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2013 (8) TMI 448 - HC - Income TaxSpecial Audit of the Trust under section 142(2A) of the Income Tax Act, 1961 - complexity of the accounts – Held that:- Assessing Officer in his reply affidavit dated 19 June 2013 has in terms denied the assertion of the Petitioner that the books of accounts were not examined and/or verified by him. - Further in the affidavit it is stated that while verifying books of accounts the Assessing Officer came to the conclusion that the audit report and the books of accounts submitted by assessee were faulty and unreliable as auditor had not reported related party transactions - At no stage prior to the filing of this petition, has the petitioner taken up the plea that the Assessing Officer had not examined the books of accounts of the petitioner. In fact, even at the hearing before the Commissioner of Income Tax for purposes of considering grant to approval to carry out Special Audit, the petitioner's only submission as recorded in the approval letter dated 25 March 2013 was only that the accounts are not complex. There is not even a suggestion about the Assessing Officer concluding about the complexity of the accounts without having verified/examined the same - Condition precedent for exercising powers under Section 142(2A) of the said Act, viz: nature and complexity of accounts of the assessee have been satisfied. Reliance is placed upon the decision in the case of Joint Commissioner of Income tax v/s. I.T.C. Ltd., [1999 (7) TMI 68 - CALCUTTA High Court], wherein it was held that it is not possible for an Assessing Officer to look into the accounts and to verify whether each of the entries in the accounts reflects genuine transactions if the transactions are large in number. Therefore, in such a case, looking at large number of the transactions, the Assessing Officer can ask for the approval for the appointment of special auditor - In the present facts also, the transactions are large in number as it cover 10 entities and having turnover of Rs.100 Crores. Thus, the appointment of Special Auditor in terms of Section 142 (2A) of the Act cannot be found fault with – Decided against the Assessee. Effect of amendment to section 142(2A) vide Finance Act, 2013 - Petitioner relied upon the above provisions to contend that prior to 1 June 2013, the volume of accounts and/or doubts about correctness of accounts would not warrant a special audit. - Held that:- In any event, we need not examine the same as we are of the view that even under the unamended provision of Section 142 (2A) of the said Act, the Assessing Officer has properly exercised its jurisdiction to order a special audit after obtaining the approval of the Chief Commissioner for the same. - Decided against the assessee.
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