Back
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.M. SUBRAMANIAM, J.
M/s. J.P. Jai Land and Building Promoters Pvt. Ltd. – Petitioner
Versus
The Commissioner of Income Tax-I, Chennai and Others – Respondents
W.P. No. 746 of 2012, M.P. No. 1 of 2012
Decided On : 13-08-2021
Income Tax Act, 1961 - Sections 142(2A), 143(3) and 40 (a) (ia) - Scrutinising of assessment - Disallowances - Conduct of Statutory Audit and tax Audit of books of accounts - Income disclosing taxable total income - Disallowances including the disallowances on the application - Whether any further action is required in any matter or not - Whether his opinion initially formed, is right or wrong - Whether vouchers were produced in Audit is not known - Whether Memorandum of Articles authorize such transactions and the details of ownership as on date and violation of any statutory rules should fine a mention in auditor's report - Whether or not authorized by memo of articles etc ought to have been commented by Auditors - Company, for Assessment filed their return of income disclosing taxable total income subjecting their accounts to the statutorily prescribed audit as well as tax audit - Regarding filing of return of income, scrutinising the assessment and certain disallowances made, are not in dispute between the parties - Issue raised importantly on behalf of petitioner is that order impugned issued in violation of the principles of natural justice, in view of fact that the 1st proceedings dated passed by 2nd respondent cannot be construed as a show cause notice in compliance with the provisions of Section 142 (2A) of the Act - initiation itself is improper, the final order dcannot be sustained by respondents - Assessing authority formed a complete opinion and decided to appoint an Auditor to conduct the special audit under Section 142 (2A) of Act and objections received became an empty formality and thus –
Finding of the Court:
Court that it is not a show cause notice, it was construed as a show cause notice by the petitioner themselves - Reason would be that pursuant to the proceedings neither an Auditor was appointed immediately nor an Auditor went to the premises of the petitioner and even the approval at that point of time from Commissioner of Income Tax, was not obtained. But the petitioner submitted their objections detail and thereafter, on receipt of the objections the assessing officer obtained approval from Commissioner of Income Tax and disposed of the objections - Assessee has once again submitted an objection on 23.12.2011 and the said objections were also disposed opportunity to defend case by way of pre-decisional hearing was provided as no final order was passed based on the proceedings dated 09.12.2011 directly. Further, the petitioner has not challenged the if the said proceedings is a final order - approval from the Commissioner of Income Tax was obtained and the objections were disposed further objections raised were also disposed of by the Assessing Officer –
Result: Writ petition stands dismissed
JUDGMENT :
S.M. SUBRAMANIAM, J.
Prayer: This Writ Petition is filed under Article 226 of the Constitution of India, praying for issuance of Writ of Certiorarified Mandamus, calling for the records of the Petitioner Company on the file of the 2nd respondent to quash the impugned order dated 16.12.2011 issued in PAN-AABCJ7618K/ACIT, CO. CIRCLE II(3) for appointing Special Audit u/s 142 (2A) of the Income Tax Act, 1961 pending assessment proceedings relating to the Assessment Year 2009-10 and consequently direct the 2nd respondent to complete the scrutiny assessment u/s 143(3) of the Income tax Act, 1961 for the Assessment Year 2009-10 based on the regular audit report filed.
1. The writ on hand is filed questioning the legal validity of the order dated 16.12.2011 passed by the 2nd respondent for appointing Special Audit under section 142(2A) of the Income Tax Act, 1961 pending assessment proceedings relating to the Assessment Year 2009-10 and consequently, direct the 2nd respondent to complete the scrutiny assessment under Section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2009-10 based on the regular audit report filed by the petitioner.
2. The petitioner company was established under the Companies Act, 1956. They are assessed to Income Tax on the file of the 2nd respondent and the return of Income Tax was filed for the Assessment Year 2007-08 on 14.11.2007, declaring ‘Nil’ income after conduct of Statutory Audit and tax Audit of books of accounts.
3. The petitioner company, for the Assessment Year 2008-09 filed their return of income disclosing taxable total income at Rs. 65,99,372/- after subjecting their accounts to the statutorily prescribed audit as well as tax audit. The return of Income was taken for scrutinising the assessment under Section 143(3) of the Act dated 02.12.2010 at a taxable total income of Rs. 1,43,61,890/- after making certain disallowances including the disallowances on the application of Section 40 (a) (ia) of the Act.
4. The fact regarding the filing of return of income, scrutinising the assessment and certain disallowances made, are not in dispute between the parties. The issue raised importantly on behalf of the petitioner is that the order impugned dated 16.12.2011, was issued in violation of the principles of natural justice, in view of the fact that the 1st proceedings dated 09.12.2011, passed by the 2nd respondent cannot be construed as a show cause notice in compliance with the provisions of Section 142 (2A) of the Act.
5. The learned counsel for the petitioner reiterated that perusal of the order dated 09.12.2011 would reveal that the authority competent have decided the issues, even before hearing the petitioner on the dispute and therefore, the said order dated 09.12.2011, cannot be considered as a show cause notice, as required under the provisions of the Act. When the initiation itself is improper, the final order dated 16.12.2011 cannot be sustained by the respondents. When the procedures contemplated at the first instance had been violated and even before receiving any objections or defence from the petitioner/assessee, for appointing an Auditor by invoking Section 142(2A) of the Income Tax Act, then the final order which is impugned in this writ petition, is liable to be set aside.
6. The arguments advanced in this regard are that in the proceedings dated 09.12.2011, the assessing authority formed a complete opinion and decided to appoint an Auditor to conduct the special audit under Section 142 (2A) of the Act and therefore, the objections received became an empty formality and thus, the opportunity as contemplated has not been provided, and the objections of the petitioner/assessee were not considered in its spirit and in these circumstances, the order impugned, is to be set aside.
7. In support of the said contention, the learned counsel for the petitioner relied on the judgment of the Hon'ble Supreme Court in the case of Sahara India (Firm) vs. Commissioner of Income-Tax, (200
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
