2004 (10) TMI 83

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....e Assessing Officer for special audit under section 142(2A) of the Income-tax Act, 1961, was arbitrary and illegal and, therefore, the time taken in special audit cannot be excluded? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in cancelling the assessment on the ground that the same is barred by limitation?" Heard Shri R.L Jain with Ku. Mandlik, learned counsel for the applicant, and Shri Joshi, learned counsel for non-applicant. The question arises out of the assessment year 1985-86 for which the previous year has ended on March 31, 1985. In substance, the question is, whether the direction given by the Assessing Officer to the assessee to get the accounts audited in te....

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....since the accounts did not involve any complexity, the assessment made is barred by limitation so too the direction for getting the audit done. The question as to the interpretation of section 142(2A) was decided by this court (single Bench in W.P. No. 9515 of 2003) Sewaram Takhtani v. Asst. CIT [2004] 270 ITR 509 decided on April 5, 2004. In our view, the view taken by this court is in accord with the intention of the Legislature and we uphold it. By placing reliance on several authorities of the Supreme Court and the High Court, this court held as under: The submission of learned counsel for the petitioner was that neither there was any material to form any such opinion nor any opinion was formed and hence, the impugned order is not sus....

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....eed, the application of mind by the authority is also discernible when one peruses the impugned order. They need to be reaudited in accordance with law. In such circumstances, the authority's only option is to take recourse to the provisions of section 142(2A) ibid and issue necessary directions. It is not for the court to again examine whether the accounts in question are complex, or not, because, the writ court does not act as an appellate court over such decisions of the Assessing Officer." Once we hold that the direction for getting the special audit under section 142(2A) is legally sustainable and was rightly issued then the provisions of section 153, Explanation 1(iii) gets attracted. In other words, the period spent in special audit....