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Issues involved: Interpretation of provisions of section 142(2A) of the Income-tax Act, 1961; legality of directing special audit for extending assessment period; validity of assessment order based on special audit.
Summary: The appeal arose from a search conducted on November 20, 1997, leading to a notice u/s 158BC issued on September 7, 1998. The assessee submitted a return on October 20, 1998, declaring undisclosed income for the block period. The Assessing Officer directed the assessee to undergo special audit u/s 142(2A) one day before the block assessment period expired, extending the time for assessment. The assessment order was passed on May 24, 2000, excluding the extended period for special audit. The Tribunal found the special audit was not for its intended purpose but to extend the assessment period, deeming it illegal and time-barred. The direction to prepare new books exceeded the scope of section 142(2A) and was considered an abuse of process by the Assessing Officer. The Tribunal's factual findings were upheld, leading to the dismissal of the appeal as no substantial question of law arose. In conclusion, the High Court held that the direction for special audit to extend the assessment period was illegal and the subsequent assessment order was time-barred. The Assessing Officer's directive to prepare new books exceeded the scope of the law, constituting an abuse of process. The Tribunal's findings were based on relevant material, leading to the dismissal of the appeal for lack of any substantial question of law.
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