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TMI Blog2019 (6) TMI 1586X X X X Extracts X X X X X X X X Extracts X X X X ..... iven by the Commissioner to direct such audit of the business of the respondent dealers and that the Joint Commissioner, a lower Authority, was not empowered to order any such audit of the particular business dealer, as there was no authorisation or delegation by the Commissioner possible in terms of Section 64(4) of the Act. The order of the learned Commissioner was therefore quashed. Being aggrieved by the same, the Revenue has filed the present Writ Appeal before this Court. 4. Learned counsel for the Revenue Mr.Mohammed Shafiq, with due emphasis, sought to submit that there was a due and proper authorisation in the impugned order for audit under Section 64(4) of the Act by the learned Commissioner of Commercial Taxes, Chepauk, Chennai-5 and under the impugned order No.Q3/11740/2013 dated 16.05.2014, the learned Commissioner had selected the Registered dealers as per the list annexed with the said order comprising of Registration Numbers, TIN Numbers and names of 94 dealers, who were selected on the basis of the following parameters for conducting VAT audit by Enforcement Wing officials. The said order enumerates the following parameters for such selection of the registered dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the part of the Commissioner was perfectly justified and any such audit order now produced was also liable to be quashed including the consequential proceedings. He has further submitted that the learned Commissioner cannot delegate the power to order an audit of the business of the registered dealers to any lower authority including the Joint Commissioner much less than the Deputy Commercial Taxes Officers and the Commissioner himself has to apply his mind to the various criterias enumerated under Section 64(4) of the Act, on the basis of which, the order for audit of business of particular dealer can be directed by the learned Commissioner. He submitted that no such exercise had been undertaken by the Commissioner in the present case and laying down the general guideline, he could not have directed the audit of 94 dealers as per the list annexed and produced before the Court today. He further submitted that there was no application of mind by the learned Commissioner for individual cases of the dealers as to for what violation or fulfilling of the relevant rules or criteria, such audit was required to be done. He further submitted that the learned Commissioner by the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner, Mr.K.Rajaraman and his endorsement was not even available. The annexure thereto comprising list of 94 dealers is not signed by anybody. When the Court expressed its anguish on the manner in which an incomplete document was produced before this court, with due apology, the learned counsel sought a pass over of the case and produced page 2 of the said order, which we have taken on record and have perused the order accordingly and taken the same on record. Admittedly, the said order was never produced before the learned Single Judge in its complete or even incomplete form. The manner in which, the Revenue Authority has dealt with the legal proceedings before this Court is deprecated and it appears that the Commercial Taxes Department takes the legal proceedings very casually. 8. Coming to the provisions of the Act itself, let us first quote Section 64, which deals with the "Maintenance of upto date, true and corect Accounts and Records by the Dealers", particularly Sub-Section (4), thereof with which we are concerned in the present case. The said provision in its entirety is quoted below for ready reference. "64 - Maintenance of upto date, true and correct accounts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of sub-Section (4) of Section 64 empowers the Head of the Department viz., the Commissioner to order for an audit of the business of any registered dealer by an officer not below the rank of the Deputy Commercial Taxes Officer, who is much lower authority in the hierarchy. The criteria of selection of dealers of such audit as enumerated in clauses (a) to (e) of Sub-Section (4) could be broadly construed to be "Defaulter Dealers" viz., those Dealers i) who have not filed returns; ii) who have claimed exorbitant refund of tax; iii) whose returns are not correct; iv) any other criteria or on a random selection basis. v) where details, are to be scrutinized in the opinion of the Commissioner. 10. It is clear that the said sub-section (4) does not empower the Commissioner to delegate the power to pass order to any lower authority. Therefore, the application of mind by the Commissioner himself about the nature of the default by the particular Assessee concerned and therefore there is a need to audit the books of accounts and other revenue records of the business of that Assessee has to be recorded by the Commissioner himself. The words "any registered dealer" in Sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (4) of the Act but such provisions, which may be applicable to the assessee concerned, may be under the other relevant statutes also like the provisions of the Companies Act, if an assessee is a limited Company, under the provisions of the Income Tax Act, vide Section 142(2A) thereof as well. The Income Tax Act even contains a provision in Section 142(2A) for direction of the special audit by the Auhtority concerned after giving an opportunity of hearing to the assessee. Therefore, directing the audit of the acounts of the company of the assessee is a serious matter and is not a simple administrative act. A reference hereto the judgment of Karnataka High Court in M/s.Karnataka Industrial Area Development Board vs Assistant Commissionr of Income Tax in W.P.No.1863 of 2017 connected with W.P.No.25223 of 2016 dated 02.01.2018 is appropriate. 12. The report or material collected through such proceedings is liable to be used as a material or evidence against the Assessee during the course of assessment proceedings under the provisions of the Act. Paragraph 2 of the said order itself envisages such audit proposals to be sent to the teritorrial authorities. It is not supposed to be exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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