2021 (12) TMI 260 - HC - Income Tax

Special audit u/s 142(2A) - As argued twin conditions necessary for invoking the powers under Section 142(2A) of the I.T Act are missing - also there has been a violation of principles of natural justice as giving of opportunity only for a day before reference to the Special Audit would amount to non-availment of an opportunity - HELD THAT - As the Court was disinclined to entertain this petition, learned Advocate Mr. Vora, for the petitioner has sought permission to withdraw this petition, permission is granted. Petition is dismissed as withdrawn.

Summary

Issues:
1. Claimed deduction under Chapter VI-A of the Income Tax Act.
2. Disallowance of deductions claimed under Sections 80IA and 35AD of the Act.
3. Reference to Valuation Officer for land valuation.
4. Special Audit proposed under Section 142(2A) of the Income Tax Act.

Analysis:

Claimed deduction under Chapter VI-A of the Income Tax Act:
The petitioner, a Public Limited Company engaged in infrastructure development, mining, power transmission, and real estate business, filed a Return of Income declaring total income and claimed deduction under Chapter VI-A. The petitioner submitted various details, including audit reports, to support the deduction claimed under Section 80IA of the Act. However, a show cause notice was issued questioning the deduction claimed under 80IA and Section 35AD of the Act. The petitioner raised objections and submitted relevant documents to justify the deductions claimed in preceding years. Additionally, the Valuation Officer was referred to for land valuation, despite the petitioner accepting circle rates set by the State Government.

Disallowance of deductions claimed under Sections 80IA and 35AD of the Act:
The assessing officer proposed disallowance of deductions under Section 80IA and issued a show cause notice, followed by a proposal for a Special Audit under Section 142(2A) of the Act. The petitioner objected, citing the voluminous nature of transactions, the robust accounting system maintained, and previous allowance of deductions by the Appellate Authority. The petitioner contended that the proposed Special Audit was an attempt to delay the assessment process and requested the Court to intervene.

Reference to Valuation Officer for land valuation:
The petitioner expressed grievance over the reference to the Valuation Officer for land valuation, despite accepting circle rates set by the State Government. The petitioner argued that such references were unnecessary and questioned the need for valuation when circle rates were already acknowledged.

Special Audit proposed under Section 142(2A) of the Income Tax Act:
The assessing officer proposed a Special Audit under Section 142(2A) at the end of the assessment period, leaving the petitioner with minimal time to respond. The petitioner contended that the Special Audit proposal was an attempt to delay the assessment process and pass an assessment order without due consideration of the petitioner's submissions. The petitioner sought relief from the Court, challenging the necessity and timing of the proposed Special Audit.

In conclusion, the Court dismissed the petition as withdrawn, granting permission to the petitioner's advocate to withdraw the case. The petition was subsequently dismissed, and the notice was discharged.