2021 (3) TMI 1267 - AT - Income Tax

Rectification of mistake - Validity of the reference made by the AO for special audit as per the provisions of section 142(2A) - HELD THAT - We do not find any merit in the Miscellaneous Applications filed by the Revenue since the adjudication of the reference to special audit by the ITAT has been held to be well within its jurisdiction in the case of Consulting Engineering Services Private Limited Vs. ITAT Another 2017 (9) TMI 1928 - DELHI HIGH COURT that too after considering the decision of the Hon ble Apex Court in Sahara India 2008 (4) TMI 4 - SUPREME COURT . Therefore with regard to the same there is no mistake in the order of the ITAT. Miscellaneous Applications filed by the Revenue are dismissed.

Summary

Issues:
1. Jurisdiction of ITAT in adjudicating the validity of the reference made by the AO for special audit under section 142(2A) of the Income Tax Act, 1961.

Analysis:
The judgment revolves around the issue of the jurisdiction of the ITAT in adjudicating the validity of the reference made by the Assessing Officer (AO) for special audit under section 142(2A) of the Income Tax Act, 1961. The Revenue sought the recalling of a consolidated order of the Tribunal dated 15.06.2018 for four assessment years, alleging that the ITAT had acted beyond its jurisdiction in assessing the validity of the reference for special audit. The Revenue relied on the decisions of the Hon'ble Apex Court in the cases of Rajesh Kumar Vs. DCIT and Sahara India (Firm) Vs. CIT to support its position.

During the proceedings, it was brought to the attention of the Ld. DR that the Hon'ble Delhi High Court, in a case involving Consulting Engineering Services Private Limited, had ruled on a similar issue. The High Court held that the ITAT should entertain additional grounds related to the validity of the reference made under section 142(2A) of the Act, contrary to the Revenue's argument. The Ld. DR, after reviewing the High Court's decision, acknowledged that the issue had been settled in the aforementioned case.

Based on the High Court's ruling in the Consulting Engineering Services Private Limited case, the ITAT concluded that it had not erred in adjudicating the reference to special audit, as it fell within its jurisdiction. The ITAT emphasized that the decision was in line with the High Court's interpretation and after considering the Apex Court's decision in Sahara India (Firm) Vs. CIT. Consequently, the ITAT found no merit in the Revenue's Miscellaneous Applications and dismissed them all.

In the final order pronounced on 19.03.2021, the ITAT officially dismissed all the Miscellaneous Applications filed by the Revenue, affirming its jurisdiction in adjudicating the reference to special audit under section 142(2A) of the Income Tax Act, 1961.