Law:

Section:

Under section 142(2A) of the Income-tax Act, Commissioner should not give any approval mechanically, if he finds that there is no examination of books of account by Assessing Officer before sending proposal for special audit Section 142, read with section 44AB, of the Income-tax Act, 1961 - Assessment - Inquiry before assessment - Assessment years 1996-97 to 2000-2001 - Whether under section 142(2A) Commissioner does not exercise jurisdiction of appellate authority but rather of approving authority and, therefore, he should not give any approval mechanically if he finds that there is no examination of books of account by Assessing Officer before sending proposal for special audit - Held, yes - Whether duty of Commissioner is to examine whether Assessing Officer has done it (examination of books of account) properly or not and thereafter he will apply his independent mind as to whether on facts and circumstances as indicated by Assessing Officer, exercise of power for special audit is necessary or not - Held, yes - Whether unless Assessing Officer examines the books of account, he cannot have any understanding as to nature and complexity of same, consequently, it is not possible for him to come to conclusion for necessity of special audit - Held, yes - Whether special audit under section 142(2A) can be resorted to in case of any assessee, if conditions mentioned therein are fulfilled, irrespective of limit of annual turnover, whereas compulsory audit under section 44AB is required in cases where income of assessee exceeds limit stipulated therein - Held, yes FACTS The assessee/petitioner was carrying on banking business which had been formed under the Co-operative Societies Act, 1912. The books of account and documents of the petitioner were regularly and systematically audited by the co-operative audit directorate, as well as by the auditor under section 44AB. The Assessing Officer decided to reopen the assessment for the relevant periods. While the petitioner was exchanging correspondence, meeting queries and supplying information, it was directed to get its accounts audited under section 142(2A) by the named accountant. The petitioner duly protested against…

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