- (1.) The Petitioner before me is an existing public company within the meaning of the Companies Act, 1956. In this writ petition, the Petitioner has challenged an order issued under Section 142(2A) of the Income-tax Act, 1961 directing audit of their accounts by an accountant nominated by the Chief Commissioner of Income-tax, Calcutta-3 (CCIT) in respect of the assessment year 1987-88. The order was passed on June 12, 2007, a copy of which has been made annexure P9 to the writ petition.
(2.) The dispute which led to passing of the impugned order originated in the year 1989 when the Petitioner was directed through its principal officer to furnish certain informations specified in a notice issued on December 29, 1989, in respect of the said assessment year. For the subject assessment year, the Petitioner had filed their return declaring loss of Rs. 5,48,58,580, along with audited annual report, as well as tax audit report. It is pleaded in the petition that provisional assessment in respect of the Petitioner's return was made under Section 141A of the Act and the Assessing Officer had directed refund of a sum of Rs. 1,42,22,980. The Petitioner claims to have furnished their response to the notice dated December 29, 1989 but it appears that the authorities were not satisfied with such response. On August 27, 1990 another notice was issued detailing the particulars on which the income-tax authorities wanted further information/clarification. Correspondence was being exchanged between the Petitioner and the income-tax authorities in this regard but the income-tax authorities were still not satisfied with the response of the Petitioner. Eventually by a communication issued on February 27, 1991, the Petitioner was informed that audit had been proposed in the case of the Petitioner in accordance with the provisions of Section 142(2A) of the Act, and Shri P. ML Narielwala, chartered accountant of M/s. S.R. Batliboi and Co. was being appointed as the nominated accountant under the said provisions of the Act. This order was challenged by the Petitioner before this Court by filing a writ petition, which was registered as Matter No. 1019 of 1991. This writ petition was eventually allowed by the hon'ble single judge of this Court on January 5, 2007. His Lordship held: Subject-matter of challenge in this writ petition is an order dated February 27, 1991, passed under Section 142(2A) of the Income-tax Act appointing a special auditor. Dr. Pal, learned senior advocate appearing for the writ Petitioner submitted that the order was passed without complying with the principles of natural justice, that is to say without giving opportunity of hearing to the writ Petitioner and the same is patently bad. In support of his submission he relied on a judgment of the apex court in the case of Rajesh Kumar v. Deputy CIT, 2006 287 ITR 91. Md. Nizamuddin, learned Counsel appearing for the Department took time to consider the matter. After considering the matter he very fairly submitted that in view of the judgment cited by Dr. Pal he really cannot contest the point that a show-cause notice should have been given before passing an order under Section 142(2A) of the Income-tax Act. Considering the submission made by the learned advocates for the parties the order dated February 27, 1991 is set aside. It will be open to the Department to take further steps in accordance with law. An urgent certified copy of this order be made available to the parties, if applied for upon compliance with all requisite formalities.
(3.) After this judgment was delivered, a fresh notice under Sub-section (1) of Section 142 of the Act was issued on January 11, 2007 stipulating: Sir/Madam, In connection with the assessment for the assessment year 1987-88 you are required to: (a) . . . (b) . . . (c) fumish in writing and verified in the prescribed manner information called for as per the enclosed letter of even date and on the points or matters specified therein before me at my office at Aayakar Bhawan, 5th Floor, P-7 Chowringhee Square, Kolkata-69 on January 15, 2007 at 2.;