Merely Because Order for Special Audit Contains Specific Directions to Auditor is Not Fatal to its Validity Merely Because Order for Special Audit Contains Specific Directions to Auditor is Not Fatal to its Validity

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The Tax Publishers Merely Because Order for Special Audit Contains Specific Directions to Auditor is Not Fatal to its Validity CA Manoj Gupta section 142(2A) empowers the assessing officer to direct the assessee to get its accounts audited having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of business activity of the assessee, and the interests of the revenue. This action can be taken with the previous approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. In the case of Multi Commodity Exchange of India v. DCIT Writ Petition No. 3550 of 2018, dt. 20-2-2-2019 [ 2019 TaxPub(DT) 1729 (Bom-HC)] the assessee entered into several related party transactions. The assessing officer directed it to get accounts audited. The assessee challenged such direction on ground that all transaction were subject to transfer pricing scrutiny and direction contained special direction to auditor. The Court declined to interfere on both the grounds. 1. Related provisions section 142 of the Act pertains to inquiry before the assessment. Sub-section (2A) of Section 142 post-amendment by the Finance Act, 2013 reads as under : 'If, at any stage of the proceedings before him, the assessing officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of business activity 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 Principal Chief Commissioner or Chief Commissioner or Principal 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 Principal Chief Commissioner or Chief Commissioner or Principal 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 : SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Merely Because Order for Special Audit Contains Specific Directions to Auditor is Not Fatal to its Validity

CA Manoj Gupta

section 142(2A) empowers the assessing officer to direct the assessee to get its accounts audited having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of business activity of the assessee, and the interests of the revenue. This action can be taken with the previous approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. In the case of Multi Commodity Exchange of India v. DCIT Writ Petition No. 3550 of 2018, dt. 20-2-2-2019 [ 2019 TaxPub(DT) 1729 (Bom-HC)] the assessee entered into several related party transactions. The assessing officer directed it to get accounts audited. The assessee challenged such direction on ground that all transaction were subject to transfer pricing scrutiny and direction contained special direction to auditor. The Court declined to interfere on both the grounds.

1. Related provisions

section 142 of the Act pertains to inquiry before the assessment. Sub-section (2A) of Section 142 post-amendment by the Finance Act, 2013 reads as under :

'If, at any stage of the proceedings before him, the assessing officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of business activity 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 Principal Chief Commissioner or Chief Commissioner or Principal 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 Principal Chief Commissioner or Chief Commissioner or Principal 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 :