The Division Bench of the Supreme Court comprising Justice Sanjiv Khanna and Justice M.M.Sundresh has held that the special audit under Section 142(2A) of the Income Tax Act 1961 could be conducted by relying on earlier or fresh notice .
The appellant-assessee, Rajiv Gandhi Proudyogiki Vishwavidyalaya, which is a university set up by the State of Madhya Pradeshhad filed the present appeal taking exception to the order whereby the Writ Petition filed by them challenging the notice issued by the chartered accountant for undertaking special audit for the assessment year 2018-19 has been rejected.
Sumit Nema, on behalf of the appellant submitted that the appellant they were never served with any order under Section 142(2A) of the 1961 Act. He further submitted that the assessment order had not been passed and had become barred by time and even if the special audit had been filed before the assessing officer it would be of no avail, as no assessment order could be passed now.
Balbir Singh who appeared for the respondent accepted that the order under Section 142(2A) of the Income Tax Act 1961 was never communicated or even uploaded on the portal but he contended that the written order was placed in the order sheet file. He further submitted that the assessment order had not been passed and had become barred by time and even if the special audit had been filed before the assessing officer would be of no avail, as no assessment order could be now passed.
The division Bench allowed the appeal, directing special audit under Section 142(2A) of the 1961 Act would not be given effect to and would be treated as not passed, as it was never communicated to the appellant-assessee.
The bench held that “If the assessing officer desires special audit under Section 142(2A) of the 1961 Act, he can either rely upon the earlier notice or issue a fresh notice. In case the assessing officer relies upon the earlier notice, it will be so indicated and communicated to the 2 appellant-assessee. In either case, hearing as per law will be given. Thereafter an order under Section 142(2A) of the 1961 Act if passed, will be communicated to the appellant-assessee, who will be at liberty to challenge the order in accordance with law.”
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