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2018 (1) TMI 1643 - HC - Income TaxSpecial audit u/s 142 (2A) - petitioner has fairly stated that they would not be objecting the special audit, but are concerned about the terms of reference - HELD THAT - We take the statement made by the counsel for the petitioner and the respondents on record and hope and trust that the Special Auditor would abide by the provisions of Section 142(2A) as explained and elucidated by several judgements of the Supreme Court and the Delhi High Court. During the course of hearing, an issue had arisen with reference to verification of purchase of shares of amalgamating company and premium paid by the shareholders - petitioner has expressed apprehension that the Special Auditor may re-open old and settled issues which are not subject matter of the current assessment years - respondents on instructions states that the Special Auditor would be dealing with the audit and accounts confined to the assessment years in question or earlier years as permissible under law, i.e., the Income Tax Act and Rules. We clarify that the special audit would be in accordance with the terms of reference, which are mentioned in the affidavit filed by the respondents on 16th September, 2017. Special Auditor will keep in mind the order passed today and on earlier dates. In terms of the statement made by the counsel for the parties, the writ petition is disposed of with the aforesaid observations.
Issues Involved:
1. Challenge to action under Section 142 (2A) of the Income Tax Act, 1961 for Assessment Years 2012-2013 and 2013-2014. 2. Concerns regarding terms of reference for the special audit. 3. Scope of the special auditor's role in relation to legal opinions and adjudication. 4. Verification of purchase of shares and premium paid by shareholders. 5. Possibility of re-opening old and settled issues during the special audit. 6. Compliance with the terms of reference and previous court judgments. Analysis: Issue 1: Challenge to action under Section 142 (2A) of the Income Tax Act The judgment addresses the two writ petitions filed by Vodafone Mobile Services Limited challenging the action initiated by the Assessing Officer under Section 142 (2A) of the Income Tax Act for the Assessment Years 2012-2013 and 2013-2014. The court mentions that the petitions would be disposed of through a common order. Issue 2: Concerns regarding terms of reference for the special audit The petitioner expresses concerns about the terms of reference for the special audit. It is highlighted that the special auditor should limit the scope of the audit to the accounts and refrain from providing legal opinions. The court notes the petitioner's concerns but acknowledges that they do not object to the special audit itself. Issue 3: Scope of the special auditor's role The court emphasizes that the special auditor's role is limited and does not include adjudication. The Assessing Officer is responsible for making determinations and assessments in accordance with the law. The special auditor is expected to adhere to the provisions of Section 142(2A) as interpreted in various judgments by the Supreme Court and the Delhi High Court. Issue 4: Verification of purchase of shares and premium paid by shareholders An issue arises during the hearing regarding the verification of the purchase of shares and premium paid by shareholders of an amalgamating company. The petitioner raises concerns about the possibility of the special auditor reopening old and settled issues not relevant to the current assessment years. The court clarifies that the special audit should focus on the assessment years in question or earlier years as permitted by the Income Tax Act and Rules. Issue 5: Compliance with terms of reference and previous court judgments The court ensures that the special audit will be conducted in accordance with the terms of reference provided by the respondents in their affidavit. The special auditor is instructed to consider the court's order and previous decisions while conducting the audit. The writ petition is disposed of based on the statements made by the parties, with the petitioner required to appear before the special auditor on a specified date for the audit to commence. This comprehensive analysis of the judgment covers all the issues involved and provides a detailed insight into the court's decision and directives regarding the challenges raised by Vodafone Mobile Services Limited.
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