2023 (5) TMI 947

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.... in not holding that assessment order u/ s. 153C r.w.s. 143(3) of the Act passed by the AO is bad law, illegal and null and void. 2. The learned CIT (A) has erred in law and in facts in not holding that assessment order u/ s. 153C r.w.s. 143(3) of the Act is time barred and her bad in law, illegal and void ab initio. 3. The learned CIT (A) has erred in law and in facts in not holding that direction the special audit is not in accordance with the provisions of Section 142(2A) the Act and is bad in law and illegal. 4. The learned CIT (A) has erred in law and in facts in upholding the addition of a amount of Rs. 32.38 crore being the amount brought in by the appellant in NRE account from abroad. Further the learned CIT (A) has erred in law and in facts in upholding the above addition by applying the provision of Section 5(ii) w.s 9(1)(i) of the Act. 5. The learned CIT (A) has erred in law and in facts in upholding the addition of Rs. 20 crore as unexplained credit being the loan received from identifiable parties. 6. The learned CIT (A) has erred in law and in facts in not holding that the additions made by the AO in the assessment order pa....

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....law, illegal, null and void and relied upon the order passed by the co-ordinate Bench of the Tribunal in assessee's own case for A.Y. 2010-11 in ITA No.2004/M/2017 order dated 23.12.2022. 7. However, on the other hand, the Ld. D.R. for the Revenue relied upon the order passed by the Ld. CIT(A). 8. Undisputedly notice under section 153C was issued to the assessee on the basis of search operation carried out in JB Diamond Group of cases by recording the satisfaction note by the AO brought on record by the assessee available at page 11 of the paper book, which is extracted for ready perusal as under: 9. Bare perusal of the satisfaction note for initiating the proceedings under section 153C of the Act in case of the assessee goes to prove that the same was recorded in respect of assessment years 2005-06 to 2010-11. It is also not in dispute that approval for special audit was given by the Ld. CIT(C)-II as per letter dated 11.03.2013 available at page 12 of the paper book, again for A.Y. 2005-06 to 2011-12. SGCO & Co., Chartered Accountants has also specifically mentioned in letter dated 16.09.2013 available at page 13 of the paper book that they are engaged to carry out the au....

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....pecial Auditor. To form such an opinion the Assessing Officer has to examine the accounts of the assessee. Without having examined the books of account an opinion cannot be formed with reference to "the nature and complexity of accounts". 12. The Hon'ble Supreme Court of India in the case of Sahara India (supra) after examining the provisions of Section 142(2A) of the Act held as under: - "6. A bare perusal of the provisions of sub-section (2A) of the Act would show that the opinion of the Assessing Officer that it is necessary to get the accounts of assessee audited by an Accountant has to be formed only by having regard to: (i) the nature and complexity of the accounts of the assessee; and (ii) the interests of the revenue. The word "and" signifies conjunction and not disjunction. In other words, the twin conditions of "nature and complexity of the accounts" and "the interests of the revenue" are the prerequisites for exercise of power under Section 142 (2A) of the Act. Undoubtedly, the object behind enacting the said provision is to assist the Assessing Officer in framing a correct and proper assessment based on the accounts maintained by the assessee and when ....

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....y of the accounts of the assessee. This opinion has been formed by the Assessing Officer in a very casual manner. Without examining the books of account the Assessing Officer can have no understanding of the nature and complexity of the accounts of the assessee. We are unable to impress upon ourselves to subscribe to the view of Assessing Officer to hold nature of accounts of the assessee as complex, without even having a look at the books of assessee. The Hon'ble Apex Court in Sahara India (supra) has held that there has to be a genuine and honest attempt on the part of Assessing Officer to understand accounts of the assessee. The contention of the Revenue is that the assessee is non-co-operative and did not produce books. Under such circumstances, the Assessing Officer could have resorted to any other relevant provision available under the Act to complete the assessment but reference to Special Audit. The satisfaction of the Assessing Officer in the instant case is at the outset, shallow, flawed and unsustainable. The foundation of the entire case of Revenue in making addition of Rs.553.95 crores u/s. 2(24)(iv) r.w.s. 56(1) of the Act is the observation made in the Special Audit ....