TMI Blog2009 (3) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... al audit has been ordered to gain more time, is not impressive - writ petition is wholly misconceived and the same is dismissed - 4763 of 2009 - - - Dated:- 26-3-2009 - M.M. KUMAR and H.S. BHALLA, JJ. Ms. Radhika Suri, Advocate, for the petitioner. JUDGMENT M.M. KUMAR, J. - Ludhiana Improvement Trust (for brevity, 'the petitioner-Trust') has approached this Court under Article 226 of the Constitution with a prayer for quashing show cause notices dated 5.12.2008 and 19.12.2008 (P-1 P-3) proposing to hold special audit under Section 142(2A) of the Income Tax Act, 1961 (for brevity, 'the Act'). The petitioner-Trust has also challenged the order dated 30.12.2008 (P-6) being totally arbitrary and contrary to Article 14 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice was issued by the Deputy Commissioner of Income-tax, Ludhiana, to the petitioner-Trust proposing special audit and the matter was posted for hearing on 26.12.2008. The petitioner-Trust filed objections to the second show cause notice and asserted that it was registered under Section 12AA of the Act and the Assessing Officer was required to determine whether its income had been applied to its objects. It is claimed that there was no necessity to order special audit. On 30.12.2008, the respondents dismissed the objections and passed an order referring the matter to Special Auditor Shri P.C. Goyal (P-6). 3. Ms. Radhika Suri, learned counsel for the petitioner-Trust has argued that once books of account were produced for the first time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the past history of the case a number of discrepancies/complexities in maintenance of accounts were noticed, which had resulted in reference made to the Special Auditor for conducting special audit as per the provisions of Section 142(2A) of the Act in the preceding assessment year. The show cause notice also disclosed the following three issues:- "1. You have claimed exemption which on the facts of the case was not eligible to you. 2. Physical verification of the fixed assets was not conducted, which means valuation of the properties was not done properly. 3. Complete books of accounts were not produced." 4. It was pointed out that the discrepancies which existed in the earlier year were also found to be existing in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report of such audit on prescribed form. 5. The petitioner-Trust tendered detailed reply on 12.12.2008 (P-2) and the department again on 19.12.2008 (P-3) wrote to the petitioner-Trust. A perusal of para 4 of the letter shows that a detailed questionnaire was issued on 26.11.2008, which was duly served on the petitioner-Trust on 27.11.2008. It was required to furnish reply to the queries as well as to produce complete books of account alongwith vouchers for examination on 5.12.2008. However, neither the details were furnished nor books of account were produced for examination. However, on 8.12.2008 few details were furnished, vide letter dated 5.12.2008, yet books of account were not produced. The books of account, which have been produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Commissioner of Income Tax felt that there were chances that some income chargeable to tax could be erroneously left to be computed. Accordingly, he proceeded to conclude as under:- " I am, therefore, of the opinion that keeping in view the complexity of the accounts involved, in the maintenance of books of account and other documents, by the Improvement Trust, Ludhiana and in the interest of revenue, it is necessary to issue directions in your case for getting the accounts audited by an accountant after seeing prior approval of the Commissioner of Income Tax-III, Ludhiana. Before doing so you are hereby given an opportunity of being heard, which is fixed for 26.12.2008 at 11.00 A.M. in my office at Ludhiana. Furnishing reply to this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some of which have already been adverted to in the preceding paras. Likewise, a number of other things have been recorded in the show cause notice, dated 19.12.2008 (P-3), which has produced the past checking result from the impounded books of account. The respondents reached the conclusion about the complexity of the accounts involved in maintenance of books of account and other documents relating to the petitioner-Trust by recording the satisfaction regarding such discrepancies and the voluminous books of account. Keeping in view the possibility of ignoring any income from the assessment and ensuring the interest of the revenue, a show cause notice was issued on 19.12.2008 (P-3) and hearing was granted on 23.12.2008 to which the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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