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September 2013

Block assessment: Limitation: Special audit: Sections 142(2A) and 158BC: Direction for special audit without giving opportunity to assessee: Direction given to extend period of limitation: Assessment barred by limitation:

By K. B. Bhujle, Advocate
Reading Time 1 mins
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CIT vs. Subboji Rao C. H.; 355 ITR 320 (Kar):

Pursuant to a search, block assessment proceedings were initiated by issuing a notice u/s. 158BC of the Income-tax Act, 1961 on 15-05-1998. The assessee computed the undisclosed income at Rs. 24,18,360 and the Assessing Officer computed the undisclosed income at Rs. 70,00,246. The Commissioner (Appeals) reduced the addition. He rejected the contention of the assessee that the assessment was barred by limitation since the direction for special audit u/s. 142(2A) was not valid. The Tribunal held that there was no complexity in the accounts requiring an audit u/s. 142(2A). It further held that invoking the provisions u/s. 142(2A) was bad in law and the assessment was barred by limitation.

On appeal by the Revenue, the Karnataka High Court upheld the decision of the Tribunal and held as under:

“The assessee was not heard before the order passed u/s. 142(2A). Such a procedure was resorted to extend the period of limitation. Therefore, the assessment order was void as being barred by limitation.”

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