SATISH CHANDRA, J. - (1.) PRESENT appeal is filed by the assessee under Section 260 -A of the Income Tax Act, 1961 against the judgment and order dated 15.06.2007 passed by the Income Tax Appellate Tribunal, Lucknow in Income Tax Appeal No. 760 & 790/LUC/2005 for the assessment year 2001 -02.
(2.) ON 20.08.2008, a Coordinate Bench of this Court has admitted the instant appeal on the following substantial questions of law: i. "Whether the Tribunal was legally correct in not taking into account the invalidity as had crept -in in the directions dated 09.11.2004 as given by the Assessing Officer for Special Audit under section 142 (2A) which has rendered the assessment order 09.11.2004 itself as vitiated in law? ii. Whether the Tribunal was legally correct in not taking into account the law as laid down by the Apex Court in the case of Rajesh Kumar vs. Dy. CIT reported in (2006) 287 ITR 91, while deciding the cross appeals preferred by the parties before it, in relation to the assessment order dated 09.11.2004? iii. Whether on a due and correct interpretation of the provisions of sub -section (3) of Section 145, the Tribunal was legally correct in upholding the rejection of accounts and in sustaining extra addition of Rs.5.0 lacs." iv. The Tribunal while interpreting Section 10 of Income Tax Act 1961 was wrong in recording finding that persons exempted under Section 10 of the Act are not required to computate its total income in accordance with the provisions of the Act, which may include the computation of depreciation on written down value and not in any other manner? " The brief facts of the case are that the assessee/appellant has been carrying on business of electronic goods, appliances and other commodities from last 40 years. The books of accounts are subjected to the tax audited as per section 44 AB of the Act. For the assessment year under consideration, the case of the assessee was picked up for scrutiny. So, after issuing notice, the A.O. has rejected the books of accounts under section 145 and made the various additions on estimate basis. Total addition made by the A.O. is for Rs.29,56,690/ - under the various heads like car expenses, depreciation commission, printing stationary, advertisement, security expenses, stall welfare, rebate discount, telephone -electric expenses, building repair maintenance etc. The same was upheld not only by the first appellate authority but also by the Tribunal. Being aggrieved, the assessee has filed the present appeal.
(3.) WITH this background, Sri S. K. Garg, learned counsel for the assessee submits that the notice under section 143 (2) was issued on 28.01.2002 and the time limit for completion of the scrutiny was due to expire on 31.03.2004. However, before completion of the assessment, the A.O. took a view that there are certain discrepancies. So, he referred the matter to the CIT (Central) Kanpur for seeking the approval to issue a direction for special audit under section 142 (2A) of the Act. He read out Section 142 (2A), which on reproduction, reads as under: "Section 142(2A) - If, at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts of the assessee and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant as defined in the Explanation below sub - section (2) of section 288, nominated by the Chief Commissioner or Commissioner in this behalf and to furnish a report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed and such other particulars as the 10 [Assessing] Officer may require " ;