ALLIANCEBUILDERS AND CONTRACTORS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The assessee carries on business as a builder and developer. The dispute which is raised before the Court in these proceedings arises from a direction which has been given on 21 March 2014 by the Assistant Commissioner of Income Tax, Central Circle-II, Kanpur, under Section 142(2A) of the Income Tax Act, 1961, directing a special audit for assessment year 2011-12. The order of the Assistant Commissioner of Income Tax is based on a sanction granted by the Commissioner of Income Tax (Central), Kanpur on 13 March 2014.

(2.) For Assessment Year 2011-12, the assessee filed a return of income showing a total income of Rs.67.77 lacs. The assessee claimed a deduction under Section 80-IB(10) for AY 2010-11. A notice was issued under Section 143(2) of the Act on 28 September 2012. Another notice under Section 142(1) of the Act was issued on 26 September 2013, by which the assessee was called upon to furnish a copy of the audit report together with all underlying schedules and annexures besides, producing the books of account, bills and vouchers for verification. The assessee failed to comply with the requisition, following which a notice under Section 271(1)(b) of the Act was issued. On 6 November, 2013 a penalty of Rs.10,000 was imposed upon the assessee for non-compliance of the notice. A fresh notice was issued under Section 142(1) of the Act on 7 November 2013. Prosecution proceedings were initiated against the petitioner under Section 276D of the Act, inter alia, for wilfully withholding a copy of the audit report, books of account and other documents.

(3.) On 8 January 2014, summons were issued under Section 131 of the Act against the Directors of the Company requiring them to furnish the audit report for the AY 2011-12 together with the books of account, bills and vouchers for verification. On 7 February 2014, a notice was issued under Section 142(2A) of the Act, calling upon the assessee to show cause as to why a special audit should not be ordered. The notice adverted to the previous background noted earlier, and to the failure of the assessee to cooperate in pursuance of the various notices that were issued for the production of the tax audit report, books of account, bills and vouchers. The notice stated that since the assessee is a builder, who is engaged in the business for several years, various projects would be conducted at a time during a financial year. Considering the past record up to AY 2010-11, separate books of account for each unit and each building project are being kept. However, no statutory audit report under Section 44AB of the Act and no audit to justify the claim under Section 80-IB(10) of the Act was filed. Similarly, no profit and loss account and balance sheet had been filed unit wise. The notice accordingly indicated that it was proposed to order a special audit on the ground that (i) complexity is involved in the books of account; and considering (ii) the volume of accounts; (iii) specialised nature of business activities through different project units; and (iv) interest of the revenue.