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TMI Blog2015 (6) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... has been directed to get his accounts pertaining to assessment year 2012-13 audited under Secion 142(2A) of the Income Tax Act, 1961(the Act). Learned counsel for the petitioner has submitted that the direction for special audit has been made without examining the books of accounts of the assessee, which is in violation of principles of natural justice. It has been stated that the order impugned is illegal and beyond jurisdiction as it has been issued beyond period of limitation which has expired on 31.03.2015. It has been submitted that the direction of special audit of the accounts cannot be issued unless the books of accounts of the petitioner have been inspected. In this case, the concerned authority had never required the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect and proper assessment based on the accounts maintained by the assessee and when he finds the accounts of the assessee to be complex, in order to protect the interests of the revenue, recourse to the said provision can be had. The word "complexity" used in Section 142 (2A) is not defined or explained in the Act. As observed in Swadeshi Cotton Mills Co. Ltd. Vs. C.I.T. (1998) 171 ITR 634 (All.) , it is a nebulous word. Its dictionary meaning is: "The state or quality of being intricate or complex or that is difficult to understand. However, all that is difficult to understand should not be regarded as complex. What is complex to one may be simple to another. It depends upon one's level of understanding or comprehension. Sometimes, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflect the application of mind to the facts of the case." The Supreme Court further held that the order under Section 142(2A) does entail civil consequence, it must be consistent with the rules on natural justice and concluded it with the following orders: "24. The upshot of the entire discussion is that the exercise of power under Section 142 (2A) of the Act leads to serious civil consequences and, therefore, even in the absence of express provision for affording an opportunity of pre-decisional hearing to an assessee and in the absence of any express provision in Section 142 (2A) barring the giving of reasonable opportunity to an assessee, the requirement of observance of principles of natural justice is to be read into the said provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely administrative in nature and not quasi judicial. Moreover, in our opinion, such a direction does not have civil consequences. It does not affect the assessee's rights or liability. Hence, the decision of the Supreme Court in State of Orissa v. Dr. Binapani Dei AIR 1967 SC 1269, does not apply. No doubt an administrative order if it has civil consequences can only be passed after giving opportunity of hearing, but in our opinion a direction under Sub-section (2A) of Section 142 does not have civil consequences because it does not affect his rights and does not create any liability against the assessee. It is only the assessment order which will create a liability. The purpose of the direction under Sub-section (2A) of Section 142 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before him, the Assessing Officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of business activity of the assessee and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant as defined in the Explanation below sub- section (2) of section 288, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner of the Department in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the Section is not turned into an empty ritual. In view of the aforesaid discussions, we are of view that before issuance of order of re-assessment under Section 142 (2A) of the Act, the Assessing Officer had issued notices to the assessee but in none of them the opinion formed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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