Rajiv Gandhi Proudyogiki Vishwavidyalaya Bhopal Mp vs. Central Board Of Direct Tax

[1] THE HIGH COURT OF JUDICATURE FOR MADHYA PRADESH, AT JABALPUR (DIVISION BENCH) W.P. No. 22483 of 2021 Rajiv Gandhi Proudyogiki Vishwa Vidyalaya …..Petitioner Versus Union of India and others …..Respondents ---------------------------------------------------------------------------------------------- Coram : Hon’ble Mr. Justice Ravi Malimath, Chief Justice Hon’ble Mr. Justice Vijay Kumar Shukla, Judge ---------------------------------------------------------------------------------------------- Presence : Mr. Sumit Nema, Senior Advocate with Mr. Mukesh Agrawal, Advocate for the petitioner. Mr. Sanjay Lal, Advocate for the respondents. ---------------------------------------------------------------------------------------------- O R D E R (Oral) (11.11.2021) Per : Ravi Malimath, Chief Justice During the pendency of the assessment proceedings a show cause was issued under Section 142(2A) of the Income Tax Act (for short “the Act”) dated 07.04.2021 by respondent No.3 for the purposes of initiation of special audit for the Assessment Year 2018-2019. The petitioner filed its detailed objections on 13.04.2021 through e-portal. However, the respondent No.3, without even considering the objections, straightaway made referral for special audit/approval of respondent No.4. Thereafter on 29.04.2021 an ex-parte order was passed approving such special audit under Section [2] 142(2A) of the Act. The petitioner being prejudiced by such an order, has filed the instant petition. 2. Learned counsel for the petitioner contends that the provisions of Section 142(2A) of the Act provides a reasonable opportunity of being heard be given to the petitioner before an order is to be passed. It is contended that whenever an order of special audit is to be made by the respondents, the same should be through a speaking order which is lacking in the instant case. That there is no such speaking order passed by the respondents with regard to compliance of the provisions of the law. Hence, the action of the respondents is liable to be set aside. In support of his case, he relies on the judgments of Hon’ble Supreme Court in the case of Rajesh Kumar vs. Deputy Commissioner of Income-tax reported in 287 ITR Page 91 = [2006] 157 Taxman 168 (SC). He further places reliance on the judgment of the Hon’ble Supreme Court in the case of Sahara India (Firm), Lucknow vs. Commissioner of Income Tax, Central-I and another reported in (2008) 14 SCC 151. Hence, he contends that the order is vitiated and is liable to be set aside. 3. The same is disputed by the learned counsel appearing for the respondents contending that an opportunity of hearing has been given to the petitioner and that the provisions of Section 142(2A) of the Act have been complied with. Not only adequate opportunity has been given, but all the objections raised by the petitioner have been considered. Hence, he pleads that the petition be dismissed. 4. Heard learned counsels. [3] 5. The Hon’ble Supreme Court in Rajesh Kumar’s case came to the conclusion that even though hearing need not be elaborate, the same has to be given to the petitioner. It held in para 53 as follows:- “53. The hearing given, however, need not be elaborate. The notice issued may only contain briefly the issues which the Assessing Officer thinks to be necessary. The reasons assigned therefor need not be detailed ones. But, that would not mean that the principles of justice are not required to be complied with. Only because certain consequences would ensue if the principles of natural justice are required to be complied with, the same by itself would not mean that the court would not insist on complying with the fundamental principles of law. If the principles of natural justice are to be excluded, the Parliament could have said so expressly. The hearing given is only in terms of section 142(3) which is limited only to the findings of the special auditor. The order of assessment would be based upon the findings of the special auditor subject of course to its acceptance by the Assessing Officer. Even at that stage the assessee cannot put forward a case that power under section 142(2A) of the Act had wrongly been exercised and he has unnecessarily been saddled with a heavy expenditure. An appeal against the order of assessment, as noticed hereinbefore, would not serve any real purpose as the appellate authority would not go into such a question since the direction issued under section 142(2A) of the Act is not an appellate order.” As a consequence whereof, the proviso to Section 142(2A) of the Act was added by the Finance Act, 2007 (22 of 2007) w.e.f. 01.06.2007, which provided as follows:- “Provided that the Assessing Officer shall not direct the assessee to get the accounts so audited unless the assessee has been given a reasonable opportunity of being heard.” 6. To this, learned counsel for the respondents places various material to indicate that adequate opportunity was given to the petitioner. Firstly; is the communication vide Annexure P-7 dated 11.01.2021 with regard to the initiation of special audit proceedings under Section 142(2A) of the Act; thereafter, a show cause notice under Section 142(2A) of the Act dated [4] 07.04.2021 was issued to the petitioner. He has accordingly replied to the same. Various material were produced by the petitioner in support of his case. Thereafter, in terms of the communication vide Annexure P-13 dated 24.08.2021, the petitioner was intimated that the proposal for special audit under Section 142(2A) of the Act was approved by the concerned PCIT(AU). Subsequently, Shri A.K. Sharma, Chartered Accountant was assigned to conduct special audit under Section 142(2A) of the Act. Therefore, it is contended that since adequate opportunity of hearing was given to the petitioner and he having availed the same, the necessary order has been passed. Therefore, it cannot be said that no opportunity was given. 7. We do not find any reason to interfere in this petition. In terms of the proviso to Section 142(2A) of the Act, opportunity of hearing was afforded to the petitioner. There is no grievance with regard to the same. However, what is being contended, is that when an order is passed under Section 142(2A) of the Act, necessary reasons have to follow which will enable the petitioner to know as to the circumstances on which the order was passed. On considering the same, we do not deem it appropriate to accept the contention. What was provided by the judgment of the Hon’ble Supreme Court in Rajesh Kumar’s case, culminated into the proviso being added that an adequate opportunity be granted. Admittedly, even according to the petitioner, adequate opportunity has been given. That only presupposes, that the objections as raised by the petitioner with regard to the notice issued, have been duly considered by the respondents. It is only after such application of mind, the order has been passed. The material on record would clearly indicate that substantial opportunity has been given as well as the reply to objections filed by the [5] petitioner. Therefore, to contend that none of them has been considered by the respondents, in our considered view, may run opposite to the record produced before us. The material clearly indicates that the provisions of law have been complied with. The contention of the petitioner regarding non-application of mind or non-granting of any reasons for passing order, therefore, would not be sustainable. 8. Consequently, we do not find any ground to interfere. Hence, the writ petition is dismissed. (RAVI MALIMATH) (VIJAY KUMAR SHUKLA) CHIEF JUSTICE JUDGE psm Digitally signed by PREM SHANKAR MISHRA Date: 2021.11.24 10:30:21 +05'30'