TaxTMI 
TaxTMI 
2018 (1) TMI 545
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....dent - Deputy Commissioner of Income Tax, Bangalore, directing 'Special Audit' of its Accounts for the Assessment Years 2013-14 and 2014-15 under Section 142(2-A) of the Income Tax Act, 1961, by two separate orders passed on 28/03/2016 in Writ petition No.25223/2016 and on 15/12/2016 in Writ Petition No.1863/2017. 2. The petitioner being a Government of Karnataka Undertaking, engaged in the activities of Development of Industrial Areas within the State of Karnataka and is already subject to Audit at the hands of the Comptroller and Auditor General of India (C & AG) as well as the independent Chartered Accountant, also under the provisions of the KIADB Act itself and has already produced these two Audit Reports for the said two years before....
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.... also urged before the Court that the Respondent Authority has merely referred and relied upon the Audit objections and Audit Paras given by the Comptroller and Auditor General of India (C & AG) for the said period to which the assessee Board had given its due reply and explanations to the said Comptroller and Auditor General of India and it was for their consideration and there was no independent application of mind and formation of reasonable belief by the Assessing Authority himself to direct such 'Special Audit' under the Income Tax Act in the case of the petitioner assessee Board, which is exempt from payment of Income Tax under the provisions of Section 11 of the Act. 6. Similar are the facts in the connected Writ Petition No.1863/20....
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....s been directed the petitioner -KIADB just to get the period of limitation to complete the assessment for Assessment Year 2013-14 of the petitioner which is in the nature of charitable trust/institution without any object of profit. 3. The learned Counsel submitted that the proceedings seeking to cancel the registration of the petitioner's Institution, for the earlier Assessment year 2003-04 and 2004-05, has already reached up to the Hon'ble Apex Court. He also urged that the alleged reasons expressed in impugned communication Annexure-A dated 28.3.2016 namely, "...... considering the complexities involved, volume of transactions and doubt about the correctness of the accounts, it is felt necessary and expedient to refer the case for 'Spe....
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....Mr.E.I.Sanmathi, learned standing counsel for Income Tax Department. Both the respondents 1 & 2 (Commissioner of Income Tax and Deputy Commissioner of Income Tax) are directed to positively file their personal affidavits in response to the notice issued by this Court justifying their action for directing the 'Special Audit' under Section 142 (2A) in the case of the present petitioner by the next date of hearing and they are also directed to remain present before the Court on the next date. List this case again on 18.07.2016. In the meanwhile and until further orders, the operation of the impugned communication Annexure-A dated 28.03.2016 shall remain stayed." 8. The learned counsel for the Revenue, Mr. E.R. Indra Kumar, Senior Counsel, h....
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.... 142 (2-A) of the Act is to get a true and fair view of the Accounts produced by the assessee so that upon the 'Special Audit' conducted at the instance of the Revenue may yield more revenue in the form of Income Tax and it is not expected to be mere paper exercise or a repetitive audit exercise. Therefore, the special circumstances must exist to direct the 'Special Audit' under Section 142 (2-A) of the Act and such special circumstances or the special reasons must be discussed in detail in the order under Section 142(2-A) of the Act itself. 13. From the facts narrated above, it prima facie appears that the Assessing Authority has not only directed the 'Special Audit' in the case of the petitioner assessee Board rather mechanically, but at....
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....ng Authority in which he is invoking a serious provision of the Act against an assessee which is a Government Undertaking engaged in a public purpose of Industrial Development and being exempt from Income Tax under the KIADB Act itself, are very telling facts, in the perspective of which, invoking of these provisions of Section 142 (2-A) of the Act in this manner was absolutely not called for. This reflects an irresponsible and reckless manner in which the Assessing Authority has treated an ordinary businessman assessee and an exempted Government Undertaking in the same manner, at the same level and put them on the same scale, which they are not. 16. This Court is, therefore, of the opinion that the impugned orders under Section 142(2-A) o....