TaxTMI 
TaxTMI 
2012 (5) TMI 166
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....ckground facts may be noticed in brief. The dispute pertains to the Assessment Year 2009-2010. The petitioner filed its income tax return disclosing a loss of Rs.16,98,96, 909/-. The assessment notice under section 143 (2) of the Act was issued on 4th of September, 2010. In response, the petitioner produced its account books for verification before its Assessing Authority namely Deputy Commissioner of Income Tax Central Circle-2, Kanpur, respondent no.2 herein. The Assessing Officer scrutinized the account books on various dates in the light of the reply to his query furnished by the petitioner from time to time. The Assessing Officer thereafter sent a proposal under section 142 (2A) of the Act seeking previous approval of respondent no.1 to direct the assessee to get the accounts audited by special auditor. The respondent no.1 invited objections from the petitioner to the proposal of the Assessing Officer and passed the impugned order dated 28.12.2011 granting approval to direct the assessee to get its account books audited by the special auditor. Challenging the legality and validity of the order dated 28.12.2011, the present writ petition has bee....
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....It was submitted that the respondent no.1 could not have granted exparte approval without allowing the petitioner an opportunity of being heard and thus the order has been passed in gross violation of principles of natural justice which has the effect of vitiating the entire action. Reliance was placed by him on the well known decision of the Apex Court in the case of Rajesh Kumar and others Vs. Deputy Commissioner of Income Tax and others, (2006) 287 ITR 91. No doubt it has been held in the aforesaid case that an order of approval should not be granted mechanically. The same should be done having regard to the materials on record. The explanation given by the assessee, if any, would be a relevant factor. The approving authority was required to go through it. He could have arrived at a different opinion. It may be noted that the decision in the case of Rajesh Kumar and others (supra) was given prior to incorporation of the proviso to section 142 (2A). By the Finance Act, 2007, w.e.f. 1st of June, 2007 the following proviso has been inserted:- "Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee ....
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....the show cause dated 19th of December, 2011. Its bare perusal would show that the respondent no.1 took into consideration the relevant facts and the material on record and it cannot be said that he committed any illegality in granting the approval by not providing personal hearing to the petitioner. A feeble attempt was made by the learned counsel for the petitioner to show that proper opportunity of hearing was not afforded in the sense that there is variance in between the show cause notice given to the petitioner and the ground on which the previous approval has been granted by the respondent no.1. However, we find no substance therein. A comparison of the show cause notice given to the petitioner with the reasons given by the Assessing Officer would show that the grounds on which the previous approval has been granted, finds mention in the show cause notice dated 11th of September, 2011 and the petitioner has not been prejudiced in any manner. The point was not pursued any further. We, therefore, hold that a reasonable opportunity of hearing was given to the petitioner, as required under the proviso to Section 142 (2A) of the Act to the petitioner. ....
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....mation received from UPPCL. It may further be informed that as per quantitative details of items of raw material, finished goods and bye-products of Co-gen Division furnished by you as per annexure "N" of your reply dated 16.08.2011, the quantum of electricity sold has been shown at 22640746 KW whereas as per the copy of invoices furnished by you with respect to sale of electricity to UPPCL vide your reply filed on 23.11.2011, the aggregate quantum of electricity sold works out to 13113360 KW. The quantum of electricity sold to UPPCL as informed by the UPPCL, Lucknow is 14539440 KW (copy already enclosed). Thus, it may be seen that there is vast difference in quantity of electricity sold to UPPCL as appearing in your reply, in the quantitative details and as compared to the information received from UPPCL. Furthermore, since the assessee has utilized non carbon sources of power by utilizing baggage it was entitled for carbon credits, the details of which are not shown as per account of the assessee. Accordingly, the accounting of power, its decrease, non accounting of subsidies and lack of clarity in respect of sales and licensed capacity does not lend itself to transparency or cla....
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....was 3,18,18,000 Kilo Watts. In the financial year 2008-2009 a production of 2,29,20,000 KW has been disclosed. There is shortage in the power production in spite of the fact that there has been addition by way of new plant and machinery in the power generation Division of the Company during the previous year. The assessee has taken a shifting stand with regard to the quantum of power imported from Mandhyanchal Vidyut Vitran Nigam Limited. According to the assessee 1595520 KW power was imported from Mandhyanchal Vidyut Vitran Nigam Limited. The said figure does not tally with the information received from UPPCL. In the reply given only this much has been stated that there is no substantial expansion although there is no denial that there has been expansion in the power generation unit of the petitioner. The respondent no.1 has objectively examined the stand of the petitioner as set out in its reply and it rightly took notice of the note of the assessee's auditor's report and reached to the conclusion that the Assessing Officer has objectively evaluated the information submitted during the course of the assessment proceedings and pointed out the complexity in the report in ....
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....nds upon one's level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully." Thus, before dubbing the accounts to be complex or difficult to understand, there has to be a genuine and honest attempt on the part of the Assessing Officer to understand accounts maintained by the assessee; appreciate the entries made therein and in the event of any doubt, seek explanation from the assessee. But opinion required to be formed by the Assessing Officer for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. There is no gainsaying that recourse to the said provision cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee and pass on the buck to the special auditor. Similarly, the requirement of previous approval of the Chief Commissioner or the Commissioner in terms of the said provision being an inbuilt protection against any arbitrary or unjust exercise of power by the Assessing Officer, casts a very heavy duty on the said high ranking authority to see to i....
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.... take a different view of the matter. In view of the above, the contention of the learned counsel for the petitioner that the account books are not complex on the facts and circumstances of the case, has got no merit and the same is hereby rejected. In nutshell we do not find that the order directing the special audit suffers from any jurisdictional error. The Assessing Officer had given sufficient opportunities as per the facts disclosed in the writ petition beginning from 16th of August, 2011. The account books according to the petitioner were produced for examination on 25th of August, 2011. Certain queries were put and reply was filed on 14th of September, 2011. Reply was examined and the matter was adjourned to 23rd September, 2011. it was adjourned to 3rd of December, 2011. On that date also, the account books were examined and the matter was looked into by the Assessing Officer. The Assessing Officer further examined the account books on the subsequent dates as mentioned in paragraph 21 of the writ petition. In the impugned order, the respondent no.1 has considered the matter in depth and has given valid and cogent reasons for granting the prior approval.....