TMI Blog2005 (2) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... oked the jurisdiction of this court under articles 226 and 227 of the Constitution of India praying for issuance of appropriate writ, order; particularly, the writ of certiorari quashing the direction/order dated December 7, 2004, passed by the Deputy Commissioner of Income-tax, Circle 18, Jhandewalan, New Delhi, directing special audit under section 142(2A) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for the block period April 1, 1996 to December 18, 2002. The petitioners are challenging the validity of this direction on the ground that the same has been issued without application of mind and recording any reason whatsoever in the assessment proceedings or otherwise. It is also the contention of the petitioners that the provisions of section 142(2A) of the Act cannot relate to any other record except books of account of the assessee. Thus, the order being beyond the scope of the relevant provision is even without jurisdiction. In order to examine the merits of these contentions, reference to basic facts giving rise to the present petition would be necessary. On December 18, 2002, a team of the Income-tax Department carried out search and seizure upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icularly the reasons, basis for treating the accounts of the petitioner as "complexity in accounts" and justifying issuance of the direction. Having failed to receive any response to their letter, the petitioners challenged the correctness of the impugned letter in this petition. It is a settled principle of law that while exercising its jurisdiction under article 226 of the Constitution of India, this court does not sit as a court of appeal and a patent illegality or lack of inherent jurisdiction in passing the impugned action/letter would be a limited ground for invoking the jurisdiction of this court. Having heard counsel for the petitioner at great length as well as examining the facts and circumstances of the present case, we are of the considered view that the letter dated December 7, 2004 does not suffer from a patent illegality or inherent lack of jurisdiction on the part of the Assessing Officer. There cannot be any dispute to the proposition that the competent authority under the provisions of the Act is vested with the power to direct special audit, provided the conditions and requirements of section 142(2A) are satisfied. The provisions of this section contemplate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Union of India [1998] 100 Taxman 570 (Delhi), the Division Bench of this court held as under: "A bare reading of the provision shows that all that is required for initiation of special audit is formation of the opinion that it is necessary so to do depending on the availability of the above said two facts. The provision does not use the words 'reason to believe.' Recording of reasons is not an essential requirement of the provision. The Assessing Officer must obtain previous approval of the Chief Commissioner or the Commissioner. The intervention of such a high ranking authority is an in-built protection to the assessee against any arbitrary or unjust exercise of the power by the Assessing Officer. It is not the case of the petitioner that such previous approval of the Chief Commissioner or the Commissioner has not been obtained. There is no allegation of mala fide. This court would not in exercise of its writ jurisdiction sit in appeal over the formation of the opinion by the Assessing Officer." Reference in this regard can also be made to the case of Super Cassettes Industries Ltd. v. Asst. CIT [1999] 102 Taxman 202 (Delhi), which reads as under: "In Abhay Kumar and Co' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction by the Assessing Officer. We find no merit in this contention. Before passing the impugned direction, the Assessing Officer had issued a detailed questionnaire under section 142(1) of the Act to each of the petitioners requiring them to furnish the details. As many as 120 questions were served upon the assessee under the questionnaire dated November 1, 2004. It is not necessary for us to note these questions in greater detail. Suffice it to note that certain amounts which were not found in the books of account but for which documents were seized, the assessee was called upon to answer about the income in relation to various years out of the block period. For example, cash amounting to Rs. 3,60,000 was found from the residence of one of the assessees and the assessee was called upon to explain the same in relation to the books of account for the financial year 2002-2003. A sum of Rs. 10,81,000 was stated to be seized from the assessee by the Director of Investigation under section 132 of the Act on October 31, 2002, which was not shown in the books of account and the assessee was required to show why the same be not treated as unexplained income for the financial year 2001-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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