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2014 (2) TMI 1035 - HC - Income TaxValidity of direction for special audit of accounts u/s 142(2A) of the Act – Transfer pricing adjustments - Held that:- There is no merit in the petition of the assessee - in the petitioner’s letter dated 31.10.2011, addressed to the respondent in response to various notices issued by the latter and with reference to the subsequent discussions held in the course of the hearing which took place on 19.10.2011, the petitioner has submitted an elaborate reply in paragraph 9 of the letter under the caption “show cause as to why special audit under Section 142(2A) of the Act should not be conducted in the instant case” - The paragraph clearly refers to the request made by the respondent on 19.10.2011 to the petitioner to show cause as to why special audit should not be conducted because of the nature and complexity in the financial statements. The inclusion of the last mile charges in the profit and loss account as a debit, when the capitalised infrastructure cost is eligible also to depreciation, may amount to double deduction - The approval was accorded by the CIT on 23.12.2011 - It cannot be said that the CIT did not apply his mind to the proposal for special audit - The assessing officer referred the matter to the Transfer Pricing Officer under Section 92CA of the Act on which the latter did make an addition on account of transactions with the petitioner’s associated enterprises and it was at that stage the assessing officer made a reference to special audit; the suggestion was that the exercise was uncalled for since the direction of the TPO was binding on the AO in any case - the AO is empowered to refer the accounts to the special auditor “at any stage of the proceedings” S.142(2A) - there is no bar, and there is nothing in the sub-section which makes its provisions subject to the powers of the TPO - The reference to special audit cannot be held to be contrary to law on that score – Decided against Assessee.
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