- (1.) COMPLIANCE of the office objection is dispensed with. Office to register the appeal as regular appeal.
(2.) WE have heard learned Counsel for the appellant. The brief facts and circumstances in which this appeal has arisen are that a search took place on 20th Nov., 1997 and notice under Section 158BC was issued on 7th Sept., 1998. In compliance of which, the assessee submitted a return on 20th Oct., 1998, declaring undisclosed income of Rs. 2,44,000 for the block period. Only one day before the period for completing the block assessment was expiring, the AO directed the assessee to have the accounts subjected to special audit in terms of Section 142(2A) of the IT Act, 1961. Thus, by dint of time, having the accounts subjected to special audit, the limitation for completing the block period was sought to be extended and the assessment order was ultimately passed on 24th May, 2000 by excluding the extended period for getting the special audit conducted of the books of account of assessee.
(3.) THE Tribunal after taking into consideration the record of proceedings and material on record has come to the conclusion that reference to the special audit under Section 142(2A) of the IT Act in the circumstances was not for the purpose for which the provision was enacted but merely for getting the extended period for completing assessment, which is not permissible under law. On the basis of this finding, the reference to the special audit was held to be illegal and consequently, the assessment order was held to be barred by time. There is no dispute about it that if the period reckoned for special audit which was directed to be conducted a day before the expiry of period of completing the block assessment, is not taken into account, the assessment order is clearly barred by time. The Tribunal found that merely because accounts and documents were voluminous, it is not taken to assume complexity so as to invoke the provisions of Section 142(2A) of the IT Act as a matter of course. The Tribunal also noticed that the AO has not merely referred the accounts to be audited under special audit by an auditor named by him, but he has directed the special auditor to prepare the books of account in the form of cash book, ledger, on the basis of documents/papers seized during the course of search as per his directions. The auditor was also required to prepare trading, P&L; a/c, which were recorded in the regular books of account and further to determine the undisclosed income of the block period.;