TaxTMI 
TaxTMI 
2002 (9) TMI 100
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....material whatsoever before the respondent authorities on the basis of which they could be satisfied that the nature of the company's accounts was such or that the company's accounts were complex so that having regard to the interests of the Revenue, it was necessary to have a special audit under section 142(2A) conducted. The impugned order for special audit, it has been strenuously urged, has been made on extraneous, irrelevant and collateral considerations, without application of mind and without the existence or satisfaction of the conditions precedent for forming the requisite opinion. It is further contended by Mr. R.N. Bajoria, learned senior counsel, assisted by Mr. J.P. Khaitan, Mr. C.M. Ghorawal and Mr. Sandeep Chowdhury, the learned advocates for the petitioner that all information has been furnished to the Assessing Officer along with the return of tax and all requisitions under sections 142(1) and 143(2) of the Act have been complied with. The Assessing Officer did not call for nor examine the books of account. At no point of time, it is contended by Mr. Bajoria, did that the Assessing Officer require the company to produce any of the books of account regularly maint....
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....urther his Lordship was pleased to make it clear in that said order that the merits of the case had not been gone into. Pursuant to the aforesaid order of court hearing was afforded to the petitioner-company by the Commissioner of Income-tax, Kolkata-II (for short "the CIT"), by his letter dated October 19, 2001 (annexure P-19). The petitioner in response thereto submitted their objections through their letter dated November 6, 2001 (annexure P-20). Annexure P-21 is the order passed by the Commissioner of Income-tax, Kolkata-II dated November 8, 2001, which has been impugned in the instant writ application. It has been recorded in the impugned order that the Commissioner of Income-tax had discussed with the authorised representatives of the petitioner and that he has also gone through the written submissions dated November 6, 2001. For the sake of convenience a relevant portion from the impugned order is extracted hereunder as it contains the reasons upon which the impugned order is founded: "There is no denying the fact that the accounts submitted by you along with the return for the relevant assessment year are so complex in nature that it is difficult for the Assessing Office....
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....sed by the Commissioner of Income-tax is one really based upon the approval given by respondent No. 2, Chief Commissioner of Income-tax-II. The said authority respondent No. 2 has not heard the petitioner but granted approval in violation of the principles of natural justice. The impugned order passed by the Commissioner of Income-tax, respondent No. 1, cannot therefore be sustained as it is founded upon extraneous considerations. The authority that accorded approval is respondent No. 2 but the order is passed by respondent No. 1 and cannot therefore be sustained, contends Mr. Bajoria. On behalf of the respondents, Mr. Rupendra Nath Mitra on behalf of his leader Mr. D.K. Shome, the learned senior advocate assisted by Mr. Pallav Banerjee, the learned advocate for the respondent-tax authorities, sought to sustain the impugned order based upon the reasons contained therein. It was further contended that each assessment year is to be considered independently. It is not relevant, contends Mr. Mitra, relying upon the averments made in the affidavit-in-opposition, that in the preceding year or in a succeeding year any particular provision was not invoked and the same would debar the De....
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....ose consideration on the merits of the contentions raised in the instant writ application. No doubt, as contended by Mr. Bajoria, learned senior counsel for the petitioner, there is a reference to the approval having been granted by the Chief Commissioner of Income-tax-II, Kolkata, in paragraphs 7, 12, 18 and 21 of the affidavit-in-opposition. Merely because of that it cannot be concluded that the impugned order was in fact was passed by the Chief Commissioner, respondent No. 2, and not by respondent No. 1, Commissioner of Income-tax, who afforded an opportunity of being heard to the petitioners' representatives. As already noticed supra, notice of hearing being annexure P 19 dated October 19, 2001, was issued by the Commissioner of Income-tax, Kolkata, in compliance with the order of court dated July 12, 2001. Objections (annexure P-21) were submitted before the Commissioner of Income-tax by the petitioners and the impugned order dated November 8, 2001 (annexure P-21) is one passed by the Commissioner of Income-tax, respondent No. 1. It cannot be denied that respondent No. 1 (CIT) is competent to grant approval in terms of section 142(2A) of the Income-tax Act. Also, it must....
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....purpose. The Allahabad High Court in its judgment in Swadeshi Cotton Mills Co. Ltd. v. CIT [1988] 171 ITR 634 held that the exercise of the power to direct special audit depends upon the satisfaction of the Income-tax Officer with the added approval of the Commissioner. The assessing authority must be satisfied that the accounts of the assessee are of a complex nature, and, in the interests of the Revenue, the accounts should be audited by a special auditor. The satisfaction of the authorities should not be subjective satisfaction but should be based on objective assessment regard being had to the nature of the accounts. The nature of the accounts must indeed be "of a complex nature. That is the primary requirement for directing a special audit". The court also considered the meaning to be assigned to the word "complex". It was observed that 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. Their Lordships of the Division Bench of ....
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....f Income-tax, Kolkata-II, the relevant portion whereof has been extracted, supra, would show that the learned Commissioner of Income-tax proceeded on the premise that the accounts submitted by the assessee along with the return for the relevant assessment year is complex. Thereafter it proceeds to record that some vital information is not ascertainable from the accounts so submitted and the same can only be made known if the accounts are got specially audited by the auditor. I am inclined to accept the submissions made by Mr. Bajoria, the learned senior advocate for the petitioner, that the grounds based upon which the impugned order is founded, cannot be sustained in the light of the judgments, cited supra. As can be seen from the letter dated October 19, 2001 (annexure P-19), whereby the petitioner was given opportunity to present his case personally or through the authorised representative, the Commissioner of Income-tax expressed even at that stage that he was of the "firm opinion" that special audit is warranted. The contention of Mr. Bajoria that the issue was prejudged and is based upon considerations ignoring the relevant considerations which ought to have been taken int....