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TMI Blog2022 (12) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) ought to have held that the appointment made by the Assessing Officer of the Special Auditor is not in accordance with the provisions of section 142(2A) of the Act. 4. The learned CIT(A) ought to have held that the assessment order passed by the Assessing Officer u/s. 143(3) r.w.s. 153C of the Act is void ab initio. 5. On the facts and circumstances of the case and in law, the learned CIT(A) erred in adding an amount of Rs. 3,67,20,734/- u/s. 2(24)(iv) r.w.s. 56(1) of the Act on account of amount brought in by the appellant in NRE account from abroad. 6. The learned CIT(A) has erred in adding Rs. 553.59 crores u/s. 2(24)(iv) r.w.s. 56(1) of the Act on account of loose paper found during the course of search. 7. The learned CIT(A) has failed to appreciate the facts of the case and made additions on the basis of presumptions, surmises and conjectures." 3. Shri Vijay Mehta Appearing on behalf of the assessee submitted that the assessee is a non-resident individual and is engaged in the business of trading in diamonds. A search action u/s. 132 of the Income Tax Act, 1961 (in short "the Act") was carried out in the case of J B Diamond Group on 29.10.2010. Consequent t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed AR submits that recourse to Special Audit u/s. 142(2A) of the Act could only be taken by the Assessing Officer after having regard to the nature of complexity of the accounts of the assessee and in the interests of Revenue. Thus, twin conditions for directing Special Audit have to be satisfied, i.e: (1) "nature of complexity of accounts", and (2) "interests of Revenue". The Assessing Officer in the present case without examining the accounts of the assessee jumped to the conclusion of complexity of accounts. The assessee had furnished books of account to the Assessing Officer for assessment years 2007-08 to 2011-12 on 04.10.2013. Whereas the order for Special Audit was passed on 22.03.2013 and Special Auditor furnished his report on 16.09.2013. This clearly shows that the Assessing Officer had no occasion to examine books of the assessee to come to the conclusion regarding nature of complexity of the accounts of the assessee. In so far as the report of the Special Auditor is concerned, without books of account it is not possible to conduct audit. Therefore, the Auditor's report is noting by a farce. The said report is based merely on, bank statements and capital account details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings. The assessee is a recalcitrant and did not furnish requisite financial documents including the books of account before the Special Auditor. The Special Auditor in his report has categorically observed that no books of account were furnished and only some bank statements without any vouchers, invoices or any cogent evidences to support the entries were provided. The actual investments made in India by the assessee were referred to as projections. The learned DR pointed that the assessee is related to the Directors of J B Diamond Ltd. The assessee is using J B Diamonds as a conduit for transferring funds for the purpose of investments in India. 9. Rebutting the submissions made on behalf of Department the learned AR of the assessee reiterated that no "complexity" was pointed out by the AO before making reference to Special Audit. The assessee has made all investments in Hong Kong. The loose sheets which are used by the Department for making the additions are in fact projections of the investments in Hong Kong. Hence, these sheets are unrelated to any investments in India. 10. We have heard the submissions made by rival sides and have examined the orders of autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Co. Ltd. Vs. C.I.T., it is a nebulous word. Its dictionary meaning is: "The state or quality of being intricate or complex or that 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. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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