2018 (3) TMI 1629 - HC - Income Tax

Special Audit u/s 142(2A) - Held that - Term of reference modified - In order to ensure that there is no dispute or debate about limitation, it is directed that the interim orders staying special audit and assessment proceeding for the AY 2009-2010 and subsequent years would continue till the special audit for the immediate preceding year is completed. This direction is acceptable to both the petitioner and the respondents. Interim order for the AY 2008-2009 would remain in force till 31.3.2018.

Summary

Issues:
Special audit under Section 142(2A) of the Income Tax Act, 1961 for assessment years 2008-2009 to 2013-2014.

Analysis:
The judgment addresses the modified terms of reference for the special audit, which have been accepted by both parties and are to be considered a part of the order. The special audit is set to begin on April 1, 2018, starting with the assessment year 2008-2009 and progressing to subsequent years in order. This sequential approach is intended to prevent disputes over limitation periods, with interim orders staying the special audit and assessment proceedings for the following years until the audit for the immediate preceding year is completed.

The court justifies this direction by highlighting the complexities and resource-intensive nature of conducting simultaneous audits for all years. It emphasizes the need to avoid duplication of efforts and unnecessary examinations of issues already resolved in earlier years. The assessing officer and the special auditor are tasked with determining which issues require examination in each year, allowing the petitioner to seek clarification based on previous audit or assessment orders.

Additionally, the judgment clarifies that any unresolved issues can be brought to the court through an application in the present writ petitions. It also specifies that the consent order does not impact the pending advance pricing agreement proceedings. Ultimately, the writ petitions are disposed of without any costs being awarded, concluding the legal proceedings related to the special audit under consideration.