TaxTMI 
TaxTMI 
2004 (2) TMI 56
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.... 24,61,860. Notice under section 143(2) of the Act dated June 18, 1991, was served on the petitioner on June 21,1991. Thereafter also several notices dated July 15,1991, July 30,1991, November 7,1991, November 9,1992, etc., were issued to the petitioner asking for various details and making various queries. However, it is alleged in para.9 of the petition, that at no stage of the assessment proceedings, did respondent No.1 tell or indicate to the petitioner that the account books of the petitioner were of complex nature and he was finding it difficult to understand, appreciate or apprehend the entries in the account books. It is alleged in para.10 of the petition that during the assessment in question respondent No.1 examined the account books of the petitioner in detail and formed a full and final opinion in regard to the assessment of the petitioner. Respondent No.1 assessed the income of the petitioner at Rs.62,47,993 vide assessment order dated March 24,1993 (annexure 1 to the petition). The petitioner filed an appeal to the Commissioner of Income-tax (Appeals), Varanasi on April 20,1993. It is alleged in para.14 of the petition that the appeal was heard on 5 or 6 dates, ....
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....ccount, balance- sheet and other documents and also the account books/documents furnished by the petitioner in the course of the assessment proceedings. The direction further states that they have been issued having regard to the nature and complexity of the petitioner's accounts and also on the basis of material on which the assessment has been reopened. Similar direction under section 142(2A) of the Act has been given by respondent No.1 in respect of the assessment year 1991-92 (vide annexure 5 to the petition). It is alleged that this direction does not mention the basis on which this direction is given nor is it accompanied by any annexure. The narrative of this direction does not mention that it is founded on information on the basis of which the assessment has been reopened. It is alleged in paras.25 and 26 of the petition that for the assessment years 1990-91 and 1991-92 the account books of the petitioner were audited by the authorised chartered accountant. It is alleged in para.27 of the petition that the impugned directions under section 142(2A) have been issued to the petitioner without issuing any show cause notice as to why such directions be not issued. It is im....
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.... were pursued in this regard in the course of assessment for the assessment year 1991-92. It was, then found that the other fabricator, M/s. Bharat Fabricator, was also not traceable at the address furnished by the petitioner-company. The petitioner showed investment as on March 31,1990, of Rs. 35,78,717 claiming that the aforesaid plant and machinery have been fabricated through certain parties. However, these parties were not found at the addresses given by the petitioner and it could not be believed that the sophisticated plant and machinery for manufacture of vanaspati could have been fabricated on payment of Rs. 1,02,122. The Chief Director, Ministry of Food and Civil Supplies, Directorate of Vanaspati, Government of India, sent a report to the Director of Income-tax, New Delhi, stating that such a plant costs three crores. Thus it is evident that the information furnished by the petitioner was incorrect. In para.3 (b) of the counter affidavit it is stated that from the facts it is evident that investment in plant and machinery for the assessment year 1990-91 has been understated by Rs. 1,12,98,883. Thus there was reason to believe that understated investment asses....
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.... that big factories are run by the Jhunjhunwala group. The family members are assessees but the details of returned income of the money are so meagre which clearly show that the investment appears to have been made from unaccounted source. In paras.15 to 22 of the counter affidavit it is stated that approval was sought for from the Commissioner of Income-tax (Central), Kanpur, by submitting a detailed proposal. The proposal mentioned in annexure CA4 gives full details about the complexity of the account and the interest of the Revenue. The Commissioner of Income-tax (Central), Kanpur, granted approval, vide para 22. From the facts of the case, we find no merit in this petition. It is evident from these facts that the petitioner's accounts are complex in nature and hence they require special audit. Section 142(2A) of the Income-tax Act states: "If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts of the assessee and the interests of the Revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner, direct the assessee to ge....
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....essing Officer is rested to find out whether the same is sufficient for the authority concerned to come to the conclusion that the accounts of the assessee need to be subjected to special audit. As noticed above, what is complex to one may be simple to another and, therefore, the issue has to be examined from the view point of the Assessing Officer concerned. The court is not expected to substitute its own understanding and comprehension of the accounts of an assessee. We also do not find any substance in the submission of learned counsel for the petitioners that merely because no special audit under the said provision had been directed in the past several years or that their accounts had already been subjected to statutory audit under section 44AB of the Act and the petitioners' assessments were completed without noticing any complexity in the accounts, the Assessing Officer is denuded of his power to order special audit subsequently, even though the nature of business and the method of accounting adopted by the assessee had remained the same as in the past. If the facts and circumstances so warrant, a special audit under section 142(2A) may be ordered in respect of any year." ....