TaxTMI 
TaxTMI 
2024 (5) TMI 702
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....l) at Patna granting his approval for special audit are also put to challenge. 2. This is admitted at the Bar that similar facts are pleaded in all the writ petitions. This is also an admitted position that in the aforementioned writ petitions the orders passed by the statutory Authorities are challenged only on the ground of violation of natural justice. For the sake of brevity, the prayer clause in W.P(T) No. 1720 of 2024 is reproduced herein below.: (i) For issuance of an appropriate writ/order/direction, including Writ of Certiorari, for quashing/setting aside the order dated 23.03.2024, contained in DIN & Letter No. ITBA/AST/F/17/2023-24/1063244964(1) (Annexure-10) for Assessment Year 2022-23, wherein Respondent No. 3-Assistant Commissioner of Income Tax, Central Circle, Dhanbad has issued direction under Section 142 (2-A) of the Income Tax Act, 1961 directing the Petitioner to get it books of accounts audited by the nominated Accountant, especially because aid order has been passed in utter violation of the principles of natural justice and without even considering the show cause reply filed by the Petitioner. (ii) For issuance of further appropriate writ/order/direction....
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.... Books of Accounts, and upon seeking approval of the Principal Commissioner of Income Tax (Central), the impugned order dated 23rd March 2024 was passed. Some portions of order dated 23rd March 2024 are extracted herein below: "The transactions recorded in the seized documents suggests that you had income/receipts from manufacturing and trading of steel, TMT bars, Sponge iron, billets, bricks etc and that huge cash transactions on accounts of receipts and cash deposits in the bank accounts, which were not recorded in your regular books of accounts. The voluminous transactions recorded in pages running in more than thousands in number, in the form of ledgers, loose sheets, cash book, registers and diaries, cash vouchers, challan book etc will require special audit to prepare receipt and payment account, party wise ledgers cash book etc to compare with your regular books of accounts and determine the transactions relating to receipts and payments of cash/cheque etc. which have not been recorded in your regular books of accounts for FYs 2012-13 to 2022-23 to determine the nature and source of receipts and incomes which are chargeable to tax as evident from the seized documents, but ....
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.... search, evidences of undisclosed sale during FY 2014-15 to 2021-22 have been found. When the sale mentioned in the above seized documents was verified with Tally Data found & seized from the office of Mongia Steel Ltd. Burhiadih, Tundi Road, Giridih, huge discrepancies were found. It has been found that sale mentioned in column of Sale Achieved in FY 2021-22 have not been fully accounted for in books of accounts maintained in Tally. When the data relating to FY 2020-21 were perused, it is again seen that sale has been suppressed to 40% approx. in respect of turnover shown in ITRs. On the basis of above, undisclosed sale has been extrapolated for FY 2014-15 to 2021-22. (ix) Evidences of cash transaction including hawala have been found from the mobile of Sri Gopal Agarwal, Ajay Kumar Jha, Om Kinkar Thakur, Nityanand Jha & Rishi Saluja. During the course of search, the mobile phone of Sri Gopal Agarwal, staff of Mogina Steel Ltd was examined and found evidence of hawala transactions in his whatsapp chat with other persons/employee of company. Print out of his wahtsapp chat was taken and seized with identification mark MSO-01. After due analysis of seized documents MSO-01, evidence....
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....imited by a nominated Accountant has been challenged on the ground of violation of natural justice. On a similar ground, the petitioner-Company has questioned the order dated 20th March 2024 granting approval for the special audit under section 142 (2-A) of the Income Tax Act, 1961. 5. Mr. Sumeet Gadodia, the learned counsel for the petitioner-Company submits that the exercise of powers under sub-section (2-A) to section 142 of the Income Tax Act follows serious civil consequences to the assessee. It is submitted that the exercise of powers under sub-section (2-A) is hedged with the statutory requirements contained thereunder to avoid unnecessary harassment and safeguard the interest of the assessee but without recording his satisfaction as to "six conditions" provided thereunder, the entire burden is now sought to be shifted upon the petitioner-Company. The learned counsel further submitted that by affording five days' time to respond to the notice dated 1st March 2024 the petitioner-Company was deprived of the opportunity of putting forth its objection against the proposed exercise of power under sub-section (2-A) to section 142. 6. This is a plea set up by the petitioner-Compa....
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....by the Assessing Officer shall be based on (i) the nature and complexity of accounts, (ii) the volume of the accounts, (iii) doubts about the correctness of the accounts, (iv) multiplicity of transactions in the accounts or (v) specialized nature of business activity of the assessee. While forming an opinion for the special audit by a nominated Accountant, the Assessing Officer is also required to have regard to the interests of the Revenue. In the milieu of such varied requirements as provided under sub-section (2-A), this cannot be a requirement in law that the Assessing Officer must refer to each of the aforementioned factors separately and narrate the supporting facts thereof while exercising the power under sub-section (2-A). 10. In the notice under section 142 (1) to the petitioner-Company, the Assessing Officer referred to huge discrepancies in sale descriptions in the seized documents that were verified with Tally data. During the searches, several documents and digital devices were seized and the information, retrieved from the mobile phone of the directors and employees of the petitioner-Company revealed suspected Hawala transactions. The unexplained transactions and the....
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.... requested to please furnish the reason behind this huge difference of sale disclosed at two platforms. In case of no proper submission, it will be treated as unexplained sale and in that case please show cause why not the unexplained/ unaccounted/ undisclosed sale to the tune of Rs. 2,31,69,34,500/- should be added back to the total income of the concerned assessee for the FY 2021-22 relevant to the AY 2022-23. 1. During the course of search in the case of Mongia Steel Ltd at Burdiadih, Tundi Road, Giridih, various documents and digital devices were found and seized with identification marks AKJ-01 to AKJ-11 and AKJ/HD/12 and AKJPO/01, In the meantime, mobile of Sri Ajay Kumar Jha, director of Mongla Steel Ltd., was examined and found evidence of hawala transaction in his whatsapp chat with other persons. Printout of those whatsapp chat were taken and seized. On verification of this, it is found that, Sri Ajay Kumar Jha has been indulged in the hawala transaction and these transactions have not been recorded in the books. The financial year wise details of the transaction are as follows:- FY Amount involved (in Rs.) 2019-20 6,50,950/- 2020-21 -- 2021-22 45,00,000/- 2022....
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....the case of Om Kinker Thakur at Giridih, various documents and digital devices were found and seized with identification marks OKT-01 to OKT-03, OKT/HDD/01 and OKT/HDD/02. In the meantime, mobile of Sri Om Kinker Thakur and his wife Smt Mita Thakur, one of the directors of Mongia Steel Ltd, were examined and found evidence of hawala transaction in his whatsapp chat with other persons. Printout of those whatsapp chat were taken and seized having identification marks as OKT-01. On verification of this, it is found that, Sri Om Kinker Thakur and his wife Smt Mita Thakur has been indulged in the hawala transaction and these transactions have not been recorded in the books. The financial year wise details of the transaction are as follows:- FY Amount involved (in Rs.) 2019-20 2,15,52,362/- 2020-21 6,17,65,341/- 2021-22 1,09,07,861/- 2022-23 15,92,018/- Total 9,58,17,582/- In this regard, the assessee is requested to please state the reason behind such transaction. Please state whether these transaction have been recorded in the books of accounts. Please furnish the relevant portion of the books of accounts with supporting documentary evidences. In case of no proper sub....
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.... transaction are as follows:- FY Amount involved (in Rs.) 2021-22 32,11,633/- 2022-23 8,69,74,618/- Total 9, 01,86, 251/- In this regard, the assessee is requested to please state the reason behind such transaction. Please state whether these transaction have been recorded in the books of accounts. Please furnish the relevant portion of the books of accounts with supporting documentary evidences. In case of no proper submission, it will be treated as unexplained transaction and in that case please show cause why not the unexplained/unaccounted/undisclosed transaction to the tune of Rs. 32,11,633/- and Rs. 8,69,74,618/- should be added back to the total income of the concerned assessee for the FY 2021-22 and 2022-23 relevant to the AY 2022-23 and 2023-24. During the course of the search operation in the case of M/s Mongia Steel Ltd. at Buriadih, Tundi Road, Giridih, various documents and digital devices were found and seized with identification marks MSO-01 to 58, MSO/HD/01 to MSO/HD/08, MSO/Desktop-01 and MSO/Mobile-01. Page No. 48-56 of MSO/39 represents the report of daily production of Mongia Steel Ltd., prepared by the search team during the course of search on the ....
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....ns are like specialized transactions and (iv) the accounts are complex and certainly voluminous. The order granting approval dated 20th March 2024 for special audit under section 142 (2-A) of the Income Tax Act takes note of every detail of the case. This would evince no doubt that at this stage, the statutory Authority is required to form a prima facie opinion and not to render a conclusive finding. The Latin word "prima facie" which means at first glance shall refer to materials based on which the statutory Authority shall form an opinion. In the concluding paragraph, the Principal Commissioner of Income Tax (Central) recorded thus: "10. In view of the above discussions and after careful consideration of the facts and circumstances of the case and the provisions of law, and having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts and in the interests of the revenue, I am of the opinion that it is necessary to get the accounts of the assessee audited by an accountant under the provisions of section 142 [2A] of the Income-tax Act, 1961. Accordingly, approval is he....