TMI Blog2014 (5) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that the grounds which are stipulated in Section 142(2A) of the Act have been duly established - the assessee had failed to produce the books of account, that does not leave the AO with a recourse to Section 145A of the Act as the only available means to determine the income of the assessee for the purposes of an assessment - the requirement contained in Section 142(2A) of the Act about the specialized nature of the business activity of the assessee is broad enough to comprehend the facts - The assessee consistently obstructed the assessment proceedings by refusing to produce relevant information which was in its possession ostensibly because there was a dispute in the Management before the Company Law Board - The AO was justified in holding that the interest of the revenue had to be protected by ordering a special audit – thus, there was no reason to interfere in the order – Decided against Assessee. - Writ Tax No. - 293 of 2014 - - - Dated:- 13-5-2014 - Hon'ble Dr. Dhananjaya Yeshwant Chandrachud,CJ And Hon'ble Dilip Gupta,JJ. For the Petitioner : Harsh Vardhan Gupta,S. D. Singh For the Respondent : C.S.C., It ORDER The assessee carries on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st record up to AY 2010-11, separate books of account for each unit and each building project are being kept. However, no statutory audit report under Section 44AB of the Act and no audit to justify the claim under Section 80-IB(10) of the Act was filed. Similarly, no profit and loss account and balance sheet had been filed unit wise. The notice accordingly indicated that it was proposed to order a special audit on the ground that (i) complexity is involved in the books of account; and considering (ii) the volume of accounts; (iii) specialised nature of business activities through different project units; and (iv) interest of the revenue. 4. The assessee responded to the notice to show cause on 14 February 2014. In the reply, the assessee proceeded on the basis that the special audit under Section 142(2A) of the Act could be ordered only where there is a complexity in the accounts and the interest of the revenue so requires. The assessee submitted that the grounds which were raised in the show cause notice were, therefore, contrary to the provisions of Section 142(2A) of the Act. Evidently, the reply of the assessee, as we shall note ignores the amendment which was brought about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act and it is always open to the Assessing Officer to reject the books and to carry out a best judgment assessment. 7. On the other hand, it has been urged on behalf of the Revenue that (i) the record of the case would indicate that there has been a complete and total obstruction on the part of the assessee to respond to several notices which were issued for the production of the tax audit report under Section 44AB of the Act, the audit report in support of the claim for a deduction under Section 80-IB(10) of the Act and the books of account, bills and vouchers; (ii) the assessee proceeded on a manifestly incorrect notion that a special audit could be only justified on the complexity of the accounts whereas Section 142(2A) of the Act has now been amended with effect from 1 June 2013 by the Finance Act, 2013, to cover additional grounds; (iii) it is an incorrect reading of the proposal which was submitted by the ACIT to urge that the ground of complexity of accounts was given up; (iv) the grounds which have been raised both by the CIT (Central), Kanpur, and the ACIT in ordering a special audit, are squarely within the purview of Section 142(2A) of the Act. 8. In assessing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. The failure of the assessee to comply with the notices which were issued under Section 143(2) and Section 142(1) of the Act led to the imposition of a penalty of Rs.10000 under Section 271(1)(b) of the Act. That however does not dilute or detract from the jurisdiction of the Assessing Officer to order a special audit under Section 142(2A) of the Act provided the conditions mentioned in the provision are duly fulfilled. The notice to show cause which was issued to the assessee on 7 February 2014 refers to the basis on which it was opined, prima facie, that the accounts involved complexity. Besides this, the grounds which have been newly added by the Finance Act, 2013 were also referred to in justification of the proposal to get a special audit done. In the reply of the assessee, it was sought to be urged that the special audit could be ordered only where the complexity of the accounts and the interest of the revenue so justified. This submission was manifestly contrary to the amended provisions of sub-section 2A of Section 142 of the Act. In his proposal which he submitted to the CIT (Central), Kanpur, on 14 February 2014, the Assessing Officer noted this legal position in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly justified and is founded on grounds which are statutorily recognized in sub-section (2A) of Section 142 of the Act. Once after the grant of a reasonable opportunity to the assessee as required by law, the Assessing Officer has indicated the material on the basis on which he has come to the conclusion that a special audit was necessary, it would not be open to the Court to test the sufficiency of the grounds. Undoubtedly, the Court would be justified in interfering in a case where there has been a breach of the procedural requirement of complying with the principles of natural justice or where there is absolutely no material whatsoever to sustain the conclusion that the grounds which have been relied upon do exist. The CIT (Central), Kanpur, as well as the Assessing Officer have furnished cogent reasons for holding that the grounds which are stipulated in Section 142(2A) of the Act have been duly established. Where the assessee as in the present case, had failed to produce the books of account, that does not leave the Assessing Officer with a recourse to Section 145A of the Act as the only available means to determine the income of the assessee for the purposes of an assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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