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2014 (10) TMI 707 - HC - Income TaxPrinciples of natural justice not followed - Opportunity of being heard - Validity of direction made by AO for audit of accounts u/s 142(2A) - Whether Section 142(2A) of the Act renders it imperative that before passing an order an AO is required to afford a reasonable opportunity of being heard to an assessee – Held that:- An opportunity of being heard was not granted to the assessee thereby prohibiting the AO from exercising power u/s 142(2A) of the Act, to order audit of the assessee's accounts by an auditor nominated by the AO – the contention of the revenue cannot be accepted that during the process of examination of accounts, spread over the period of six months during which various queries were raised with respect to the accounts, may be considered as an opportunity of hearing, disregards the fact that a hearing is to be afforded after the AO forms a prima-facie opinion, based upon credible material that the accounts produced by the assessee require to be audited by an auditor nominated by the department - The AO formed such an opinion and served a show cause notice upon the assessee but thereafter did not afford an opportunity of being heard - The absence of an opportunity of being heard cannot be cured by reference to queries that preceded the show cause notice – thus, the order is to be set aside though department would be at liberty to proceed afresh/further and if permissible in law – Decided in favour of assessee.
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