2019 (2) TMI 1540 - HC - Income Tax

Special audit u/s 142 - modified terms of reference made under Section 142(2a) to be followed - HELD THAT - In line with the previous orders made in all the said writ petitions, simultaneous special audit for all years will create difficulties and also result in overlapping of some issues that may arise during examination in all different years. The Assessing Officer and the Special Auditor may examine these aspects also. It is open to the petitioner/assessee to approach the AO and the special auditor on the basis of audit and the assessment order passed in the earlier years. In the event it is necessary to resolve any such incidental issue, the parties are at liberty to approach this court.

Summary

Issues:
1. Special audit orders for Assessment Years 2015-16 and subsequent years.
2. Compliance with modified terms of reference under Section 142(2A) of the Income Tax Act, 1961.
3. Clarification on the commencement of special audits and resolution of issues arising in different years.

Analysis:
1. The petitioner sought orders similar to those issued for special audits in previous years. The court had previously directed that modified terms of reference under Section 142(2A) must be followed. The Assessing Officer's order dated 31.12.2018 indicated the modified terms of reference. The court reiterated the acceptance of modified terms of reference for special audits and clarified the commencement sequence for audits from 1.4.2018 onwards. The court emphasized the importance of avoiding simultaneous audits for all years to prevent difficulties and overlapping issues. The parties were given the liberty to approach the court if any issues remained unresolved.

2. The court reiterated that simultaneous special audits for all years could lead to difficulties and overlapping issues. The Assessing Officer and Special Auditor were directed to consider these aspects. The petitioner/assessee was granted the liberty to consult the AO and the special auditor based on previous audit and assessment orders. If necessary, the parties could seek resolution through court intervention for any incidental issues arising.

3. The Special Auditor was instructed to strictly adhere to the terms of reference outlined in the order dated 31.12.2018 while conducting the audit. The writ petition and application were disposed of in accordance with the above terms, ensuring compliance with modified terms of reference and addressing the commencement and resolution of issues in different assessment years.