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TMI Blog1987 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... tered office of the company were searched by the Income-tax Department under section 132(1) of the Income-tax Act (for short " the Act "). The authorities seized voluminous records and account books and removed them in five almirahs and two steel trunks. The Inspecting Assistant Commissioner of Income-tax, D-Range, Kanpur, examined the account books seized. He found that the accounts were of a complicated nature. Accordingly, he submitted a report to the Commissioner of Income-tax, Kanpur, seeking approval for special audit as required under section 142(2A) of the Act. He had suggested in his report that the chartered accountant appointed for that purpose may have to visit various units of the company and get the accounts verifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention urged, we may deal with the relevant provision of the Act. Section 142 of the Act has been amended by adding sub-sections (2A), (2B), (2C) and (2D) by the Taxation Laws (Amendment) Act, 1975 (41 of 1975). It has come into force with effect from April 1, 1976. Under sub-section (2A), the Income-tax Officer has been empowered to direct an assessee in a case where the nature and complexity of the accounts and the interests of the Revenue so require, to get his accounts audited by a chartered accountant and furnish a report of such audit in the prescribed manner. Such a direction can be issued only with the prior approval of the Commissioner. The chartered accountant for the purpose of conducting the special audit is also to be nomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y requirement for directing a special audit. But the word " complexity " used in sub-section (2A) 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 are 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, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully. Therefore, special audit should not be directed on a cursory look at the accounts. There should be an honest attempt to understand the accounts of the assessee. Of cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e area of selection, the actual selection should be confined to a few carefully selected cases needing special probe. Further, when a case is referred for special audit for any particular assessment year, it would be desirable if the other intervening years as well as the latest assessment years are also covered. While submitting such cases for approval to the Commissioner of Income-tax, the reasons for selecting the case/cases should be stated ........" These guidelines are no doubt binding on the income-tax authorities. But they should not be construed as mandate to the authorities for directing special audit in every case falling under those, guidelines. If that were the object, then, we must say that they would run counter to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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