Validity of the reference for special audit u/s 142(2A) of the Income Tax Act

The Income Tax Appellate Tribunal (ITAT) in Chandigarh has ruled in favour of the assessee regarding the validity of a special audit reference. The assessee argued that the issue was covered by a previous ITAT decision with identical facts. The Revenue contended that the ITAT lacked jurisdiction to decide on the special audit's validity, citing a Supreme Court case. However, the Revenue could not dispute that the special audit reference was for the same purposes as in the precedent case. Consequently, all appeals filed by the assessee were allowed.

IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH ‘A’, CHANDIGARH

BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER

ITA Nos.696 to 698/Chd/2013

Assessment Year : 2003-04 to 2005-06

M/s Chet Ram Ravi Kumar,
101, New Grain Market,
Muktsar.

The D.C.I.T.,
Central Circle-III,
Ludhiana.

Assessee by : Shri Ashwani Kumar, CA &
Shri Aditya Kumar, CA

Revenue by : Smt.C.Chandrakanta, CIT

Date of Hearing : 25.08.2021

Date of Pronouncement : 04.10.2021

(Hearing through webex)

ORDER

 It was common ground that identical issue was involved in al l the above appeals, hence, the same were
taken up together for hearing and are being decided by a common order for the sake of convenience.

2. With respect to ground being argued, the Ld. Counsel for the assessee stated that the issue raised therein stood
covered in favour of the assessee by the decision of the ITAT in the case of Sunder Mal Satpal Vs. DCIT in ITA Nos.154 to 157/Chd/2013 vide order dated 15.06.2018. The Ld.Counsel for the assessee pointed out that the facts in the
case of M/s Sunder Mal Satpal (supra) were identical to the case of the assessee. He stated that the assessee had been subjected to search proceedings u/s 132 of the Act on 24.10.2007.

3. The Ld. DR, on the other hand, vehemently contested  the stand of the Ld.Counsel for the assessee. The primary
content ion being that the ITAT had no jurisdiction to decide the validity of the order for special audit and she relied
heavily on the order of the Hon'ble Apex Court in the case of Rajesh Kumar Vs. DCIT (2006) 157 Taxman 168 (SC) for the said purpose. Besides the above, she was unable to controvert the fact brought to our not ice by the Ld.Counsel
for the assessee that the reference to special audit in the impugned case was for identical purposes as in the case of
Sunder Mal Satpal (supra) vide a common letter of the AO as reproduced above.

4. In the result , al l the captioned appeals of the assessee are allowed.
Order pronounced on 4th October, 2021.

Please find attached the enclosed file for the full judgement