SALUJA STEEL AND POWER PVT LTD THRO ITS AUTHORIZED SIGNATORY NAMELY VIJAY BANERJEE V. UNION OF INDIA THROUGH PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL

WPC/1721/2024

AI Insights

Saluja Steel and Power Private Limited filed writ petitions against the Union of India and its tax officials, challenging the orders for a special audit of its books of account for the assessment years 2020-21 and 2022-23. The company argued that the orders were passed in violation of the principles of natural justice, as they were not given adequate opportunity to respond to the notices issued under section 142(2-A) of the Income Tax Act, 1961. The court examined the circumstances under which the audit orders were issued, including a search and seizure operation that revealed significant discrepancies in the company's financial records. The court concluded that the orders were justified based on the evidence of unaccounted sales and purchases, and upheld the audit orders, emphasizing the need for a thorough examination of the company's financial activities in the interest of revenue.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 747599 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 24-04-2024
• Assessment Year: misc
• Other Referred Cases: Sahara India (Firm) Lucknow Vs. Commissioner of Income Tax, Central-I and Anr., Malloch v. Aberdeen Corporation, Cinnamond v. British Airports Authority, Escorts Farms Ltd. v. Commr., Kumaon Division
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: KUMAR VAIBHAV; ANURAG VIJAY; OM PRAKASH; SHIVAM SINGH
• Assessee Lawyers: SUMEET GADODIA; DEBASHISH CHATTERJEE; PRAVEEN BARNWAL; SHILPI GADODIA; SHRUT SHEKHAR
• Keywords: Audit of books of accounts; Income Tax; Natural Justice; Special Audit; Violation of natural justice
• Section: 148; 143(3); 131; 271(1)(b); 132(4); 276D; 272A(1); 142(2)(a)

Judgement Text

" IN THE HIGH COURT OF JHARKHAND AT RANCHI (Civil Writ Jurisdiction) W.P. (T) No.1721 of 2024 Saluja Steel and Power Private Limited, (a company registered under the Companies Act, 1956/2013), having its Unit at Mahtodih, Tundi Road, P.O. and P.S. Tundi, District Giridih, PIN 815301 (Jharkhand), through its Authorised Signatory, namely, Vijay Banerjee, aged about 32 years, son of Srimonto Banergee resident of New House, Etwari Nagar, Near Law College, Telipara, Dhanbad, P.O. and P.S. Dhanbad, District Dhanbad, PIN 826001 (Jharkhand). … … Petitioner Versus 1. Union of India, through Principal Commissioner of Income Tax (Central), having its Office at 3rd Floor, Jai Prakash Bhawan, Dak Bunglow Chowk, P.O. – G.P.O., P.S. Dak Bunglow, Town and District Patna (Bihar). 2. Additional Commissioner of Income Tax (Central), Range-II, Ranchi, having its office at Central Revenue Building, 5A, Mahatma Gandhi Road, Ranchi, P.O. – G.P.O., P.S. Chutia, District Ranchi, PIN 834001. 3. Assistant Commissioner of Income Tax, Central Circle, Dhanbad, having its office at ‘Aaykar Bhawan’, Lubi Circular Road, Dhanbad, P.O. and P.S. Dhanbad, District Dhanbad, PIN 826001. … … Respondents With W.P. (T) No.1882 of 2024 Saluja Steel and Power Private Limited, (a company registered under the Companies Act, 1956/2013), having its Unit at Mahtodih, Tundi Road, P.O. and P.S. Tundi, District Giridih, PIN 815301 (Jharkhand), through its Authorised Signatory, namely, Vijay Banerjee, aged about 32 years, son of Srimonto Banergee resident of New House, Etwari Nagar, Near Law College, Telipara, Dhanbad, P.O. and P.S. Dhanbad, District Dhanbad, PIN 826001 (Jharkhand). … … Petitioner Versus 1. Union of India, through Principal Commissioner of Income Tax (Central), having its Office at 3rd Floor, Jai Prakash Bhawan, Dak Bunglow Chowk, P.O. – G.P.O., P.S. Dak Bunglow, Town and District Patna (Bihar). 2. Additional Commissioner of Income Tax (Central), Range-II, Ranchi, having its office at Central Revenue Building, 5A, Mahatma Gandhi Road, Ranchi, P.O. – G.P.O., P.S. Chutia, District Ranchi, PIN 834001. 3. Assistant Commissioner of Income Tax, Central Circle, Dhanbad, having its office at ‘Aaykar Bhawan’, Lubi Circular Road, Dhanbad, P.O. and P.S. Dhanbad, District Dhanbad, PIN 826001. … … Respondents 2 W.P.(T) No. 1721 of 2024 & Anr. …………………. CORAM: HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE NAVNEET KUMAR …………………. For the Petitioners : Mr. Sumeet Gadodia, Advocate Mr. Debashish Chatterjee, Advocate Mr. Praveen Barnwal, Advocate Mrs. Shilpi Sandil Gadodia, Advocate Ms. Shrut Shekhar, Advocate For the Respondents : Mr. Kumar Vaibhav, Sr. S.C. Mr. Anurag Vijay, Jr. S.C. Mr. Om Prakash, Advocate Mr. Shivam Singh, Advocate …………………. 24th April 2024 Per, Shree Chandrashekhar, A.C. J. In these writ petitions, Saluja Steel and Power Private Limited seeks to challenge the orders passed under section 142 (2-A) of the Income Tax Act, 1961 for a special audit of its Books of Account for the Assessment Years 2020-21 and 2022-23 by a nominated Accountant. In relation thereto, the orders passed by the Principal Commissioner of Income Tax (Central) 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 both the writ petitions. This is also an admitted position that in 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. 1721 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/17/2023-24/1063248864(1) (Annexure -8) 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 said 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 to call for and set aside 3 W.P.(T) No. 1721 of 2024 & Anr. the approval accorded by Respondent No.1-Principal Commissioner of Income Tax (Central), Patna vide its Letter bearing No. F. No. PCIT/Central/Pat/T-165/2023- 24/5870-71 dated 20.03.2024, wherein approval has been accorded for audit of the accounts of the Petitioner in terms of Section 142(2-A) of the Income Tax Act, 1961 by an Accountant namely, M/s. Dinesh Kumar Yadav & Associates, Patna. (iii) For issuance of any other appropriate writ(s)/order(s)/direction(s) as Your Lordships may deem fit and proper in the facts and circumstances of the case. 3. Briefly stated, Saluja Steel and Power Private Limited is a Company registered under the Companies Act, 1956 and the Act of 2013. It was issued a notice under section 148 of the Income Tax Act for reopening the income tax assessment, after a search and seizure was conducted on 14th December 2022 and subsequent dates at the premises of Saluja Group of Companies. The petitioner-Company pleaded that for the scrutiny under section 143(3) for the Assessment Year 2022-23 a notice under section 142(1) was issued on 30th October 2023 for furnishing specific details mentioned in the said notice. According to the petitioner-Company, a reply thereof was submitted on 24th November 2023 but a second notice under section 142(1) was issued to it on 30th December 2023. The alleged reason for a second notice under section 142(1) was some suspected transactions by the petitioner-Company. In the communication dated 30th December 2023, the Assessing Officer referred to huge transactions of several crores of rupees in cash by the assessee. Such materials were collected during the search and seizure at Saluja house, offices and other places and included documents and digital data. The petitioner-Company filed its response on 22nd March 2024 and endeavored to clarify that it had already filed its Income Tax Returns for Assessment Year 2022-23 even before a search was conducted. Still, show-cause notice dated 1st March 2024 was issued under section 142(2-A) for a special audit of its 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 4 W.P.(T) No. 1721 of 2024 & Anr. 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, 2016-17 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 not disclosed by you. 5. Accordingly, you are hereby directed to get your book of accounts audited by the above nominated accountant. The nominated accountant will be required to submit the report as per rule 14A of Income Tax Rules, 1962 and in prescribed form no 6B. In addition to the same, the nominated accountant auditing your books is directed as follows:- (i) To prepare date wise receipt and payment account with regard to money in cash or through bank transaction. (ii) To verify whether such transactions of receipts and payments are recorded in assessee’s regular books of accounts. (iii) To report and comment on the nature of transactions and purpose of payments and their allowability under the Income Tax Act, 1961 as expenditure. (iv) To determine and comment as to whether amounts received in cash or through bank are in the nature of the assessee’s income considering the nature of the business of the assessee company. (v) The report should incorporates all the above points and also any other point that may need to be further referred to the accountant by this office and (vi) During the search operation at business/factory/office premises at Giridih, certain books of accounts consisting of ledgers, registers, loose documents and diaries were seized as mentioned above. It is observed from the seized materials that substantial amounts of the cash transactions were undertaken by the assessee company and those cash amounts were deposited in disclosed/undisclosed bank accounts of the company. Perusal of the contents of the seized documents shows that the issue has direct and cumulative effect on the taxable income of the assessee company for FYs 2013-13, 2016-17 to 2022-23 relevant to the AYs 2013-14, 2017-18 to 2023-24. (vii) During the search operation, one Dell Laptop was found and seized from the Director’s office with Identification Marked as SSPPL/F/Laptop/18. In this laptop, an excel file was found. Further, on verification of excel file, one sheet named as OUT was found. This sheet contains the details of products sold or moves out of the factory along with the party name, vehicle no. and weight for period 01.04.2021 to 19.11.2022. When the same was verified with books of accounts, it was found that there is mismatch in the quantity of product sold. From perusal of above, it is seen that there is huge difference between the sale figure found in the excel sheet and actual sale accounted for in Tally for FY 2021- 22 and FY 2022-23. Thus, it is apparent from above that there is suppression of sale. (viii) During the search, an excel file named IN was found. As per sheet IN, it has been found that various items like sponge, iron ore, coal, etc has been purchased from various parties from 01.04.2021 to 19.11.2022. On verification of purchase entered in the excel sheet with books of accounts in Tally, it has been found that various purchase has not been accounted for in the regular books of accounts maintained in Tally. Further, on verification of purchase from Amalgam, it has been found that quantity of 853.110 MT out of total purchase of 3784.920 MT has not been entered in books of accounts in Tally. Similarly, quantity of 3826.030 MT out of total purchase of 4822.630 MT from Atibir has not been entered in books of account. Thus, most of the purchases have not been accounted for in 5 W.P.(T) No. 1721 of 2024 & Anr. regular books of accounts maintained in Tally. (ix) During the course of search, a ledger of Rishi Saluja was found. From perusal of ledger, it is evident that raw materials have been purchased in kaccha and payment has been made in cash. (x) The accountant is requested to ensure that the report should incorporate all the above mentioned points 6. The assessee is hereby directed to submit the report of the accountant by 15.05.2024 on the above mentioned point/issues. You are also directed to extend all cooperation to the nominated accountant and make available all necessary documents, evidences, books of accounts as may be required by him so as to conduct audit and prepare and submit the report within the given time period. 7. You are, hereby directed to provide the auditors with the books of accounts, password of all soft data, bills and vouchers, bank accounts, cash book, narration of each entry, trial balance etc and other materials. You are also hereby directed to extend full cooperation and furnish all requisite details and information sought by aforesaid auditor for completion of special audit u/s 142(2A) of the Act. 8. In case of non-co-operation to the authorized accountant, you will be liable for penalty u/s 271(1)(b)/272A(1) and prosecution u/s 276D of the Income Tax Act, 1961. 9. The progress of the audit should be intimated to the undersigned every month/fortnight and as and when required. Any other particulars which the undersigned may find necessary, the same will be communicated to you during the course of the audit.” 4. As mentioned above, the order dated 23rd March 2024 in DIN & Letter No. ITBA/AST/F/17/2023-24/1063248864(1) for Assessment Year 2022-23 for the audit of the Books of Accounts of Saluja Steel and Power Private Limited 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 6 W.P.(T) No. 1721 of 2024 & Anr. deprived of the opportunity of putting forth its objection against the proposed exercise of power under sub-section (2-A) to section 142. 6. The relevant portions of show-cause notice dated 1st March 2024 is extracted below:- “The case of the assessee for the A.Y. 2022-23 was also opened under compulsory scrutiny on 31.05.2023 through CASS. Notice u/s 142(1) of the Act was issued on 30.10.2023. The detailed submission has not been filed by the assessee till date. 1. On perusal of the submission filed till date in this case, Appraisal Report, seized materials, statements recorded during the search operations, digital data and the financial information available on record, it is found that there are huge number of transactions either in cash or cheque. The entries/transactions in seized/impounded documents/digital documents/bank accounts are not matching with the financials shown by the assessee in its return of income for the different A.Ys. It is observed that tax implication of the transactions in such complex incriminating documents is substantial. Some of the major financial transactions are discussed below:- 1. Undisclosed sale- During the search operations, one Dell Laptop was found and seized from the Director’s office with identification Marked as SSPPL/F/Laptop/18. In this laptop, an excel file was found. Further, on verification of excel file, one sheet named as OUT was found. This sheet contains the details of products sold or moves out of the factory along with the party name, vehicle no. and weight for period 01.04.2021 to 19.11.2022. When the same was verified with books of accounts, it was found that there is mismatch in the quantity of product sold. The same was worked out during the course of search. As per calculation of data, it has been found that unaccounted sale of Rs.62,04,75,295.20/- and Rs.24,43,21,965.4/- was found for F.Y. 2021-22 & F.Y. 2022-23 respectively. The details are as under: Particulars F.Y. 2021 Sale/out as per found data in MT Recorded sale in MT Difference in MT Rate per MT in Rs. Value in Rs. M.S. Billet 30872.67 21036.48 9836.19 55000 54,09,90,450 Mill Scale 1860.51 1385 475.51 5971 2839270.21 Miss Roll 902.67 1176.28 45000 0 Slag 24385.74 0 24385.74 2500 60964350 Iron Fines 15742.27 26866.29 8000 0 Iron ores 2405.25 560.4 1844.85 8500 15681225 Total 620475295.2 F.Y. 2022-23 M.S. Billet 29243.16 24697.73 4545.43 44700 203180721 Mill Scale 1192.13 1256.63 6500 0 Miss Roll 789.46 642.37 147.09 38904 5722389.36 Slag 81.94 2872.99 200 0 Iron Fines 636.78 636.81 2800 0 Iron ores 2338.09 0 2338.09 7500 17535675 Coal 993.51 0 993.51 18000 17883180 Total 244321965.4 From the perusal of above, it is seen that there is huge difference between the sale figure found in the excel sheet and actual sale accounted for in Tally for F.Y. 2021-2022 and F.Y 2022-23. Thus, it is apparent from above that there is suppression of sale of Rs.62,04,75,295/- and Rs. 24,43,21,965/- for FY 2021-22 7 W.P.(T) No. 1721 of 2024 & Anr. and 2022-23 relevant to AY 2022-23 and 2023-24 respectively. On being confronted on this issue, the assessee has not filed the submission with documentary evidences till date despite various reminders. Further, it is to note that the assessee had also not submitted any concrete evidences regarding the discrepancies found as above, while recording of statement u/s 132(4) during the search operation or even after post search statement recorded u/s 131 of the IT Act by the Investigation wing. 1. Unexplained Purchase:- During the search at Saluja Steel & Power Pvt. Ltd. and excel file named IN was found. As per sheet IN, it has been found that various items like sponge, iron ore, coal, etc has been purchased from various parties from 01.04.2021 to 19.11.2022. On verification of purchase entered in the excel sheet with books of accounts in Tally, it has been found that various purchase has not been accounted for in the regular books of accounts maintained in Tally. On verification of purchase from Amalgam, it has not been found that quantity of 853.110 MT out of total purchase of 3784.920 MT has not been entered in books of accounts in Tally. Similarly, quantity of 3826.030 MT out of total purchase of 4822.630 MT from Atibir has not been entered in books of accounts. Thus, most of the purchases have not been accounted for in regular books of accounts maintained in Tally. The summary of the unaccounted purchase made during the FY 2021-22 is as under:- Party Name Period Wt Fy Amount ATIBIR 13/01/2021 to 05/02/2022 3853.200 4,50,53,980.00 ARORAR IRON 14/04/2021 to 24/07/2021 19937.770 4,03,50,655.50 ABHAY SINHA 01/04/2021 to 31/03/2022 7778.050 31,27,32,990.00 AMALGAM 01/04/2021 to 05/02/2022 854.410 2,65,83,689.00 AMIT JAIN 26/04/2021 to 01/06/2021 1380.530 2,39,29,661.00 BIRENDRA JEE 01/04/2021 to 11/03/2022 259.510 ATIBIR HI TECH 22/03/2022 to 30/03/2022 708.410 1,91,27,070.00 DEEPAK CHIRANIA 02/04/2021 to 29/03/2022 2231.020 40,01,760.00 SHANKY JEE 06/04/2021 to 31/03/2022 12785.700 44,95,98,854.00 Total 49788.600 92,13,78,659.50 From perusal of above, purchase of Rs.92,13,78,659/- for FY 2021-22 has not been accounted in books of account of the assessee. Further, the assessee has not explained the nature and the context of the transactions till date. Therefore, Rs.92,13,78,659/- remains unexplained. On being confronted on this issue, the assessee has not filed the submission with documentary evidences till date despite various reminders. Further, it is to note that the assessee had also not submitted any concrete evidences regarding the discrepancies found as above, while recording of statement u/s 132(4) during the search operation or even after post search statement recorded u/s 131 of the IT Act by the Investigation wing.” 7. This is a plea set up by the petitioner-Company that the order dated 20th March 2024 by the Principal Commissioner, Income Tax (Central) approving special audit does not take note of its objections, and the Assessing Officer wrongly recorded that the petitioner-Company did not submit its reply to the show-cause notice dated 1st March 2024. 8 W.P.(T) No. 1721 of 2024 & Anr. 8. Per contra, Mr. Kumar Vaibhav, the learned Sr. Standing Counsel while supporting the exercise of powers under sub-section (2-A) to section 142 of the Income Tax Act submits that the Assessing Officer is vested with wide powers to safeguard the interest of the Revenue and avoid evasion of taxes. 9. Sub-section (2-A) to section 142 of the Income Tax Act provides as under: “(2-A) if, at any stage of the proceedings before him, the Assessing Officer, 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 or specialised nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-section (2) of section 288, nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such 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.” 10. On a plain reading of the provisions under sub-section (2-A), it becomes clear that the Assessing Officer can exercise the powers thereunder at any stage of the proceedings before him. Sub-section (2-A) provides that if the Assessing Officer thinks that it is necessary to cause a special audit he may with the previous approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner direct the assessee to get the accounts audited by a nominated Accountant. The opinion so formed 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- 9 W.P.(T) No. 1721 of 2024 & Anr. 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). 11. 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 transactions. The unexplained transactions and the details of suspicious transactions are spread over fourteen pages in the notice dated 30th December 2023. 12. The satisfaction indicated under sub-section (2-A) for forming an opinion by the Assessing Officer shall not be open to judicial scrutiny and wherever it is shown to the Court that there are materials for arriving at satisfaction for the special audit of the accounts of an assessee by an Accountant as defined in explanation to sub-section (2) of section 288, the writ Court shall be denuded of its power of judicial review under Article 226 of the Constitution of India. The submission that by passing an order under sub-section (2-A) the period of limitation which shall be expiring on 31st day of March 2024 would be extended by six months and thereby cause prejudice to the assessee cannot be countenanced in law. Unless it is demonstrated by producing materials to the satisfaction of the Court that the exercise of powers under sub-section (2-A) by the Assessing Officer is with mala fide intention, the writ Court shall not exercise its powers under Article 226 of the Constitution. In the opinion of this Court, the Assessing Officer for valid and justifiable reasons may exercise the powers under sub-section (2-A) till the last date of the financial year. 13. Having regard to the initial stage of inquiry, we shall be careful to see that no prejudice is caused to the assessee and would therefore simply indicate that (i) there are certainly doubts about the correctness of the accounts (ii) multiplicity of transactions is apparent (iii) 10 W.P.(T) No. 1721 of 2024 & Anr. unexplained/unaccounted transactions 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 hereby granted for audit in terms of section 142[2A] of the Income-tax Act, 1961 for the financial years F.Y. 2012-13, 2016-17, 2017-18, 2018-19, 2019-20, 2020-21, 2021-2022, and 2022-23 by Dinesh Kumar Yadav & Associates, M-4, Narayan Palace, Behind Punjab & Sindh Bank, 4, Patna Bihar 800001 duly empanelled for this purpose by the Pr. Chief Commissioner of Income-tax (B&J), Patna vide order dated 15.02.2024. The above accountant shall complete the audit within a reasonable time and furnish a report in the prescribed form to the concerned Assessing Officer. The terms of reference as well as specific issues to be examined during the course of such special Audit shall be determined and communicated by the Assessing Officer.” 14. An order passed in violation of natural justice becomes susceptible in law. “Sahara India (Firm) Lucknow Vs. Commissioner of Income Tax, Central-I and Anr.” (2008) 14 SCC 151 is an authority to the proposition that reasonable opportunity must be given to the assessee before the power under section 142(2-A) is exercised by the Assessing Officer. After the amendment, this requirement to follow natural justice is incorporated in sub-section (2-A) by providing that reasonable opportunity of being heard shall be provided to the assessee. To a limited extent, we may agree with the learned counsel for the petitioner-Company that five days to respond to the notice under section 142(2-A) was not sufficient and the Assessing Officer passed the order without looking at the objections raised by the petitioner-Company. 11 W.P.(T) No. 1721 of 2024 & Anr. 15. Even so, there is no law of universal application that every order passed in breach of natural justice must be interfered by the Court. The requirement in law that every order that ensues civil consequence must be passed following the rules of natural justice shall vary from case to case and no strait-jacket formula can be prescribed. We are not in agreement with the learned counsel for the petitioner-Company that serious prejudice has been caused to the petitioner-Company on account of violation of the rules of natural justice. Lord Wilberforce observed that: “a breach of procedure cannot give (rise to) a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court does not act in vain” [see, “Malloch v. Aberdeen Corporation” (1971) 2 ALL ER 1278 (HL)]. In the same vein were the observations in “Cinnamond v. British Airports Authority” (1980) 2 All ER 368 (CA). Brandon L.J. rendered the opinion; “no one can complain of not being given an opportunity to make representations if such an opportunity would have availed him nothing”. The Hon’ble Supreme Court rendered a decision in “Escorts Farms Ltd. v. Commr., Kumaon Division” (2004) 4 SCC 281 on the same lines and held that the rules of natural justice shall not apply in cases where it would be of no use if an opportunity of hearing shall be a mere ritual and without the possibility of any change in the decision on merits. A notice under section 142(2-A) of the Income Tax Act is only a step towards the assessment of income tax and the nominated Auditor’s report is not the final decision. Moreover, the objections so laid by the petitioner-Company prima facie do not reflect any merit. In a proceeding under Article 226 of the Constitution, the writ Court shall not exercise its discretionary jurisdiction where the records reveal that the petitioner-Company has, in fact, no defence to object to a special audit under sub-section (2-A) to section 142. 16. For the foregoing reasons, we are not inclined to interfere with the orders dated 23rd March 2024 contained in DIN & Letter No. ITBA/AST/F/17/2023-24/1063248864(1) and DIN & Letter No. ITBA/AST/F/17/2023-24/1063248625(1). We however indicate that we 12 W.P.(T) No. 1721 of 2024 & Anr. have referred to some facts and made observations thereon for examining the plea of natural justice and such observations shall not be treated as an expression of opinion on the merits of the case; observations are only for the present case. To protect the interest of the petitioner-Company, we issue the following directions: (i) The time indicated in the order dated 23rd March 2024 for submission of report by the nominated Auditor is extended by a further three months; (ii) The nominated Auditor shall confine the inquiry to the matters indicated in para no.5 of the order dated 23rd March 2024; and (iii) He shall not refer to any internal document/appraisal report prepared by the Income Tax Department concerning the petitioner- Company. 17. These writ petitions are disposed of. I.A., if any, stands disposed of. (Shree Chandrashekhar, A.C.J.) (Navneet Kumar, J.) Basant B/S.Das "