TMI Blog2014 (2) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... erests of the revenue, in view of the fact that he found the accounts of the Assessee to be complex on the basis of objective criteria - the conditions prescribed for invoking Section 142(2A), i.e., nature of accounts, complexity of accounts and interest of the revenue are fulfilled and therefore the proposal for special audit under Section 142(2A) of the Act was approved – Decided against Assessee. - Writ Tax No. - 213 of 2012, Writ Tax No. - 214 of 2012 - - - Dated:- 7-2-2014 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Petitioner : S. D. Singh For the Respondent : C.S.C., Income Tax,D. Awasthi ORDER (Delivered by Hon'ble Surya Prakash Kesarwani,J ) 1. In Writ Tax No. 213 of 2012, the petitioner has prayed for writ, order or direction in the nature of certiorari to quash the order dated 30.12.2011 (Annexure No.15) passed by the Assistant Commissioner Income Tax, Range-I, Kanpur (hereinafter referred to as 'ACIT'), under Section 142(2A) of the Income Tax Act, 1961 ( hereinafter refereed to as the 'Act') for carrying out special audit of their books of account; and the order of approval dated 29.12.2011 (Annexure No. 17) passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t at the premises of all the aforementioned three engineering college as well as their offices. Statements of various persons including member of the society Sri Gaurav Singh was recorded and certain books of account and computer hard disk etc. were impounded. The petitioners were unable to reconcile the discrepancies found during the course of survey. They also could not produce the regular books of account and vouchers for the F.Y.2008-09 corresponding to the Assessment Year 2009-2010. 5. On 7.12.2011, a show cause notice for special audit under section 142(2A) of the Act was issued by the ACIT, i.e., the Assessing Officer to the petitioners but no one appeared on behalf of the petitioners on the date fixed. On 14.12.2011, a reply was filed by the petitioners. After considering the reply, the Assessing Officer referred the matter for special audit under Section 142(2A) of the Act which was duly forwarded by the Commissioner of Income Tax, Range-I, Kanpur to the CCIT. The CCIT thereafter sent a letter dated 23.12.2011 to the petitioners to appear before him on 27.12.2011. On the date fixed, Sri Rakesh Garg, Advocate attended the hearing on behalf of the petitioners and filed rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their account audited by M/s Atul Garg Associates, 418, Kalpana Plaza, 24/147A, Birhana Road, Kanpur and to furnish a report of such audit in the prescribed form duly signed and verified by the Chartered Accountant and setting forth the prescribed particulars and the other particulars as under : - "1) To furnish the audit report in respect of the Profit and loss account and Balance Sheet in form No.6B for the society. 2) The Auditor is required to cross to cross check the impounded data, as per computer hard disk, relating to the society with the regular books of accounts of the society. 3) The Auditor is required to identify all the receipts and expenditure relating to the society in the "Consolidated books" with the necessary evidences thereof and verify whether the same have been properly accounted for. 4) To get verified all the receipts relating to the society with the books of accounts regularly maintained by the assessee and reconcile the same with the impounded material aloong with necessary evidence thereof. 5) To get verified all the major expenses including Salaries, Generator running, Vehicle Expenses, Mess Expenses and other expenses with the underlying vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar books of accounts and whether there was any difference between the cash balance as per the "Consolidated Books" and the regular books of accounts. 11) To get verified whether the Investment claimed to have been made in construction of building is as per the books of account. Get the investment made in construction of building reconciled with the costs estimated by the District Valuation Officer in this report. 12) To get verified all the material impounded during the course of survey u/s 133A of the I.T Act relating to the Society M/s Navodaya Sikshan Evam Jan Kalyan Sea Samiti, Kanpur with the regular books of account and identify the variances and impact thereof. 13) To get verified whether the accounts have been maintained according to the Mercantile system of Accounting, relevant and applicable Accounting Standards, and whether they reflect the true state of affairs of the activities having regard to each head of expenditure and incomes, particularly to ascertain correctness of provision(s) expenditure and accrual of income under each head. 14) To get verified the Fixed Assets as per the books of accounts and whether the depreciation has been claimed accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere not accounts u/s 44AA of the Act. Sri Gaurav Singh, although, happens to be a member of the society "was not a relevant person". He was merely looking after construction work and the papers found from his possession appears to be maintained by him for his own purposes which cannot be said to be books of the petitioners. At best, the Assessing Officer could have proceeded for best judgment assessment under Section 144 of the Act, but he could not direct for special audit on the facts of the present case. He submits that substitution of the words "the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of business activity of the assessee" for the words " the nature and complexity of the accounts of the assessee and" by the Finance Act, 2013 in Section 142(2A) of the Act is prospective in nature and shall be effective from 1.6.2013 and not prior to that. The aforesaid amendment is not clarificatory or explanatory and as such it shall apply prospectively w.e.f. 1.6.2013. He submits that since the amended provisions were not available to the department for mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30.12.2011 directing special audit. He submits that in view of the facts, the arguments made on behalf of petitioners with regard to violation of principles of natural justice and fairness and non applicability of the amended provisions are wholly misconceived. In the impugned order the reply of the petitioners was considered and after application of mind the CCIT reached to the conclusion that the conditions prescribed for invoking the provision of Section 142(2A) of the Act stood satisfied and accordingly he accorded the approval for special audit. Thereafter, the ACIT issued appropriate orders. The impugned orders are thus wholly valid and do not suffer from any error of law or facts. Our findings 11. We find that the ACIT, i.e., the Assessing Officer has issued a show cause notice dated 7.12.2011 to the petitioners giving detailed reasons requiring them to show cause as to why the case for Assessment Year 2009-10 be not referred for special audit under section 142(2A) of the Act looking to the nature of complexity in the books of accounts. The petitioners submitted reply dated 14.12.2011. Thereafter the A.O. referred the proposal of special audit for seek approval of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieties. He recorded that in view of the facts and circumstances the conditions prescribed for invoking provisions of section 142(2A), i.e., nature of accounts, complexity of accounts and interest of the revenue is fulfilled and accordingly he accorded the approval to the proposal sent by the Assessing Officer. We do not find any infirmity in the findings recorded by the CCIT, Kanpur in its order of approval dated 29.12.2011. 14. The contention of Shri S.D. Singh appearing for petitioners relying on the case of Bajrang Textiles (supra) that no authority has been given to Assessing Officer to direct the preparation of fresh books of accounts by referring to the auditor for special audit, is without substance. In the present set of facts, the provision of Section 142(2A) of the Act has been invoked in view of complexity of accounts and interest of revenue. We find that all the three ingredients of Section 142(2A) namely, nature of accounts, complexity of accounts and interest of revenue exist in the present set of facts. Vide impugned order dated 30.12.2011, the Assessing Officer has directed for special audit after seeking approval from the CCIT, Kanpur. He has required the special ..... X X X X Extracts X X X X X X X X Extracts X X X X
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