High Court affirms special audit under Income Tax Act, petitioner's objections duly considered.

The High Court upheld the initiation of the special audit under Section 142(2A) of the Income Tax Act, finding that the petitioner had been given adequate opportunity to be heard, and the provisions of law had been duly complied with. The Court dismissed the writ petition, concluding that there were no grounds for interference as the order was passed after due application of mind and the petitioner's objections had been considered.

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Issues:
1. Compliance with Section 142(2A) of the Income Tax Act for special audit initiation.
2. Adequacy of opportunity of being heard before passing the special audit order.
3. Requirement of a speaking order under Section 142(2A) of the Act.

Analysis:

Issue 1: Compliance with Section 142(2A) of the Income Tax Act for special audit initiation
The petitioner challenged the initiation of a special audit under Section 142(2A) of the Income Tax Act for the Assessment Year 2018-2019. The petitioner contended that the respondent did not consider their objections before referring the case for special audit. The petitioner argued that a speaking order was necessary, which was missing in this case. The petitioner relied on judgments of the Hon'ble Supreme Court to support their case. However, the respondents argued that they had given the petitioner an opportunity to be heard and had complied with the provisions of Section 142(2A) of the Act. They presented communication and notices sent to the petitioner as evidence of compliance.

Issue 2: Adequacy of opportunity of being heard before passing the special audit order
The petitioner claimed that they were not adequately heard before the special audit order was passed. They argued that the principles of natural justice required a reasonable opportunity to be given before such orders. The Hon'ble Supreme Court's judgment emphasized the importance of providing a hearing, even if not elaborate. The Finance Act, 2007 added a proviso to Section 142(2A) requiring the Assessing Officer to grant the assessee a reasonable opportunity of being heard before directing a special audit.

Issue 3: Requirement of a speaking order under Section 142(2A) of the Act
The Court considered whether a speaking order was necessary under Section 142(2A) of the Act. The respondents provided evidence that the petitioner had been given adequate opportunities for hearing, and their objections had been duly considered. The Court observed that the provisions of law had been complied with, and the order was passed after due application of mind. The Court concluded that the contention of the petitioner regarding non-application of mind or lack of reasons for passing the order was not sustainable. Therefore, the Court dismissed the writ petition, finding no grounds for interference.

In conclusion, the High Court upheld the initiation of the special audit under Section 142(2A) of the Income Tax Act, finding that the petitioner had been given adequate opportunity to be heard, and the provisions of law had been duly complied with.

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