TaxTMI 
TaxTMI 
2011 (7) TMI 645
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....ort in the prescribed Form duly signed and verified by the said Chartered Accountant, setting forth for such particulars as may be prescribed under Rule 14-A in Form No. 6B upto 30th June, 2011. The petitioner has also prayed for a direction commanding respondent no. 3 not to proceed further in compliance to the order dated 30.6.2011, read with order dated 3.5.2011, and further not to proceed in making assessment for the assessment year 2008-09 in pursuance to directions dated 3.5.2011. The petitioner has also prayed for directions commanding the respondent no. 4, not to proceed with the Special Audit, under Section 142 (2A) for the financial year 2007-08 during the pendency of the writ petition. 3. The petitioner had earlier approached this Court by filing a Writ Petition No. 257 of 2001 on the grounds that sufficient and adequate opportunity was not given to the petitioner before directing Special Audit under Section 142 (2A) of the Act. The writ petition was disposed of on 3.3.2011 with following directions:- "1. The UP State Industrial Development Corporation Ltd. (UPSIDC) (the Petitioner) is a statutory Corporation of State of Uttar Pradesh. It has filed the present writ pet....
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....e petitioner has also filed a supplementary affidavit that is taken on record. With the consent of the parties, the writ petition is disposed of at this stage. THE DECISION 13. A perusal of the photostat copy of the order sheet of the CCIT indicates that the approval was granted on 14.12.2010. This was before the date fixed namely 15.12.2010 by the CCIT. Subsequently, he again granted approval on 28.12.2010 considering the supplementary report dated 23.12.2010. It is not disputed that copy of this supplementary report was not given to the petitioner. 14. Considering the aforesaid facts, it cannot be said that the petitioner was afforded reasonable opportunity to have his say in the matter. In view of this, the approval granted on 14.12.2010 as well as 28.12.2010 and the order dated 29.12.2010 passed by the Assessing Officer are quashed. 15. The copy of the proposal dated 18.11.2010 has already been given to the counsel for the Petitioner. The copy of the supplementary proposal dated 23.12.2010 has also been handed over to them. The petitioner may appear before the CCIT in the week commencing 28th of March, 2011 and file certified copy of this order. The petitioner along with th....
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....d by M/s P.D. Agarwal & Co., Chartered Accountant on 29.9.2008. To verify this fact, a letter was written on 05.7.2008 to M/s P.D. Agarwal & Co, who informed by its letter dated 05.7.2010 that the audit of financial year 2007-08 relevant to the assessment year 2008-09, has not been completed by them and therefore, a copy of the tax audit report in Form 3CA & 3CD could not be provided. The assessee company had thus made a false statement, in verifying and uploading the e-return, on which the Assessing Officer was directed to examine the penal provisions. 7. The petitioner vide its letter dated 22.11.2010 was required to file various details with explanation on the issues mentioned in the letter to which no compliance was made. The assessing officer found that there was no option but to conduct special audit and made a proposal to that effect. The CCIT Kanpur found that the assessee was given number of opportunities before sending the proposal for Special Audit. The assessee however did not produce the books of account till the date of appointment of auditors. He has also observed that there are reports of misfeasance, gross neglect or breach of duty on the part of the principal off....
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.... a ground for special audit. In such case if the accounts are not produced or if the assessing authority is not satisfied, the A.O., can proceed to make best judgment assessment under Section 144 of the Act. Shri S.K. Garg also submits that the assessment has become barred by time. 10. We may firstly deal the conduct of the petitioner. It is not denied that in this case the order of sanction was earlier passed on 28.12.2010. This fact was cleverly concealed from this Court in presenting a case by Shri S.K. Garg, who has been appearing for the assessee-company in all the proceedings including the earlier writ petition. He had argued that no opportunity was given by the CCIT before giving the approval. He does not deny that the order dated 14.12.2010, which was projected to be the order of approval passed in the case of the petitioner, was actually passed in the case of UPSIC, which is a different government company. In the absence of denial, that the approval was given on 28.12.2010, we have no hesitation in finding that the petitioner-company got the order from this Court earlier, by concealment of facts and thereafter did not either get the order corrected, or filed the certified....
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.... 1956 by the auditors appointed by the Controller and Auditor General of India, New Delhi, made a false statement in the e-return that its accounts have been accounted by P.D. Agrawal & Co on 29.9.2008. The auditor was given notice, to which a reply was given on 5.7.2010, that they had not completed the audit for the relevant financial year. Subsequently the petitioner in response to the notice issued by the A.O. delayed submission of accounts. The accounts were submitted after a period of two years. The auditor's report, appended to the account and referred to by the CCIT-Kanpur, clearly demonstrates that the account was not produced before the auditor as well. We find it useful to quote the comments of the auditors in their report dated 18.8.2010, in paragraph 4 (a) and (b) as follows:- "4. Further to our comments in the Annexure referred to above, we state that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit, except certain records of C.E. Kanpur office which is under joint custody of SIT. Further party ledger, lease deed register, Allotment Register, Plot wise register,....
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....nd other assets, however in certain areas internal control needs further strengthening like allotments of industrial plots, payment of advances/development expenditures and collection of demand drafts and deposit into bank, we observed that MIS in respect of party ledger, lease deed register, Allotment Register, Plot wise register, transfer register full allottee wise details of earnest money are not completed. On the test checking of payment of advances, we found that payment made to the contractors through Chief Engineer Division, Kanpur amounting to Rs. 6, 05, 21, 740/- without submitting bills/invoices were debited in development instead of advances. Advance to others amounting to Rs. 16, 64, 30, 676.70 given to suppliers and Rs. 4, 61, 96, 050.33 given to various parties in earlier years were not yet adjusted. On test checking of Chief Engineer Kanpur office, we found that some files are not available to check and explained to us that these are at Branch level and at the branch explained that the maintenance of bond files exceeding Rs. One crore at Chief Engineer office. On test checking of Chief Engineer Kanpur office, it was found that work has been completed on 31.01.2008 ....
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....counts books were not complex in nature for which the special audit is required. The satisfaction of the complexity of the accounts is not required to arrive at by discussing the accounts in meticulous details. Where the approving authority has considered the account books along with auditors reports and finds that there was a malafide intention to avoid the verification of the books and accounts and that there are various comments on the auditors justifying gross neglect, and misappropriation of funds, the satisfaction, in this case for Special Audit, cannot be said to be without application of mind. 16. The order under Section 142 (2A) may have civil consequence as it involves investigation but that in the facts and circumstances of the present case where the activities of the UPSIDC were found to be extremely large, and that there is delay in carrying out the statutory audit coupled with the fact that full and detailed accounts including ledger of the parties was not complete and produced before the auditors, the satisfaction of the nature of the complexity of accounts and interest of revenue, is entirely justified. 17. The petitioner is a government company within the meaning....