Y.R.Meena, J. - (1.) These are two connected appeals, one made by the Revenue and the other made by the assessee. The Revenue has challenged the impugned order on the ground that the learned single Judge has granted leave in terms of prayer (1) of the writ petition, that is, the stay of operation of the order appointing special auditor. The assessee has challenged the impugned order dated May 4, 1999, on the ground that before issuing of notice under Section 142(1) of the Income-tax Act, 1961, the Income-tax Officer has not applied his mind, and that it is not possible to comply with the direction referred to in the said notice.
(2.) As both the appeals are connected, whether the accounts of the assessee be audited by the special auditor appointed under Section 142(2A) of the Act or whether the Assessing Officer should look into the accounts himself, in case the special auditor is not permitted to audit the account and the Assessing Officer is also not in a position to look into the accounts of all the branches when the assessee is not in a position to produce all the books of account maintained by all the 43 branches of the assessee, then whether it can be said that the impugned order under Section 142(2A) of the Act is without application of mind. Sub-section (2A) of Section 142 reads as under : "(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 Assessing Officer may require." There is no dispute that the Assessing Officer with the approval of the Commissioner or Chief Commissioner can direct the assessee that his accounts be audited by the special auditor appointed by the Assessing Officer with the approval of the Commissioner or Chief Commissioner.
(3.) Learned counsel for the assessee submits that before appointment of a special auditor there must be an opinion of the Assessing Officer that the nature and complexity of the accounts is such and/or also in the interests of the Revenue, it is necessary that accounts of the assessee be audited with the special auditor appointed, with the approval of the Commissioner or Chief Commissioner under Sub-section (2A) of Section 142 of the Act. He placed reliance on the decision of this court in the case of Peerless General Finance and Investment Co. Ltd. v. Deputy CIT [1999] 236 ITR 671, and on the decision of the Allahabad High Court in the case of Swadeshi Cotton Mills Co. Ltd. v. CIT [1988] 171 ITR 634. He further submits that after proposal by the Assessing Officer, the notice was issued by the Commissioner, after hearing the assessee he simply recommended the case, supporting the view of the Assessing Officer, to the Chief Commissioner and the Chief Commissioner has not given an opportunity to the assessee, though hearing was given by the Commissioner. Therefore, the Chief Commissioner should not have given approval for appointment of special auditor under Sub-section (2A) of Section 142 of the Act.;