High Court Quashes Commissioner's Order, Directs Reconsideration Based on Objective Grounds

The High Court found that the Deputy Commissioner and Commissioner did not give objective consideration to the case. The Court noted that the audit would impose a heavy burden on the petitioner and that the mere fact of reconciling stocks was not sufficient justification for the audit. The Court deemed the Commissioner's order as mechanical and perfunctory, quashing it and directing a reconsideration based on the Assessing Officer's recommendation.

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Issues Involved: Challenge to communication for special audit u/s 142(2A) of Income-tax Act.

Summary:
The petitioner, a public sector undertaking, challenged a communication from the Assistant Commissioner of Income-tax regarding the need for a special audit u/s 142(2A) for the assessment year 1983-84. After a long legal process, the Assessing Officer sought to withdraw the audit order as the statutory auditors had completed the audit. However, the Deputy Commissioner disagreed, citing concerns about reconciling balances and recommended the audit be conducted. The Commissioner then passed a non-speaking order upholding the audit. The High Court found that the Deputy Commissioner and Commissioner did not give objective consideration to the case. The Court noted that the audit would impose a heavy burden on the petitioner and that the mere fact of reconciling stocks was not sufficient justification for the audit. The Court deemed the Commissioner's order as mechanical and perfunctory, quashing it and directing a reconsideration based on the Assessing Officer's recommendation.

This judgment highlights the importance of objective consideration in audit decisions and the need to justify the imposition of audits, especially in cases where statutory auditors have already completed their work.

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