URBAN IMPROVEMENT TRUST V. ADDITIONAL COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER

CW/9558/2022

AI Insights

The case involves the Urban Improvement Trust, Alwar, which challenged an order directing a special audit of its accounts by the Income Tax Department under Section 142(2A) of the Income Tax Act, 1961. The petitioner argued that the order was merely an intimation and not a formal order, and that it did not receive a fair opportunity to be heard. The respondents countered by providing evidence of multiple notices and opportunities given to the petitioner to respond, which were not adequately utilized. The court referenced previous judgments to support the decision that the authority had acted within its rights and had provided sufficient opportunity for the petitioner to contest the audit.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 674372 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 11-07-2022
• Assessment Year: misc
• Other Referred Cases: Rajesh Kumar and Ors. Vs. D. Commissioner of Income Tax and Ors., Karnataka Industrial Area Development Board Vs. Assistant Commissioner of Income-tax (Exemptions), Circle-1
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ANUROOP SINGHI; N S BHATI
• Assessee Lawyers: PRAKUL KHURRANA
• Keywords: Application of mind; Audit report; Income Tax; Opportunity of Hearing; Special Audit; Objection rejection
• Section: 142(2A); 12A(1)(b)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Civil Writ Petition No. 9558/2022 Urban Improvement Trust, Alwar, Urban Improvement Trust Building, Bhagat Singh Circle, Alwar (Rajasthan) Through Its Authorised Signatory, Phailee Ram Meena, S/o Moolchand Meena, Aged Bout 34 Years, R/o 2, Scheme No. 3 Vasant Vihar Alwar 301001 ----Petitioner Versus 1. Additional Commissioner Of Income Tax/income Tax Officer, National E-Assessment Centre, Delhi 2. Circle (Exemp.), Jaipur, Kailash Height, Lal Kothi, Tonk Road, Jaipur, Rajasthan 302015. ----Respondents For Petitioner(s) : Mr. Prakul Khurrana, Advocate For Respondent(s) : Mr. Anuroop Singhi, Advocate with Mr. N.S. Bhati, Advocate HON'BLE MR. JUSTICE MANINDRA MOHAN SHRIVASTAVA HON'BLE MRS. JUSTICE SHUBHA MEHTA Order 11/07/2022 Heard. This petition is directed against the order dated 23.03.2022 which according to the petitioner does not constitute an order but only an intimation as also subsequent communication dated 24.05.2022 rejecting objection against special audit of accounts of the petitioner under Section 142 (2A) of the Income Tax Act, 1961 (for brevity “the Act of 1961”). Relying upon the judgment in the case of Rajesh Kumar and Ors. Vs. D. Commissioner of Income Tax and Ors. reported in (2007)2SCC181 and Karnataka Industrial Area Development Board Vs. Assistant (2 of 4) [CW-9558/2022] Commissioner of Income-tax (Exemptions), Circle-1 reported in (2018)401 ITR 74 (Karnataka), the argument of learned counsel for the petitioner is that firstly a proper opportunity of hearing was not given and secondly, the communication dated 23.03.2022 does not reflect any opinion by application of mind and recording reasons before issuance of direction for audit of accounts. According to the learned counsel for the petitioner, even though in response to earlier notices, the petitioner for some reasons, could not submit his reply, law required the authority to form an opinion before passing order dated 23.03.2022. Shri Singhi, learned advocate who appears on behalf of respondents, would bring to the notice of the Court, a detailed order passed by the Authority when subsequently an objection was submitted on 01.04.2022. What we find from the records of the case is that the notice was initially issued to the petitioner on 28.01.2022 which mentioned specific material relied upon by the authority while proposing to appoint an Auditor under Section 142 (2A) of the Act of 1961, which is stated below:- “The income and expenditure account was signed by the ‘Lekhadhikari’ (Accounts Officer) of the UIT. For the year under consideration, gross receipts of the UIT is exceeded the prescribed limit to get its accounts audited but you have not furnished audit report in Form No. 10B as per required Section 12A(1)(b) of the Act and audited balance sheet. Thus, you have submitted only a part of final accounts which are not audited/signed by the Chartered Accountant. In view of the discrepancies observed above, doubts about the correctness of accounts arise.” It is not in dispute that the reply to the notice was not filed within the period stipulated in the notice. The petitioner did not even bring to the notice of the authorities that any audit was got (3 of 4) [CW-9558/2022] done by him. It is further revealed from the report that a letter for extension was submitted on 09.02.2022, by which the petitioner sought further time of 15 days. In response thereto, the assessee was given time till 14.02.2022 to respond to the notice under Section 142 (2A) of the Act of 1961, that intimation required the petitioner to file his objection as final opportunity. It is not the case of the petitioner that neither the notice was served nor the subsequent communication was received but, the petitioner chose not to file any response. In the absence thereof, finally a proposal was submitted for approval of the PCIT (REFAC) for issuance of appropriate directions to the assessee to get his account audited under Section 142 (2A) of the Act of 1961. It is also clear that when order was passed by the Authority on 23.03.2022, the petitioner did not challenge that order but kept on making representation. In course of time, a detailed objection was also submitted on 01.04.2022 without challenging earlier order dated 23.03.2022 before this Court or any other judicial forum. The objection also came to be rejected vide subsequent order dated 24.05.2022. We have gone through the same. The peculiar circumstances of the case are that despite repeated opportunities, the assesse did not respond to the notice even though more than one opportunity was granted to him and subsequently after passing of order dated 23.03.2022 when he submitted a detailed objection that too has been rejected on 24.05.2022, which contains detailed reasons why special audit has been directed under Section 142 (2A) of the Act of 1961. In the facts and circumstances of the present case, we are not inclined to interfere with the proceedings particularly when the (4 of 4) [CW-9558/2022] petitioner has chosen not to challenge the order dated 23.03.2022 at the first instance and despite repeated opportunities, no reply was submitted by him and taking into consideration that in any case, his objection was rejected by detailed order. This writ petition is dismissed accordingly. (SHUBHA MEHTA),J (MANINDRA MOHAN SHRIVASTAVA),J LAKSHYA SHARMA /12 "