TaxTMI 
TaxTMI 
2005 (5) TMI 46
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....l Government of India on the recommendations of the Comptroller and Auditor General of India. The accounts of the Corporation are liable to be placed before Parliament. In terms of section 11 of the Warehousing Corporations Act, the Corporation submits programme of its activities and financial estimate to the Central Government for approval. In the normal course of its business, the activities carried out are long, medium and short-term storage of goods. The nature of work undertaken by the Corporation are CFSs (container freight station) and ICDs (inland clearance depots) and performs the following activities under these two classes: "The following activities are performed in a CFS/ICD. (i) Receipt and dispatch of containerisable export cargo; (ii) Stuffing/destuffing and aggregation/delivery of import cargo; (iii) Customs clearance and examination of export cargo; (iv) Safe and scientific storage of valuable cargo and containers; and (v) Storage of destuffed cargo." It is the case of the petitioner that the income from these activities of the Corporation being exempted under section 10(29) of the Act, and thus there would be no occasion for the tax authorities to pass any ....
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....d into by the authorities, whether the exemption is permissible, to the Corporation as exemption is admissible only to certain incomes. Even if part of the income of the Corporation falls within that exemption, its extent must be examined so as to correctly determine the receipts on the general principles of assessment. The petitioners were unable to provide these break-ups in the receipts as well as the expenses and considering the volume of their accounts and for the reasons indicated in the order, it was necessary to direct a special audit. In the reply, special reference has been made to the assessment year 1997-98. It was detected that the Corporation had been dealing in 87 items of commodities including alcohol, cigarettes, air-conditioners, refrigerators, arms and ammunitions and other luxury items. The claim of the Corporation was that these commodities were exempted from taxation under section 10(29) of the Act, however it did not produce the relevant notification supporting its claim. For the same year, the Corporation had filed a balance-sheet showing a gross turn over of Rs. 238.68 crores and a net profit of Rs. 8.94 crores and no separate profit and loss accounts were ....
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....al review of such an opinion of the Assessing Officer would fall within a very limited jurisdiction as the Assessing Officer would be the best person who would have to record his opinion in the following manner and at the stages indicated: (a) Having regard to the nature and complexity of the accounts of the assessee; (b) It is in the interest of the Revenue; and (c) The Assessing Officer would have to form an opinion in regard to these ingredients at any stage of the proceeding before him. Once such an opinion is recorded by the Assessing Officer, he could direct the assessee for a special audit in terms of these provisions subject to the previous approval of the Chief Commissioner or Commissioner of Income-tax. The expression "accounts" used in section 142(2A) is not merely the "books of account" of the assessee. It could include the books of account, balance-sheets and all other records which are available to the Assessing Officer during the course of assessment proceedings. A Division Bench of this court in the case of Rajesh Kumar, Prop. Surya Trading v. Deputy CIT [2005] 275 ITR 641 in the case of W.P.(C) No. 921-924/2005 decided on February 3, 2005 held as under: "We a....
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....than High Court in the case of Pani Devi v. Union of India [2000] 245 ITR 798, stated the principle that the provisions of section 44AB which cast an obligation on persons carrying on business to have their accounts audited, are no way in conformity with the provisions of section 142(2A) of the Act. General audit as contemplated under section 44AB is an obligation of the assessee, while special audit is contemplated under section 142(2A) is a power vested in the Assessing Officer to direct special audit over and above the general audit, provided the Assessing Officer was satisfied that the ingredients of section 142(2A) of the Act were satisfied. Thus, the argument on behalf of the petitioner that their accounts were duly audited and were counter checked by the Comptroller and Auditor General of India's nominee would no way further the cause of the petitioner. It is in fact the own case of the petitioner that they have branches all over India amongst others, and they are involved in the activities of CFS/ICD. It is also the conceded case that in terms of the notification of the Government, part of the income of the assessee is exempted from tax while the other part of it is taxable....
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....n 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). Although the object behind enacting the said provision is to assist the Assessing Officer in framing the assessment when he finds the accounts of the assessee to be complex and is to protect the interests of the Revenue recourse to the said provisions cannot be had by the Assessing Officer merely to shift his responsibility of scrutinizing the accounts of an assessee to determine his true and correct income, on to an auditor. True that an order under the said provision cannot be passed on the ipse dixit of the Assessing Officer merely because he finds some difficulty in understanding the accounts. There has to be a genuine and honest attempt on his part to understand the accounts of the assessee, appreciate the entries therein and if in doubt, seek explanation from the assessee or his representative, rather than pass on the buck to the special auditor. A cursory look at the books of account is not sufficient. It needs little emphasis that the opinion required to be formed by the Assessing Officer for exercise of power under s....