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2023 (5) TMI 947 - AT - Income TaxSpecial audit report u/s 142(2A) - whether report of the nominated auditors is purely based on surmises and assumptions? - HELD THAT:- Undisputedly u/s 142(2A) of the Act special audit can be referred by the AO during assessment proceedings only when the accounts of the assessee are complex in nature or it is necessary for the interest of the Revenue. An admitted fact on record that the AO had no occasion to examine the books of accounts furnished by the assessee, which were actually furnished for A.Y. 2007-08 to 2011-12 on 04.10.2013 whereas order for special audit was passed on 22.03.2013 and pursuant thereto special auditor furnished report on 16.09.2013. When we examine the contentions raised by assessee in the light of the aforesaid undisputed facts it goes to prove that the order for special audit has been passed in these cases merely on the basis of surmises by the AO as well as the Ld. CIT even without having a look into the books of accounts furnished by the assessee. Rather on the other hand the assessee has been objecting to the special audit since beginning. Order for special audit in this case was passed on 22.03.2013 and audit report was furnished on 16.09.2013, the AO had no occasion whatsoever to peruse the books of accounts furnished by the assessee for A.Y. 2007-08 to 2011-12 on 04.10.2013. Action of the AO referring the matter for special audit was purely a subjective decision based upon surmises which is patently against the spirit of section 142(2A). Re-course to the special audit by the AO is without any basis and even without perusing the books of accounts of the assessee, which were actually not there before the AO at that time. In that eventualities the AO was having the only option to frame the assessment on the basis of best judgment assessment u/s 144 of the Act. So when the very initiation of proceedings for calling special audit report by the AO and approved by the Ld. CIT is bad in law, merely based upon surmises, the subsequent proceedings are also not sustainable in the eyes of law. Appeal of assessee allowed.
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