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Issues:
1. Quashing and setting aside an order issued by the joint Commissioner of Income-tax for a special audit. 2. Compliance with the provisions of sub-section (2A) of section 142 of the Income-tax Act, 1961. 3. Application of mind by the Assessing Officer before taking action. 4. Opportunity of hearing to be afforded before passing orders. 5. Interpretation of the relevant factors required for exercising power under sub-section (2A) of section 142 of the Act. Analysis: 1. The petitioner sought to quash an order for a special audit issued by the joint Commissioner of Income-tax. The order stated the necessity of auditing the accounts of the assessee-company for specific financial years. Various contentions were raised during the hearing, leading to the admission of the main matter for final disposal. Both parties agreed for the petition's disposal, and the court proceeded with the final hearing. 2. The petitioner contended that the Assessing Officer did not comply with the provisions of sub-section (2A) of section 142 of the Act. It was argued that the conditions precedent for exercising power under this section were not met, emphasizing the necessity for an application of mind by the Assessing Officer. The court analyzed the relevant provision which mandates the Assessing Officer to consider the nature and complexity of accounts, the interests of the Revenue, and obtain previous approval before directing an audit. 3. The court further examined whether the Assessing Officer applied his mind before issuing the order for a special audit. The petitioner argued that no mention in the order indicated the Assessing Officer's consideration of the required conditions. Citing precedents, it was emphasized that an application of mind is essential before taking action under sub-section (2A) of section 142. 4. Another contention raised was the lack of opportunity for a hearing before passing the order, which the petitioner argued warranted quashing the order. Precedents were cited to support the necessity of providing a fair hearing before such decisions are made. 5. The court considered the arguments presented by both parties regarding the factors influencing the decision to conduct a special audit. While the respondents supported the order, the court found that the reasons provided in subsequent affidavits could not be considered if not reflected in the original order. Emphasizing the objective interpretation of public orders, the court concluded that the order for the special audit lacked the necessary considerations and thus quashed and set it aside. In conclusion, the court allowed the petition, quashed the order for the special audit, and granted liberty to the authorities to take appropriate action in accordance with the law. The petitioner was also given the option to approach the appropriate forum if the decision was against them. No costs were awarded in this matter.
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