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2017 Supreme(Guj) 1018
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
M.R. Shah and B.N. Karia, JJ.
Takshashila Realties Pvt. Ltd. - Appellants
Vs.
Deputy Commissioner of Income Tax, Circle-4(1)(2) and Ors. - Respondent
Special Civil Application No. 4691 of 2017
Decided On : 09-06-2017
For the Appellant : J.P. Shah, Manish J. Shah
Headnote:
Constitution of India – Article 226 – Income Tax Act, 1961 – Section 142(2A) – Assessment – Audit Report –Petition under Article 226 of the Constitution of India, the petitioner - assessee - Takshashila Realties Pvt. Ltd. (formerly known as Takshashila Gruh Nirman Pvt. Ltd.) has prayed for an appropriate writ, direction and order to quash and set aside the impugned order dated 28.12.2016 passed by the Assessing Officer under Section 142(2A) of the Income-Tax Act, by which in exercise of powers under Section 142(2A) of the IT Act, the Assessing Officer has directed the assessee to get the accounts for A.Y. 2014-15 audited through Special Auditor – Held, objections the petitioner never pointed out that there is no consequential effect of the previous transactions in the year under consideration. It is the case on behalf of the Revenue/Department that effect of earlier transactions/conversions in the earlier years would have a direct bearing for A.Y. 2014-15 also. Under the circumstances, after giving fullest opportunity to the petitioner and after dealing with the objections raised by the petitioner and thereafter having obtained the approval from the Principal Commissioner who has granted the approval after considering the material on record and thereafter when the Assessing Officer has passed the order of Special Audit considering the specialized nature of the business activities of the assessee and the multiplicity of transactions, it cannot be said that the Assessing Officer has committed any error. Now, so far as the submission on behalf of the petitioner that along with the return of income for A.Y. 2014-15, the petitioner submitted the Special Audit Report and the Tax Audit Report and therefore, there is no further requirement of Special Audit is concerned, at this stage it is required to be noted that considering section 142(2B) of the IT Act irrespective of the fact whether the assessee has got the accounts audited by the Auditor, the Assessing Officer can pass an order of Special Audit. Under the circumstances, merely because the assessee along with the return of income submitted a Statutory Audit Report and Tax Audit Report, considering section 142(2B) of the IT Act, the order of Special Audit under Section 142(2A) of the IT Act cannot be said to be invalid – Writ petition dismissed
M.R. Shah, J.
1. By way of this petition under Article 226 of the Constitution of India, the petitioner - assessee - Takshashila Realties Pvt. Ltd. (formerly known as Takshashila Gruh Nirman Pvt. Ltd.) has prayed for an appropriate writ, direction and order to quash and set aside the impugned order dated 28.12.2016 passed by the Assessing Officer under Section 142(2A) of the Income-Tax Act, 1961 (hereinafter referred to as "IT Act"), by which in exercise of powers under Section 142(2A) of the IT Act, the Assessing Officer has directed the assessee to get the accounts for A.Y. 2014-15 audited through Special Auditor.
2. The facts leading to the present Special Civil Applications, in nutshell, are as under:
2.1 That, in the case of erstwhile firms viz., M/s. Chanakya Infracon Private Limited; M/s. Chanakya Buildcon [P] Limited; M/s. Takshashila Realties Private Limited; M/s. Youngstar Infracon [P] Limited and Takshashila Properties [P] Limited, the assessment proceedings for A.Y. 2010-2011 were completed. That, pursuant to an order dated 22nd March 2011 passed by the High Court of Gujarat in Company Application No. 263 of 2011, five companies viz., M/s. Chanakya Buildcon Private Limited; M/s. Chanakya Infracon Private Limited; M/s. Takshashila Properties Private Limited; M/s. Takshashila Realities Limited and M/s. Youngstar Infracon Private Limited came to be amalgamated with Takshashila Gruh Nirman Private Limited. Messrs. Takshashila Gruh Nirman Private Limited is subsequently named as M/s. Takshashila Realities Limited. It appears that in case of transferee companies viz., M/s. Takshashila Gruh Nirman Private Limited; M/s. Chanakya Buildcon Private Limited; M/s. Chanakya Infracon Private Limited and M/s. Youngstar Infrastructure Private Limited, reassessment proceedings came to be initiated for A.Y. 2010-2011. Notices under Section 148 of the IT Act came to be issued and served upon the respective assessees. The aforesaid transferee companies-original assessees preferred Special Civil Applications No. 13971 of 2016; 14018 of 2016; 14071 of 2016 and 14794 of 2016 before this Court challenging Notices under Section 148 of the Act and the reassessment proceedings. That, by a detailed judgment and order dated 5th December 2016, Division Bench of this Court, dismissed the said Special Civil Applications.
2.2 That thereafter, the petitioner herein-Takshashila Realities Private Limited has been served with a Notice under Section 142(2A) of the IT Act and the petitioner, as the successor of firms viz., M/s. Chanakya Buildcon Private Limited; M/s. Chanakya Infracon Private Limited; M/s. Takshashila Properties Private Limited and M/s. Youngstar Infracon Private Limited was called upon to show cause why an order for special audit under Section 142(2A) of the IT Act may not be passed. In the show cause notice, it was noted that the conversion of five firms into companies, after revaluation of land, merger of five companies with M/s. Takshashila Gruh Nirman Private Limited; later with issue of equity shares against the balance of revaluation credits at a premium; valuation of shares as Discounted Cash Flow method by estimating cash flows and adopting a random discounted rate for valuation, there is a complex web of transactions in the group of firms namely introduction of land by some of the partners; revaluation of lands and crediting of amounts in the current accounts of all partners; conversion of firms into companies which merged with existing Company; valuation of share by discounted cash flow method and allotment of shares against the amounts outstanding as unsecured loans at unreasonable premium, clubbed with multiple revaluation or properties over the years, starting from 2008 to 2013 in various entities involves application of provisions of the Companies Act, application of Accounting Standards and examination of provisions of capital gains in the hands of various partners, firms and directors is involved, and therefore, ha
