TMI Blog2023 (5) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... rder 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. - ITA Nos. 353, 354 & 355/M/2021 - - - Dated:- 27-4-2023 - SHRI KULDIP SINGH , JUDICIAL MEMBER AND SHRI GAGAN GOYAL , ACCOUNTANT MEMBER For the Assessee : Shri Bharat Kumar, A.R. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/ or delete any of the above grounds of appeal. 3. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : on the basis of search operation carried out under section 132 of the Income Tax Act, 1961 (for short the Act ) in case of JB Diamond Group of cases, notice was issued and served upon the assessee under section 153C of the Act, to which assessee has not filed any return for A.Y. 2007-08. The assessee filed the return of income for A.Y. 2008-09 2009-10 declaring total income at Rs.66,480/- Rs.2,400/- respectively. Notice under section 143(2) of the Act was duly served upon the assessee and in response thereto the assessee filed details. The assessee raised specific objections to the special audit report called by Assessing Officer (AO) under section 142(2A) on the ground that report of the nominated auditors is purely based on surmises and assumptions. Declining the contentions raised by the assessee the AO proceeded to frame the assessment making addition of Rs.52,39,02,630/-, Rs.39,88,77,085/- Rs.1,09,19,230/- for A.Y. 2007-08, 2008-09 2009-10 respectively under section 153A read with section 143(3) of the Act. 4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amine 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. 11. When we examine the contentions raised by the Ld. A.R. for the 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. 12. Identical issue has already been decided by the co-ordinate Bench of the Tribunal in assessee s own case for A.Y. 2010-11 (supra) which was part of the search carried out on 29.10.2010, operative part of which is extracted as under for ready perusal: 10. We have heard the submissions made by rival sides and have examined the orders of authorities below. The prime grievance of the assessee is against appointment of Special Auditor u/s. 142(2A) of the Act. It is an undisputed fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is difficult to understand. However, all that is difficult to understand should not be regarded as complex. What is complex to one may be simple to another. It depends upon one s level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully. Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the Assessing Officer to understand accounts maintained by the assessee; appreciate the entries made therein and in the event of any doubt, seek explanation from the assessee. But opinion required to be formed by the Assessing Officer for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.w.s 153C of the Act is time barred? The time limit for completing the assessment u/s.153C of the Act is one year from the end of the Financial Year in which seized documents were handed over to the Assessing Officer. In the instant case it is undisputed that seized documents were handed over to the Assessing Officer on 17/11/2011. Therefore, the assessment should have been completed on or before 31/03/2013, whereas, the assessment order was passed on 14/11/2013, hence, clearly beyond the period of limitation as specified u/s. 153B of the Act. The extended time for completing assessment would have been available to the Assessing Officer if reference to Special Auditor was held to be valid. As a sequitur to our findings on reference to Special Auditor, we hold the assessment order time barred, ergo, liable to be quashed. We hold and direct accordingly. 13. Following the order passed by the co-ordinate Bench of the Tribunal and in view of the admitted fact that 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. 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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