audit report suo motu.”

11 The  Notes  on  clauses  to  the  Finance  Bill,  2008  contain  the  following

explanation: “Clause 28 seeks to amend section 142 of the Income-tax Act, which relates to enquiry before assessment.  

Sub-sections (2A) to (2D) of the said section deal with power of Assessing Officer  to order special  audit,  where the nature and complexity  of  the  accounts  requires  such  audit,  to  seek  the assistance of a chartered accountant.

Sub-section (2C) of the said section specifies the period within which the audit report is to be furnished. The Proviso to the said sub-section provides that the Assessing Officer may extend the

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said period of furnishing of audit report, on an application made in this  behalf,  by  the  assessee  and  for  any  good  and  sufficient reason.

It is proposed to amend the said proviso so as to provide 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.

This amendment will take effect from 1st April, 2008.”

The Memorandum accompanying the Finance Act similarly provides:

“Granting of power to the Assessing Officer to extend the time for completion of special audit under sub-section (2A) of section 142 Sub-sections  (2A)  to  (2D)  of  section  142  deal  with  power  of Assessing Officer to order a special audit. Such power is required to be exercised by the Assessing Officer  having regard to  the nature and complexity of the accounts of the assessee and the interest of the revenue.

Sub-section (2C) of the said section specifies the period within which the audit report is to be furnished. The proviso to said sub- section empowers the Assessing Officer to extend this period of furnishing of  audit  report.   Further,  it  is  also provided that  the aggregate  of  the  originally  fixed  period  and  the  period(s)  so extended shall not exceed 180 days from the date of issuance of direction of special 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.

It is proposed to amend the said proviso so as to also allow the Assessing  Officer  to  extend  this  period  of  furnishing  of  audit report  suo  motu.  Hence,  while  the  Assessing  Officer  shall continue  to  have  power  to  grant  extension  on  an  application made in this behalf by the assessee and when there are good and sufficient reasons for such extension, he can also grant such extension on his own.

The amendment will take effect from 1st April, 2008.”     12 In  the  context  of  the  above  background,  it  has  been  submitted  that  the

purpose of the amendment was to “also allow the assessing officer to extend the

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period  for  furnishing  of  an  audit  report,  suo  motu”.  The  amendment  to  Section

142(2C) preserves the jurisdiction of the assessing officer to grant an extension on

an application made by the assessee and for any good and sufficient reasons. In

addition, the amendment allows the assessing officer to extend the period suo motu.

The amendment having taken effect from 1 April 2008, it has been urged on behalf

of the assessees that this power was not vested in the assessing officer prior to that

date. Moreover, learned counsel appearing on behalf of the assessee urged that:

(i) The  consequence  of  the  exercise  of  the  jurisdiction  to  extend  time  for

submission of the audit report under the proviso to sub section (2C) is the

extension  of  the  period  of  limitation  for  the  completion  of  an  assessment

under Explanation (ii) to Section 153B. This is indicative of the fact that the

provision for extension is not procedural in nature; (ii) The consequence of the failure of the assessee to comply with the direction of

submitting the audit report by the date prescribed by the assessing officer is

that under Section 144(1)(b), the assessing officer is empowered to frame

a best judgment assessment; (iii) The expression in Explanation (ii)  to Section 153B “ending on the date on

which the assesse is required to furnish a report of such audit” signifies the

end of the period of exclusion of time for the framing of an assessment under

Section 153B; (iv) Section  142(2C)  must  consequently  be  interpreted  in  the  context  of  the

provisions of Sections 153B and 144; and (v) The expression ‘and’ in the substantive part  of Section 142(2A) has been

held to be conjunctive by the decision of this Court in  Sahara India (Firm),

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Lucknow v Commissioner of Income Tax, Central-I4. The expression ‘and’

in the proviso to sub-section 2C must be given the same meaning.

13 On the other hand, it has been submitted on behalf of the Revenue that:

(i) In construing the proviso to Section 142(2C), it is primarily the language of the

statutory provision which must be construed; (ii) The  amendment  to  sub  section  (2C)  was  necessitated  by  reason  of  the

ambiguity in the provision as it stood prior to 1 April 2008;  (iii) The legislature having stepped in to remove an ambiguity, the amendment

brought  about  by  the  Finance  Act  must  necessarily  be  regarded  as

clarificatory in nature; and (iv) The amendment is purely procedural and must be retrospective in character.

14 The rival submissions now fall for consideration.                        15 Sub-section (2A) of Section 142 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 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

4 (2008) 14 SCC 151

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time.  

16 The submission of the assessee would have this Court interpret the proviso to

mean that the assessing officer can extend the period which was originally fixed only

on the request of the assessee.  Besides leading to absurd consequences, such a

construction  of  the  proviso  is  patently  contrary  to  its  language,  purpose  and

intendment.  

17 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.  The  discretion  is

intimated to the Assessing officer.   

18 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

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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  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 reason”.   

19 There are two ways of looking at the situation.  Firstly, the proviso to sub-

section (2C) creates a remedy for an assessee to apply for extension where, for a

good and sufficient reason, the audit report could not be submitted.  Otherwise, the

assessee may face a penalty under Section 271 apart from being subjected to a

best judgment assessment under Section 144. By extending time at the behest of

the assessee,  the assessing officer  allows the original  order  calling for  an audit

report to be duly implemented. The creation of a remedy under the proviso in favour

of the assessee cannot be construed to detract from the authority which vests in the

assessing officer, who has specified the time limit for the submission of an audit

report in the first instance, to extend time without an application by the assessee.  To

hold otherwise, and to construe the proviso to sub-section (2C) as foreclosing the

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authority of the assessing officer to extend time without a request by the assessee,

would lead to an absurd consequence.  The assessee would then be in control of

whether or not to seek an extension of time, where the audit report has not been

finalized. Even if the auditor, for genuine reasons (not bearing on the default of the

assessee),  was  unable  to  comply  with  the  time  schedule,  having  regard  to  the

nature or complexity of the accounts, the assessee would then have a sole and

unrestricted  power  to  determine  whether  an  extension  should  be  sought.   Not

seeking an extension would in effect defeat the underlying purpose and object of

directing the assessee to obtain a report of an auditor under sub-section (2A).  The

legislature could not have intended this consequence.  An interpretation which would

defeat the purpose underlying sub-section (2A) must be avoided.  The assessing

officer who has fixed the time in the first instance must necessarily, as an incident of

the authority to fix time, be entitled to extend time without an application by the

assessee.  While extending time, the assessing officer will be subject to the overall

ceiling of time fixed under the proviso to sub section 2C.

20 Secondly, the alternate construction of the proviso is that the expression “and

for any good and sufficient reason” should be read to mean “or for any good and

sufficient reason”. As a matter of statutory interpretation, it is well settled that the

expression “and” can in a given context be read as “or” (see in this context Ishwar

Singh Bindra  v  State of  UP5).   This  submission was opposed on behalf  of  the

assessees by urging that in the context of sub-section (2A), it has been held by this

Court in Sahara India (Firm), Lucknow v CIT (supra) that the word “and” is used in

5 (1969) 1 SCR 219 = AIR 1968 SC 1450

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the conjunctive sense. Undoubtedly the expression “and” in sub-section (2A) has

been held to the conjunctive, while delineating the circumstances on the basis of

which  an  opinion  can  be  arrived  at  by  the  assessing  officer.  This  would  not

necessarily  furnish  an index to  how the expression “and”  in  the proviso to  sub-

section  (2C)  should  be  construed.  The  interpretation  of  the  expression  must  be

based on the context in which it  is used. In the proviso to sub-section (2C),  the

expression “and” is used in connection with the grant of an extension of time and not

in the context of the formation of an opinion for ordering a special audit. The power

is of a procedural nature.  

21 The learned counsel  for  the assessees sought  to  urge that  the legislative

history  surrounding  the  amendment  to  the  proviso  to  sub-section  (2C)  by  the

Finance Act would indicate that the amendment was intended to be prospective with

effect from 1 April 2008 and, that prior to this date, the assessing officer had no

jurisdiction to grant an extension of time, save on the application by the assessee.

Circular 1/2009 dated 27 March 2009 indicates that the amendment was brought

about “with a view to rationalize the said proviso”. Learned counsel argued that the

expression in Circular 1/2009 that the amendment was to also allow the assessing

officer to extend the period for furnishing of the audit report suo motu, indicates that

such a  power  did  not  exist  prior  to  the amendment.  The  submission  cannot  be

accepted. The mere fact that the amendment has been made with effect from 1 April

2008 does not detract from it being clarificatory in nature or that it was designed to

obviate an ambiguity.  In Justice GP Singh’s Principles of Statutory Interpretation6

6 11th Edition (2008)

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the issue of whether a statutory provision is retrospective has been analysed thus: ““The  presumption  against  retrospective  operation  is  not applicable  to  declaratory  statutes.  As  stated  in Craies and approved  by  the  Supreme  Court:  ‘For  modern  purposes  a declaratory  Act  may  be  defined  as  an  Act  to  remove  doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason  for  passing  a  declaratory  Act  is  to  set  aside  what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if  not invariably, such an Act contains a preamble, and also the word “declared” as well as the word “enacted”.’ But the use of the words ‘it is declared’ is not conclusive that the Act is declaratory for these words may, at times, be used to introduce new  rules  of  law  and  the  Act  in  the  latter  case  will  only  be amending the law and will  not  necessarily  be retrospective.  In determining, therefore, the nature of the Act, regard must be had to  the  substance  rather  than  to  the  form.  If  a  new  Act  is  ‘to explain’ an earlier Act, it would be without object unless construed retrospective. An  explanatory  Act  is  generally  passed  to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language ‘shall be deemed always  to  have  meant’  or  ‘shall  be  deemed  never  to  have included’ is declaratory, and is in plain terms retrospective. In the absence  of  clear  words  indicating  that  the  amending  Act  is declaratory,  it  would  not  be  so  construed  when  the  amended provision was clear and unambiguous. An amending Act may be purely  clarificatory  to  clear  a  meaning  of  a  provision  of  the principal  Act  which  was  already  implicit.  A  clarificatory amendment of this nature will have retrospective effect ….”                                                                        (emphasis supplied)

The above extract  was cited by this  Court  in  Commissioner  of  Income Tax-1,

Ahmedabad v Gold Coin Health Food Pvt Ltd7. A Constitution Bench of this Court

also  cited  the  above  extract  with  approval  in  Commissioner  of  Income  Tax

(Central – I) v Vatika Township (P) Ltd.8.  

22 The Notes on Clauses as well as the Memorandum to the Finance Act do not

7 2008 (9) SCC 622 8 [2014] 31 ITR 466 (SC); 2015 1 SCC 1

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indicate a contrary hypothesis. The reason for the introduction of the amendment

arose because of the element of ambiguity inherent in the erstwhile position as it

stood  before  1  April  2008.  The  ambiguity  was  precisely  on  the  question  as  to

whether the assessing officer was precluded from granting an extension of time of

his  own  accord  merely  because  the  assessee  was  permitted  to  apply  for  an

extension. Since the purpose of the amendment was to remove this ambiguity, we

are clearly of the view that by the Finance Act, Parliament essentially clarified the

position as it existed prior to the amendment.  

23 Moreover, there exists a presumption of retrospective application in regard to

amendments which are of a procedural nature. This position was stated in Maxwell

on The Interpretation of Statutes9:

“The general principle, however, seems to be that alterations in procedure are retrospective, unless there be some good reason against it.”

In Commissioner of Income Tax (Central – I) v Vatika Township (P) Ltd. (supra),  

this Court held thus:

“30. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit  on  some  persons  but  without  inflicting  a corresponding detriment  on some other  person or  on the public generally, and where to confer such benefit appears to have  been  the  legislators'  object,  then  the  presumption would  be  that  such  a  legislation,  giving  it  a  purposive construction,  would  warrant  it  to  be given a  retrospective effect.  This  exactly  is  the  justification  to  treat  procedural provisions as retrospective…   

9 11th Edition, Sweet and Maxwell (1962) at pg 217

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31… Thus,  the  rule  against  retrospective  operation  is  a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication.  Dogmatically  framed,  the  rule  is  no  more  than  a presumption,  and  thus  could  be  displaced  by  outweighing factors.”

(emphasis supplied)

24 We find no substance in the submission urged on behalf of the assessees that

to  adopt  an  interpretation  which  we  have  placed  on  the  provisions  of  Section

142(2C) would enable the assessing officer to extend the period of  limitation for

making an assessment under Section 153B. Explanation (iii) to Section 153B(1), as

it stood at the material time, provided for the exclusion of the period commencing

from the date on which the assessing officer had directed the assessee to get his

accounts audited under sub-section (2A) of Section 142 and ending on the day on

which the assesee is required to furnish a report under that sub-section. The day on

which the assessee is required to furnish a report of the audit under sub-section (2A)

marks the culmination of the period of exclusion for the purpose of limitation. Where

the assessing officer had extended the time, the period, commencing from the date

on which the audit was ordered and ending with the date on which the assessee is

required to furnish a report, would be excluded in computing the period of limitation

for  framing  the  assessment  under  Section  153B.  The  principle  governing  the

exclusion of time remains the same.  The act on which the exclusion culminates is

the date which the assessing officer fixes originally, or on extension for submission

of the report.

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25 The issue as to whether the amendment which has been brought about by the

legislature is intended to be clarificatory or to remove an ambiguity in the law must

depend upon the context. The Court would have due regard to (i) the general scope

and purview of the statute; (ii) the remedy sought to be applied; (iii) the former state

of the law; and (iv) what power that the legislature contemplated (See Zile Singh v

State  of  Haryana10).  The  decision  in  Sedco  Forex  International  Drill  Inc. v

Commissioner of Income Tax11 on which learned counsel for the assesses relied

involved a substitution of the Explanation to Section 9(1)(ii) of the IT Act, 1961 with

effect  from 1 April  2000.   A two  Judge Bench of  this  Court  held  that  given  the

legislative history of Section 9(1)(ii), it can only be assumed that it was deliberately

introduced  with  effect  from  1  April  2000  and  was  therefore  intended  to  be

prospective. This was also so construed by the CBDT, and in the explanatory notes

to the provisions of the Finance Act, 1999. As we have indicated, interpretation is a

matter  of  determining  the  path  on  the  basis  of  statutory  context  and  legislative

history.  In taking the view that we have, we have also taken note of the fact that the

same view was adopted by several High Courts. Among them are (i) the Punjab and

Haryana High Court in  Jagatjit Sugar Mills Co Ltd  v  Commissioner of Income

Tax12;  (ii)  the  Kerala  High  Court  in  Commissioner  of  Income  Tax,  Cochin v

Popular  Automobiles13; and  (iii)  the  Allahabad  High  Court  in  Ghaziabad

10 (2004) 8 SCC 1 11 [2005] 279 ITR 310 (SC); (2005) 12 SCC 717 12 (1994) 74 Taxman 8 (Pun.&Har.); [1994] 210 ITR 468 13 (2011) 333 ITR 308

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Development Authority v Commissioner of Income Tax, Ghaziabad (UP)14. The

decision of the Kerala High Court  in  Popular  Automobiles (supra) is the subject

matter of Civil Appeal No 2951 of 2012 in these proceedings.   

26 For the reasons we have adduced, we have come to the conclusion that the

provisions of Section 142(2C) of the Income Tax Act 1961, as they stood prior to the

amendment which was enacted with effect from 1 April 2008 by the Finance Act,

2008 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. We hold and declare that the

amendment was intended to remove an ambiguity and is clarificatory in nature. As a

consequence of our decision, we specifically overrule the judgment of a Division

Bench of the Delhi High Court in Commissioner of Income Tax v Bishan Swaroop

Ram Kishan Agro Pvt. Ltd.15 dated 27 May 2011.  

27 Accordingly, Civil Appeals @ SLP (C) Nos 6082, 7573, 8761 and C.A. No.

2951 of 2012 are restored to the file of the Commissioner of Income Tax (Appeals)

for  decision  on  merits.  Civil  Appeals  @ SLP(C)  Nos  2808,  2811,  36496,  6680,

36495, 11869, 12026, 12027, 10191, 10190, 9720, 8512, 2810, 7660, 9463, 16130,

27681 of 2012; Civil Appeal Nos 4599, 4334, 7076 of 2017; Civil Appeals @ SLP(C)

Nos 17500, 10248, 10247 of 2017 and C.A. No. 5305 of 2017 are restored to the file

of the Income Tax Appellate Tribunal for decision on merits.

14 (2011) 12 Taxman.com 334 (Allahabad); 2011 SCC On Line All 1151 15 [2011] 203 TAXMAN 326 (Delhi) – ITA No. 1775/2010 - 2011 SCC Online Del 2463

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   28 There shall be no order as to costs.

                                             ............................................................J                        [Dr Dhananjaya Y Chandrachud]

...........................................................J    [Hemant Gupta]

New Delhi; March 26, 2019  

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