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2019 (7) TMI 1324 - HC - Income TaxSpecial audit u/s 142(2A) - satisfaction recorded by the Assessing Office - Power of AO to pass audit orders - HELD THAT:- The question of complexity in accounts, we have to apply the test of 'reasonable man' by replacing the word and qualities of a reasonable man, with the word and qualities of a reasonably competent AO. The question of complexity of accounts has to be judged applying the yardstick or test; whether the accounts would be complex and difficult to understand to a normal AO who has basic understanding of accounts etc., without the aid, assistance and help of a Special Auditor. Thus due regard has to be given to nature and character of transactions, method of accounting, whether actuarial were adopted for making entries, basis and effect thereof, etc., though mere volume of entries might not be a justification by themselves as volume and complexity are somewhat different. The satisfaction recorded by the AO as reflected would indicate that the same is not just an eyewash. We are convinced that in the case on hand, the Assessing Officer had applied his mind to various aspects like the nature of accounts, method of maintaining accounts, entries recorded etc. and reached to the conclusion that the accounts were complex and it was in the interest of the Revenue that the special audit u/s 142(2A) should be directed. It will be too much for this Court to try and understand the complexity for and on behalf of the AO. We are of the view that we should not disturb the order passed by the AO in exercise of his powers u/s 142(2A). Writ-application fails and is hereby rejected. The interim order earlier granted stands vacated forthwith. Applicability of law and scope of amendment in Section 142(2A) - HELD THAT:- There has been substantial expansion of scope and ambit of Special Audit u/s 142(2A) of the Act with effect from 1st June 2013. The amended section has been widened to include volume of accounts, doubts about correctness of accounts, multiplicity of transactions in the accounts or specialised nature of business activity of an assessee. These amendments by Finance Act, 2013, with effect from 1st June 2013, substitute the words 'nature and complexity of accounts of the assessee'. We are not concerned with the said amendment in the present case as the impugned order in question directing special audit was passed on 11th May 2007 i.e. before the amendments became effective.
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