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2020 (2) TMI 131 - HC - Income TaxSpecial audit u/s 142(2A) - non-compliance to the principles of natural justice at the stage of making the proposal - whether the AO before sending a proposal for conducting special audit under Section 142(2A) of the Act, was required to provide an opportunity of hearing to the assessee and in absence of the same, can the proceedings conducted thereafter be held to be vitiated in law ? - HELD THAT:- Following the amendment, it is now a statutory requirement that the Assessing Officer has to provide reasonable opportunity of hearing to the assessee before directing the assessee to get the accounts audited under the said provision. Reverting back to Sahara India [2008 (4) TMI 4 - SUPREME COURT] Supreme Court held that special audit is more or less in the nature of an investigation and in some cases, may even turn out to be stigmatic. Therefore, even after the obligation to pay the auditor's fees by the assessee, civil consequences would still ensue on the passing of an order for special audit. We have no hesitation in holding that in the absence of pre-decisional hearing, the decision to have special audit was invalid and consequentially, all the proceedings conducted thereafter stood vitiated. - Decided in favour of assessee.
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