Special audit approval requires objective satisfaction, fair hearing, and consideration of the original proposal before it can stand.

Special audit under the Income-tax Act is valid only where the Assessing Officer forms an objective view that the accounts are complex and Revenue interests require audit, and the approving authority considers the proposal on its stated materials. The proviso requires a real opportunity of hearing, so the assessee must know the grounds for the proposed audit and be able to object effectively. Approval was unsustainable where the authority relied on grounds outside the proposal, ignored detailed objections, and acted without a cogent basis showing complexity of accounts; the special audit approval was quashed.

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Issues: Whether the approval for special audit under Section 142(2A) of the Income-tax Act, 1961 was liable to be quashed for want of proper application of mind, because it was granted on grounds not forming part of the proposal and without a fair and effective hearing.

Analysis: Special audit under Section 142(2A) can be directed only where the Assessing Officer forms an objective opinion that the accounts are complex and that the Revenue's interest requires such audit, and the approving authority must consider the proposal on the materials on which it is founded. The proviso to Section 142(2A) makes a reasonable opportunity of hearing mandatory, and the assessee must be informed of the real grounds on which special audit is proposed so that an effective objection can be made. Approval cannot be sustained where the authority travels beyond the proposal, relies on extraneous materials, ignores the assessee's detailed objections, and grants approval in undue haste. In the facts found, the ground relied upon at the stage of approval was not part of the original proposal and the order did not disclose any real consideration of the objections or any cogent basis showing complexity of accounts.

Conclusion: The approval for special audit was held unsustainable and was quashed.

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