TaxTMI 
TaxTMI 
2014 (2) TMI 467
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.... to quash the order dated 30.12.2011 ( Anenxure No.13) passed by the ACIT under Section 142(2A) of the Act and the order of approval dated 29.12.2011(Annexure No. 15) passed by the CCIT. Since the facts of both the writ petitions and controversy involved are common and as such both the writ petitions are being decided together. 2. Briefly stated the facts of the present case are that the petitioner of Writ Tax No. 213 of 2012 is a Society ( hereinafter referred to as 'Society No.1') registered under Section 12A of the Act. It runs a college known as "Helizer Borden Inter College, Panki, Kanpur" and an Engineering Institute known as "Bhabha Institute of Technology at Anoha, Rashoolabad, Kanpur Dehat". The petitioner of Writ Tax No. 214 of 2012 is also a society ( hereinafter referred to as 'Society No.2'). It runs an institution known as "Navudai Shiksha Sansthan Awam Jan Kalyan Sewa Samiti" and an engineering institute known as "Bhabha College of Engineering" at Anobha, Rashoolabad, Kanpur Dehat. There is yet another society belonging to the same group and known as "Abhinav Shikshan Awam Jan Kalyan Sewa Samiti" ( hereinafter referred as to 'Society No.3') which runs an engineeri....
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.... dated 29.12.2011 (Annexure 15 to the Writ Tax No.214 of 2012) the CCIT observed : - "Reply of the assessee have been considered. It is clear that at the time of survey Sri Gaurav Singh, who is member of all the three societies, found to be dealing with all the receipts, payments, expenditure etc. of all the three societies jointly. As per the report of the AO, no separate books of accounts of each society were found during the survey. In the computer, found during the survey, single set of accounts in the name of Bhabha Group of Institutions were found. It was also noticed that these were not correct and complete and secondly, single account pertaining to three engineering colleges is being maintained without any distinction to the engineering colleges. Thus, the receipts and payments of assessee's engineering college could not be ascertained from these accounts. Moreover, during the course of survey, Shri Gaurav Singh expressed his inability to furnish bifurcation of cash of each engineering college. Contention of the assessee that he has produced all the books of accounts during the course of assessment proceeding is considered however, it is also true that the books of ac....
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....ounts and also explain / justify that as to how the same are related to the society since in the bills and vouchers. Etc. the name of "Bhabha Group of Institution" has been mentioned. Also explain whether the entire receipts and payments have been fully accounted for or not. 7) To get verified the books of accounts, impounded materials and other books and to identify and state whether any payments have been made for the personal benefit of the persons covered u/s 13(3) of the Act. Particularly keeping in view the fact that there was a discrepancy found during the course of survey that huge cash was give to Shri Gaurav Singh, member of the society. It was also noticed that from 1.4.2008 to 2.4.2009, total cash of Rs.3,78,45,475/- was paid in cash to Shri Gaurav Singh. Out of this, cash of Rs.65,35,106/- was received back, thus it left excess cash of Rs.3,13,10,369/- with him paid by Bhabha Goup of Institutions. It was stated by Shri Gaurav Singh ( statement recorded during the course of survey on oath) that the records might be available in the head office but no such records were produced in the Head Office during the course of survey. In view of this, huge amount of cash given ....
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.... respect to the assets held by the assessee. 16) Whether all account balances with the banks and any other persons covered u/s 13(3) of the Act, if any, are duly reconciled. Quantify the difference party wise, if any, and its impact on income / expenditure. Report any specific finding with regard to transactions with sister concerns covered u/s 13(3) of the Act. 17) Whether provisions of sections 269SS & 269 T of the Income Tax Act have been duly complied with in relation to loans and Deposits. Report particular instances of violation of provisions of the said sections and the consequential penalty leviable. 18) Details of outstanding expenses that are payable. The auditor may examine to whom these are payable and since when and whether provision(s) made is in respect to ascertained liability or not and also state whether any part of aforesaid liability is no longer payable. 19) The auditor should clarify the ownership / status of fixed assets on which depreciation has been claimed. The Auditor must check the purpose for which any asset is being used and supporting evidence thereof. If assets are being used by any person other than assessee, full particulars must be rep....
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....tural justice and fairness of the procedure adopted. In support of his submission Sri S.D. Singh has relied on the judgment of Rajasthan High Court in the case of Commissioner of Income Tax Versus Bajrang Textiles, 2007 (294) ITR 561 in which it is held that under Section 142(2A) of the Act no authority has been given to the Assessing Officer to direct the preparation of fresh books of accounts by referring to a auditor for special audit. The purpose of special audit is to satisfy about the authenticity and credibility of accounts prepared by the assessee and not preparation for new books of accounts as per direction of Assessing Officer. Submissions on behalf of Respondent 10. Sri Dhananjay Awasthi submits that in the survey made under section 133A of the Act, conducted on 3.3.2009, it was found that the petitioners under the garb of imparting education has introduced huge un-accounted money in development of its infrastructure and was running the institution commercially with profit motive. The financial affairs recorded in a day book are not identifiable with reference to each of the three societies. The petitioners were confronted with the impounded material and show caus....
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....sidered the submissions of the petitioners and after due application of mind accorded approval dated 29.12.2011 to the proposal for special audit under Section 142(2A) of the Act. On receipt of such approval, the Assessing Officer passed the impugned order dated 30.12.2011 directing the petitioners for special audit under Section 142(2A) of the Act for A.Y. 2009-10. In view of these facts, the allegations of the petitioners that principles of natural justice and fairness has been violated, is not acceptable and is without substance. In our view the authorities have complied with the proviso to Section 142(2A) of the Act and the principles of natural justice has not been violated. 12. In the order dated 29.12.2011, the CCIT, Kanpur has recorded the findings that Sri Gaurav Singh, a member in all the three societies, was found dealing with all the receipt, payments and expenditure etc. of all the three societies jointly but no separate books of accounts of each societies were found during the survey. In the computer found during the survey, a single set of accounts in the name of Bhabha Group of Institutions was found. It was noticed that the account so maintained were not correct....
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....ssessing Officer to require the special auditor to furnish these particulars, because of nature and complexity of accounts and the interest of revenue. 15. In view of the conclusion reached by us, the arguments on behalf of petitioners deserves to be rejected. We hold that the impugned orders dated 30.12.2011 and the orders dated 29.12.2011 are wholly valid and they do not suffer from any legal infirmity. The judgment relied by the petitioners in the case of Commissioner of Income Tax Versus Bajrang Textiles is with regard to direction for preparation of fresh books of accounts. We do not find any such direction in the impugned orders. 16. In Sahara India (Firm) Vs. CIT (2008) 14 SCC 151, the Supreme Court approving Swadeshi Cotton Mills Company Ltd. Vs. CIT (1988) 171 ITR 634 (Alld), held that the object behind Section 142(2A) is to assist the assessing officer in framing a correct and proper assessment based on the accounts maintained by the assessee, and when he finds the accounts of the assessee to be complex, in order to protect the interest of the revenue, recourse to the said provision can be had. Such opinion must be framed on objective criteria and not on the basis o....