Special audit under Section 142(2A): reasonable opportunity to be heard required; failure renders audit order void and mandates fresh assessment.

Special audit under the Act requires affording a reasonable opportunity of being heard; mere invitation to file a reply does not satisfy this statutory precondition, and failure to provide a sufficient opportunity to reply and be heard renders any order under the special audit provision void. Principles of natural justice are engaged and objections raised by the revenue cannot be dismissed without consideration; consequence is that the assessment may be set aside and the matter remitted for de novo framing of assessment to the Assessing Officer with an opportunity to be heard.

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Issues: (i) Whether the additional grounds challenging the validity and jurisdiction of the assessment proceedings under Section 142(2A) and the competence of the Additional Commissioner to pass the assessment order are admissible; (ii) Whether the assessment framed pursuant to Section 142(2A) is valid in view of alleged failure to afford a reasonable opportunity of being heard and whether the matter should be restored to the Assessing Officer for de novo assessment.

Issue (i): Admissibility of additional grounds challenging jurisdiction and validity of assessment under Section 142(2A).

Analysis: The additional grounds directly challenge the jurisdictional validity of the assessment proceedings. Previous proceedings on identical facts in an earlier assessment year resulted in directions to admit similar grounds. The Tribunal considered the procedural history and the nature of the grounds which go to the root of the matter.

Conclusion: The additional grounds are admitted.

Issue (ii): Validity of the assessment passed under Section 142(2A) given the alleged failure to afford a reasonable opportunity of being heard, and appropriate relief.

Analysis: The record shows narration of special audit proceedings but does not demonstrate that a sufficient, reasonable opportunity of hearing was provided as required by the proviso to Section 142(2A). Merely calling for a reply does not satisfy the statutory requirement of a reasonable opportunity of being heard. Relevant assessment record entries prior to a specified date were not produced to fully adjudicate factual disputes; having regard to the absence of clear compliance evidence and the jurisdictional nature of the complaint, it is appropriate to remove the controversy from further appellate limbo.

Conclusion: The assessment is set aside and the matter is restored to the file of the Assessing Officer for framing a de novo assessment after giving the assessee a reasonable opportunity of being heard; the assessee is at liberty to raise objections in accordance with law.

Final Conclusion: The appeals are allowed for statistical purposes and the assessment is restored to the Assessing Officer for fresh adjudication in accordance with law, after affording a reasonable opportunity of hearing to the assessee.

Ratio Decidendi: An order framed under Section 142(2A) of the Income-tax Act, 1961 is null and void if a reasonable opportunity of being heard is not afforded; where jurisdictional infirmity is alleged and record is incomplete, restoration for de novo assessment after providing the required opportunity is the appropriate remedy.

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