Erande Balasaheb Mahadev, Solapur V. Assistant Commissioner of Income-tax,

ITA 1239/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7074 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Time period of passing order
• Section: 143(3); 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , ! , $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURV EDI, AM . / ITA NO.1239/PUN/2015 & & / ASSESSMENT YEAR : 2008-09 SHRI ERANDE BALASAHEB MAHADEV C/O HOTEL BLUE DIAMOND, MIRAJ ROAD, A/P SANGOLA, DIST SOLAPUR . / APPELLANT PAN: AAAPE6324R VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, SOLAPUR . RESPONDENT / APPELLANT BY : SMT. DEEPA KHARE / RESPONDENT BY : SHRI ANIL CHAWARE DATE OF HEARING : 18.01.2017 / DATE OF PRONOUNCEMENT: 15.02.2017 / ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-7, PUNE, DATED 25.05.2015 RELATING TO ASSESSMENT YEAR 2008-0 9 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (I N SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 7, PUNE IS NOT JUSTIFIED ON CONFORMING ADDITION OF RS.6,30,000/- O N ACCOUNT OF DIFFERENCE OBSERVED IN CLOSING BALANCE OF THE HOTEL DIVISION AND CONSTRUCTION DIVISION. ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 2 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 7 , PUNE IS NOT JUSTIFIED ON CONFORMING ADDITION OF RS.5,00 , 000/- ON ACCOUNT O F DIFFERENCE IN CASH BALANCE. 3. THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) 7, PUNE IS NOT JUSTIFIED ON CONFORMING ADDITION OF RS . 50 , 000/- ON ACCOUNT OF C ASH PURCHASES. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 7, PUNE IS NOT JUSTIFIED ON CONFORMING ADDITION OF RS.6,70 , 000/- ON ACCOUNT OF OTHER CONTRACT RECEIPTS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) 7, PUNE IS NOT JUSTIFIED ON CONFORMING ADDITION OF RS . 20,54,754/- ON ACCOUNT O F NEGATIVE CASH BALANCE ON VARIOUS DATES ADDED BY ASS ES S IN G OFFICER U/S 68 . 6. THE L E ARNED COMMISSIONER OF I N COME TAX ( A PPEALS) 7 , PUNE IS NOT JUSTIFIED ON CONFORMING ADDITION OF RS.1,00,000/- O N ACCOUNT O F DISALLOWANCE OF EXPENSES OUT OF RS . 3,53,350/- DISALLOWING BY ASSESSING OFFICER . 3. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUN D OF APPEAL WHICH READS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ASSESSING OFFICER PASSED ON 24.08.2011 WAS WITHIN THE LIMITAT ION PERIOD AS PROVIDED IN SECTION 153 OF THE ACT READ WITH EXPLANATION 1 CLAU SE (III)(A). THE IMPUGNED ASSESSMENT HAVING BEING MADE AFTER THE EXPIRY OF TH E PERIOD OF LIMITATION, IS TIME BARRED AND MAY BE CANCELLED. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE POINTED OUT THAT THE ISSUE RAISED BY WAY OF ADDITIONAL GROUND OF APP EAL IS PURELY LEGAL ISSUE WITH REFERENCE TO SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT, WHEREIN NO PRE- DECISIONAL HEARING WAS GIVEN TO THE ASSESSEE BEFORE MAKING REFERENCE AND DOES NOT INVOLVE ANY INVESTIGATION OF FACTS. HE PL EADED THAT THE ADDITIONAL GROUND OF APPEAL GOES TO THE ROOT OF ASSESSMENT MAD E IN THE CASE OF ASSESSEE AND THE SAME MERITS TO BE ADJUDICATED BEFORE DECIDI NG THE ISSUE ON MERITS. WE FIND THAT THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS PURELY LEGAL AND WE ADMIT THE SAME FOR ADJUDICATION. ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 3 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE FURTHER POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. IN ITA NO.447/PN/2013, RELATING TO ASSESSMENT YEAR 2004-05, IN VILSONS PARTICLE BOARD INDUSTRIES LTD. VS. ITO IN I TA NOS.309 & 310/PN/2013, RELATING TO ASSESSMENT YEARS 2005-06 & 2006-07 AND IN ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. IN ITA NOS.448 & 449 /PN/2013, RELATING TO ASSESSMENT YEARS 2005-06 & 2006-07, VIDE CONSOLIDAT ED ORDER DATED 21.12.2016 AND THE COPY OF THE SAID ORDER WAS FILED ON RECORD. 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.12,64,010/- AND AGRICULTURAL INCOME OF RS.20,000/-. THE ASSESSEE WAS ENGAGED IN HOTEL BUS INESS AND WAS ALSO UNDERTAKING CIVIL CONSTRUCTION WORK. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED VARIOUS DI SCREPANCIES IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE WHICH ARE ENLISTED AT PA GES 2 AND 3 OF THE ASSESSMENT ORDER. IN VIEW OF THE SAME, THE ASSESSI NG OFFICER SERVED LETTER DATED 25.12.2010 UPON THE ASSESSEE, CALLING FOR CLA RIFICATION AND GRANTING OPPORTUNITY FOR SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT. AS PER PARA 5 OF THE ASSESSMENT ORDER, IT IS MENTIONED THAT HAVING R EGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND IN T HE INTEREST OF REVENUE, WHERE THE ASSESSING OFFICER WAS OF THE VIEW THAT TH E BOOKS OF ACCOUNT NEED TO BE AUDITED BY SPECIAL AUDITOR WITH THE PRIOR APPROV AL OF THE COMMISSIONER OF INCOME TAX. THE ASSESSING OFFICER THUS, REFERRED T HE CASE OF THE ASSESSEE TO CIT-IV REQUESTING FOR GRANTING PERMISSION FOR SPECI AL AUDIT UNDER SECTION 142(2A) OF THE ACT ON 24.12.2010. THE APPROVAL WAS RECEIVED FROM THE COMMISSIONER ON 25.12.2010. HERE, IT MAY BE POINTE D OUT THAT THE ASSESSEE ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 4 WAS SERVED LETTER DATED 25.12.2010 ASKING FOR CLARI FICATION, IN REPLY TO WHICH THE ASSESSEE FILED REPLY ON 27.12.2010. THE ASSESSING OFFICER PASSED AN ORDER UNDER SECTION 142(2A) OF THE ACT ON 30.12.2010, UND ER WHICH THE ASSESSEE WAS DIRECTED TO GET HIS BOOKS OF ACCOUNT AUDITED FROM T HE SPECIAL AUDITOR WITHIN 45 DAYS THEREFROM. THE SEQUENCE OF EVENTS IN THE PRES ENT CASE REFLECTS THAT THE ASSESSING OFFICER FIRST MADE REFERENCE TO THE COMMI SSIONER VIDE LETTER DATED 24.12.2010, PURSUANT TO WHICH, APPROVAL WAS RECEIVE D ON 25.12.2010. THE ASSESSING OFFICER THEREAFTER, GAVE AN OPPORTUNITY T O THE ASSESSEE VIDE LETTER SERVED ON 25.12.2010, THEREAFTER, PASSED AN ORDER U NDER SECTION 142(2A) OF THE ACT ON 30.12.2010. THE SEQUENCE OF EVENTS IN THE C ASE OF ASSESSEE REFLECTS THAT THE ASSESSING OFFICER BEFORE MAKING REFERENCE TO THE COMMISSIONER FOR CONDUCTING SPECIAL AUDIT ON THE PRE-DECISIONAL STAG E I.E. BEFORE 24.12.2010 HAD NOT CONFRONTED THE ASSESSEE AS TO WHETHER THE SPECI AL AUDIT UNDER SECTION 142(2A) OF THE ACT MERITS TO BE CONDUCTED. THE LET TER WHICH WAS ISSUED TO THE ASSESSEE, TO WHICH THE ASSESSEE FILED REPLY ON 27.1 2.2010 WAS AFTER MAKING REFERENCE TO THE COMMISSIONER. THE COMMISSIONER HA S GIVEN HIS APPROVAL ON 25.12.2010. THUS, WE FIND THAT ON PRE-DECISIONAL S TAGE OF COMING TO DECISION AS TO WHETHER THE ACCOUNT OF ASSESSEE NEED TO BE SU BJECTED FOR SPECIAL AUDIT, NO OPPORTUNITY OF HEARING WAS GIVEN TO THE ASSESSEE AND THE ASSESSEE WAS ONLY HEARD ON 27.12.2010 I.E. AFTER RECEIPT OF PERM ISSION FROM THE COMMISSIONER. 7. WE FIND THAT SIMILAR ISSUE OF NON-GRANTING OF HE ARING ON PRE-DECISIONAL STAGE TO THE ASSESSEE BEFORE MAKING REFERENCE UNDER SECTION 142(2A) OF THE ACT AROSE BEFORE THE PUNE BENCH OF TRIBUNAL IN THE CASE OF ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. (SUPRA) AND WHEREIN IT WAS HELD AS UNDER:- ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 5 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE PROVISIONS OF SECTION 142(2A) OF THE ACT I.E. LOOKING AT THE NATURE AND COMPLEXIT Y OF THE ACCOUNTS AND VOLUME AND MULTIPLICITY OF TRANSACTIONS AND INTEREST OF RE VENUE, THEN THE PROCEDURE TO BE FOLLOWED BY THE ASSESSING OFFICER IN MAKING REFE RENCE FOR SPECIAL AUDIT AND APPLYING THE REPORT OF SPECIAL AUDITOR FOR CARRYING OUT THE ASSESSMENT IN THE CASE OF CONCERNED ASSESSEE. SECTION 142(2A) OF THE ACT READS AS UNDER:- 142.. (2A) 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 O F THE OPINION THAT IT IS NECESSARY SO TO DO, HE MAY, WITH THE PREVIOUS APPRO VAL OF THE CHIEF COMMISSIONER OR COMMISSIONER, DIRECT THE ASSESSEE T O GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288, NOMINATED BY THE CHIEF COMMISSIONER OR COMMISSIONER IN THIS BEHALF AND TO FURNISH A REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH AC COUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED AND SUC H OTHER PARTICULARS AS THE ASSESSING OFFICER MAY REQUIRE: PROVIDED THAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 21. AS PER PROVISIONS OF SAID SECTION IF AT ANY STA GE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER IN VI EW OF THE NATURE AND COMPLEXITY OF THE ACCOUNTS, ITS VOLUME, DOUBTS ABOU T CORRECTNESS OF THE ACCOUNTS, MULTIPLICITY OF TRANSACTIONS IN THE ACCOU NTS OR SPECIALIZED NATURE OF BUSINESS ACTIVITY OF ASSESSEE AND THE INTERESTS OF REVENUE, IS OF THE OPINION THAT IT IS NECESSARY TO DO SO, HE MAY, WITH PREVIOUS APP ROVAL OF PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COM MISSIONER OR COMMISSIONER AS THE CASE MAY BE, DIRECT THE ASSESSE E TO GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT, AND TO FURNISH A REPORT O F SUCH DATA IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT SE TTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED, AND SUCH OTHER PARTICULARS AS MAY BE REQUIRED. THE PROVISO THEREUNDER STIPULATES THAT THE ASSESSING OF FICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. 22. SUB-SECTION (2B) THEREUNDER PROVIDES THAT THE P ROVISIONS OF SUB-SECTION (2A) SHALL HAVE EFFECT NOTWITHSTANDING THAT THE ACC OUNTS OF THE ASSESSEE HAVE BEEN AUDITED UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE. SUB-SECTION (2C) PROVIDES THE TIME LIMIT I.E. EVERY REPORT UNDER SUB -SECTION (2A) SHALL BE FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER WITHIN SUCH PERIOD AS MAY BE SPECIFIED BY THE ASSESSING OFFICER. THE PROVISO UNDER SECTION 142 (2C) OF THE ACT READS AS UNDER:- PROVIDED THAT THE ASSESSING OFFICER MAY, SUO MOTU, OR ON AN APPLICATION MADE IN THIS BEHALF BY THE ASSESSEE AND FOR ANY GOOD AND SUFFICIENT REASON, EXTEND THE SAID PERIOD BY SUCH F URTHER PERIOD OR PERIODS AS HE THINKS FIT ; SO, HOWEVER, THAT THE AG GREGATE OF THE PERIOD ORIGINALLY FIXED AND THE PERIOD OR PERIODS SO EXTEN DED SHALL NOT, IN ANY CASE, EXCEED ONE HUNDRED AND EIGHTY DAYS FROM THE D ATE ON WHICH THE DIRECTION UNDER SUB-SECTION (2A) IS RECEIVED BY THE ASSESSEE. ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 6 23. THE PROVISO DEALS WITH THE EXTENSION OF PERIOD FOR COMPLETION OF SPECIAL AUDIT AND IT IS PROVIDED THAT THE ASSESSING OFFICER MAY SUO MOTU, WHICH IS INSERTED BY THE FINANCE ACT, 2008 W.E.F. 01.04.2008 , OR ON AN APPLICATION MADE BY THE ASSESSEE AND FOR ANY GOOD AND SUFFICIENT REA SON, EXTEND THE PERIOD FOR SUCH FURTHER PERIOD OR PERIODS AS HE THINKS FIT. H OWEVER, THERE IS A CAP THAT THE AGGREGATE OF THE PERIOD ORIGINALLY FIXED AND EXTEND ED IN NO CASE SHALL EXCEED 180 DAYS FROM THE DATE ON WHICH DIRECTION UNDER SUB -SECTION (2A) IS RECEIVED BY THE ASSESSEE. READING THE ABOVE SAID PROVISIONS , IT IS CLEAR THAT WHERE THE ASSESSING OFFICER HAS SOUGHT SPECIAL AUDIT REPORT, THEN IT IS INCUMBENT UPON THE ASSESSEE TO SUBMIT THE SAID REPORT WITHIN SUCH PERI OD WHICH IS SPECIFIED BY THE ASSESSING OFFICER. HOWEVER, IF THE SAID AUDIT HAS NOT BEEN COMPLETED WITHIN SUCH FIXED PERIOD, THEN THE ASSESSING OFFICER HAS P OWER ON HIS OWN MOTION OR ON AN APPLICATION MOVED BY THE ASSESSEE OR FOR ANY OTHER REASONS, TO EXTEND THE PERIOD FOR FURNISHING THE SPECIAL AUDIT REPORT WITHIN SUCH EXTENDED PERIOD. 24. SECTION 142(2A) OF THE ACT IN THE FIRST INSTANC E TALKS ABOUT THE PERIOD WHICH IS SPECIFIED BY THE ASSESSING OFFICER I.E. TH E PERIOD GIVEN TO ASSESSEE TO CONDUCT SPECIAL AUDIT BY ISSUE OF NOTICE IN THIS BE HALF. WHEN THE PERIOD IS EXTENDED THEN, THE CAP IS PLACED ON AGGREGATE PERIO D IN WHICH THE REPORT IS TO BE GIVEN WHEREIN, IT IS PROVIDED THAT THE SAME SHAL L NOT EXCEED 180 DAYS FROM THE DATE ON WHICH THE DIRECTION UNDER SUB-SECTION ( 2A) IS RECEIVED BY THE ASSESSEE. IF WE CONSIDER THE MAIN PROVISIONS OF SU B-SECTION (2C) AND PROVISO THEREUNDER, THEN THE REFERENCE IS MADE TO DIFFERENT PERIODS. IN THE MAIN PROVISION, THE REFERENCE IS MADE TO THE PERIOD WHIC H HAS BEEN SPECIFIED BY THE ASSESSING OFFICER IN THE NOTICE ISSUED TO THE ASSES SEE. HOWEVER, IN ORDER TO RECKON THE PERIOD OF 180 DAYS, THEN FROM THE DATE O N WHICH DIRECTION UNDER SUB- SECTION (2A) IS RECEIVED BY THE ASSESSEE. 25. THE RELEVANCE OF DATES AND THE TIME PERIOD WITH IN WHICH SPECIAL AUDIT IS TO BE TAKEN NOTE OF IS TO BE APPLIED WHILE CALCULAT ING THE TIME LIMIT FOR COMPLETION OF ASSESSMENT UNDER SECTION 153A OF THE ACT. THE PROVISIONS AT THE RELEVANT TIME PROVIDED THAT WHILE COMPUTING THE PER IOD OF LIMITATION FOR THE PURPOSE OF COMPLETION OF ASSESSMENT, THE PERIOD COM MENCING FROM THE DATE ON WHICH THE ASSESSING OFFICER DIRECT THE ASSESSEE TO GET HIS ACCOUNTS AUDITED UNDER SECTION 142(2A) OF THE ACT AND ENDING WITH LA ST DATE ON WHICH THE ASSESSEE IS REQUIRED TO FURNISH REPORT OF SUCH AUDI T UNDER THAT SUB-SECTION OR WHERE SUCH DIRECTION IS CHALLENGED BEFORE THE COURT ENDING WITH DATE ON WHICH THE ORDER SETTING ASIDE THE ORDER IS RECEIVED, BY T HE PRINCIPAL COMMISSIONER OR COMMISSIONER, IS TO BE EXCLUDED. THIS IS AS PER EX PLANATION UNDER SECTION 153B CLAUSE (II). THE PROVISIONS OF SECTION 142(2A ) OF THE ACT HAVE BEEN THE SUBJECT MATTER OF VARIOUS JUDICIAL RULINGS. 26. THE APEX COURT IN RAJESH KUMAR AND OTHERS VS. D CIT (SUPRA) VIDE JUDGMENT DATED 01.11.2006 HAS LAID THE PROPOSITION THAT DIRECTION ISSUED UNDER SECTION 142(2A) OF THE ACT FOR SPECIAL AUDIT OF THE ACCOUNTS OF ASSESSEE WAS NOT ADMINISTRATIVE IN NATURE BUT WAS QUASI-JUDICIAL ORD ER. REFERRING TO THE EXPRESSION HAVING REGARD TO IN SECTION 142(2A) OF T HE ACT, THE APEX COURT HELD THAT THE SAME WAS SIGNIFICANT AND THE OPINION MUST BE FORMED STRICTLY IN TERMS OF FACTORS ENUMERATED THEREIN. THE APEX COURT HELD THAT WHERE ONCE IT IS HELD THAT THE ASSESSEE SUFFERS CIVIL CONSEQUENCES AND AN Y ORDER PASSED WOULD BE PREJUDICIAL TO HIM, THEN THE PRINCIPLES NATURAL JUS TICE MUST BE HELD TO BE IMPLICIT, WHICH WAS REQUIRED TO BE APPLIED INTER-ALIA TO MINI MIZE ARBITRARINESS. IT WAS FURTHER OBSERVED BY THE APEX COURT THAT IF THE ASSE SSEE IS PUT TO NOTICE HE COULD SHOW THAT THE NATURE OF ACCOUNTS WAS NOT SUCH AS WOULD REQUIRE APPOINTMENT OF SPECIAL AUDITOR. HE COULD ALSO SHOW THAT WHAT THE ASSESSING OFFICER CONSIDERS COMPLEX IS IN FACT NOT SO. IT WA S FURTHER HELD THAT FORMATION OF OPINION UNDER SECTION 142(2A) OF THE ACT THAT THE A CCOUNTS OF ASSESSEE ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 7 REQUIRES AN EXPERT AUDIT SHOULD INDISPUTABLY BE BAS ED ON OBJECTIVE CONSIDERATIONS AND NO ORDER CAN BE PASSED ON WHIMS OR CAPRICE. THE HONBLE SUPREME COURT CONCLUDED BY HOLDING AS UNDER:- 55. THE FACTORS ENUMERATED IN SECTION 142(2A) OF T HE ACT, THUS, ARE NOT EXHAUSTIVE. ONCE IT IS HELD THAT THE ASSESSEE S UFFERS CIVIL CONSEQUENCES AND ANY ORDER PASSED BY IT WOULD BE PR EJUDICIAL TO HIM, PRINCIPLES OF NATURAL JUSTICE MUST BE HELD TO BE IM PLICIT. THE PRINCIPLES OF NATURAL JUSTICE ARE REQUIRED TO BE APPLIED, INTER A LIA, TO MINIMIZE ARBITRARINESS. 56. IT IS TRITE, EVEN IF THERE IS A POSSIBILITY THA T THE TRIBUNAL WOULD CORRECTLY FOLLOW THE STATUTORY PROVISIONS, STILL CO MPLIANCE WITH PRINCIPLES OF NATURAL JUSTICE WOULD BE REQUIRED. [SEE R. V. KE NSINGTON AND CHELSEA RENT TRIBUNAL, EX P. MACFARLANE [1974] 1 WLR 1486 ( QB)]. 57. JUSTICE, AS IS WELL KNOWN, IS NOT ONLY TO BE DO NE BUT MANIFESTLY SEEM TO BE DONE. IF THE ASSESSEE IS PUT TO NOTICE, HE COULD SHOW THAT THE NATURE OF ACCOUNTS IS NOT SUCH WHICH WOULD REQU IRE APPOINTMENT OF SPECIAL AUDITORS. HE COULD FURTHER SHOW THAT WHAT T HE ASSESSING OFFICER CONSIDERS TO BE COMPLEX IS IN FACT NOT SO. IT WAS A LSO OPEN TO HIM TO SHOW THAT THE SAME WOULD NOT BE IN THE INTEREST OF THE REVENUE. 58. IN THIS CASE ITSELF THE APPELLANTS WERE NOT MAD E KNOWN AS TO WHAT LED THE DEPUTY COMMISSIONER TO FORM AN OPINION THAT ALL RELEVANT FACTORS INCLUDING THE ONES MENTIONED IN SECTION 142 (2A) OF THE ACT ARE SATISFIED. IF EVEN ONE OF THEM WAS NOT SATISFIED, N O ORDER COULD BE PASSED. IF THE ATTENTION OF THE COMMISSIONER COULD BE DRAWN TO THE FACT THAT THE UNDERLYING PURPOSE FOR APPOINTMENT OF THE SPECIAL AUDITOR IS NOT BONA FIDE IT MIGHT NOT HAVE APPROVED THE SAME. 27. THE HONBLE SUPREME COURT FURTHER HELD AS UNDER :- 60...WHILE EXERCISING ITS POWER, THE ASSESSING O FFICER HAS TO FORM AN OPINION. IT IS FINAL SO FAR AS HE IS CONCERNED A LBEIT SUBJECT TO APPROVAL OF THE CHIEF COMMISSIONER OR THE COMMISSIONER, AS T HE CASE MAY BE. IT IS ONLY AT THAT STAGE HE IS REQUIRED TO CONSIDER TH E MATTER AND NOT AT A SUBSEQUENT STAGE, VIZ., AFTER THE APPROVAL IS GIVEN . 61 62. WHEREAS THE ORDER OF ASSESSMENT CAN BE THE SUBJ ECT MATTER OF AN APPEAL, A DIRECTION ISSUED UNDER SECTION 142(2A) OF THE ACT IS NOT. NO INTERNAL REMEDY IS PRESCRIBED. JUDICIAL REVIEW CANN OT BE SAID TO BE AN APPROPRIATE REMEDY IN THIS BEHALF. THE APPELLATE PO WER UNDER THE ACT DOES NOT CONTAIN ANY PROVISION LIKE SECTION 105 OF THE CODE OF CIVIL PROCEDURE. THE POWER OF JUDICIAL REVIEW IS LIMITED. IT IS DISCRETIONARY. THE COURT MAY NOT INTERFERE WITH A STATUTORY POWER. 28. THE THREE JUDGE DECISION OF HONBLE SUPREME COU RT IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) WHILE DECIDING T HE ISSUE OF SCOPE AND NATURE OF ASSESSING OFFICERS AND COMMISSIONERS RE SPONSIBILITY HELD THAT THE ORDER ENTAILS CIVIL CONSEQUENCES AND THE ASSESSEE H AS TO BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSIN G THE ORDER. THE HONBLE SUPREME COURT TOOK NOTE OF INSERTION OF PROVISO TO SECTION 142(2A) OF THE ACT W.E.F. 01.04.2007, UNDER WHICH IT IS PROVIDED THAT THE ASSESSING OFFICER SHALL NOT ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 8 DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED, UNLESS THE ASSESSEE HAS BEEN GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. THE COURT OBSERVED THAT EXERCISE OF POWER UNDER SECTION 142(2A) OF THE ACT LEADS TO SERIOUS CIVIL CONSEQUENCES AND THEREFORE, EVEN IN THE ABSENCE OF ANY EXPRESS PROVISION FOR AFFORDING AN OPPORTUNITY OF PRE-DECISIONAL HEARING TO THE ASSESSEE AND IN THE ABSENCE OF ANY EXPRESS PROVISION IN SECTION 142(2A) OF THE ACT BARRING GIVING OF REASONABLE OPPORTUNITY TO THE ASSESSEE, THE REQUIRE MENT OF OBSERVANCE OF PRINCIPLES OF NATURAL JUSTICE IS TO BE READ INTO SA ID PROVISIONS. THE APEX COURT RE-AFFIRMED EARLIER DECISION OF APEX COURT IN RAJES H KUMAR AND OTHERS VS. DCIT (SUPRA). IT MAY BE POINTED OUT HEREIN ITSELF THAT PURSUANT TO DECISION IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) BY THE APE X COURT, LARGER BENCH WAS AFFIRMED ON THE POINT THAT WHETHER IN EVERY CAS E WHERE THE ASSESSING OFFICER ISSUED DIRECTIONS IN TERMS OF SECTION 142(2 A) OF THE ACT, THE ASSESSEE HAS TO BE HEARD BEFORE SUCH ORDER IS PASSED. THE D IVISION BENCH WAS OF THE VIEW THAT IT DOES NOT APPEAR TO BE CORRECT POSITION OF LAW. THE THREE JUDGE BENCH THEREAFTER, TOOK NOTE OF THE PROVISIONS OF SE CTION 142(2A) TO (2D) OF THE ACT AND SECTION 142(3) OF THE ACT AND OBSERVED THAT THE TWIN CONDITIONS OF THE NATURE AND COMPLEXITY OF ACCOUNTS AND INTEREST OF R EVENUE WERE THE PRE- REQUISITE FOR EXERCISE OF POWER UNDER SECTION 142(2 A) OF THE ACT. IT WAS FURTHER OBSERVED THE WORD COMPLEXITY USED IN SECTION 142( 2A) OF THE ACT WAS NOT DEFINED OR EXPLAINED IN THE ACT BUT WHAT MAY BE COM PLEX TO ONE, MAY NOT BE COMPLEX AS FAR AS THE UNDERSTANDING OF OTHER. SO, THERE HAS TO BE GENUINE AND HONEST ATTEMPT ON THE PART OF ASSESSING OFFICER TO UNDERSTAND THE ACCOUNTS MAINTAINED BY THE ASSESSEE, ENTRIES AND IN THE EVEN T OF ANY DOUBT, SEEK EXPLANATION FROM THE ASSESSEE. BUT OPINION REQUIRE D TO BE FORMED BY THE ASSESSING OFFICER FOR EXERCISE OF POWER UNDER THE S AID PROVISION MUST BE BASED ON OBJECTIVE CRITERIA AND NOT ON THE BASIS OF SUBJE CTIVE SATISFACTION, WAS THE PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT. FURTHER, EVEN THE REQUIREMENT OF PREVIOUS APPROVAL OF CHIEF COMMISSIO NER OR COMMISSIONER WAS HELD TO BE AN INBUILT PROTECTION AGAINST ARBITRARY AND UNJUST EXERCISE OF POWER BY THE ASSESSING OFFICER. IT ALSO CASTED A HEAVY DUTY ON THE HIGH RANKING AUTHORITY, TO SAY THAT THE REQUIREMENT OF PREVIOUS APPROVAL, ENVISAGED IN SECTION IS NOT TURNED INTO EMPTY RITUAL. IT WAS FURTHER LA ID DOWN BY THE HONBLE SUPREME COURT THAT BEFORE GRANTING THE APPROVAL, THE CHIEF COMMISSIONER OR COMMISSIONER AS THE CASE MAY, MUST HAVE BEFORE HIM THE MATERIAL ON THE BASIS WHEREOF AN OPINION IN THIS BEHALF HAS BEEN FO RMED BY THE ASSESSING OFFICER AND THE APPROVAL MUST REFLECT THE APPLICATI ON OF MIND TO THE FACTS OF THE CASE. THEN THE REQUIREMENT OF HEARING OR NOT BEFOR E THE ORDER FOR SPECIAL AUDIT WAS TAKEN UP BY THE HONBLE SUPREME COURT AND THE C ONCEPT OF NATURAL JUSTICE AND THE PRINCIPLES GOVERNING THE SAID APPLICATION W ERE REFERRED TO. THE APEX COURT REFERRED TO THE EARLIER DECISION OF THE COURT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) OBSERVED AS UNDER:- 20. DEALING WITH THE QUESTION WHETHER THE REQUIREM ENT OF AFFORDING AN OPPORTUNITY OF HEARING IS TO BE READ INTO SECTIO N 142(2A), IN RAJESH KUMAR(1) IT HAS BEEN HELD THAT PREJUDICE TO THE ASS ESSEE IS APPARENT ON THE FACE OF THE SAID STATUTORY PROVISION. IT HAS BE EN OBSERVED THAT ON ACCOUNT OF THE SPECIAL AUDIT, THE ASSESSEE HAS TO U NDERGO THE PROCESS OF FURTHER ACCOUNTING DESPITE THE FACT THAT HIS ACC OUNTS HAVE BEEN AUDITED BY A QUALIFIED AUDITOR IN TERMS OF SECTION 44AB OF THE ACT. AN AUDITOR IS A PROFESSIONAL PERSON. HE HAS TO FUNCTIO N INDEPENDENTLY. HE IS NOT AN EMPLOYEE OF THE ASSESSEE. IN CASE OF MISCOND UCT, HE MAY BECOME LIABLE TO BE PROCEEDED AGAINST BY A STATUTOR Y AUTHORITY UNDER THE CHARTERED ACCOUNTANTS ACT, 1949. BESIDES, THE A SSESSEE HAS TO PAY A HEFTY AMOUNT AS FEE OF THE SPECIAL AUDITOR. MOREO VER, DURING THE AUDIT OF THE ACCOUNTS AGAIN BY THE SPECIAL AUDITOR, HE HA S TO ANSWER A LARGE NUMBER OF QUESTIONS. REFERRING TO THE DECISION OF T HIS COURT IN BINAPANI ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 9 DEI WHEREIN IT WAS OBSERVED THAT WHEN BY REASON OF AN ACTION ON THE PART OF A STATUTORY AUTHORITY, CIVIL OR EVIL CONSEQ UENCES ENSUE, THE PRINCIPLES OF NATURAL JUSTICE ARE REQUIRED TO BE FO LLOWED AND IN SUCH AN EVENT, ALTHOUGH NO EXPRESS PROVISION IS LAID DOWN I N THIS BEHALF, COMPLIANCE WITH THE PRINCIPLES OF NATURAL JUSTICE W OULD BE IMPLICIT, THE LEARNED JUDGES HELD {1.[2006] 287 ITR 91 (SC) 2.[19 67] AIR 1967 SC 1269.} THAT BY VIRTUE OF AN ORDER UNDER SECTION 142 (2A) OF THE ACT, THE ASSESSEE SUFFERS CIVIL CONSEQUENCES AND THE ORDER P ASSED WOULD BE PREJUDICIAL TO HIM AND, THEREFORE, THE PRINCIPLES O F NATURAL JUSTICE MUST BE HELD TO BE IMPLICIT. THE COURT HAS FURTHER OBSERVED THAT IF THE ASSESSEE WAS PUT TO NOTICE, HE COULD SHOW THAT THE NATURE OF ACCOUNTS IS NOT SUCH WHICH WOULD REQUIRE APPOINTMENT OF SPECIAL AUDITORS . HE COULD FURTHER SHOW THAT WHAT THE ASSESSING OFFICER CONSIDERS TO B E COMPLEX IS, IN FACT, NOT SO. IT WAS ALSO OPEN TO HIM TO SHOW THAT THE SAME WOULD NOT BE IN THE INTERESTS OF THE REVENUE. 21. IN THE LIGHT OF THE AFORENOTED LEGAL POSITION, WE ARE IN RESPECTFUL AGREEMENT WITH THE DECISION OF THIS COURT IN RAJESH KUMAR THAT AN ORDER UNDER SECTION 142(2A) DOES ENTAIL CIVIL CONSEQUENCE S. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO TAKE NOTE OF THE INSERTION OF THE PROVISO TO SECTION 142(2D) WITH EFFECT FROM JUNE 1, 2007. THE PROVISO PROVIDES THAT THE EXPENSES OF THE AUDITOR APPOINTED IN TERMS OF THE S AID PROVISION SHALL, HENCEFORTH, BE PAID BY THE CENTRAL GOVERNMENT. IN V IEW OF THE SAID AMENDMENT, IT CAN BE ARGUED THAT THE MAIN PLANK OF THE JUDGMENT IN RAJESH KUMAR TO THE EFFECT THAT DIRECTION UNDER SEC TION 142(2A) ENTAILS CIVIL CONSEQUENCES BECAUSE THE ASSESSEE HAS TO PAY SUBSTANTIAL FEE TO THE SPECIAL AUDITOR IS KNOCKED OFF. TRUE IT IS THAT THE PAYMENT OF AUDITOR'S FEE IS A MAJOR CIVIL CONSEQUENCE, BUT IT CANNOT BE SAID TO BE THE SOLE CIVIL OR EVIL CONSEQUENCE FLOWING FROM DIRECTIONS UNDER S ECTION 142(2A). WE ARE CONVINCED THAT SPECIAL AUDIT HAS AN ALTOGETHER DIFFERENT CONNOTATION AND IMPLICATIONS FROM THE AUDIT UNDER SECTION 44AB. UNLIKE THE COMPULSORY AUDIT UNDER SECTION 44AB, IT IS NOT LIMI TED TO MERE PRODUCTION OF THE BOOKS AND VOUCHERS BEFORE AN AUDI TOR AND VERIFICATION THEREOF. IT WOULD INVOLVE SUBMISSION OF EXPLANATION AND CLARIFICATION WHICH MAY BE REQUIRED BY THE SPECIAL AUDITOR ON VAR IOUS ISSUES WITH RELEVANT DATA, DOCUMENT, ETC., WHICH, IN THE NORMAL COURSE, AN ASSESSEE IS REQUIRED TO EXPLAIN BEFORE THE ASSESSING OFFICER . THEREFORE, SPECIAL AUDIT IS MORE OR LESS IN THE NATURE OF AN INVESTIGA TION AND IN SOME CASES MAY EVEN TURN OUT TO BE STIGMATIC. WE ARE, THEREFORE, OF THE VIEW THAT EVEN AFTER THE OBLIGATION TO PAY AUDITOR'S FEES AND INCIDENTAL EXPENSES HAS BEEN TAKEN OVER BY THE CENTRAL GOVERNMENT, CIVI L CONSEQUENCES WOULD STILL ENSUE ON THE PASSING OF AN ORDER FOR SP ECIAL AUDIT. (EMPHASIS SUPPLIED BY US) 29. THEN DEALING WITH THE ISSUE AT HAND THAT WHETHE R THE PRE-DECISIONAL HEARING IS REQUIRED OR NOT, THE APEX COURT HELD AS UNDER:- 22. WE SHALL NOW DEAL WITH THE SUBMISSION OF LEARN ED COUNSEL APPEARING FOR THE REVENUE THAT THE ORDER OF SPECIAL AUDIT IS ONLY A STEP TOWARDS ASSESSMENT AND BEING IN THE NATURE OF AN IN QUIRY BEFORE ASSESSMENT, IS PURELY AN ADMINISTRATIVE ACT GIVING RISE TO NO CIVIL CONSEQUENCE AND, THEREFORE, AT THAT STAGE A PRE-DEC ISIONAL HEARING IS NOT REQUIRED. IN RAJESH KUMAR(1) IT HAS BEEN {1.[20 06] 287 ITR 91 (SC)} HELD THAT IN VIEW OF SECTION 136 OF THE ACT, PROCEE DINGS BEFORE AN ASSESSING OFFICER ARE DEEMED TO BE JUDICIAL PROCEED INGS. SECTION 136 OF THE ACT STIPULATES THAT ANY PROCEEDING BEFORE AN IN COME-TAX AUTHORITY ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 10 SHALL BE DEEMED TO BE JUDICIAL PROCEEDING WITHIN TH E MEANING OF SECTIONS 193 AND 228 OF THE INDIAN PENAL CODE, 1860 , AND ALSO FOR THE PURPOSE OF SECTION 196 OF THE INDIAN PENAL CODE AND EVERY INCOME-TAX AUTHORITY IS A COURT FOR THE PURPOSE OF SECTION 195 OF THE CODE OF CRIMINAL PROCEDURE, 1973. THOUGH HAVING REGARD TO T HE LANGUAGE OF THE PROVISION, WE HAVE SOME RESERVATIONS ON THE SAID VI EW EXPRESSED IN RAJESH KUMAR'S CASE, BUT HAVING HELD THAT WHEN CIVI L CONSEQUENCES ENSUE, NO DISTINCTION BETWEEN QUASI-JUDICIAL AND AD MINISTRATIVE ORDER SURVIVES, WE DEEM IT UNNECESSARY TO DILATE ON THE S COPE OF SECTION 136 OF THE ACT. IT IS THE CIVIL CONSEQUENCE WHICH OBLIT ERATES THE DISTINCTION BETWEEN QUASI-JUDICIAL AND ADMINISTRATIVE FUNCTION. MOREOVER, WITH THE GROWTH OF THE ADMINISTRATIVE LAW, THE OLD DISTINCTI ON BETWEEN A JUDICIAL ACT AND AN ADMINISTRATIVE ACT HAS WITHERED AWAY. TH EREFORE, IT HARDLY NEEDS REITERATION THAT EVEN A PURELY ADMINISTRATIVE ORDER WHICH ENTAILS CIVIL CONSEQUENCES, MUST BE CONSISTENT WITH THE RUL ES OF NATURAL JUSTICE. (ALSO SEE : MRS. MANEKA GANDHI V. UNION OF INDIA AN D S. L. KAPOOR V. JAGMOHAN. AS ALREADY NOTED ABOVE, THE EXPRESSION 'C IVIL CONSEQUENCES' ENCOMPASSES INFRACTION OF NOT MERELY PROPERTY OR PERSONAL RIGHTS BUT OF CIVIL LIBERTIES, MATERIAL DE PRIVATIONS AND NON- PECUNIARY DAMAGES. ANYTHING WHICH AFFECTS A CITIZEN IN HIS CIVIL LIFE COMES UNDER ITS WIDE UMBRELLA. ACCORDINGLY, WE REJE CT THE ARGUMENT AND HOLD THAT SINCE AN ORDER UNDER SECTION 142(2A) DOES ENTAIL CIVIL CONSEQUENCES, THE RULE AUDI ALTERAM PARTEM IS REQUI RED TO BE OBSERVED. 23. WE ARE ALSO UNABLE TO PERSUADE OURSELVES TO AGR EE WITH THE PROPOSITION CANVASSED BY LEARNED COUNSEL FOR THE RE VENUE THAT SINCE A POST DECISIONAL HEARING IN TERMS OF SUB-SECTION (3) OF SECTION 142 IS CONTEMPLATED, THE REQUIREMENT OF NATURAL JUSTICE IS FULLY MET. APART FROM THE FACT THAT ORDINARILY A POST DECISIONAL HEARING IS NO SUBSTITUTE FOR PRE- DECISIONAL HEARING, EVEN FROM THE LANGUAGE OF THE S AID PROVISION IT IS PLAIN THAT THE OPPORTUNITY OF BEING HEARD IS ONLY I N RESPECT OF THE MATERIAL GATHERED ON THE BASIS OF THE AUDIT REPORT SUBMITTED UNDER SUB- SECTION (2A) AND NOT ON THE VALIDITY OF THE ORIGINA L ORDER DIRECTING THE SPECIAL AUDIT. IT IS WELL SETTLED THAT THE PRINCIPL E OF AUDI ALTERAM PARTEM CAN BE EXCLUDED ONLY WHEN A STATUTE CONTEMPLATES A POST DECISIONAL HEARING AMOUNTING TO A FULL REVIEW OF THE ORIGINAL ORDER ON MERIT, WHICH, AS EXPLAINED ABOVE, IS NOT THE CASE HERE. (EMPHASIS SUPPLIED BY US) 30. THE APEX COURT THUS, LAID DOWN THAT THE PRINCIP LES OF AUDI ALTERAM PARTEM COULD BE EXCLUDED ONLY WHEN THE STATUTE CONT EMPLATES A POST DECISIONAL HEARING AMOUNTING TO A FULL REVIEW OF TH E ORIGINAL ORDER ON MERIT I.E. THE DECISION TO MAKE A REFERENCE FOR GETTING SPECIA L AUDIT DONE UNDER SECTION 142(2A) OF THE ACT. WHERE THEY RECOGNIZED THE PROC EDURE THAT AFTER THE SPECIAL AUDIT REPORT IS SUBMITTED UNDER SECTION 142(2A) OF THE ACT, THE ASSESSMENT PROCEEDINGS WOULD GIVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE ON THE SAID FINDINGS OF THE SAID AUDITOR AND THE PRE-DECISIONAL HEARING I.E. WHETHER SAID AUDIT IS REQUIRED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IS NOT OPEN FOR DISCUSSION. UPHOLDING THE VIEWS EXPRESSED IN RAJES H KUMAR AND OTHERS VS. DCIT (SUPRA), THE APEX COURT HELD AS UNDER:- 24. THE UPSHOT OF THE ENTIRE DISCUSSION IS THAT TH E EXERCISE OF POWER UNDER SECTION 142(2A) OF THE ACT LEADS TO SERIOUS C IVIL CONSEQUENCES AND, THEREFORE, EVEN IN THE ABSENCE OF EXPRESS PROV ISION FOR AFFORDING AN OPPORTUNITY OF PRE-DECISIONAL HEARING TO AN ASSESSE E AND IN THE ABSENCE OF ANY EXPRESS PROVISION IN SECTION 142(2A) BARRING THE GIVING OF ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 11 REASONABLE OPPORTUNITY TO AN ASSESSEE, THE REQUIREM ENT OF OBSERVANCE OF THE PRINCIPLES OF NATURAL JUSTICE IS TO BE READ INTO THE SAID PROVISION. ACCORDINGLY, WE REITERATE THE VIEW EXPRESSED IN RAJ ESH KUMAR'S (1) CASE. 31. THE APEX COURT FURTHER RECOGNIZED THE INSERTION OF PROVISO UNDER SECTION 142(2A) OF THE ACT W.E.F. 01.06.2007 WHICH PROVIDED THAT NO DIRECTION FOR SPECIAL AUDIT SHALL BE ISSUED WITHOUT AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE FACTS OF THE CASE BEFORE THE APEX COURT BEFORE PASSING THE ORDER REQUIRING THE ASSESSEE TO HAVE TH EIR ACCOUNTS AUDITED BY CHARTERED ACCOUNTANT, NO SHOW CAUSE NOTICE WAS GIVE N TO THE ASSESSEE. THE ASSESSEE IN THE SAID CASE WAS REQUIRED TO FURNISH B Y MARCH 20, 2006 THE DETAILED EXPLANATION IN RESPECT OF QUERIES RAISED V IDE ORDER SHEET ENTRIES BUT IN THE MEANTIME IMPUGNED ORDER ASKING THE ASSESSEE TO GET THE ACCOUNTS AUDITED BY THE SPECIAL AUDITOR WERE PASSED ON 14.03.2006. THE APEX COURT HELD THAT IT IS MANIFESTLY CLEAR THAT WHEN THE IMPUGNED ORDERS W ERE MADE, THE ASSESSING OFFICER HAD NO OCCASION TO HAVE EVEN A GLIMPSE OF T HE ACCOUNTS MAINTAINED BY THE APPELLANTS. THEREFORE, IN THE LIGHT OF THE LEGA L POSITION NOTED ABOVE, WE HAVE NO OPTION BUT TO HOLD THAT THE IMPUGNED ORDERS DATE D MARCH 14, 2006, ARE VITIATED BY THE FAILURE TO OBSERVE THE PRINCIPLE OF AUDI ALTERAM PARTEM. 32. THE NEXT QUESTION WHICH WAS DECIDED BY THE APEX COURT WAS WHETHER THE ASSESSMENT ORDER PASSED IN THE CASE IS BARRED B Y LIMITATION. THE APEX COURT ADMITTED THAT THE LAW ON SUBJECT WAS NOT CLEA R TILL THE JUDGMENT IN RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) WAS RENDERED AND THERE WAS DIVERGENT OPINIONS AMONGST VARIOUS HIGH COURTS. THE APEX COU RT HELD THAT THE LAW ON THE SUBJECT CLARIFIED BY THE APEX COURT WOULD APPLY PROSPECTIVELY AND IT WOULD BE OPEN TO THE ASSESSEE TO URGE BEFORE APPELLATE AU THORITIES THAT THE EXTENDED PERIOD OF LIMITATION WAS NOT AVAILABLE TO THE ASSES SING OFFICER BECAUSE AN INVALID ORDER WAS PASSED UNDER SECTION 142(2A) OF T HE ACT. HOWEVER, IT WOULD BE OPEN TO THE ASSESSEE TO QUESTION BEFORE APPELLAT E AUTHORITIES IF SO ADVISED THE CORRECTNESS OF MATERIAL GATHERED ON THE BASIS O F AUDIT REPORT SUBMITTED UNDER SECTION 142(2A) OF THE ACT. 33. BOTH THE LEARNED AUTHORIZED REPRESENTATIVES HAV E RELIED ON SEVERAL DECISIONS OF DIFFERENT COURTS AND THE TRIBUNALS ON THE ISSUE WHICH HAVE BEEN TAKEN NOTE AND THE PROPOSITION LAID DOWN BY THE APE X COURT IS BEING APPLIED TO DECIDE THE PRESENT ISSUE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AND CIT(A) PLACED RELIANCE ON ACIT VS. SUSH ILA MILK SPECIALTIES (P.) LTD. (SUPRA), WHICH RELATED TO PRE-AMENDED PROVISIO NS AND HENCE, THE SAID ISSUE CANNOT BE APPLIED TO THE PRESENT SET OF FACTS . HOWEVER, WE FIND THAT THE MUMBAI BENCH OF TRIBUNAL IN ACIT VS. CLARIDGES INVE STMENTS & FINANCES (P) LTD. (SUPRA) ON SIMILAR FACTS, WHEREIN THE ORDER IN ITIATING SPECIAL AUDIT WAS PASSED WITHOUT ALLOWING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD WAS HELD TO BE VITIATED IN LAW. IT WAS FURTHER HELD THAT TH E EXTENDED TIME LIMIT LAID DOWN IN EXPLANATION (1)(III) TO SECTION 153A OF THE ACT WAS NOT AVAILABLE TO HIM FOR WANT OF VALIDITY AND PROPER REFERENCE UNDER SECTION 142( 2A) OF THE ACT AND THE ASSESSMENT ORDER BEING PASSED AFTER THE STATUTORY T IME LIMIT MAKES THE ASSESSMENT TO BE BAD IN LAW AND WAS ANNULLED. 34. THE HONBLE HIGH COURT OF ALLAHABAD IN KAKA CAR PETS VS. CIT (SUPRA) VIDE JUDGMENT DATED 17.01.2014 HAD ALSO HELD AS UND ER:- 23. THUS, A.O. SHOULD RECONSIDER THE ISSUE AS TO W HETHER A DIRECTION SHOULD BE ISSUED UNDER SECTION 142(2A) OF THE ACT A FTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE AND AFFORDING A REASONAB LE OPPORTUNITY OF BEING HEARD, IN TERMS OF SECTION 142(2A) OF THE ACT . IT IS ONLY AFTER THE ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 12 A.O. REACHES TO A FAIR CONCLUSION AFTER CONSIDERING THE REPLY GIVEN BY THE PETITIONER, AND AFFORDING AN OPPORTUNITY OF HEARING , THE CIT AS APPROVING AUTHORITY WILL CONSIDER WHETHER THE SPECIAL AUDIT I S REQUIRED TO BE CARRIED OUT FOR THE PURPOSES OF UNDERSTANDING THE ACCOUNTS MAINTAINED BY THE ASSESSEE. THE OPINION MUST BE FORMED REFLECTING TH E APPLICATION OF MIND BASED ON OBJECTIVE CRITERIA AND NOT ON THE BAS IS OF SUBJECTIVE SATISFACTION. 35. THE HONBLE HIGH COURT OF ALLAHABAD IN KAKA CAR PETS VS. CIT (SUPRA) THUS, HAS DISTINGUISHED BETWEEN THE ADJUDICATING AU THORITY AND APPROVING AUTHORITY AND HELD THAT THE FIRST DECISION IS TO BE MADE BY THE ASSESSING OFFICER, THE ADJUDICATING AUTHORITY OF GIVING THE APPROVAL A FTER CONSIDERING THE OBJECTIONS OF ASSESSEE AND AFFORDING REASONABLE OPPORTUNITY OF HEARING IN TERMS OF PROVISIONS OF THE SAID SECTION. THE APPROVAL GIVEN BY THE COMMISSIONER WAS AS AN APPROVING AUTHORITY AND THAT ALSO SHOULD BE P ASSED AFTER APPLICATION OF MIND TO THE FACTS OF THE CASE AND THE REPLY GIVEN B Y THE ASSESSEE. 36. THE HONBLE BOMBAY HIGH COURT IN NICKUNJ EXIMP ENTERPRISES PVT. LTD. (SUPRA) TAKING NOTE OF AMENDED PROVISIONS OF INSERT ION OF PROVISO TO SECTION 142(2A) OF THE ACT W.E.F. 01.06.2007 HELD THAT THE ASSESSING OFFICER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. WHERE THE PARLIAMENT HAD SPECIFICALLY INCORPORATED REQUIREMENT OF REASON ABLE OPPORTUNITY OF BEING HEARD, THE SAID REQUIREMENT COULD NOT BE A MEANINGL ESS FORMALITY AND THE WHOLE OBJECT AND PURPOSE OF SUCH OPPORTUNITY WAS TO BE APPLICABLE TO THE ASSESSEE TO DEMONSTRATE BEFORE THE ASSESSING OFFICE R THAT THE INGREDIENTS OF SECTION 142(2A) OF THE ACT WERE NOT FULFILLED. IN THE FACTS OF THE CASE BEFORE THE HONBLE BOMBAY HIGH COURT, THE ASSESSING OFFICER HA D GIVEN NOTICE TO THE ASSESSEE BUT HAD NOT DEALT WITH SUBMISSIONS MADE BY THE ASSESSEE IN THIS BEHALF AND HENCE, THE ASSESSING OFFICER WAS DIRECTE D TO CONSIDER THE OBJECTIONS RAISED BY THE ASSESSEE. 37. IT MAY BE POINTED OUT HEREIN ITSELF THAT THE LE ARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN EARLIER DECISION D ATED 07.03.2006 IN ATLAS COPCO (INDIA) LTD. VS. ACIT (SUPRA), WHEREIN IT WAS HELD THAT BEFORE PASSING AN ORDER UNDER SECTION 142(2A) OF THE ACT WHETHER AN O PPORTUNITY OF HEARING IS TO BE GIVEN TO THE ASSESSEE AND IT WAS HELD THAT THE S AID DECISION OF HONBLE BOMBAY HIGH COURT IS PRIOR TO THE AMENDMENT IN THE ACT AND ALSO PRIOR TO THE DECISION PASSED BY THE APEX COURT IN RAJESH KUMAR A ND OTHERS VS. DCIT (SUPRA) AND THREE JUDGE DECISION IN SAHARA INDIA (F IRM) VS. CIT AND ANOTHER (SUPRA) AND ALSO LATER DECISION OF HONBLE BOMBAY H IGH COURT IN NICKUNJ EXIMP ENTERPRISES PVT. LTD. VS. ACIT (SUPRA). 38. NOW, COMING TO THE FACTS OF THE PRESENT CASE, S EARCH AND SEIZURE ON THE PREMISES OF GROUP CONCERNS WAS CARRIED OUT ON 23.08 .2006. AS PER PROVISO TO SECTION 153B OF THE ACT, THE ASSESSMENT PROCEEDINGS IN SUCH CASE HAD TO BE COMPLETED BY 31.12.2008, WHEREAS THE ASSESSMENT ORD ER IN THE PRESENT CASE WAS PASSED ON 11.06.2009. THE REVENUE EMPHASIZED T HAT THE ASSESSMENT ORDER PASSED IN THE CASE IS WITHIN TIME FRAME AS RE FERENCE WAS MADE FOR SPECIAL AUDIT AND TIME ALLOWED FOR GETTING THE SPEC IAL AUDIT UNDER SECTION 142(2A) OF THE ACT IS TO BE EXCLUDED FOR WORKING OU T THE LIMITATION PERIOD FOR PASSING THE ASSESSMENT ORDER. IN THIS REGARD, THE COMMUNICATION AND CORRESPONDENCE BEFORE PERMISSION GIVEN TO SPECIAL A UDIT NEED TO BE LOOKED INTO. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS FILED ON RECORD COPY OF ORDER SHEET ENTRIES, WHEREIN THE ASS ESSEE WAS ASKED TO FILE ENGLISH TRANSLATION OF THE SEIZED NOTE BOOKS AFTER ASSIGNMENT OF CASE UPON THE ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 13 DCIT, CENTRAL CIRCLE, THE ORDER SHEET ENTRY IS DATE D 16.05.2008. THEREAFTER, THERE WAS PROPOSAL TO CENTRALIZE PATEL GROUP CASES WITH ADDL. CIT, CIRCLE-1, PUNE. VIDE ORDER SHEET ENTRY DATED 11.09.2008 ITSE LF, A PROPOSAL FOR AUDIT UNDER SECTION 142(2A) OF THE ACT IN THE CASE OF PAT EL WAS SUBMITTED TO CIT, CENTRAL, PUNE THROUGH PROPER CHANNEL. THE CASES OF PATEL GROUP WERE ASSIGNED TO THE ITO, CENTRAL-I, PUNE ON 13.10.2008. ON 22.10.2008, A PROPOSAL FOR AUDIT UNDER SECTION 142(2A) OF THE ACT IN THE CASE OF PATEL GROUP WAS SUBMITTED TO CIT(C), PUNE THROUGH PROPER CHANNE L. THEREAFTER, LETTER DATED 21.11.2008 IN RESPECT OF SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT WAS SERVED UPON THE ASSESSEE AS PER ORDER SHEET ENT RY DATED 25.11.2008. ON 16.12.2008, THE COUNSEL FILED A LETTER REQUESTING F OR COPIES OF SEIZED NOTE BOOKS AND DIARIES WHICH WERE SUPPLIED TO HIM ON 17. 12.2008. ON 30.03.2009, THE CASES WERE ASSIGNED TO ITO, CENTRAL, KOLHAPUR A ND THE RECORDS WERE HANDED OVER ON 17.04.2009. THEREAFTER, THE ASSESSM ENT PROCEEDINGS WERE TAKEN. 39. THE FIRST COMMUNICATION OF ASSESSING OFFICER TO THE ASSESSEE IS VIDE LETTER DATED 21.11.2008, UNDER WHICH REFERENCE IS M ADE TO THE CIT (CENTRAL), PUNES ORDER GRANTING APPROVAL UNDER SECTION 142(2A ) OF THE ACT DATED 01.11.2008, WHEREIN THE ASSESSEE WAS ASKED TO GET T HE ACCOUNTS AUDITED THROUGH NOMINATED AUDITOR WITHIN PERIOD OF SIXTY DA YS AND SUBMIT THE AUDITED ACCOUNTS ALONG WITH AUDIT REPORT. HE WAS ALSO ASKE D TO GET ADDITIONAL PARTICULARS AS VERIFIED BY THE NOMINATED AUDITOR AN D SUBMIT THE SAME; COPY OF THE SAID LETTER IS PLACED AT PAGES 251 TO 252 OF TH E PAPER BOOK. THE ASSESSEE HAS ALSO PLACED ON RECORD THE ORDER GRANTING PERMIS SION UNDER SECTION 142(2A) OF THE ACT BY THE CIT (CENTRAL), PUNE WHICH IS DATE D 04.11.2008, UNDER WHICH IT IS MENTIONED THAT PROPOSAL DATED 11.09.2008 FOR CON DUCTING SPECIAL AUDIT IN THE GROUP CASES OF PATEL GROUP WAS RECEIVED. THE DETAI LED REASONS FOR SPECIAL AUDIT AS GIVEN IN THE PROPOSAL ARE MENTIONED WHICH WERE FORWARDED TO THE ADDL. CIT, PUNE. FURTHER, SHOW CAUSE NOTICE WAS ISSUED T O THE ASSESSEE ON 12.09.2008 BY THE CIT AND HE WAS ASKED TO EXPLAIN A S TO WHY SPECIAL AUDIT SHOULD NOT BE ORDERED. THE CIT IN THE SAID ORDER M ENTIONS THAT ALONG WITH NOTICE OF HEARING, DETAILED PROPOSAL AS RECEIVED FR OM THE DCIT, CENTRAL, KOLHAPUR WAS ALSO ENCLOSED. THE ASSESSEE WAS AGAIN SENT ANOTHER SHOW CAUSE NOTICE AND THE ASSESSEE APPEARED THEREAFTER. THE CIT(C) NOTED THAT NOTICES WERE INADVERTENTLY ISSUED FOR COMPULSORY AU DIT FOR ASSESSMENT YEAR 2008-09 WHILE THE CASES TO BE AUDITED WERE FOR ASSE SSMENT YEARS 2001-02 TO 2007-08, HENCE, THEREFORE, NOTICES WERE ISSUED TO T HE ASSESSEE AND THE CIT PASSED THE ORDER GRANTING PERMISSION FOR SPECIAL AU DIT UNDER SECTION 142(2A) OF THE ACT RECORDING THE REASONS FOR THE SAME. THE SA ID ORDER IS PLACED AT PAGES 267 TO 273 OF THE PAPER BOOK. THE ASSESSEE HAS ALS O ENCLOSED VARIOUS NOTICES RECEIVED FROM CIT(C) AND THE REPLIES FILED THEREIN AT PAGES 274 TO 285 OF THE PAPER BOOK. THEREAFTER, SPECIAL AUDITOR WAS APPOINTED AND HE CONDUCTED THE SPECIAL AUDIT. 40. THE QUESTION WHICH ARISES FOR ADJUDICATION BEFO RE US IS THAT IN THE PRESENT SET OF FACTS, WHERE THE ASSESSING OFFICER B EFORE SENDING A PROPOSAL FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF T HE ACT HAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND IN V IEW OF THE PROVISO TO SECTION 142(2A) OF THE ACT, IS THE SAID PROPOSAL MADE WITHO UT AFFORDING PRE-DECISIONAL HEARING TO THE ASSESSEE VALID AND CAN THE PROCEEDIN GS CONDUCTED THEREAFTER BE HELD TO BE VITIATED IN LAW. THE HONBLE SUPREME CO URT IN THREE JUDGE DECISION IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) HAD DECIDED THE ISSUE OF SHOW CAUSE NOTICE TO BE GIVEN ON PRE-DECISIONAL STA GE AND POST-DECISIONAL STAGE OF STARTING THE PROCEEDINGS UNDER SECTION 142 (2A) OF THE ACT AND HAD ALSO REFERRED TO THE EARLIER DECISION OF APEX COURT IN R AJESH KUMAR AND OTHERS VS. DCIT (SUPRA). THE PRINCIPLES LAID DOWN BY THE HON BLE SUPREME COURT ARE THAT ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 14 THE PRINCIPLE OF AUDI ALTERAM PARTEM CANNOT BE IGNO RED EVEN AT THE STAGE OF PRE- DECISIONAL HEARING. IN OTHER WORDS, IN CASE THE AS SESSING OFFICER IS OF THE VIEW THAT HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS AND INTERESTS OF REVENUE, IT IS NECESSARY TO GET THE ACCOUNTS AUDITE D BY AN ACCOUNTANT, WITH PREVIOUS APPROVAL OF PRINCIPAL CHIEF COMMISSIONER, THEN HE CAN DO SO. HOWEVER, THE PROVISO INSERTED BY THE FINANCE ACT, 2 007 W.E.F. 01.06.2007 HAS VERY CATEGORICALLY PROVIDED THAT THE ASSESSING OFFI CER SHALL NOT DIRECT THE ASSESSEE TO GET THE ACCOUNTS SO AUDITED UNLESS THE ASSESSEE HAS BEEN GIVEN AN OPPORTUNITY OF BEING HEARD. IN OTHER WORDS, THE PRINCIPLES OF NATURAL JUSTICE THAT A PERSON COULD NOT BE CONDEMNED UNHEARD, HAVE BEEN INCORPORATED IN SECTION ITSELF W.E.F. 01.06.2007. THE APEX COURT I N RAJESH KUMAR AND OTHERS VS. DCIT (SUPRA) HAD DELIBERATED ON THE PROVISIONS OF THE ACT BEFORE INSERTION OF SAID PROVISO BUT HAD LAID DOWN THE PROPOSITION T HAT NOBODY COULD BE UNHEARD EVEN AT THE STAGE OF FORMING AN OPINION THAT IN VIE W OF THE NATURE AND COMPLEXITY OF ACCOUNTS AND INTEREST OF REVENUE, SPE CIAL AUDIT IS TO BE CONDUCTED UNDER SECTION 142(2A) OF THE ACT. THE APEX COURT I N SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA) HAVE UPHELD THE SAID PROPOS ITION LAID DOWN BY THE HONBLE SUPREME COURT AND HAS ALSO TAKEN NOTE OF TH E AMENDMENT W.E.F. 01.06.2007 AND HAVE HELD THAT THE PRINCIPLES OF NAT URAL JUSTICE HAVE TO BE FULFILLED EVEN AT THE PRE-DECISIONAL STAGE. IN CON CLUSION, THE APEX COURT DIRECTED THAT THE SAID PROPOSITION WOULD BE APPLICA BLE PROSPECTIVELY. THE CASE OF THE ASSESSEE BEFORE US RELATES TO THE PERIOD WHI CH IS PROSPECTIVE TO THE DECISION OF THE APEX COURT AND IS ALSO AFTER INSERT ION BY THE FINANCE ACT, 2007 W.E.F. 01.06.2007. REASONABLE OPPORTUNITY OF BEING HEARD ON PRE-DECISIONAL STAGE TO BE ALLOWED BY THE ASSESSING OFFICER TO THE ASSESSEE WAS ON STATUTE WHEN THE PROCEEDINGS WERE TAKEN UP AGAINST THE ASSE SSEE. HOWEVER, AS THE FACTS REVEAL BEFORE SUBMITTING THE PROPOSAL DATED 1 1.09.2008 FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT TO T HE CIT(C), NO OPPORTUNITY OF HEARING WAS GIVEN TO THE ASSESSEE. THE REQUIREMENT OF THE ACT IS THAT THE ASSESSING OFFICER HAS TO GIVE FINDING THAT THERE IS COMPLEXITY OF ACCOUNTS AND THE INTERESTS OF REVENUE WOULD BE AFFECTED, AND IN SUCH CIRCUMSTANCES, SHOW CAUSE NOTICE NEEDS TO BE GIVEN TO THE ASSESSEE TO E XPLAIN ITS CASE. WHERE THE ASSESSEE WAS ABLE TO EXPLAIN THE NATURE OF ENTRIES AND ALSO JUSTIFY THAT THE SAME ARE NOT COMPLEX, THEN THERE IS NO NEED TO PUT THE ASSESSEE TO SUCH HARDSHIP OF CONDUCTING SPECIAL AUDIT. THE ASSESSIN G OFFICER HAVING FAILED TO GIVE ANY OPPORTUNITY OF HEARING TO THE ASSESSEE BEF ORE MAKING THE PROPOSAL FOR CONDUCTING SPECIAL AUDIT UNDER SECTION 142(2A) OF T HE ACT AT THE PRE-DECISIONAL STAGE, THEN SUCH PROPOSAL MADE BY THE ASSESSING OFF ICER TO THE CIT(C), PUNE IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND SU FFERS FROM INFIRMITY. THE CASE OF REVENUE BEFORE US IS THAT THE CIT(C), PUNE BEFOR E PASSING HIS ORDER OF GIVING PERMISSION TO THE ASSESSING OFFICER TO ASK T HE ASSESSEE TO GET THE SPECIAL AUDIT CONDUCTED HAD GIVEN FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ROLE OF CIT(C) IS THE ROLE OF APPROVING AUTHORI TY. THE ROLE IS NOT THAT OF ADJUDICATING AUTHORITY WHICH HAD TO BE CARRIED OUT BY THE ASSESSING OFFICER. THE ADJUDICATING AUTHORITY IN THE PRESENT SET OF FA CTS HAS FAILED TO GIVE ANY OPPORTUNITY TO THE ASSESSEE BEFORE MAKING PROPOSAL FOR SPECIAL AUDIT AND THE OPPORTUNITY ALLOWED BY THE APPROVING AUTHORITY, WHO IN ANY CASE IS ENSHRINED WITH THE DUTIES OF CHECKING WHETHER THERE IS NO ARB ITRARINESS IN FUNCTIONING OF ADJUDICATING AUTHORITY, HAS TO BE SATISFIED BEFORE GIVING APPROVAL. HENCE, THE OPPORTUNITY ALLOWED BY THE CIT(C), PUNE AFTER PROPO SAL WAS MADE BY THE ADJUDICATING AUTHORITY DOES NOT ABSOLVE THE NON-ALL OWANCE OF REASONABLE OPPORTUNITY OF HEARING BY THE ASSESSING OFFICER. 41. APPLYING THE PRINCIPLES LAID DOWN BY THE APEX C OURT IN SAHARA INDIA (FIRM) VS. CIT AND ANOTHER (SUPRA), WE HOLD THAT WH ERE NO SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE BEFORE MAKING THE ORDER P ROPOSING CONDUCT OF SPECIAL AUDIT UNDER SECTION 142(2A) OF THE ACT, IN THE PRESENT CASE AND THE CIT ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 15 HAVING APPROVED THE SAID PROPOSAL THOUGH AFTER GIVI NG OPPORTUNITY OF HEARING TO THE ASSESSEE IS VITIATED BECAUSE OF NON-COMPLIANCE WITH THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE ASSESSMENT ORDER PASSED IN THE FACTS OF PRESENT CASE IS BEYOND THE PERIOD OF LIMITATION AND HENCE, THE SAME IS INVALID AND BAD IN LAW. 8. WE FIND THAT THE ISSUE RAISED IN THE PRESENT APP EAL IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE TRIBUNAL IN THE CASE OF ITO VS. VILSONS PARTICLE BOARD INDUSTRIES LTD. (SUPRA) AND IN THE ABSENCE OF ANY OPPORTUNITY GIVEN TO THE ASSESSEE TO SHOW CAUSE AS TO WHY SPECIAL AUDIT UNDE R SECTION 142(2A) OF THE ACT SHOULD NOT BE CARRIED OUT IN THE CASE OF ASSESS EE I.E. AT THE PRE-DECISIONAL STAGE, THE SPECIAL AUDIT CONDUCTED IN THE CASE IS W ITHOUT JURISDICTION AND CONSEQUENTLY, THE ASSESSMENT ORDER PASSED IS BEYOND THE STIPULATED DATE, BECAUSE OF TIME TAKEN FOR SPECIAL AUDIT, IS INVALID AND SINCE IT IS PASSED BEYOND PERIOD OF LIMITATION AND HENCE, IS INVALID AND BAD IN LAW. ACCORDINGLY, WE HOLD SO. WE ALLOW THE ADDITIONAL GROUND OF APPEAL RAISE D BY THE ASSESSEE AND THE GROUNDS OF APPEAL RAISED ON MERITS IN THIS REGARD B ECOME ACADEMIC AND THE SAME ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THIS 15 TH DAY OF FEBRUARY, 2017. SD/- SD/- (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 15 TH FEBRUARY, 2017 . GCVSR ITA NO.1239/PUN/2015 ERANDE BALASAHEB MAHADEV 16 ( )*+ ,+ / COPY OF THE ORDER IS FORWARDED TO : THE APPELLANT; THE RESPONDENT; ' () THE CIT(A)-7, PUNE; ' / THE CIT-6, PUNE; * --., ., / DR A, ITAT, PUNE; 3 / GUARD FILE. / BY ORDER * - // TRUE COPY // / ASSISTANT REGISTRAR, . , / ITAT, PUNE