IMPORTANT POINT
The court established that the exercise of powers under Section 142(2-A) of the Income Tax Act, 1961, requires the Assessing Officer to form a prima facie opinion based on the complexity and volume of accounts, and that procedural violations do not automatically invalidate such orders unless they cause substantial prejudice.

JUDGMENT :

Shree Chandrashekhar, A.C.J.

In this batch of writ petitions, Mongia Steel 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 2016-17, 2018-19 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 all the writ petitions. This is also an admitted position that in the aforementioned writ petitions 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. 1720 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/17/2023-24/1063244964(1) (Annexure -10) 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 aid 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 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-163/2023-24/5868-69 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. Khetan Rajesh Kumar & Co. 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, Mongia Steel 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 vide communication dated 27th March 2023 for reopening the income tax assessment, after a search and seizure was conducted on 14th December 2022 and subsequent dates at the premises of Mongia 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 28th July 2023 for furnishing specific details mentioned in the said notice. According to the petitioner-Company, a reply thereof was submitted on 14th August 2023 but a second notice under section 142(1) was issued to it on 28th December 2023. The alleged reason for a second notice under section 142(1) was some suspected Hawala transactions by the petitioner-Company and its directors, employees etc. In the communication dated 28th 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, Mongia Steel Ltd.’s offices and other places and included documents, digital data and WhatsApp chats. The petitioner-Company filed its response on 17th January 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, another notice under section 142(1) was issued to it on 15th January 2024 to complete the scrutiny proceedings within the statutory period of limitation and a reply thereto was sent Online by the petitioner-Company on 12th February 2024. Now a notice