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TMI Blog2011 (6) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... , appointment of an auditor u/s 142(2A) is permissible for auditing the accounts seized from the assessee and such audit report and findings by the auditor could be relied on by the AO for making block assessment u/s 158BC. Also, after providing consent assessee cannot at a later stage object against the appointment of the auditor or reliance of the auditor's report in the assessment. In view of the consent given by the assessee for the appointment of an auditor by the Department,the assessee cannot at a later stage object against the appointment of the auditor or reliance of the auditor's report in the assessment. The challenge against the Tribunal's order on this ground cannot, therefore, be accepted. As neither the first appellate aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an auditor under section 142(2A). In fact, in the reply sent to the officer, the assessee even requested the officer to authorise the auditor to be appointed by the officer under section 142(2A) to audit the accounts of the two directors of the assessee-company also. After obtaining consent from the assessee, the officer appointed a special auditor under section 142(2A), who filed a report after verifying the accounts and determining undisclosed income, which is over 1.49 crores from chit business and Rs. 3 lakhs towards undisclosed income from interest. When the assessee contested the assessment in appeal, the Commissioner of Income-tax (Appeals) held that block assessment cannot be made on the report of the auditor appointed under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther materials seized. 4. After hearing both sides and after going through the orders of the authorities below, we are of the view that the appointment of an auditor under section 142(2A) does not invalidate a block assessment completed under section 158BC of the Act. Section 142(2A) authorises the Assessing Officer to appoint an auditor nominated by the Chief Commissioner if at any stage of the proceedings before him, he needs the assistance of an independent auditor to be appointed by the Department. Nothing in this section bars the Assessing Officer to get audit of accounts seized by him in search proceedings. Of course, section 158BC read with section 158BB authorises block assessment of undisclosed income found as a result of searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the Assessing Officer for making block assessment under section 158BC of the Act. 5. It is seen from the orders that the assessee on receipt of the notice from the officer proposing appointment of an auditor under section 142(2A) agreed with the officer that the accounts contained mistakes and it is maintained in a complex manner justifying audit under section 142(2A). In fact, the assessee volunteered to offer audit of accounts of the directors of the assessee also by the auditor appointed by the Department under section 142(2A) of the Act. In view of the consent given by the assessee for the appointment of an auditor by the Department, we do not think the assessee can at a later stage object against the appointment of the audito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imation of undisclosed income assessed by the officer based on the auditor's report. In our view, it was the duty of the Commissioner of Income-tax (Appeals) to closely examine the auditor's report based on which the assessment is made and if required, the first appellate authority could get clarification from the auditor as well as from the officer. Since the correctness of the undisclosed income of estimate is not considered by the first appellate authority as well as the Tribunal, we think the assessee should be given one more opportunity to contest the assessment on quantum addition. 7. We, therefore, allow the appeal by partly setting aside the orders of the Tribunal and direct the first appellate authority to restore the appeal to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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