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Issues involved: Failure to issue a show cause notice u/s 142(2A) of the Income Tax Act, 1961.
The High Court, in the case at hand, addressed the issue of failure to issue a show cause notice u/s 142(2A) of the Income Tax Act, 1961. The learned Standing Counsel for the Revenue referred to the decision in Rajesh Kumar v. Deputy Commissioner and acknowledged that the matter had been referred to a larger Bench of the Supreme Court. Despite this, he conceded that based on the ratio laid down in Rajesh Kumar, the impugned order could be set aside due to the absence of a show cause notice prior to deciding on a special audit. The Court, without expressing any opinion on the merits of the case, set aside the impugned order and granted the Revenue one week to issue a show cause notice to the assessee as required by Rajesh Kumar. The assessee was directed to respond within two weeks of receiving the notice and cooperate fully with the Revenue. The Department was to make a final decision on whether to order a special audit within a fortnight of receiving the assessee's reply. It was clarified that the statutory time limits would apply if a special audit was indeed ordered, and the time spent on the petition would not be counted towards the assessment timeline. The writ petition was disposed of with these directions, and orders were to be provided to both parties promptly.
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