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TMI Blog2016 (9) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 30.03.2012, under which, five companies viz. Chanakya Buildcon Pvt. Ltd., Chanakya Infracon Pvt. Ltd., Takshashila Properties Pvt. Ltd., Takshashila Realities Limited and Youngstar Infracon Pvt. Ltd., were amalgamated with the Takshashila Gruh Nirman Pvt. Ltd. It was noticed that these five companies were initially the partnership firms already doing the business of real estate and construction which were later on converted into companies. It was noticed that the project in relation to which deduction under section 80IB of the Act was claimed, had changed hands and eventually, the deduction is being claimed in the hands of the present assessee. With this background, in the said notice, the Assessing Officer noted as under: "4. It is seen that at the time of formation, or at a later date some of the partners brought land into the firms as their capital contribution. Before conversion to companies, the firms got the lands available in the books revalued and the amounts were credited in the current capital accounts of the partners. Consequent to amalgamation, the company has issued 6,00,000 equity shares at a fare price of Rs. 10/and a premium of Rs. 390/per share against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been approved by the High Court. In such proceedings, Income tax department was also a party. The assessee also contended that there is no question of complexity of accounts, volume of accounts or doubt about the correctness of accounts or the multiplicity of transactions which would warrant a special audit. The petitioner followed up these objections with another communication dated 18.03.2016, in which also, while passing the proposal for special audit, the petitioner contended that various transactions took place between the years 2008 to 2013 and that in any case, looking to the transactions, provisions of section 142(2A) could not be invoked. The petitioner relied on various decisions in support of such contentions. 5. This principle show cause notice and the petitioner's replies to the same were followed by further communications between the two sides. Eventually, by the order dated 31.03.2016, the Assessing Officer directed as under: "2. In connection with ongoing assessment proceedings in the case of the company, M/s. Takshashila Gruh Nirman Pvt. Ltd. (now known as Takshashila Realties Pvt. Ltd.) for A.Y. 2013-14, the Principal Commissioner of Income tax Ahmedabad4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. On the other hand, learned advocate Shri Nitin Mehta for the department opposed the petition contending that looking to the complex web of partnerships being converted into companies being ultimately amalgamated into one company, there was a need for special audit. The Assessing Officer after having given an opportunity of being heard to the petitioner, had passed the order recording reasons, which calls for no interference. Counsel submitted that the showcause notice must be read as a whole and the proposal cannot be seen in isolation to canvas that the final order travel beyond the show cause notice. 8. Before dealing with the rival submissions, we may refer to the decision of the Supreme Court in case of Rajesh Kumar and others v. Deputy Commissioner of Income-Tax and others reported in [2006] 278 ITR 91 (SC) cited by the counsel for the petitioner. In such decision, the Supreme Court held that direction issued under section 142(2A) of the Act for special audit is not administrative in nature, but is in exercise of quasijudicial powers. Any order which is likely to result in adverse civil consequences, must be proceeded by a show cause notice and a reasonable opportunity t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and later on, conversion of the firms which eventually merged with the existing company. In the opinion of the Assessing Officer, such properties had undergone multiple revaluation over the years from 2008 to 2013, which involve the application of the provisions of the Companies Act and the accounting standards provided therein. He was therefore of the opinion that having regard to the nature and complexity of the accounts, volume of accounts etc, it was necessary to get the accounts audited by the special auditor. 11. It was on the basis of such reasons, after hearing the petitioner and considering the objections that the Assessing Officer passed the impugned order. In such order, however, he provided for special auditor, not only concerning financial year 2012-13 of the assessee, but also for the financial year 2009-10 and significantly also called for special audit of various other firms and companies, which ultimately, as noted above, amalgamated into a single company. 12. Insofar as the direction for auditing the company's account for the assessment year 2012-13, we see the same is backed by proper materials on record and reasons recorded by the Assessing Officer. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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