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2019 (11) TMI 1191 - GUJARAT HIGH COURTSpecial audit u/s 142 sub-section (2A) - infirmity in the process - Whether irrelevant directions are issued without application of mind ? - HELD THAT:- Insofar as the procedure for invoking sub-section (2A) of section 142 of the Act is concerned, there is no infirmity in the process as the petitioner has been given opportunity of hearing by the AO as well as the PCIT. AO has duly considered the objections raised by the petitioner before passing the order disposing of the objection. PCIT has duly given an opportunity of hearing to the petitioner and after applying his mind to the material on record and satisfying himself as regards the necessity of directing the petitioner to get his accounts audited by an accountant as envisaged under section 142(2A) of the Act has granted approval for the proposal for special audit. One of the contentions raised of the petitioner is that in the terms of reference, various irrelevant directions are issued without application of mind and therefore, the reference to special audit under section 142(2A) of the Act stands vitiated. While it is true that some of the directions contained in the terms of reference to the Special Auditors are not germane, it appears that such directions are issued in some standard format. In the opinion of this court, merely because the terms of reference contain some irrelevant directions, the same would not vitiate the entire process as is sought to be contended on behalf of the petitioner. Needless to state that the Special Auditors would confine the inquiry only to the relevant directions. Insofar as the contention regarding separate assessment year wise show cause notices not having been issued for different assessment years is concerned, the same is beyond the scope of the present petition, wherein the subject matter of challenge is the direction to get the accounts audited by an accountant as envisaged under sub-section (2A) of section 142 of the Act and further proceedings pursuant thereto. Upon verification of it bank statement, the Assessing Officer found that the money credited in the bank has either been withdrawn in cash immediately or transferred to other bank accounts and then withdrawn and was of the view that this proves that the donations received in the bank account were not used for the purpose of the Trust but were diverted for personal usages or some other activities. He has accordingly held that the total deposits in the account are not eligible for exemption under section 11 and 12 of the Act and are to be treated as income in the hands of the recipient, that is, the Trust for the assessment years 2011-12 to 2017-18. This court does not find any infirmity in the procedure for initiation of proceedings under section 142(2A) of the Act as well as directions issued by the Assessing Officer for special audit under section 142(2A) of the Act so as to warrant interference.
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