2015 (6) TMI 139 - HC - Income Tax

Validity of special audit under Section 142(2-A) - Held that - As on the date fixed for examination of the account books etc. nobody on behalf of the assessee appeared before the Assessing Officer although the case was adjourned on the request of Chartered Accountants of the assessee on an earlier occasion. What we further find is that the assessee did not deem it fit and proper to respond to the notice dated 07.12.2006 wherein complex discrepancies in respect of books of account etc. were noticed by the Assessing Officer. Reasons for such non-appearance/nonresponse to the show cause notice have not been stated in the present writ petition. In our opinion the assessee had the opportunity to raise objections in the matter of appointment of special auditor by responding to the show cause notice. He has chosen not to do so. Therefore there is hardly any scope under Article 226 of the Constitution of India to permit such an assessee to question the order before the writ Court. Thus no good reason to interfere with the order directing special audit under Section 142(2-A) of the Income Tax Act. - Decided against assesse.

Summary

Issues:
Challenge to order for special audit under Section 142(2-A) of the Income Tax Act.

Analysis:
The High Court heard arguments from both parties regarding a writ petition filed by a development authority against an order for special audit under Section 142(2-A) of the Income Tax Act. The authority challenged the appointment of a Chartered Accountant as a Special Auditor. The court noted that discrepancies in the account books were found during scrutiny, and a show cause notice was issued to the authority. However, the authority did not respond to the notice. The court emphasized that the authority had the opportunity to raise objections but chose not to do so. Therefore, the court found no grounds to interfere with the order for special audit.

Regarding the argument that the special audit was directed to seek an extension of the assessment period, the court dismissed this claim. The court highlighted that the authority could address this issue through appropriate channels and ensure compliance with the law. Ultimately, the court dismissed the writ petition, and any interim orders were discharged.

In conclusion, the High Court upheld the order for special audit under Section 142(2-A) of the Income Tax Act, emphasizing the authority's failure to respond to the show cause notice and rejecting the argument regarding the purpose of the special audit. The court stressed the importance of compliance with legal procedures and dismissed the writ petition.