TMI Blog2023 (7) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and would be purely governed by the said statute. Payment of remuneration is also based on the factors prescribed in the Rules as discussed above. The nature of the assessment is not commercial but is a statutory nomination for the assistance of the AO and in effect the IT Department. IT Department cannot be termed as a buyer when it is nominating the accountant for conducting a Special Audit and neither can the CA Firm be termed as a supplier . The remuneration payable to the accountant cannot also be termed as consideration as the Special Audit is a statutory duty being performed by the accountant for and on behalf of the AO. The invocation of the provisions of the MSMED Act under such circumstances, in respect of Special Audit remuneration u/s 142(2D) would, therefore, not be tenable and is completely misplaced. MSMED Act has no applicability to the nature of the assignment which has been given to the Respondent/CA Firm. CA Firm may be registered as a Micro or Small enterprise and may be entitled to invocation of the jurisdiction of the MSMED Act for other purposes. Insofar as the assignment is one which is emanating from a statute i.e., u/s 142(2A) of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . After the completion of the said Special Audit assignments and the submission of the final audit reports, the CA Firm raised four invoices in respect of the said audits. The grievance of the Special Auditor- CA Firm is that qua the invoices raised, the full payment has not been made. Further, in respect of one of the assignments the payment has not been received at all. 5. Under such circumstances, the CA Firm invoked the provisions of the MSMED Act and approached the MSEFC by way of references under Section 18 of the Act. 6. Pursuant to the said references, the matter was thereafter referred to the Delhi International Arbitration Centre (hereinafter DIAC ) by the MSEFC vide the impugned reference orders and a retired judge of the Supreme Court was appointed as the Arbitrator in W.P.(C) No. 16294/2022. However, in W.P.(C) No. 13754/2019, the ld. Arbitrator was yet to be appointed. 7. The IT Department has preferred the present two writ petitions, challenging the impugned reference orders passed by the MSEFC on the ground that the MSEFC under the MSMED Act lacks jurisdiction to deal with claims raised by Special Auditors under Section 142(2A) in respect of the fee payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said Special Audit assignment. 16. On 5th September 2016, W.P.(C) No. 3273/2013 titled Sahara India (Firm), Lucknow v. Commissioner of Income Tax, Delhi (Central)-1, New Delhi Others was disposed of. 17. In 2018, having not received the payment of its fee bill, the CA Firm filed a writ petition being W .P.(C) No. 1773/2018 titled M/s SBG Co. vs. The Union of India Ors. before this Court, regarding the payment of its fees. 18. W.P.(C) No. 1773/2018, was disposed of vide order dated 26th February 2018, with a direction that the writ petition would be treated as a representation to the Competent Authority i.e., the IT Department in this case, which would inform the CA Firm about their decision on the fee within a period of eight weeks. 19. However, no such decision was made by the Competent Authority within the said period. Consequently, the CA Firm filed a contempt petition being CONT. CAS(C) 456/2018 titled SBG Company v. B K S Pandya before this Court. Further, an application was moved seeking extension of time to comply with the said order. 20. Finally, after various communications and submissions between the IT Department and the CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 27. The DIAC thereafter, issued letter dated 28th September 2019 informing the CA Firm and the IT Department of the impugned reference and the details regarding the arbitration proceedings, such as filing of statement of claims as also other formalities pertaining to the arbitration proceedings. 28. In response to the same, while the CA Firm filed its statement of claim with DIAC, the IT Department vide letter dated 19th November 2019, challenged the jurisdiction of DIAC in terms of Section 293 of the IT Act. Further, it sought minimum 7 days time to file the statement of claims and to suggest the names of Arbitrators. The IT Department, vide letter dated 12th December 2019, also informed the DIAC that it was in the process of filing a writ petition and requested that the proceedings be kept in abeyance till the outcome of the writ petition. 29. Thereafter, the IT Department filed the present writ petition. 30. Vide order dated 23rd December 2019, this Court stayed the impugned order dated 19th September 2019 along with the proceedings emanating therefrom. W.P. (C) 16294/2022 31. This petition deals with the Special Audit of three entities, in respect of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T) and Rs. 2,37,71,100 /- (inclusive of GST) 37. On 12th July 2019 and 19th July 2019, the IT Department passed orders under Section 142(2D) of the IT Act, determining the remuneration of the CA Firm with respect to the Special Audits of Oracle and Reverse, respectively. The amounts determined under Section 142(2D) of the IT Act by the IT Department are set out below. (i) Oracle at Rs. 67,50,000/- (exclusive of GST) i.e., Rs. 79,65,000/- (inclusive of GST (ii) Reverse at Rs. 60,90,000/- (exclusive of GST) i.e., Rs. 71,86,200/- (inclusive of GST) 38. However, at this stage, no remuneration was determined by the IT Department with respect to the Special Audit of SIFCL. 39. The IT Department, thereafter, released the following payments: - (i) Reverse- Rs. 64,55,400/- (Rs. 60,90,000/- plus GST @ 18% i.e., Rs. 10,96,200/- less IT TDS of Rs. 6,09,000/- less GST TDS of Rs. 1,21,800/-) (ii) Oracle-Rs. 71,55,000/-(Rs. 67,50,000/- plus GST @ 18% i.e., 12,15,000/- less ITTDS of Rs. 6,75,000/- less GST TDS of Rs. 1,35,000/-). 40. The said payments were treated a part-payment of the total fee amount. The CA Firm sought the payment of the balance amounts alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst ex-parte. 47. Thereafter, the ld. Arbitrator passed further orders dated 8th September 2022 and 12th October 2022 in the said arbitration proceedings. 48. Aggrieved by the impugned reference orders dated 10th December 2021 and the proceedings emanating therefrom, the IT Department filed the present petition. 49. Vide order dated 25th November 2022, this Court stayed the impugned reference orders dated 10th December 2021 along with the proceedings emanating therefrom. 50. It is of import to note that during the course of the proceedings in the present petitions, the IT Department passed an order dated 8th May 2023 under Section 142(2D) of the IT Act with respect to the Special Audit of SIFCL determining the remuneration at Rs. 15,25,000/- which it submitted before the Court. Submissions Submissions by the Petitioner 51. On behalf of the Petitioner, Mr. Ruchir Bhatia, ld. Counsel has made the following submissions: A. That the role of the Special Auditor under Section 142(2A) of the IT Act is determined by the Principal Chief Commissioner or the Chief Commissioner or other similarly placed senior officials of the Income Tax Department. The rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso then made to the statement of claims filed by the CA Firm before the DIAC wherein it is clearly alleged that the consideration determined is palpably incorrect, which therefore takes it into the jurisdiction of the IT Act and not under the MSMED Act. G. That Section 24 of the MSMED Act would not be applicable and would not be attracted in this case inasmuch as the Act itself would apply only if the conditions under Section 15 and the definition of buyer under Section 2(d) of the MSMED Act are satisfied. The Petitioner/IT Department cannot be termed as a buyer within the meaning of the MSMED Act as there is no consideration which has been paid. There is also no agreement but a nomination which has been made by the IT Department. Since the MSMED Act itself is not attracted in the present case, Section 24 of the said Act would have no application. H. That there is no conflict between Section 18 and Section 24 of the MSMED Act and the provisions of the IT Act. I. That insofar as Section 24 of the MSMED Act is concerned, reliance is placed on Section 293 of the IT Act to argue that none of the orders made under the IT Act can be agitated by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment. O. That, overall, there are four Special Audit assignments in which the CA Firm was nominated by the IT Department. In respect of all the four assignments, the IT Department has made its determination regarding the amounts. The only option/remedy available to the Respondent- CA Firm is a challenge through a writ petition. However, the Respondents have not challenged the same by way of a writ petition. P. That there has been no delay by the IT Department in approaching this Hon ble court by way of the present writ petitions. Further, it is submitted that the proceedings before an authority lacking inherent jurisdiction are nullity and thus, void ab initio. 52. On 17th March 2023, the Court directed both the parties to bring their respective computations of the amounts paid/payable for their perusal. On the next date i.e., 16th March 2023, Respondent No. 2/CA Firm handed over the computation of the amounts paid and payable as directed by the Court. 53. Mr. Bhatia, then handed over the tabulated details of the amounts determined and paid to the CA Firm under Section 142(2D) of the IT Act regarding the four Special Audit assignments. 54. Order dated 8th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fees are to be paid by the Assessee. However, as per the proviso inserted with effect from 1st June 2007, the phrase relating to finality of determination was conspicuously missing. In respect of the assignments given after 1st June 2007, the payment of fee is to be made by the Central Government. The Commissioner, IT Department is thus stated to be an interested party subject to bias. If such finality was read into the proviso, it would be unconstitutional and violative of Article 14. Reliance is also placed on the salutary principle of natural justice that no man can be a judge in his own cause to argue that the IT Department cannot be judging its own case as to whether the determination is final. Reliance is placed upon two decisions of the ld. Supreme Court in J. Mohapatra Co and Anr. v. State of Orissa Anr. [Civil Appeal No. 6814/1981] as also Union of India Anr v. Tulsiram Patel Ors. [Civil Appeal No. 6814/1981] . F. That in terms of Section 293 of the IT Act, it is only the availment of a remedy before the Civil Court which is barred. Reliance is placed upon the Gujarat High Court Judgment which has also been upheld by the Supreme Court in Principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner has filed the present writ petition in a malafide manner. N. That the Respondent has computed the fee as approved in Rakesh Raj Associates vs. CIT[WP(C) No. 1230/2015] and Dhanesh Gupta Co. vs. CIT [2010]327 ITR 246 (Del). Further, the objection is irrelevant as the issue in the present case relates to the jurisdiction of the MSEFC over the dispute and not the quantum of fee payable. O. It is specifically submitted, that the Petitioner, by its own admission has accepted that there lies no remedy in the IT Act against the order under Section 142(2D) of the same, and thus the Respondent cannot be left remediless and would be entitled to explore alternate remedies that it may be eligible for. P. That the present petitions are not maintainable on account of non-maintainability of writ jurisdiction during arbitral proceedings. Further as the jurisdiction of the MSEFC over the dispute was not challenged before the MSEFC the writ jurisdiction is not maintainable. He relies upon the decision in BHEL v. MSEFC [W.P.(C) 10886/2016] , wherein the ld. Single Judge of this Court has held that if the jurisdiction is not challenged before the MSEFC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have Judicial and Technical Members (Administrative Tribunals, TDSAT, Competition Appellate Tribunal, Consumer fora, Cyber Appellate Tribunal, etc). 19. Similar observations were made by the Supreme Court in SREI Infrastructure Finance Limited (supra) as under: 14. Arbitration is a quasi judicial proceeding, equitable in nature or character which differs from a litigation in a Court. The power and functions of arbitral tribunal are statutorily regulated. The tribunals are special arbitration with institutional mechanism brought into existence by or under statute to decide dispute arising with reference to that particular statute or to determine controversy referred to it. The tribunal may be a statutory tribunal or tribunal constituted under the provisions of the Constitution of India. Section 9 of the Civil Procedure Code vests into the Civil Court jurisdiction to entertain and determine any civil dispute. The constitution of tribunals has been with intent and purpose to take out different categories of litigation into the special tribunal for speedy and effective determination of disputes in the interest of the society. Whenever, by a legislative enactment jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral process; (vii) Excessive judicial interference in the arbitral process is not encouraged; (viii) It is prudent not to exercise jurisdiction under Article 226/227; (ix) The power should be exercised in `exceptional rarity or if there is `bad faith which is shown; (x) Efficiency of the arbitral process ought not to be allowed to diminish and hence interdicting the arbitral process should be completely avoided.; 57. Thus, even while applying the strict test for entertaining of writ petitions in arbitral proceedings, a case where the MSMED Act may itself not be applicable, would constitute an exceptional circumstance. Thus, the issue as to whether the MSEFC had jurisdiction ought to be considered at the threshold itself inasmuch as, if the provisions of the MSMED Act, 2006 have no application, the Petitioner cannot be subjected to the lengthy arbitral proceedings under the said Act which also entails various other consequences including extremely high rates of interest under Section 16 of the Act. In order to avoid further complications and delay in adjudication by the competent forum, the question as to jurisdiction thus deserves to be considered at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount outstanding as per the CA Firm is liable to be paid by the Department. In order to recover the outstanding amounts, the CA Firm approached the MSEFC under the MSMED Act, which in turn referred the disputes to the DIAC for arbitration. 62. In the first case i.e., W.P.(C) 13754/2019 , the arbitration proceedings were stayed vide order dated 23rd December 2019. The order dated 23rd December 2019 passed in W.P.(C) 13754/2019 is set out below: Issue notice. Notice is accepted by Mr. Ramesh Singh, leamed standing counsel on behalf of respondent no. 1. Let notice be issued to the remaining respondents to be served through all modes. Counter affidavit be filed within a period of four weeks. Rejoinder, if any, be filed within a period of two weeks thereafter. The Income Tax Department has filed the present petition impugning the order dated 19.09.2019 passed by the Micro and Small Enterprises Facilitation Council, New Delhi (hereinafter referred to as the 'MSME Council) whereby the matter has been referred to arbitration before the Delhi International Arbitration Centre (DIAC). The case of the petitioner is that Respondent no. 2, a firm of Chartered Accountant who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made in terms thereof, no further action can lie. Mr. Ramesh Singh, Standing Counsel for Respondent no. 1 submits that the jurisdiction of the MSME Council is de hors the provisions of the Income Tax Act. He also relied upon Section 24 of the MSMED Act, 2006 to argue that the provisions in Sections 15 to 23 shall have effect notwithstanding the provisions of the Income Tax Act. He also refers to the decision of the Division Bench of this Court in LPA 91/2019 titled M/s Bharat Heavy Electricals Ltd vs. Micro and Small Enterprises Anr. This issue would require consideration. I am of the prima facie view that once Respondent No. 2 has been paid its statutory audit fees, in terms of the orders passed by this Court, the jurisdiction of MSME Council could not have been invoked. In view of the above, till the next date of hearing, the order dated 19.09.2019 and the proceedings emanating therefrom shall remain stayed. List on 21st April 2020 63. However, in the second case i.e., W.P.(C) 16294/2022, the Sole Arbitrator was appointed and thereafter the arbitration proceedings were stayed vide order dated 25th November 2022. The said order dated 25th November 2022 in W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Regulation) Act, 1951. Section 29B of the Act provides for notifying reservation of items for exclusive manufacture in the small-scale industry sector. Except for these two provisions, there exists no legal framework for this dynamic and vibrant sector of the country s economy. Many Expert Groups or Committees appointed by the Government from time to time as well as the small-scale industry sector itself have emphasised the need for a comprehensive Central enactment to provide an appropriate legal framework for the sector to facilitate its growth and development. Emergence of a large services sector assisting the small-scale industry in the last two decades also warrants a composite view of the sector, encompassing both industrial units and related service entities. The world over, the emphasis has now been shifted from industries to enterprises . Added to this, a growing need is being felt to extend policy support for the small enterprises so that they are enabled to grow into medium ones, adopt better and higher levels of technology and achieve higher productivity to remain competitive in a fast globalisation area. Thus, as in most developed and many developing countries, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the need to promote self-regulation or self-certification by such enterprises. (j) prescribe for maintenance of records and filing of returns by small and medium enterprises with a view to reduce the multiplicity of often-overlapping types of returns to be filed; (k) Make further improvements in the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 and making that enactment a part of the proposed legislation and to repeal that enactment. 3. The Bill seeks to achieve the above objects. 68. The above SOAR would show that the entire focus of the legislation was to enact a law to support small-scale industries engaged in the manufacturing sector and extending the said support in a comprehensive manner to the services sector. It is of specific relevance to point out that insofar as Chapter V of the MSMED Act relating to delayed payments is concerned, the same was based on the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (hereinafter, Delayed Payments Act, 1993 ). 69. The Delayed Payments Act, 1993 was meant to create a statutory liability upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day: Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed one hundred and twenty days from the day of acceptance or the day of deemed acceptance. Section 4. Date from which and rate at which interest is payable.- Where any buyer fails to make payment of the amount to the supplier, as required under section 3, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay interest to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at one and half time of prime Lending Rate charged by the State Bank of India. Explanation .- For the purposes of this section, Prime Lending Rate means the Prime Lending Rate of the State Bank of India which is available to the best borrowers of the bank. Section 5. Lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which happens after enforcement of the Act i.e. 23.09.1992. 33. The second part of Section 3 is buyer shall make payment . Obviously, question of payment shall arise only after supply of goods or rendering any service. Thus, by virtue of Section 3, both the incidents i.e. supply or service on the one hand and payment on the other has to be after the enforcement of Act, 1993. Statutory provision of Section 3 further creates statutory liability to make payment on the agreed day in writing between the buyers and the supplier and if there is no agreement then before appointed day. The fact that agreement in writing between buyer and supplier for supply and payment is prior to the enforcement of the Act is neither relevant nor material, what is material is that supply and services had to be after the enforcement of the Act, only then the liability of payment shall accrue. 34. We have already noticed that the purpose and object of legislation was prompt payments of money by buyer which has been statutorily ensured in Act, 1993 by containing mandatory provisions of payment of interest. 35. Section 4 which deals with date from which and rate at which interest is payable. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Small enterprise supplies any goods or renders services to a buyer the payment for the same shall be made as agreed between the parties. As per the said section the maximum period for payment to Supplier , cannot exceed 45 days, as stipulated therein. In case of delay in payments, Section 16 provides for interest at a rate much higher than that provided by banks. Further, Section 17 of the MSMED Act, stipulates that the Buyer would be liable to pay the interest in terms of Section 16. The said provisions read as under: Section 15: Liability of buyer to make payment. Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day: Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance. Section 16: Date from which and rate at which interest is payable. Where any buyer fails to make payment of the amount to the supplier, as requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. (4) Notwithstanding anything contained in any other law for the time being in force, the Micro and Small Enterprises Facilitation Council or the centre providing alternate dispute resolution services shall have jurisdiction to act as an Arbitrator or Conciliator under this section in a dispute between the supplier located within its jurisdiction and a buyer located anywhere in India. (5) Every reference made under this section shall be decided within a period of ninety days from the date of making such a reference. 78. Section 24 of the MSMED Act provides that the said Act would have overriding effect over the MSMED Act. The said provision is set out below. Section 24: Overriding Effect- The provisions of sections 15 to 23 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 79. A reading of the aforesaid sections makes it clear that Sections 15 to 18 of the Act are inter-linked with each other and are also linked to the title of the chapter i.e., Chapter V: Delayed Payments to Micro and Small Enterprises. The benefit of interest to the Suppliers which are Micro/Small Enterprises un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or Principal Commissioner or Commissioner, direct the assessee to get either or both of the following namely:- (i) to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of section 288 nominated by the Principal Chief Commissioner or Chief Commissioner or Principal/ Commissioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars, as may be prescribed and such other particulars as the Assessing Officer may require; (ii) to get the inventory valued by a cost accountant, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf and to furnish a report of such inventory valuation in the prescribed form duly signed and verified by such cost accountant and setting forth such particulars, as may be prescribed, and such other particulars as the Assessing Officer may require: Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited or inventory so valued unless the assessee has been given a reasonable opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged for the purpose of audit, is to be paid remuneration . The said remuneration is to be determined by the Commissioner or the Principal Commissioner, Chief Commissioner or the Principal Chief Commissioner. Upon being determined, the said remuneration, shall be final. 85. In respect of Special Audits directed prior to 1st June, 2007 the remuneration is recoverable from the Assessee but, after the enactment of the Proviso to Section 142(2D) i.e., with effect from 1st June, 2007, the remuneration is to be paid by the Central Government. 86. Rule 14B of the IT Rules provides the guidelines for the manner in which the remuneration for Special audits is to be determined. The said Rule reads as under: 14B.-Guidelines for the purposes of determining expenses for audit - (1) Every Chief Commissioner shall maintain a panel of accountants, out of the persons referred to in the Explanation to sub-section (2) of section 288, for the purposes of sub-section (2A) of section 142. (2) Where the Assessing Officer directs for audit under sub-section (2A) of section 142 on or after the 1st day of June, 2007, the expenses of, and incidental to, audit (including the remuneratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he remuneration demanded by the person proposed to be appointed as special auditor is not acceptable to the Chief Commissioner or the Commissioner, as the case may be, he may not assign the work to him. But it would be difficult to accept that the special audit can be assigned to a person without fixing either the remuneration or the norms on which the remuneration is to be calculated after the work is completed and conveying the same to him. Taking such a view would amount to giving an arbitrary power to the Chief Commissioner or the Commissioner, as the case may be, to fix any fee which he may decide to fix irrespective of the quantum of the work and the scale on which the remuneration is to be determined taking the quantum of work into consideration. This, to our mind is not the scheme of section 142(2D) of the Act. 89. The hourly rates are prescribed under Rule 14B (2). Rule 14B (5) of the IT Rules also specifies clearly that the number of hours claimed have to be commensurate with the size and quality of the report. Thus, the scheme of the Act and the Rules entails the following steps: - (i) Submission of Expression of Interest (ii) Nomination by the Department ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the object and purpose of special audit is as such to facilitate the Assessing Officer to arrive at correct taxable income and for which the Assessing Officer is authorized to direct the assessee to get the books of account audited by an accountant authorized by the Assessing Officer, in case, the Assessing Officer is of the opinion that books of account are complex in nature and there are multiplicity of transactions, for which, accounts are required to be audited through the special auditor. As observed hereinabove and even as per sub-section (3) of section 142 ample opportunity shall be available to the assessee to make submission/comments on the report of the special auditor and therefore, there shall not be any prejudice caused to the assessee if the accounts are ordered to be audited through the special auditor under section 142(2A) of the Income-tax Act. With this, challenge to the impugned order is required to be considered. 6.2 Identical question came to be considered by the Delhi High Court in the case of DLF Ltd. (supra). In the said decision, the Delhi High Court has considered the scope, ambit and powers of the Assessing Officer while passing order under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. These amendments by Finance Act, 2013 with effect from June 1, 2013, substitute the words 'nature and complexity of accounts of the assessee'. We are not concerned with the said amendment in the present case as the impugned order in question directing special audit was passed on March 25, 2013, before the amendments became effective. We are, therefore, primarily concerned with whether or not keeping in view the nature and complexity of accounts and the interest of Revenue direction for special audit is justified for the reasons set out in the order dated March 25, 2013. (We have not examined the constitutional validity of the amended provisions and we express no opinion on the said aspect) Powers under section 142(2A) have to be exercised in terms of the legislative provisions. The object and purpose behind the legislation is to facilitate investigation and proper determination of the tax liability. The importance and relevancy of the legislation cannot be underestimated and it is a power available with the Assessing Officer to aid and assist him. Accounts should be accurate and provide real time record of the financial transactions of the assessee. Prepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inality attached to the determination of the remuneration by the Commissioner or Chief Commissioner is well within the knowledge of the accountant/CA Firm. 96. The nature of the Audit and the manner in which remuneration is to be determined would require domain expertise and knowledge which the MSEFC cannot possess. Moreover, the function which is in effect delegated to the Audit firm is one which is exercised under the Income Tax Act and would be purely governed by the said statute. Payment of remuneration is also based on the factors prescribed in the Rules as discussed above. 97. The nature of the assessment is not commercial but is a statutory nomination for the assistance of the AO and in effect the IT Department. The IT Department cannot be termed as a buyer when it is nominating the accountant for conducting a Special Audit and neither can the CA Firm be termed as a supplier . The remuneration payable to the accountant cannot also be termed as consideration as the Special Audit is a statutory duty being performed by the accountant for and on behalf of the AO. 98. The invocation of the provisions of the MSMED Act under such circumstances, in respect of Special A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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