TaxTMI 
TaxTMI 
2016 (7) TMI 320
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.... grounds of appeal raised are as under: "1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding an order of assessment dated 1.8.2012 framed under section 143(3) of the Act by learned Additional Commissioner of Income Tax, Range-18, New Delhi inspite of the fact that the same was barred by limitation and as such deserved to be quashed as such in light of various settled judicial pronouncements. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that since pre-conditions for invoking the provisions contained in section 142(2A) of the Act were not satisfied in the instant case and, the directions for issue of special audit were with a mere motive to extend the period of limitation, therefore reference was without jurisdiction and order of assessment so made in pursuance thereto was barred by limitation. 1.2 That the learned Commissioner of Income Tax (Appeals) ought to have appreciated that there was no complexity involved with regard to the books of accounts and the directions for special audit could not have been issued for drawing legal inferences particularly having regard ....
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....appellant were encumbered shares whereas fresh shares issued were free, the economic interest always remained with the appellant in case of transfer of shares and even the funds were also provided by the appellant to finance the purchase etc. and as such theoretical, hypothetical and notional addition sustained is wholly unjustified and untenable in law. 2.4 That the learned Commissioner of Income Tax (Appeals) has also erred in proceedings to uphold the addition on wholly irrelevant, extraneous and immaterial consideration that alleged real net worth of eight wireless companies increased substantially after the 2G license was granted by the DOT and as such, addition sustained is not in accordance with law. 2.5 That further finding of the learned Commissioner of Income Tax (Appeals) that "assessee company has deliberately transferred the 75% stake in eight wireless companies at the face value of Rs. 10/- per share only when the real net worth of the shares were @ Rs. 179.73 per share at which the Telenor had subscribed the shares of these eight wireless companies" is factually incorrect, wholly misconceived and is contrary to evidence on record and therefore, lega....
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....and conclude that income on disinvestment of investments was business income of the appellant company. 3.4 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate written submissions alongwith evidence placed on record to establish that gain on disinvestment of shares of subsidiary companies to M/s. Tata Realty and Infrastructure Ltd. was "capital gain" and the approach adopted to regard the same as business income was "look through approach" which in essence lifted the corporate veil and was not permissible 3.5 That the finding that "the floating of subsidiary companies and sale of land through the sale of shares of the subsidiary companies is a regular practice and is a regular business of the assessee and therefore, the Assessing Officer was justified to treat the income of business income" is not only arbitrary but also shows the casual approach of the learned Commissioner of Income Tax (Appeals), in upholding the arbitrary addition. 4 That likewise the learned Commissioner of Income Tax (Appeals) has further erred in treating the capital gain of Rs. 478,50,42,117/- on disinvestment of shares of the following companies as b....
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....e, the ground alone the addition sustained may kindly be deleted. 6 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the addition of Rs. 120 crores representing the alleged deemed dividend under section 2(22)(e) of the Act. 6.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that sum advanced by M/s. Shivalik Venture Pvt. Ltd. to the appellant company under a Memoandum of Understanding dated 13.09.2008 was a business advance and therefore, a commercial transaction and as such, beyond the scope of section 2(22)(e) of the Act. 6.2 That even otherwise, the learned Commissioner of Income Tax (Appeals) has failed to appreciate that since there were no accumulated profits at the beginning of the year in M/s. Shivalik Venture Pvt. Ltd., and as such the addition made by invoking section 2(22)(e) of the Act was wholly unjustified, misconceived and therefore, not taxable. 6.3 That the finding of the learned Assessing Officer that Memorandum of Understanding dated 13.09.2008 is a sham document without making any enquiries whatsoever from M/s. Shivalik Venture Pvt. Lt....
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.... as per the books of creditors could not be a ground to invoke section 41(1) of the Act. 9 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding disallowance of expenditure of Rs. 3,42,556/- out of advertisement expenses of Rs. 5,83,916/- incurred and claimed by the appellant company by making payment to M/s. Cross Section International, Delhi. 9.1 That the finding of the learned Commissioner of Income Tax (Appeals) that assessee has been unable to reconcile the discrepancy in the claim of expenses is factually incorrect, legally misconceived and thus untenable. 10 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding disallowance of sum of Rs. 66,43,500/- representing alleged short deduction of TDS on service tax by invoking section 40a(ia) of the Act. 10.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that section 40a(ia) of the Act is wholly inapplicable on alleged short deduction of income tax and as such, disallowance made is perse without jurisdiction. 10.2 That the learned Commissioner of Income Tax....
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.... 6 On the facts and circumstances of the case and in law, ld. CIT()A erred in giving a relief of Rs. 22,66,78,086/- out of the total disallowance of Rs. 26,33,18,259/- made u/s 14A r.w.r 8-D without appreciating that assessee failed to give bifurcation of expenses incurred on exempt income. 7 On the facts and circumstances of the case and in law, ld. CIT(A) erred in deleting the addition of Rs. 2,11,68,804/- out of deduction u/s 24 without appreciating that the corresponding income was in the nature of business income and not income from house property. 8 On the facts and circumstances of the case and in law, ld. CIT(A) erred in deleting the addition of Rs. 1,68,54,000/- made on account of disallowance of processing charges on the loan taken by Unitech Power Transmission Ltd. (UTPL) without appreciating that the said loan was actually availed by UTPL and not by the assessee company. 9 On the facts and circumstances of the case and in law, ld. CIT(A) erred in deleting the addition of Rs. 20,91,39,405/- on account of disallowance of proportionate interest expenses in respect of investment of Rs. 260.26 crors made by assessee in its subsidiary M/s Un....
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....that learned CIT(A) failed to appreciate that there was no complexity involved with regard to the books of accounts and the directions for special audit could not have been issued for drawing legal inferences particularly having regard to the fact that the method of accounting and manner and mode of business stood accepted by the revenue in the preceding assessment years in respect of assessments framed under section 143(3) of the Act. In Ground 1.3 it has been challenged that the finding of the CIT(A) that the assessee also fulfilled the conditions of Part 2(6) of Instruction Number 1076 for selecting case for special audit as there was allegation of tax deviation as the Assessing Officer has received information from the Investigation Wing that the assessee is involved in 2G scam vide remand report of the Assessing Officer dated 18.4.2013 and 2.5.2013 is factually incorrect, legally misconceived and unsustainable. In essence the challenge in each of the above grounds is that the reference for special audit u/s 142(2A) of the Act was illegal and therefore consequently the order of assessment is barred by limitation. 8 The factual matrix emanating from record is that return of i....
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....ayment was actually been made to subsidiaries. In absence of bank statement in proper form no co- relation could be made. ii) The assessee company had received Rs. 534 crores form Simpson Unitech Wireless (P). Ltd. through very complicated transactions and apparently it was a consideration for sale of shares of 8 Wireless companies by the assessee to Simpson Unitech Wireless (P). Ltd. What the assessee had received was much more than what had been accounted as income of the assessee. The nature of these transactions was to be ascertained to determine its taxability under the Act. The entire transaction was to be correlated with the fund flow and bank statement of the assessee. Similarly transactions of sale of shares of 8 Wireless Companies to M/s Cestos Unitech Wireless Pvt. Ltd. and Acorus Unitech Wireless Pvt. Ltd. were to be looked into and similar co- relation was to be made. This was necessary in view of the fact that that under similar transactions prices charged by the 8 Wireless Companies was 18 times higher than apparent sale consideration shown by the assessee. iii) Assessee has entered three share purchase agreement: (i) SPA with Unitech Limited, Mille....
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....ies Pvt. Limited, Zanskar Realty Pvt. Limited and M/s Unitech Realty Builders Pvt. Limited. Huge advance given to above subsidiaries and other subsidiaries factors needs thorough investigation and verification. Assessee company has diverted huge interest bearing funds to subsidiary companies as interest free funds in the name of purchase of land/ advances/ investment in shares/ loan etc. which is not a business purpose and out of normal courses of business. vi) The Assessee Company is advancing income generated from real estate business to its subsidiaries free of interest and showing loss amounting to (Rs. 13,17,56,705/-) from main activity of business from real estate in computation of total income, definitely requires elaborate and extensive search of accounting details under section 142(2A) of the I.T. Act 1961 to assist assessment proceedings to vindicate the interest of revenue. vii.) Assessee company has transferred 75% of its shares in 8 Unitech Wireless companies to three subsidiary companies viz. Simpson Unitech Wireless Pvt. Limited, Cestos Unitech Wireless Pvt. Limited and Acorus Unitech Wireless Pvt. Limited at par value of Rs. 10 on 30.01.2009. where....
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....imitation. Reliance was placed on the decision of Jodhpur Bench in the case of Bajrang Textiles v DCIT 83 TTJ 566 affirmed by the Rajasthan High Court in the case of CIT v Bajrang Textiles 205 CTR 97. It was submitted that no directions u/s 142(A) can be made on whims or caprice and, more particularly in absence of any complexity in the books of accounts of the appellant company. It was submitted that the reference made was without jurisdiction in view of the following reasons: a) That there was no "complexity" in the books of accounts of the assessee company; b) That order for special audit was made with a motive to make fishing and roving enquiries and, with an ulterior motive to extend the period of limitation; c) That directions for Special Audit were in complete infraction of Instruction No. 1076, dated 12th July, 1977 issued by CBDT, which provides for the Guidelines for selection of cases for audit under section 142(2A) of the Act; and d) That learned CIT did not apply his mind at all as regards the pre-requisite for grant of prior approval and, mechanically granted the approval for appointment of special auditors. 10. It was contended ....
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....er may desire in addition to the above. Hence the legislation has given vast power to the special auditor to examine all aspects having bearing on profit and loss account and balance sheet so as to enable him to form his opinion whether the profit and loss account and balance sheet give a true and fair view or not. The under signed cannot curtail the power of special auditor which has been given by the legislation. In view of the above it cannot be interpreted that the special auditor could not report deficiencies of books of acocutns and other matters having bearing on profit and loss account and balance sheet other than what is referred to him while reporting in resonse to special audit on reference u/s 142(2A) of the I.T. Act, 1962. It has also been held in the case of Rajesh Kumar, Prop. Surya Trading vs. Dy. CIT (2005) 275 ITR 641 (Del) that the expression 'accounts of the assessee' covers not only the books of account of the assessee but also other documents which are available in the course of an assessment and at any stage subsequent thereto, that may become available to the Assessing Officer." 11 On appeal, the contention was again rejected by the CIT(....
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....nous and difficult to understand. It was submitted that a show cause notice dated 16.11.2011 was issued to the appellant whereby the learned AO asked the appellant to submit reply as to why the books of accounts should not be audited u/s 142(2A) of the Act and the appellant filed his detailed reply on 23.11.2011. It was further submitted that subsequently the learned AO sent proposal to CIT, Delhi-V for conduct of special audit which was approved on 8.12.2011 and on the same date special auditor was appointed to conduct audit of appellant's books of account. It was submitted that the aforesaid directions were not satisfying the statutory precondition as: a) the appellant has been maintaining the accounts in the same manner year after year; b) the department has not found the same to be complex in the earlier year even though scrutiny assessments made; c) the appellant carried on the same business activity and maintained the accounts in the exactly similar manner in the current year as it had maintained in the earlier year; d) the financial statements of Appellant Company for the subject year have been duly audited by the statutory auditors after ....
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....iary with respect to the conduct of special audit under section 142(2A), it is humbly submitted that an order under section 142(2A) cannot be passed arbitrarily merely because Assessing Officer finds some difficulty in understanding the accounts of a particular assessee. There has to be genuine and honest attempt on the part of the Assessing Officer to understand accounts maintained by the assessee and obtain necessary explanations from the assessee, wherever required. The Assessing Officer, after duly considering the accounts of the assessee and the explanations offered by the assessee, should come to a conclusion that the accounts of the assessee are complex and thus, require special audit in the interest of revenue. 16.1 In the instant case, there is no complexity in the books of account of the Appellant Company, which have been prepared in accordance with the accepted accounting principles. The aforesaid accounts have also been audited by the statutory auditors of Appellant Company and there has been no adverse remark/inference from the statutory auditors in this regard. Further, as stated earlier, all the income/expenses reporter therein are normal income/expenses ear....
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....le interpreting the above proviso as legislature has given the extended period of 60 days for completing the assessment only in exceptional circumstances and not to extend the period of limitation in the garb of making references at the fag end of the assessment which itself provides the outer limit of receiving the information that the ld. AO ought to make efforts to receive such report within period of limitation and not wait for the report to count the period of limitation from the date of receipt thereof. 16.6 Accordingly, it is prayed that assessment may kindly be quashed/annulled in view of the above submission." 15 It was emphasized that order passed for special audit u/s 142(2A) of the Act (at page 436 of Paper book) is a cryptic and non speaking order and no specific instance of complexity with regard to books of accounts to be pointed out in the said order. It was submitted that replies and explanations as tendered by assessee has not been discussed at all in the order u/s 142(2A) of the Act. It was further submitted that the opinion required to be formed by the Assessing Officer for exercise of power under the provisions of section 142(2A) of the Act must be ....
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.... CIT 258 ITR 317 (Del) iii) Sahara India (Firm) vs. CIT 300 ITR 403 (SC") 16 The learned special counsel Shri Dilip Shivpuri for the revenue on the other hand contended that submissions of the appellant are not maintainable. It was contended that order u/s 142(2A) of the Act was not an appealable order and therefore any submission to the effect that order u/s 142(2A) is an invalid order in the instant proceedings is not tenable. The judgment of Hon'ble Supreme Court in the case of Rajesh Kumar and Ors. Vs. DCIT 287 ITR 91(SC) was cited in support of the above submission. It was submitted that the appellant having not challenged the order u/s 142(2A) of the Act in an appropriate proceedings was therefore precluded for raising such a plea in the instant proceedings. It was submitted that period of limitation stood extended by 180 days in terms of section 142(2C) read with section 142(2A) and section 153 of the Act. Apart from the above it was submitted that even in the argument of the assessee there are no reasons that the order u/s 142(2A) is incorrect. He also made reference to proposal sent by the AO to CIT seeking approval for special audit and approval by CIT alo....
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.... b) one year from the end of the financial year in which a return or a revised return relating to the assessment year, is filed under sub section (4) or sub-section (5) of section 139 whichever is later:] Provided that in case the assessment year in which the income was first assessable is the assessment year commencing [on or after the 1st day of April 2004 b ut before the Ist day of April, 2010], the provisions of clause (a) shall have effect as if for the words "two years", the words "twenty-one months" had been substituted:] 19 From the reading of the aforesaid section it is noted that no order of assessment shall be made u/s 143(3) or section 144 at any time after the expiry of two years from the end of the assessment year in which the income was first assessable. However proviso to the said sub section mandates that in case the assessment year in which the income was first assessable is the assessment year commencing on or after 1st day of April 2004 but before 1st day of April 2010 no order of assessment shall be made u/s 143(3) of the Act or section 144 at any time after the expiry of 21 months from the end of the assessment year in which the inco....
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.... immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub sections (1), [(1A), (1B)] [(2)], (2A), and (4) available to the Assessing officer for making an order of assessment, is less than sixty days, such remaining period shall be extended to sixty days. The revenue has submitted that in the instant case it is a matter of record that on 9.12.2011 directions were issued by the Addl. CIT, Range-18, New Delhi to the appellant to get the accounts audited u/s 142(2A) of the Act and furnish a report of such audit in the prescribed proforma within a period of 120 days from the date of receipt of directions. Thereafter, it is also a matter of record that in pursuance to an application dated 19.3.2012 by the appellant the period to furnish the report u/s 142(2A) of the Act was extended for 60 days from the earlier time allowed upto 7.4.2012 (120 days from 9.12.2011) i.e. to 6.6.2012. Accordingly the special audit report was submitted by the appellant vide letter dated 4.6.2012 u/s 142(2A) of the Act. According to the revenue in computing the period of limitation the period commencing from 9.12.2011 i.e. the date on which the Assessing off....
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.... given a reasonable opportunity of being heard] (2B) (2B) The provisions of sub-section (2A) shall have effect notwithstanding that the accounts of the assessee have been audited under any other law for the time being in force or otherwise. (2C) Every report under sub-section (2A) shall be furnished by the assessee to the [Assessing] Officer within such period as may be specified by the [Assessing] Officer : Provided that the [Assessing] Officer may, [suo motu, or] on an application made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit; so, however, that the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub-section (2A) is received by the assessee. (2D) The expenses of, and incidental to, any audit under sub-section (2A) (including the remuneration of the accountant) shall be determined by the [Principal Chief Commissioner or] Chief Commissioner or 6[Principal Commissioner or] Commissioner] (which determination shall be....
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....al justice are to be excluded, the Parliament could have said so expressly."[Underlined by us) 24 Having regard to the above, Their Lordships interpreted section 142(2A) of the Act to conclude that the twin conditions of "nature and complexity of the accounts" and "the interests of the revenue" are the pre-requisites for exercise of power under section 142(2A) of the Act. It was held that the word "complexity" used in section 142(2A) is not "defined" or "explained" in the Act and therefore approving the interpretation of the Hon'ble Allahabad High Court in the case of Swadeshi Cotton Mills Co. Ltd. vs. CIT 171 ITR 634 (All.), it was held that dictionary meaning of complex is "The state or quality of being intricate or complex or that is difficulty to understand. However all that is difficult to understand should not be regarded as complex. What is complex to one, may be simple to another. It depends 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". It was further held that before dubbing the accounts to be complex or difficult to understand, there has to be a....
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.... of the legal position to the facts their Lordships concluded that the order dated 14.3.2006 u/s 142(2A) of the Act was vitiated as neither AO had occasion to have a glimpse of the accounts and nor any show cause notice was issued to the assessee and thus the same did not satisfy the principle of audi alteram partem. Concluding the above discussion, it was held as under: "28. The next crucial question is that keeping in view the fact that the time to frame fresh assessment for the relevant assessment year by ignoring the extended period of limitation in terms of Explanation 1( iii) to sub-section (3) of section 153 of the Act is already over, what appropriate order should be passed. As noted above, the learned Additional Solicitor General had pleaded that if we were not inclined to agree with him, the interpretation of the provision by us may be given prospective effect, otherwise the interest of the revenue will be greatly prejudiced. 29. There is no denying the fact that the law on the subject was in a flux in the sense that till the judgment in Rajesh Kumar's case (supra) was rendered, there was divergence of opinion amongst various High Courts. Additionally, e....
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....ble because of an invalid order u/s 142(2A) of the Act. The above view finds support also from the judgment of Hon'ble Karnataka High Court in the case of CIT v Subboji Rao C.H (supra). In the said case the Tribunal held that there was no complexity in accounts requiring an audit u/s 142(A) of the Act and the same had been taken to avail of further time to complete the assessment, the assessment was hopelessly barred by limitation. On appeal by the revenue, the decision of ITAT was upheld by observing as under: "6. The Apex Court in the case of Rajesh Kumar v. Dy. CIT [2006] 157 Taxman 168 (SC) held that the assessee suffers civil consequences, as a result of an order under Section1 42(2A) of the Act and the same is prejudicial to him and therefore the principles of natural justice must be held to be implicit in the provisions of Section 142(2A) of the Act and an opportunity of hearing has to be given before issuing a direction under Section 142(2A) of the Act. When the matter was referred to a larger Bench of the Supreme Court, the larger Bench upheld the aforesaid judgment in Rajesh Kumar's case. However, in the meanwhile, the legislature amended Section 142(2A) of t....
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.... the conclusion that reference to the special audit under section 142(2A) of the Income-tax Act in the circumstances was not for the purpose for which the provision was enacted but merely for getting the extended period for completing assessment, which is not permissible under law. On the basis of this finding, the reference to the special audit was held to be illegal and consequently, the assessment order was held to be barred by time. There is no dispute about it that if the period reckoned for special audit which was directed to be conducted a day before the expiry of period of completing the block assessment, is not taken into account, the assessment order is clearly barred by time. The Tribunal found that merely because accounts and documents were voluminous, it is not taken to assume complexity so as to invoke the provisions of section 142(2A) of the Income-tax Act as a matter of course. The Tribunal also noticed that the Assessing Officer has not merely referred the accounts to be audited under special audit by an auditor named by him, but he has directed the special auditor to prepare the books of account in the form of cash book, ledger, on the basis of documents/papers se....
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....) should be furnished by you to the undersigned within a period of 120 days from the date of receipt of this direction. This direction u/s 142(2A) is issued with the prior approval of Commissionier of Income Tax, Delhi-VI, New Delhi vide letter F.No. CIT/Delhi-VI/Spl..Audit/2011- 12/2233 dated 9.12.2011 Copy to: Yours faithfully (Addl. Commissioner of Income Tax Range-18, New Delhi 1 The Commissioner of Income Tax, Delhi-VI, New Delhi 2 M/s Dass Gupta and Associates, B-4, Gulmohar Park, New Delhi with a direction to carry out the audit as per the terms of reference attached herewith. Yours faithfully (Addl. Commissioner of Income Tax Range-18, New Delhi" 32 It is not denied and disputed that the aforesaid directions is the only document communicated to the assessee u/s 142(2A) of the Act. According to the appellant the aforesaid direction is an order without recording reasons and therefore is a non speaking order u/s 142(2A) of the Act vitiated in the eyes of law and thus, deserves to be quashed. 33 The Hon'ble Punjab and Haryana High court in the case of Hind Samachar Ltd. (supra) testing the aforesaid p....
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....n disclosed in Bhagat Raja v. Union of India AIR 1967 SC 1606 the Supreme Court deprecated the practice of one word order of the type "rejected" or "dismissed". Similarly, in case of Dhondi Ba Gundu Proma Je v. State of MaharashtraAIR 1976 SC 1151, the High Court had dismissed a criminal appeal summarily under section 421 of the Code of Criminal Procedure by one word order "dismissed", it was held that some reasons should have been given by the High Court why no arguable case was made out on a perusal of the record. There is a vital difference between the conclusions and reasons. Reasons are the links between the material on which conclusions are based. The actual conclusion should disclose how the mind is applied to the subject matter for a decision, and should reveal a rational nexus between the facts considered and the conclusion reached See Union of India v. M.L. Capoor AIR 1974 SC 87 on p. 98. 9. Therefore, we are of the view that reasons must be recorded in the order to show that there is application of mind on the part of the officer concerned on the basis of the material available on record and in the absence of reasons in the order for the direction as contemplate....
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....n deciding is faithful to the doctrine of precedent or to principles of incrementalism. l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or `rubber-stamp reasons' is not to be equated with a valid decision making process. m. It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737). n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". o. In all common law jurisdictions judgments play a vital role in....
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....of the Act after considering the objections of the assessee and affording a reasonable opportunity of being heard, in terms of Section 142 (2A) of the Act. It is only after the A.O. reaches to a fair conclusion after considering the reply given by the petitioner, and affording an opportunity of hearing, the CIT as approving authority will consider whether the special audit is required to be carried out for the purposes of understanding the accounts maintained by the assessee. The opinion must be formed reflecting the application of mind based on objective criteria and not on the basis of subjective satisfaction." 39 Also in the case of United Electricals Co. (P) Ltd. vs. CIT (supra), it has been held as under: "19. What disturbs us more is that even the Additional Commissioner has accorded his approval for action under section 147 mechanically. We feel that if the Additional Commissioner had cared to go through the state-ment of said V.K. Jain, perhaps he would not have granted his approval, which was mandatory in terms of proviso to sub-section (1) of section 151 of the Act as the action under section 147 was being initiated after the expiry of four years from the end ....
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....any; replies dated 20.9.2011 and 27.9.2011 were furnished by the appellant company. Later an another questionnaire dated 12.10.2011 was issued and two replies dated 18.10.2011 were furnished by the appellant company. Another, questionnaire dated 20.10.2011 alongwith notice u/s 142(1) was issued and served on the appellant company. On the said date the appellant produced books of account and since they were not properly numbered therefore the appellant was directed to produce all books of accounts with original voucher on 28.10.2011. The assessee in compliance produced books of accounts on 28.10.2011 which were impounded by the AO. It is noticed thereafter on 31.10.2011 the appellant company furnished further information in the course of assessment proceedings. Later, replies dated 1.11.2011, 2.11.2011, 4.11.2011 were furnished by the appellant company. Another questionnaire dated 8.11.2011 was again issued to the appellant company and the appellant furnished reply dated 9.11.2011 and 16.11.12011 in the course of assessment proceedings. On 16.11.2011 the Addl. CIT, Range-18, New Delhi issued a show cause notice u/s 142(2A) of the Act for compliance on 23.11.2011. In compliance to th....
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....ch directions for special audit are proposed to be issued so as to enable the assessee company to furnish its reply and grant a personal hearing. It appears that no further communication or any notice was issued to the appellant company other than a hearing by the CIT on 8.12.2011 disposing of the objection raised by the appellant company to the show cause notice u/s 142(2A) of the Act. The only communication subsequent to the above response is the order dated 9.12.2011 which is completely silent as stated above to the objections taken by the appellant company for invocation of power u/s 142(2A) of the Act. Also it is noticed that appellant in the assessment proceedings had submitted as under: "Apart from the above, it will be seen that, your goodself has proposed various additions/disallowances in the notice which itself suggest that, your goodself is able to determine the income of the assessee company. However just to overcome the period of limitation, a directioin is being issued for special audit u/s 142(2A) of the Act. It may be also relevant to state here that, each of the additions/disallowances proposed in the notice are otherwise too based on factual misconceptio....
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....t, in the course of assessment proceedings Shri Kaushal Nagpal, Deputy General Manager, Accounts had also shown the entries from the books of accounts maintained in the computer. It is therefore submitted that, your observation that, ledger accounts are maintained with no narration of entries is erroneous and is attempt to merely make arbitrary observations which, are contrary to record, so as to issue direction on willy-nilly basis u/s 142(2A) of the Act. Madam, you may please confront the assessee, the specific ledger accounts where either there is no narration and, details of which cannot be verified in ordinary manner. It may be stated here that, you may kind confront the assessee as to what you mean by ordinary manner. You may also further let us know, on what basis it has been alleged that, bank name and accounts are not maintained through which payments are received or paid. The observation is highly preposterous and in the most humble submission absurd. It is submitted that, your goodself has failed to appreciate that, method of maintaining accounts was the same in the earlier years when no such allegation was ever made. This itself demonstrates that, the observati....
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.... Declared Income (before Tax) Tax Paid Assessed Under section 1. 2008-09 2,802.28 1,365.50 327.31 143(3) 2. 2007-08 2,443.97 1,344.83 376.32 143(3) 3. 2006-07 674.75 108.12 35.91 143(3) 4. 2005-06 527.18 43.37 12.56 143(1) 5. 2004-05 382.05 20.53 5.62 143(3) It will be evident, from the above that, volume is inherent in the size of operation of the company and therefore, the obvservation are farfetched, remote and entirely irrelevant consideration for alleging complexity in the books of accounts of the assessee company." 41 The revenue however has drawn our attention on two documents one is dated 5.12.2011 which is a reference sent by Addl. CIT, Range-18, New Delhi to CIT-VI, New Delhi. This reference has not been confronted to the appellant before the issue of the order u/s 142(2A) of the Act. Also none of the reasons as stated therein form part of the directions dated 9.12.2011 u/s 142(2A) of the Act and thus the....