SATYABRATA SINHA,J. - (1.) Interpretation of the provisions of S. 142(2A) of the IT Act, 1961, calls for decision in this application.
(2.) THE aforementioned question arises for consideration in the following circumstances : The petitioner is a company incorporated under the Companies Act. In terms of the provisions of s. 44AB of the IT Act as also under the Companies Act these are required to have their accounts duly audited by a chartered accountant. According to the petitioner, during the earlier assessment years various questions as to whether a particular receipt would be a capital receipt or a revenue receipt came up for consideration and the same had been considered and disposed of by the Appellate Authorities. By an order dt. 20th March, 1998, the AO being the Dy. CIT, Special Range-13, directed the petitioner to get the accounts audited in respect of points enumerated therein and furnish the report of the said special audit within a period of 150 days from 18th March, 1998. It appears that prior thereto a proposal for special audit under S. 142(2A) in the case of the petitioner was placed before the Chief CIT-II, on 10th March, 1998, and he without granting any approval merely nominated Sri G. P. Agarwal, FCA, for the purpose of special audit on 16th March, 1998. Sec. 142(2A) of the IT Act reads thus : "If, at any stage of the proceedings before him, the AO, 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 CIT or CIT, direct the assessee to get the accounts audited by an accountant, as defined in the Explanation below sub-s. (2) of S. 288, nominated by the Chief CIT or CIT 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 AO may require."
(3.) WITH a view to appreciate the rival contentions of the parties it is necessary to consider the scope and purport of the Act. Sec. 142 deals with an enquiry before assessment and for the said purpose the AO may serve a notice to a person who has either filed a return or not in relation to the matters specified therein which includes production of such accounts or documents as the AO may require. Sec. 143(1) provides that where a return has been filed under S. 139, or in response to a notice under sub-s. (1) of S. 142, a general assessment may be made. However, sub-s. (2) of S. 143 empowers the AO where it is considered necessary and expedient so as to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax, to serve on the assessee a notice requiring him, inter alia, to produce any evidence on which the assessee may rely in support of his return. However, such notice shall not be served after the expiry of 12 months from the end of the month in which the return is furnished. Sub-s. (3) of S. 143 reads thus : "On the day specified in the notice issued under sub-s. (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the AO may require on specified points, and after taking into account all relevant material which he has gathered, the AO shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him (or refund of any amount due to him) on the basis of such assessment." It is in the aforementioned backdrop of legislative policy relating to assessment, that the provisions of S. 142(2A) has to be considered.;