SEWARAM TAKHTANI Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE decision rendered in this writ shall also govern disposal of other connected writ petitions being WP Nos. 9430, 9437, 9472, 9473, 9474, 9492, 9493, 9494, 9534, 9535 of 2003 and 203 of 2004, as in all these writs, common question of law is involved.

(2.) THE short question that arises for consideration in these petitions is, whether respondent No. 1--Asstt. CIT, Range 2 (1) Indore was justified in invoking the powers conferred under Section 142 (2a) of the IT Act for getting the accounts of the assessee, i. e. , petitioner, audited from an accountant as defined in Explanation below Sub-section (2) of Section 288? In other words, the short question that arises for consideration is, whether in the facts of this case, a direction to get the accounts audited from an accountant was called for? If the contention of the petitioner is that it was not called for because none of the conditions specified in Section 142 (2a) ibid were present in this case so as to entitle the AO (Assessing Officer) to invoke Section 142 (2a), the ease of the Revenue on the other hand is that no case for interference in the impugned order is called for because the impugned order satisfies on facts all the attributes of Section 142 (2a) of the Act. Facts in brief are these.

(3.) IT is not in dispute that a raid/search operation under Section 132 of the IT Act was carried out in the premises of the petitioner alongwith several of his associates called "shimla Group" of business house engaged in the business of manufacture and sale of sweet scented supari and mouth freshener by and under the name "sewaram Rajkumar, Indore". As a consequence of the raid operation, several incriminating documents in the form of loose papers were seized which prima facie indicated that assessee had regularly been entering into huge transactions in Benami names outside regular books of accounts. It was also noticed that there were evasions, alterations and corrections in the regular books of accounts maintained in the course of business which did not reflect correct income of the assessee. Since, it was a case of raid; the block assessment proceedings as contemplated under Section 158bc of the IT Act for the period 1st April, 1995 to 25th Sept. , 2001, have been initiated. It is in the course of these assessment proceedings, the AO noticed aforementioned infirmities in the books of accounts of the petitioner which led to passing of the impugned order (Annex. P-5) by taking recourse to the provisions of Section 142 (2a) ibid directing the petitioner to get the accounts audited from an accountant named therein. It was found that the order to get the audit done is called for looking to the nature of complexity of the accounts and in the interest of Revenue. As stated supra, it is this order which is impugned in this writ by contending that no case for issuance of such direction was called for. Notice of the writ was issued to Revenue (IT Department ). The Department has submitted the return and has justified passing of impugned order on facts on record.