Direction for Special Audit (Audit by department) - Section 142(2A) to (2D)

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....m duly signed and verified by such accountant and setting forth such particulars, as may be prescribed, and such other particulars as the Assessing Officer may require, Such a decision may be taken by the AO, if regard to the following :- * The nature and complexities involved in accounts or * Volume of the accounts; or * Doubts about the correctness of the accounts; or * Multiplicity of transactions in the accounts; or * Specialized nature of business activity of the assessee; and * It is in the interest of the revenue to get the special audit done. * Such Direction can be issue with prior approval of Chief commissioner/Commissioner of Income-tax (CIT/CCIT/PCIT/PCCIT). * An opportunity of being heard must be given before di....

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....une, 2007; or * (ii) for inventory valuation u/s 142(2A)(ii) on or after the 1st day of April, 2023, * Where the direction for special audit or inventory valuation is issued by the Assessing officer, the expenses of and incidental to such special audit or inventory valuation, including remuneration of the accountant or cost accountant shall be determined by the Principal chief commissioner or chief commissioner principal commissioner or commissioner in accordance prescribed guidelines. * The expenses so determined shall be paid by the central Government. * ​​​​​​The expenses of, and incidental to, audit or inventory valuation (including the remuneration of the Accountant or Cost Accountant, qualif....

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....e allowed by AO which can be extended by the AO may, suo motu, or on an application made in this behalf by the assessee but maximum time must not exceed 180 days from the date on which direction under section 142(2A) is received by the assessee. 6. Special audit can be directed for particular segment of A/c's i.e. sales, purchase etc. 7. CONSEQUENCES OF FAILURE TO GET BOOKS AUDITED Failure to comply with the direction under section 142(2A) to get books of account audited entails the best judgment assessment under section 144. Besides, it attracts penalty under section 271 and prosecution under section 276D. These provisions are attracted only if there is a default by the assessee. If the accountant nominated by the Commissioner refuses....