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Issues Involved: Challenge to an order passed by the Deputy Commissioner of Income-tax u/s 142(2A) of the Income-tax Act, 1961 regarding audit of accounts of a partnership firm engaged in chitty business.
Summary: The petitioner, a partnership firm engaged in chitty business, challenged an order (Exhibit P-7) passed by the Deputy Commissioner of Income-tax u/s 142(2A) of the Income-tax Act, 1961. The order required the petitioner to get their accounts audited by a chartered accountant nominated by the Commissioner of Income-tax. The petitioner contended that the order was not in line with natural justice principles and the circumstances did not warrant such an audit. The petitioner argued that their accounts were not complex and had been properly maintained, supported by profit and loss accounts. The petitioner also raised concerns about the high expenses directed to be paid for the audit. The Income-tax Department highlighted that the petitioner had not cooperated in past assessments and crucial details were missing from the submitted accounts. The Department justified the need for the audit based on the complexity of the accounts and the interests of the Revenue. The Department argued that the Assessing Officer was justified in passing Exhibit P-7 as the petitioner's returns did not provide a clear picture of their business operations. After hearing both sides, the Court held that the order passed u/s 142(2A) was unjustified as the Assessing Officer did not have proper justification for ordering the audit without a thorough examination of the accounts. The Court emphasized the importance of a fair hearing before such decisions are made. The Court set aside Exhibit P-7 and directed the Assessing Officer to hear the petitioner and make a fresh decision in accordance with the law. In conclusion, the original petition was allowed, and each party was directed to bear their respective costs.
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