High Court Of Madhya Pradesh : Indore Bench
Sewaram Takhtani vs. Assistant Commissioner Of Income Tax & Anr.
Sections 142(2A)
Asst. Year Block period 1st April, 1995 to 25th Sept., 2001 &
Assessment year 2002-2003
A.M. Sapre, J.
Writ Petn. Nos. 9430, 9437, 9472 to 9474, 9492 to
9494, 9515, 9534 & 9535 of 2003 and 203 of 2004
5th April, 2004
Counsel Appeared
G.M. Chafekar with Sarda, M.M. Asudani & P.M. Choudhary, for the Petitioners : A.P. Patankar, for the Respondents
ORDER
A.M. Sapre, J. :
The decision rendered in this writ shall also govern disposal of other connected writ petitions being WP Nos. 9430,9437, 9472, 9473, 9474, 9492, 9493, 9494, 9534, 9535 of 2003 and 203 of 2004, as in all these writs, common question of law is involved.
The short question that arises for consideration in these petitions is, whether respondent No. 1— Asstt. CIT, Range 2(1) Indore was justified in invoking the powers conferred under s. 142(2A) of the IT Act for getting the accounts of the assessee, i.e., petitioner, audited from an accountant as defined in Explanation below sub-s. (2) of s. 288? In other words, the short question that arises for consideration is, whether in the facts of this case, a direction to get the accounts audited from an accountant was called for? If the contention of the petitioner is that it was not called for because none of the conditions specified in s. 142(2A) ibid were present in this case so as to entitle the AO (Assessing Officer) to invoke s. 142(2A), the ease of the Revenue on the other hand is that no case for interference in the impugned order is called for because the impugned order satisfies on facts all the attributes of s. 142(2A) of the Act. Facts in brief are these.
It is not in dispute that a raid/search operation under s. 132 of the IT Act was carried out in the premises of the petitioner alongwith several of his associates called “Shimla Group” of business house engaged in the business of manufacture and sale of sweet scented supari and mouth freshener by and under the name “Sewaram Rajkumar, Indore”. As a consequence of the raid operation, several incriminating documents in the form of loose papers were seized which prima facie indicated that assessee had regularly been entering into huge transactions in Benami names outside regular books of accounts. It was also noticed that there were evasions, alterations and corrections in the regular books of accounts maintained in the course of business which did not reflect correct income of the assessee. Since, it was a case of raid; the block assessment proceedings as contemplated under s. 158BC of the IT Act for the period 1st April, 1995 to 25th Sept., 2001, have been initiated. It is in the course of these assessment proceedings, the AO noticed aforementioned infirmities in the books of accounts of the petitioner which led to passing of the impugned order (Annex. P-5) by taking recourse to the provisions of s. 142(2A) ibid directing the petitioner to get the accounts audited from an accountant named therein. It was found that the order to get the audit done is called for looking to the nature of complexity of the accounts and in the interest of Revenue. As stated supra, it is this order which is impugned in this writ by contending that no case for issuance of such direction was called for. Notice of the writ was issued to Revenue (IT Department). The Department has submitted the return and has justified passing of impugned order on facts on record.
4. Heard Shri G.M. Chafekar, learned senior counsel with Shri Sarda, Shri M.M. Asudani and Shri P.M. Choudhary, learned counsel for the petitioners and Shri A.P. Patankar, learned counsel for the respondents.
In substance, the submission of learned counsel for the petitioner as taken note of supra was that none of the conditions necessary for invoking s. 142(2A) ibid are present in this case. Elaborating this submission, learned counsel contended that no efforts were made by AO before passing the impugned order as to whether accounts in question are complex. In reply, learned counsel for the Revenue defended the impugned order and prayed for its upholding.
Having heard learned counsel for the parties and having perused the record of the case. I find no merit in these writ petitions. As a consequence, the petitions must fail.
In my considered opinion, no fault can be found in the impugned order when it directed the petitioner to get the audit done in terms of s. 142(2A) of the Act. Indeed, in view of admitted and peculiar facts of the case, the authority specified in s. 142(2A) ibid was justified in directing the petitioner to get the audit of his/their books of account done from an accountant mentioned in the impugned order.
As taken note of supra, it is not in dispute that the block assessment proceedings in question are initiated in consequence of the raid conducted in petitioner’s business premises. It is also not in dispute that in this raid, the Department was able to collect/seize several incriminating documents indicating petitioner’s as also his associates’ involvement in various kinds of Benami transactions which obviously did not reflect in regular books of accounts maintained by the petitioner. It was also noticed that even the books of accounts maintained had several evasions, alterations and corrections.
It is with this background if the authority feels that books of accounts are complex in nature and need to be scrutinized by another chartered accountants then in my view, no fault can be found in such approach. It is a case where one can easily conclude that formation of opinion is based on relevant material on record. In other words, it is a case where AO had before him adequate material to form an opinion needed for giving direction to get an audit done. Obviously, it is in the interest of Revenue because if it is found in raid, that petitioner has indulged in several Benami transactions, it was obviously to evade tax. Submission of learned counsel for the petitioner was that neither there was any material to form any such opinion nor any opinion was formed and hence, the impugned order is not sustainable. I do not agree. In the first place, it is dealt with supra and held against the petitioner. Secondly, mere perusal of assessment proceedings (Annex. P-4) pending before AO also indicates that AO did go into the material seized as also the books of accounts in the course of assessment proceedings and then passed the impugned order. It cannot, therefore, be contended by the petitioner that there was no material on record for forming an opinion, or that there was no application of mind to the facts of the case before passing the impugned order. I am supported by authorities reported in Kumar Films (P) Ltd. vs. CIT (2003) 179 CTR (Pat) 39 : (2002) 258 ITR 257 (Pat), Shivkant & Bros. vs. Union of India (2003) 184 CTR 535 (Raj) (Annex. R-8) and Living Media vs. CIT (2002) 175 CTR (SC) 299 : (2002) 255 ITR 268 (SC).
In my opinion, it is the subjective satisfaction of the authority concerned to decide on the basis of material on record, as to whether the accounts are complex in nature, or not? The word “complex” is not defined in the Act and hence, it has to be given its wide and liberal meaning. As in this case, if the authority noticed that large number of transactions are executed in Benami by the petitioners and that none of them are reflected in books of accounts and that the books of accounts maintained by the petitioner contains several discrepancies, erasures and overwritings, etc. then certainly such accounts are not dependable for determining the exact tax liability. Indeed, the application of mind by the authority is also discernible when one peruses the impugned order. They need to be reaudited in accordance with law. In such circumstances, the authority has only option to take recourse to the provision of s. 142(2A) ibid and issue necessary direction. It is not for the Court to again examine whether accounts in question are complex, or not? Because, the writ Court do not act as an appellate Court over such decisions of AO Submission of learned counsel for the petitioner in WP No. 9430 of 2003 and WP No. 9437 of 2003 was that in the absence of any proceedings not being pending against the petitioner, the impugned direction under s. 142(2A) could not have been issued. I find no merit in this submission. In return of WP No. 9430 of 2003, it is clearly mentioned that proceedings for asst. yr. 2002-03 (1st April, 2001 to 31st March, 2002) are pending apart from satisfaction of AO to initiate proceedings under s. 158BD in respect of block assessment for the period 1st April, 1995 to 29th Sept., 2001. Moreover, this being a raid case against one group called Shimla Group wherein all cases of these assessees are interlinked, coupled with the fact that proceedings for asst. yr. 200203 are pending is sufficient to attract the rigour of s. 142(2A) of the Act.
Learned counsel for the petitioners placed reliance on Onkarji Kasturchand (HUF) vs. CWT (1982) 135 ITR 188 (MP), ITO vs. James Joseph O’Gorman (1993) 204 ITR 454 (Cal), G.M. Breweries Ltd. & Anr. vs. Union of India (2000) 161 CTR (Bom) 33 : (2000) 241 ITR 446 (Bom), Abhay Kumar & Co. vs. Union of India (1986) 54 CTR (Raj) 188 : (1987) 164 ITR 148 (Raj) and Swadeshi Cotton Mills Co. Ltd. vs. CIT (1987) 63 CTR (All) 335 : (1988) 171 ITR 634 (All). I have gone through the view expressed in these cases. In my view, the facts of the case in hand make these cases distinguishable. Since, I have come to a conclusion that authority in this case, was justified in issuing the impugned direction looking to the peculiar facts emerging from the record of the case, and the material collected against the petitioner and the nature and complexity of the accounts, the petition must be dismissed.
As a consequence of aforesaid discussion, the petition fails and is hereby dismissed. Interim orders passed from time to time are hereby recalled. As a result, the impugned directions have to be given effect to by getting the accounts of petitioner audited strictly in accordance with the requirement of Act and the rules framed thereunder to enable the AO to make assessments within the time specified in accordance with law. No costs.
[Citation : 270 ITR 509]
