SUBHASH PARETA SON OF RAM GOPAL PARETA V. ASSISTANT COMMISSIONER OF INCOME TAX

CW/16411/2018

AI Insights

The case involves Subhash Pareta, the proprietor of M/s Pareta Associates, who challenged the appointment of a special auditor and the subsequent reopening of his income tax assessment for the year 2010-2011 by the Assistant Commissioner of Income Tax, Circle 1, Kota. The petitioner argued that he was not given a fair opportunity of hearing before the appointment of the special auditor and contested the sufficiency of the reasons provided for reopening the assessment under Section 148 of the Income Tax Act, 1961. The court examined the procedural compliance and the substantive grounds for the audit and reassessment, ultimately dismissing the petitioner's challenges.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 764113 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 18-08-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: SIDDHARTH RANKA
• Keywords: Assessment Year 2010-2011; Income Tax; Natural Justice; Reassessment; Special Auditor
• Section: 148; 142(2A)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR S.B. Civil Writ Petition No.16411/2018 Subhash Pareta Aged About 50 Years, Son Of Shri Ram Gopal Pareta, Prop. M/s Pareta Associates, Resident Of House No. 3/148, Ganesh Talab, Kota In The State Of Rajasthan. ----Petitioner Versus Assistant Commissioner Of Income Tax , Circle 1, Kota Having Its Address At Income Tax Office, Central Revenue Building, Near C.A.D. Circle, Kota In The State Of Rajasthan. ----Respondent For Petitioner(s) : Mr. Siddharth Ranka, Adv. HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA Order 18/08/2018 1. The petitioner by way of this writ petition assails the orders firstly with regard to the appointment of Special Auditor for the assessment year 2010-2011 by invoking provisions under Section 142 (2A) of the Income Tax Act, 1961 (hereinafter ‘the Act of 1961’). Learned counsel submits that he has not been given fair opportunity of hearing before passing of the order under Section 142 (2A). 2. On careful examining of the documents which have been placed on record by the learned counsel, this Court finds that the Authority has issued a notice on 23.10.2017 showing cause to why case should not be reverted for special audit under Section 142 (2A) of the Act of 1961. In reply to the said notice, the petitioner has submitted his consent in following terms:- (2 of 4) [CW-16411/2018] “As such if you feel that audit is necessary looking to complexity of the papers and documents under seizer, we can/have nothing to say and objection, but we request you to provide us the report so far prepared by the auditor as mentioned by you and also request you to call to the assessee in course of audit conducted by him. We hope the audit and your exercise shall give justice in assessing the income of the assessee.” 3. Thus, no objection against the appointment of special auditor has been made by the assessee-petitioner. Taking note of the reply filed by the petitioner, decision was taken by the Assistant Commissioner on 22.12.2017 appointing special auditor under Section 142 (2A). After having satisfied himself that considering the nature in complexity of accounts multiply all transactions in the accounts of the assessee and in the interest of revenue, special auditor was required to be appointed. 4. Thus, the argument of the petitioner’s counsel cannot be accepted that there was no opportunity given to the petitioner or that there was contravention of principle of natural justice while appointing the special auditor and on that count so far as the appointment of special auditor is concerned, is rejected. 5. The second submission relates to the order issued under Section 148 of the Act of 1961 whereby on the basis reaching to conclusion that there is a reason to believe that there has been escape of income for the assessment year 2010-2011, the petitioner has been issued notice under Section 148. Learned counsel submits that upon asking the respondents they have (3 of 4) [CW-16411/2018] provided the reasons too on the basis of which they have concluded to initiate proceedings under Section 148, however, the said reason cannot be said to be a sufficient in terms of definition of “reason to believe” and can only be a ground of reason to suspect. Learned counsel submits that for arriving to a firm conclusion, i.e. having reason to believe, apart from the report of the special auditor there was something further which was required to be looked at before initiating proceedings under Section 148. The reasons provided to the petitioner shows that the special auditor appointed after survey for the assessment year 2011-2012, found ‘pakki rokad bahi’ wherein there was certain transactions noted by the special auditor who prepared trial balance on the said basis and has reported that a total sum of Rs.3,28,79,533/- has escaped assessment. Taking the same as prima facie case of escaped assessment, notice has been issued under Section 148. The submission of the learned counsel for the petitioner is that such an approach was unjustified. The special auditor had been appointed for the year 2011-2012 alone and therefore, any report prepared by it, could not be made as sole basis for initiating proceedings under Section 148 for the year 2010-2011. 6. Objections were submitted by the petitioner before the concerned Assessing Authority who has noted that said objections as have been argued before this Court and has reached to the conclusion that the reasons which have been assigned for reopening the assessment, are based on factual aspects which can be objected to or rebutted at the time of assessment. It has also been noted that as special auditor has already been appointed for the assessment year 2010-2011, the assessee would have a fair (4 of 4) [CW-16411/2018] opportunity to rebut the reasons. Even otherwise prima facie there were sufficient reasons for reopening. 7. Having noted the aforesaid facts, I do not find any reason to interfere with the order of reopening assessment and issuance of notice under Section 148 for the year 2010-2011. As this Court has already found no reason to interfere with the order of appointment of special auditor for the year 2010-2011, obviously reassessment has to be done now accordingly. I do not find any reason to interfere with the orders passed by the Authorities concerned. 8. The writ petition is accordingly dismissed. (SANJEEV PRAKASH SHARMA),J R.Vaishnav 144. "