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Section 142 of the Income-tax Act, 1961 - Assessment - Inquiry before assessment - Assessment year 2003-04 - Whether exercise of power under section 142(2A) leads to serious civil consequences and, therefore, even in absence of an express provision for affording an opportunity of pre-decisional hearing to an assessee and in absence of any express provision in section 142(2A) barring giving of a reasonable opportunity to an assessee, requirement of observance of principles of natural justice is to be read into said provision - Held, yes - [See proviso to section 142(2A) inserted with effect from 1-6-2007] FACTS The assessee-company was directed under section 142(2A) for special audit of its accounts by a chartered accountant for the relevant assessment year. However, no opportunity of hearing was given to the assessee before passing such order. The assessee challenged that order on the ground of violation of principles of natural justice relying upon decision of the Supreme Court in Rajesh Kumar v. Dy. CIT [2006] 157 Taxman 168 . The two-Judge Bench of the Supreme Court, by its order dated 14-12-2006, was of view that observation in Rajesh Kumar's case (supra) to the effect that in every case where the Assessing Officer issues a direction in terms of section 142(2A), the assessee has to be heard before such order is passed was not correct in law. Therefore, the matter was referred to the Larger Bench. HELD A bare perusal of the provisions of section 142(2A) would show that the opinion of the Assessing Officer that it is necessary to get the accounts of the assessee audited by an accountant has to be formed only by having regard to: (i) the nature and complexity of the accounts of the assessee; and (ii) the interests of the revenue. The word 'and' signifies conjunction and not disjunction. In other words, the twin conditions of 'nature and complexity of the accounts' and 'the interests of the revenue' are the pre-requisites for exercise of power under section 142(2A). Undoubtedly, the object behind enacting the said provision is to assist the Assessing Officer in framing a correct and proper assessment based on the accounts maintained by the assessee and when he…

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