Janmejay Rajnikant Vyas v. The Assistant Commissioner Of Income Tax, Central Circle 2(2

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 9331 of 2021 ==========================================================JANMEJAY RAJNIKANT VYAS VersusTHE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRALCIRCLE 2(2) ========================================================== Appearance: MRS SWATI SOPARKAR(870) for the Petitioner(s) No. 1M R BHATT & CO.(5953) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANIandHONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 23/11/2021 ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) The petitioner by way of this present petition underArticle 226 of the Constitution of India challenges theorder disposing of the objections, passed by therespondent under Section 142(2A) of the Income Tax Act(hereinafter referred to as the ‘Act’) dated 8.4.2021 asalso the directions issued dated 22.4.2021 directing thepetitioner to get the accounts audited by an Accountantunder the provisions of Section 142(2A) for the A.Y2014-2015 to 2020-2021, being the act beyond thescope of provisions of IT Act and for the same beingallegedly illegal and contrary to the principles of naturaljustice. 2. According to the petitioner, she derives incomefrom salary, capital gains and from other sources.Search seizure and survey actions were conducted underSections 132/133A in “DISHMAN Group” on 19.12.2019and continued on subsequent dates. Various materials,documents, and voluminous data have been seized atpremises of the Company as also the residentialpremises of the petitioner. 3. On 8.2.2021 and 11.2.2021, the respondent issuednotices under Section 142(1), seeking numerous details.At that time the assessment was getting time barred on31.3.2021. Thereafter on 27.2.2021 the due date of theassessment was extended to 30.9.2021. As the detailsconcerned a span of 7 years, the petitioner submittedthose details after compiling the same. 4. It is averred that the respondent issued the noticeunder Section 142(2A) on 19.3.2021 and furnished thesatisfaction drawn to refer the case to the independentauditor. 5.The petitioner objected to the same and also soughtthe statements as well as the materials to resist thisaction by filing reply to the show cause notice. On31.3.2021, the petitioner received the communicationfrom respondent to collect the copies of requisitedocument on or before 1.4.2021 through the authorisedrepresentative. On 5.4.2021 the petitioner informed the respondent that the copies of statement were notprovided and on 6.4.2021, the petitioner was providedwith the copies of statement of only Mr. Bharat Padiaand Chirag Thakkar and not of Mr. Rajiv Shah.Therefore, on 7.4.2021 the petitioner wrote a letterseeking copies of seized materials from Rajiv Shah andfindings of investigation wing. Instead of providinginvestigation papers to the petitioner, the respondentpassed order on 8.4.2021 disposing off the objections. 6.The respondent issued the direction under Section142(2A) on 22.4.2021. Therefore, the present petition ispreferred with following prayers: “7.(a) quash and set aside the impugned order dated8.4.2021 at Annexure A1 to this petition. (b) quash and set aside the impugned directions of22.4.2021 at Annexure A2 to this petition. (c ) pending the admission, hearing and final disposal ofthis petition, to stay implementation and operation of theimpugned directions of 22.4.2021 at Annexure A2 to thispetition. (d) any other and further relief deemed just and properbe granted in the interest of justice; (e) to provided for the cost of this petition.” 7.This Court on 25.6.2021 while issuing the noticeand making it returnable on 12.7.2021 passed thefollowing order: “1. Notice, returnable on 12th July 2021. “7.(a) quash and set aside the impugned order dated8.4.2021 at Annexure A1 to this petition. (b) quash and set aside the impugned directions of22.4.2021 at Annexure A2 to this petition. (c ) pending the admission, hearing and final disposal ofthis petition, to stay implementation and operation of theimpugned directions of 22.4.2021 at Annexure A2 to thispetition. (d) any other and further relief deemed just and properbe granted in the interest of justice; (e) to provided for the cost of this petition.” 7.This Court on 25.6.2021 while issuing the noticeand making it returnable on 12.7.2021 passed thefollowing order: “1. Notice, returnable on 12th July 2021. 2. It is submitted by learned advocate Mr. Bandish Soparkar for Mrs.Swati Soparkar for the petitioner that the impugned order passed by the respondent authority is ex facie bad and has been passed withoutany application of mind inasmuch as, the powers under section 142(2A)of the Income Tax Act, 1961 could be exercised by the AssessingOfficer 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 specialised nature ofbusiness activity of the assessee, however, in the instant case, thepetitioner has income from salary, capital gains and income from othersources and therefore, she is neither obliged to maintain any books ofaccount nor has maintained any the books of account. Under thecircumstances, the respondent could not have directed the petitioner toget her books of account audited by the nominated auditor. Hesubmitted that the said objection was also raised by the petitionerbefore the concerned authorities. 3. Having regard to the above submissions, the operation andimplementation of the impugned direction under section 142(2A) ofthe IT Act dated 22.04.2021 in case of the petitioner, is stayed tillthe returnable date.” 8.The Court also protected the petitioner by staying theoperation and implementation of the directions issued underSection 142(2A) of the I.T Act. 9.Learned Senior Advocate Mr. M.R Bhatt on 25.10.2021made a request that in four other matters of the group company,the auditor has already tendered the report and he, therefore,made a request to modify the order which was the reason for theauditor not to complete his task in relation to the present petition. 9.1Two of these matters were concluded before this Courtreported in (2020): 118 taxmann.com 444 (Gujarat) (2019)418 ITR 596 and these decisions were challenged before theApex Court and therefore, this Court modified order of staydated 25.10.2021 in the following manner : 10. Without prejudice to the right of the petitioner, the orderof stay is modified this wise:- “ The Special Auditor shall confine himself to the scope ofSection 142(2A) of the Income Tax Act read with Rule 14(A)and Form 6(B) of the Income Tax Rules. The petitioner shall co-operate in the inquiry proceedings being conducted by theSpecial Auditor.” 11. We notice that the affidavit-in-reply on behalfof the respondent is filed by one Mr Brijlal Meena, CIT CentralCircle II, Ahmedabad where all the averments have beendenied categorically. According to the respondent, theAssessing Officer noted the existence of various factors whichincluded the nature and complexity of accounts, volume ofaccounts, the correctness of accounts multiplicity of transactionin the accounts so also the specialised nature of businessactivities of the assessee and therefore, the issue with regardto the non-maintenance of books of accounts would have nobearing according to the respondent. It also sought to relyupon the decision of Tehmul Burjor Sethna reported in(2019) 418 ITR 596. 11. We notice that the affidavit-in-reply on behalfof the respondent is filed by one Mr Brijlal Meena, CIT CentralCircle II, Ahmedabad where all the averments have beendenied categorically. According to the respondent, theAssessing Officer noted the existence of various factors whichincluded the nature and complexity of accounts, volume ofaccounts, the correctness of accounts multiplicity of transactionin the accounts so also the specialised nature of businessactivities of the assessee and therefore, the issue with regardto the non-maintenance of books of accounts would have nobearing according to the respondent. It also sought to relyupon the decision of Tehmul Burjor Sethna reported in(2019) 418 ITR 596. 11.1. It is further contended by the respondent that theprinciples of natural justice have been adhered to fully and duesatisfaction has been arrived at with respect to the referencewhich was to be made to the special audit. 11.2. According to the respondent, the search, seizure andsurvey actions under Section 132A were conducted on the‘Dishman Group’ and during the course of the said actions, thevoluminous incriminating material/documents were found andduring the search proceedings the digital evidence in the form of hard drive, mobile data and other such devices were foundand seized. The total volume of digital data runs into morethan 50 plus HD drive of 1 TB each and there is also SAPsoftware data. The loose material itself seized during the courseof action ran into more than 22,000 pages. The petitioner isaverred to be a key person in the ‘Dishman Group’ and,therefore, the satisfaction, according to the respondent, hasbeen correctly reached and the principles of natural justicehave been duly complied with and hence, the petition deservesto be rejected in summary. 11.3. All the grounds which have been raised including lack ofjurisdiction while initiating proceedings under Section 142(2A)have been duly dealt with. It is urged that the contentionsraised of lack of jurisdiction are bereft of any merit. It isfurther contended by the respondent that the petitioner wasfirstly provided the opportunity to explain the entiretransaction from the material which has been seized. However,he has chosen to remain silent and has not complied with thestatutory notices issued under Section 142(1) of the Act. Inabsence of any specific explanation on behalf of the petitionerand considering the complexity of material realised by theauthority and alleged bogus accomodative transaction as couldbe culled out from the data base, old case records anddocuments seized, without the aid and assistance of specialAuditor, the Assessing Officer could not have understood fullyall necessary aspects. 11.4 According to the respondent, the transaction entered into by the petitioner is highly webbed and cohesive, leading tothe difficulties in understanding the same and arriving at trueand clear picture without any assistance of a special auditor. 12.The respondent additionally demonstrated in SCA No.7620 of 2021, the case of Dishman Carbogen Amcis Limited,where terms of reference has been formulated. A chartdepicting relevancy thereof to the provisions of Section 142(2A) read with Form 6B also have been filed. It is reiterativelyemphasised that the nomenclature of the books of accountswould include the seized documents, in the form of soft copies,pen drive,seized papers etc. 13.Affidavit-in-rejoinder is filed for on behalf of thepetitioner, according to whom there are no books of accountsfor A.Y 2014-2015 to 2020-2021 and hence, there is no questionof complexity and volume of accounts and therefore, thereference under Section 142(2A) has no basis and the terms ofreference issued under Section 142(2A) of the Act as well asall the proceedings pursuant thereto are void and bad in law. 13.Affidavit-in-rejoinder is filed for on behalf of thepetitioner, according to whom there are no books of accountsfor A.Y 2014-2015 to 2020-2021 and hence, there is no questionof complexity and volume of accounts and therefore, thereference under Section 142(2A) has no basis and the terms ofreference issued under Section 142(2A) of the Act as well asall the proceedings pursuant thereto are void and bad in law. 14.It is further the say of the petitioner in hisrejoinder that if the Assessing Officer has no assistance tounderstand the seized documents after a search action, anappraisal report is made by the ADIT/DDIT(Inv) after a searchwhich sends the same to the Assessing Officer for the verysame assessment purpose. The report would encompasscomplete and thorough analysis of the seized documents bythe ADIT/DDIT. Therefore, the delegation of work of both the Investigating Officer as well as Assessing Officer upon theSpecial Auditor is bad. The DDIT (Inv.), Unit 1(3), Ahmedabadhas quantified undisclosed income of Rs 3,949 crores which therespondent himself has relied upon in his satisfaction note.Rest of all the contentions raised have been deniedemphatically. 15. We have heard extensively the learned Advocate MrBandish Soparkar for the petitioner who has emphaticallyargued before us questioning the very jurisdiction of theofficer in resorting to the provisions under Section 142(2A).According to him, the petitioner is not required to maintain thebooks of accounts. 16. Except a thin connection in one of the papers seized atthe time of search and seizure and survey actions at thecompany premises, there is nothing to involve the petitionerwho is not even expected under the law to maintain the booksof accounts. Therefore, if at all the Assessing officer neededany assistance, a separate machinery is created by thedepartment where the analysis of the seized material by way ofa appraisal report can be looked into. It is contended that thedefinition of the books of accounts under Section 2(12A) of theAct would not include the documents, loose papers, materialsetc. It is further the say of the learned Advocate for thepetitioner that the two of the matters which have been decidedby this Court were relating to the search and seizure carriedout at the premises of the company and the concernedcompany itself, while in the instant case it is the person in whose relation even some material is noticed, the reference tothe special auditor is completely undesirable and is without anyjurisdiction. Here it is not a case of initiating the actionsunder Section 153(c) nor would the petitioner question theproceedings as may be initiated against the petitioner.However this reference under Section 142(2A) is completelywithout jurisdiction and misplaced. He therefore, emphasisedthat non-entertainment of the other petitions would have nobearing so far as the present petition is concerned. It is alsopointed out to this Court as to how in case of the company aswell as the two other petitioners being Special Civil ApplicationNo. 9331 of 2021 and Special Civil Application 11249 of 2021,the Special Auditor has come out with the report. Thecomplete protection given by this Court in relation to thepresent petitioner had not made it feasible for the SpecialAuditor to work in her connection and there is a complete co-operation offered inasmuchas a software SAP used as pagesoftware which is being made available to the team. Allfacilities and amenities have been offered and the officer hascarried out scrutiny, sitting in the premises of the company.It is further urged that so far as the name of the presentpetitioner is concerned is only restricted to B6 and no whereit is shown by the respondents that there is any complexity ormultiplications so far as the accounts of the petitioner areconcerned. He has questioned the jurisdiction to assess thepetition but for special audit serious objection is raised. It isfurther his say that the objections which have been disposed ofare also done mechanically without individually examining thecase of the petitioner . 17. Learned Senior Advocate Mr. Bhatt has taken usthrough the entire material and urged that the person wisesegregation is difficult from the voluminous material foundfrom the premises of the company and also from theresidential premises. The petitioner, her son and husband aswell as three more persons are key persons. The materialunearthed would surely require the special audit as they arecomplicated details. The provision of law would permit suchreference. According to him, the name of the petitioner is quiteapparently being found from the seized material. The loosepapers when scrutinised unaccounted income is also revealed.The specialised nature of the accounts which also wouldentitle the exercise of powers under Section 142(2A) of the I.TAct. He has also pointed out from the averments raised in thepetition to urge that the petitioner has taken a vault facewhile taking a stand that Section 142 (2A) would not have anyapplicability in the case. It is further urged that matter whichhas been decided by the co-ordinate Bench, reported in(2020)118 Taxmann.com 444 would have a direct bearing onthe case as the terms of reference in all the matters areidentical. According to him the challenge was made by theCompany in the case of Dishman Carbogen Amcis Ltd., by wayof Special Leave to Appeal (C) 15782 of 2021 and the same hasbeen dismissed. 18.After hearing the learned counsels on both the sides, theCourt chose not to interfere with the judgment and order ofthis Court. 18.After hearing the learned counsels on both the sides, theCourt chose not to interfere with the judgment and order ofthis Court. 19. Thus, having heard both sides and also on extensivelyconsidering the material which has been placed before thisCourt and so also noticing the decision of this Court in case ofDishmangroup Vs Assistant Commissioner (supra), at theoutset challenge which has been made by the petitioner woulddeserve attention. The petitioner is not questioning thejurisdiction of the Assessing Officer to assess the petitioner inrelation to the material which has been seized on the search ofthe premise of the company as well as the residence, however,for reference to the special audit the serious issue has beenraised. The satisfaction arrived at while disposing of theobjections is under challenge and thus essentially is on theground that Section 142 (2A) does not permit any referenceand search in relation to the company. 20.It would be apt to reproduce Section 142 (2A) whichread as under : 142 (2A)If, at any stage of the proceedings before him,the7Assessing] Officer, having regard to the nature and complexityof the accounts of the accounts , volume of the accounts, doubts aboutthe correctness of the accounts, multiplicity of transaction inaccounts, or specialized nature of business activities of the assesseeand the interests of the revenue, is of the opinion that it is necessaryso to do, he may, with the previous approval of the9ChiefCommissioner or Commissioner], direct the assessee to get theaccounts audited by an accountant as defined in the Explanationbelow sub- section (2) of section 288, nominated by the9ChiefCommissioner or Commissioner] in this behalf and to furnish a reportof such audit in the prescribed form duly signed and verified by suchaccountant and setting forth such particulars as may be prescribedand such other particulars as the10Assessing] Officer may require. 21.At this stage, under the heading of the inquiry beforeassessment provides that at any stage of proceeding beforethe A.O having regard to the nature and complexity of theaccounts, volume of accounts, doubts about the correctness ofthe accounts, multiplicity of the transactions in the account orspecialised nature of business activity of assessee and in theinterest of the revenue, is of the opinion that it is necessaryto get the accounts audited by an Accountant, as defined inthe explanation below sub section 2 of section 288 with aprevious approval of the Principal Chief Commissioner orChief Commissioner or Principal Commissioner orCommissioner, can direct the assessee to get the accountsaudited by an Accountant and infer and direct to furnish thereport of such audit in the prescribed form duly signed andverified by such Accountant by setting forth such particularsas may be prescribed. It is quite clear from the very provisionsthat it is a discretion to be used by the A.O at any stage ofproceedings before them. He needs to arrive at a satisfactionthat the nature and complexity of the accounts its volume, itscorrectness the multiplicity of transactions or the specialisednature of activity of the assessee are such in the interest of therevenue, he may have to get the accounts audited by anAccountant as defined under Subsection 2 of Section 288.Explanation to sub Section 2 of Section 288 says thatAccountant would mean chartered accountant as defined inclause (b) of sub section 1 of Section 2 of the CharteredAccountant’s Act, 1949, who holds a valid certificate ofpractice under Sub Section (1) of Section 6. 22. The very issue came up for consideration before thisCourt in case Tehmul Burjor Sethna Vs AssistantCommissioner of Income Tax Cirle 1(1) reported in(2020) 118 taxmann.com 444 (Gujarat) ;(2019) 418 ITR596, reference of the same would be necessary at thisjuncture. 22. The very issue came up for consideration before thisCourt in case Tehmul Burjor Sethna Vs AssistantCommissioner of Income Tax Cirle 1(1) reported in(2020) 118 taxmann.com 444 (Gujarat) ;(2019) 418 ITR596, reference of the same would be necessary at thisjuncture. 23. It was the case where the petitioner was a practisingChartered Accountant and was filing regular return ofincome. The source of income of the petitioner was from houseproperty, remuneration from partnership firm, capital gain andother resources. It was his case that he was not required toprepare the personal books of accounts nor was he oblidgedto maintain books of accounts under any of the provisions ofthe Income Tax Act. A search operation came to be conductedat the residence and the office premises of the petitionerpursuant to which the notice under Section 153 (A) of the Acthad been issued for assessment years 2011-2012 to 2016-2017. The case of the petitioner was that the respondent hadissued the show cause notices raising various queries towhich he had replied. However, the respondent issued anotice under Section 142 (2A )to the petitioner proposing toget the petitioner’s account audited for the assessment year2011-2012 to 2017-2018 by an Accountant as defined underthe explanation to Section 288(2) and nominated by PrincipalCommissioner, Income Tax, Ahmedabad for the purpose. Thepetitioner had raised objections to the said proposal of Specialaudit under Section 142(2A) and objections were disposed of by the respondent wherein he was permitted a personalhearing also in relation to the same and he communicatedthe request for dropping the show cause notice issued forproposal of special audit. The very ground which is raised bythe petitioner in the present petition, he had raised statingthat he being a partner of a firm is not statutorily requiredto maintain the books of accounts and after scrutinyassessment for the earlier years, his assessment has beenaccepted by the department and thus, the basic condition forinvocation of powers under Section 142 (2A) is not satisfied.The respondent lacks jurisdiction to exercise this power ofSection 142 (2A). It was also contended that in absence ofaccounts the question of examining complexity in accountssimply would not arise and the A.O has not even called forthe books of accounts at any point of time. It is furthersubmitted that the A.O was aware of the fact that the petitionerwas neither maintaining the books of accounts nor requiredto maintain the books of accounts and he has furnished theyear wise statement of affairs, income and expenditure receiptand payments and there was nowhere any revelation in whatmanner the nature of complexity would drive the officer torefer the matter to the special audit. All these have been dealt with by this Court extensivelyin the following manner negating these contentions: All these have been dealt with by this Court extensivelyin the following manner negating these contentions: 1. At this stage, it may be germane to refer to the provisions of section142 of the Act, which read thus: 142. Enquiry before assessment.— (1)For the purpose of making an assessment under this Act, the AssessingOfficer may serve on any person who has made a return under Section115-WD or Section 139 or in whose case the time allowed under sub-section (1) of Section 139 for furnishing the return has expired a noticerequiring him, on a date to be therein specified,— (i) where such personhas not made a return within the time allowed under sub-section (1) ofSection 139 or before the end of the relevant assessment year, to142 of the Act, which read thus: 142. Enquiry before assessment.— (1)For the purpose of making an assessment under this Act, the AssessingOfficer may serve on any person who has made a return under Section115-WD or Section 139 or in whose case the time allowed under sub-section (1) of Section 139 for furnishing the return has expired a noticerequiring him, on a date to be therein specified,— (i) where such personhas not made a return within the time allowed under sub-section (1) ofSection 139 or before the end of the relevant assessment year, to furnish a return of his income or the income of any other person inrespect of which he is assessable under this Act, in the prescribed formand verified in the prescribed manner and setting forth such otherparticulars as may be prescribed, or: Provided that where any noticehas been served under this sub-section for the purposes of this clauseafter the end of the relevant assessment year commencing on or afterthe 1st day of April, 1990 to a person who has not made a return withinthe time allowed under sub-section (1) of Section 139 or before the endof the relevant assessment year, any such notice issued to him shall bedeemed to have been served in accordance with the provisions of thissubsection. (ii) to produce, or cause to be produced, such accounts ordocuments as the Assessing Officer may require, or (iii) to furnish inwriting and verified in the prescribed manner information in such formand on such points or matters (including a statement of all assets andliabilities of the assessee, whether included in the accounts or not) asthe Assessing Officer may require: Provided that— (a) the previousapproval of the Joint Commissioner shall be obtained before requiringthe assessee to furnish a statement of all assets and liabilities notincluded in the accounts; (b) the Assessing Officer shall not require theproduction of any accounts relating to a period more than three yearsprior to the previous year. (2) For the purpose of obtaining fullinformation in respect of the income or loss of any person, theAssessing Officer may make such enquiry as he considers necessary. (2-A) If, at any stage of the proceedings before him, the Assessing Officer,having regard to the nature and complexity of the accounts, volume ofthe accounts, doubts about the correctness of the accounts, multiplicityof transactions in the accounts or specialised nature of business activityof the assessee, and the interests of the revenue, is of the opinion thatit is necessary so to do, he may, with the previous approval of thePrincipal Chief Commissioner or Chief Commissioner or PrincipalCommissioner or Commissioner, direct the assessee to get the accountsaudited by an accountant, as defined in the Explanation below sub-section (2) of Section 288, nominated by the Principal ChiefCommissioner or Chief Commissioner or Principal Commissioner orCommissioner in this behalf and to furnish a report of such audit in theprescribed form duly signed and verified by such accountant andsetting forth such particulars as may be prescribed and such otherparticulars as the Assessing Officer may require: Provided that theAssessing Officer shall not direct the assessee to get the accounts soaudited unless the assessee has been given a reasonable opportunity ofbeing heard. (2-B) The provisions of sub-section (2-A) shall have effectnotwithstanding that the accounts of the assessee have been auditedunder any other law for the time being in force or otherwise. (2-C)Every report under sub-section (2-A) shall be furnished by the assesseeto the Assessing Officer within such period as may be specified by theAssessing Officer: Provided that the Assessing Officer may, suo motu,or on an application made in this behalf by the assessee and for anygood and sufficient reason, extend the said period by such furtherperiod or periods as he thinks fit;so, however, that the aggregate of theperiod originally fixed and the period or periods so extended shall not,in any case, exceed one hundred and eighty days from the date onwhich the direction under sub-section (2-A) is received by the assessee.(2-D) The expenses of, and incidental to, any audit under sub-section (2-A) (including the remuneration of the accountant) shall be determinedby the Principal Chief Commissioner or Chief Commissioner orPrincipal Commissioner or Commissioner (which determination shall be final) and paid by the assessee and in default of such payment, shall berecoverable from the assessee in the manner provided in Chapter XVII-D for the recovery of arrears of tax: Provided that where any directionfor audit under subsection (2-A) is issued by the Assessing Officer on orafter the 1st day of June, 2007, the expenses of, and incidental to, suchaudit (including the remuneration of the Accountant) shall bedetermined by the Principal Chief Commissioner or Chief Commissioneror Principal Commissioner or Commissioner] in accordance with suchguidelines as may be prescribed and the expenses so determined shallbe paid by the Central Government. (3) The assessee shall, exceptwhere the assessment is made under Section 144, be given anopportunity of being heard in respect of any material gathered on thebasis of any enquiry under sub-section (2) or any audit under sub-section (2-A) and proposed to be utilised for the purposes of theassessment. (4) The provisions of this section as they stood immediatelybefore their amendment by the Direct Tax Laws (Amendment) Act,1987 (4 of 1988), shall apply to and in relation to any assessment forthe assessment year commencing on the 1st day of April, 1988, or anyearlier assessment year and references in this section to the otherprovisions of this Act shall be construed as references to thoseprovisions as for the time being in force and applicable to the relevantassessment year. 11.1 Sub-section (2A) of section 142 of the Act cameto be amended by the Finance Act, 2013, prior thereto, it reads thus:“(2A) If, at any stage of the proceedings before him, the AssessingOfficer, having regard to the nature and complexity of the accounts ofthe assessee and the interests of the revenue, is of the opinion that it isnecessary so to do, he may, with the previous approval of the ChiefCommissioner or Commissioner, direct the assessee to get the accountsaudited by an accountant, as defined in the Explanation below sub-section (2) of section 288, nominated by the Chief Commissioner orCommissioner in this behalf and to furnish a report of such audit in theprescribed form duly signed and verified by such accountant andsetting forth such particulars as may be prescribed and such otherparticulars as the Assessing Officer may require.” 12. In the context ofthe unamended provisions of section 142(2A) of the Act, the SupremeCourt in Sahara India (Firm) (1) v. Commissioner of Income Tax, (2008)14 SCC 151, held thus: “6. A bare perusal of the provisions of sub-section (2- A) of the Act would show that the opinion of the assessingofficer that it is necessary to get the accounts of the assessee auditedby an accountant has to be formed only by having regard to: (i) thenature and complexity of the accounts of the assessee; and (ii) theinterests of the Revenue. The word “and” signifies conjunction and notdisjunction. In other words, the twin conditions of “nature andcomplexity of the accounts” and “the interests of the Revenue” are theprerequisites for exercise of power under Section 142(2-A) of the Act.Undoubtedly, the object behind enacting the said provision is to assistthe assessing officer in framing a correct and proper assessment basedon the accounts maintained by the assessee and when he finds theaccounts of the assessee to be complex, in order to protect the interestsof the Revenue, recourse to the said provision can be had. 7. The word“complexity” used in Section 142(2-A) is not defined or explained in theAct. As observed in Swadeshi Cotton Mills Co. Ltd. v. CIT, (1998) 171ITR 634, it is a nebulous word. Its dictionary meaning is: “ ‘The stateor quality of being intricate or complex “or” that is difficult tounderstand.’ However, all that is difficult to understand should not beregarded as complex. What is complex to one may be simple to another. It depends upon one’s level of understanding or comprehension.Sometimes, what appears to be complex on the face of it, may not bereally so if one tries to understand it carefully.” (emphasis supplied)Thus, before dubbing the accounts to be complex or difficult tounderstand, there has to be a genuine and honest attempt on the partof the assessing officer to understand accounts maintained by theassessee; appreciate the entries made therein and in the event of anydoubt, seek explanation from the assessee. But opinion required to beformed by the assessing officer for exercise of power under the saidprovision must be based on objective criteria and not on the basis ofsubjective satisfaction. 8. There is no gainsaying that recourse to thesaid provision cannot be had by the assessing officer merely to shift hisresponsibility of scrutinising the accounts of an assessee and pass onthe buck to the special auditor. Similarly, the requirement of previousapproval of the Chief Commissioner or the Commissioner in terms ofthe said provision being an inbuilt protection against any arbitrary orunjust exercise of power by the assessing officer, casts a very heavyduty on the said high-ranking authority to see to it that the requirementof the previous approval, envisaged in the section is not turned into anempty ritual. Needless to emphasise that before granting approval, theChief Commissioner or the Commissioner, as the case may be, musthave before him the material on the basis whereof an opinion in thisbehalf has been formed by the assessing officer. The approval mustreflect the application of mind to the facts of the case.” 13. In RajeshKumar v. Commissioner of Income Tax, (2007) 2 SCC 181, the SupremeCourt held thus: “11. We may at the outset notice that the following arethe relevant factors for invoking Section 142(2-A) the Act: (i) thenature of accounts, (ii) complexity of accounts, and (iii) interest of theRevenue. 12. The formation of opinion of the assessing officer must beon the premise that while exercising his power regard must be had tothe factors enumerated therein. The use of the word “and” shows that itis conjunctive and not disjunctive. All the aforementioned factors areconjunctively required to be read. The formation of opinion indisputablymust be based on objective consideration. 13. The expression“complexity” would mean the state or quality of being intricate orcomplex or that it is difficult to understand. Difficulty in understandingwould, however, not lead to the conclusion that the accounts arecomplex in nature. No order can be passed on whims or caprice.” 14.However, with effect from 1st June, 2013, the words “the nature andcomplexity of the accounts of the assessee and” came to be substitutedby the words “the nature and complexity of the accounts, volume of theaccounts, doubts about the correctness of the accounts, multiplicity oftransactions in the accounts or specialised nature of business activity ofthe assessee, and”. 15. While prior to its amendment, sub-section (2A)of section 142 of the Act could be invoked only upon considering twofactors, viz., the nature and complexity of the accounts of the assesseeand the interests of the revenue, now the Assessing Officer can invokethe said sub-section if he is of the opinion that having regard to: (i) thenature and complexity of the accounts, (ii) volume of the accounts, (iii)doubts about the correctness of the accounts, (iv) multiplicity oftransactions in the accounts or (v) specialised nature of businessactivity of the assessee, and the interests of the revenue, it is necessaryso to do. 16. Thus, apart from the nature and complexity of theaccounts, there are four other contingencies under which the AssessingOfficer can invoke the provision. Out of these five contingencies, whilefour refer to accounts, the fifth is independent and refers only to specialised nature of business activity of the assessee. 17. At thisjuncture, it may be germane to refer to the explanatory notes to theprovisions of the Finance Act, 2013 issued by the Central Board ofDirect Taxes vide Circular No.03/2014 dated 24th January, 2013, whichto the extent the same are relevant for the present purpose, read thus:“35. Direction for special audit under sub-section (2A) of section 14235.1 Sub-section (2A) of section 142 of the Income-tax Act, before itsamendment by the Act, inter-alia, provided that if at any stage of theproceedings, the Assessing Officer having regard to the nature andcomplexity of the accounts of the assessee and the interests of therevenue, is of the opinion that it is necessary so to do, he may, with theapproval of the Chief Commissioner or Commissioner, direct theassessee to get his accounts audited by an accountant and to furnish areport of such audit in the prescribed form. The expression “nature andcomplexity of the accounts” has been interpreted in a very restrictivemanner by various courts. 35.2 Sub-section (2A) of section 142 hasbeen amended to provide that if at any stage of the proceedings beforehim, the Assessing Officer, having regard to the nature and complexityof the accounts, volume of the accounts, doubts about the correctnessof the accounts, multiplicity of transactions in the accounts orspecialized nature of business activity of the assessee, and the interestsof the revenue, is of the opinion that it is necessary so to do, he may,with the previous approval of the Chief Commissioner or theCommissioner, direct the assessee to get his accounts audited by anaccountant and to furnish a report of such audit in the prescribed form.35.3 Applicability: – This amendment takes effect from 1st June, 2013.”18. Thus, it is the restrictive interpretation of the expression “natureand complexity of the accounts” by various courts that has occasionedthe amendment, evidently, therefore, the intention of the legislaturewas to widen the scope and ambit of sub-section (2A) of section 142 ofthe Act. The scope and ambit of sub-section (2A) of section 142 of theAct has, therefore, become wider upon its amendment with effect from1 st June, 2013 and cannot be construed in the same restrictive manneras it was prior to its amendment. 19. As noted hereinabove, sub-section(2A) of section 142 of the Act can be invoked having regard to thenature and complexity of the accounts, volume of the accounts, doubtsabout the correctness of the accounts, multiplicity of transactions in theaccounts or specialised nature of business activity of the assessee.Thus, four contingencies in which section 142(2A) of the Act can beinvoked, relate to accounts. 20. The question that then arises forconsideration is what meaning has to be assigned to the expression“accounts”. The expression “account” has been defined in the Black’sLaw Dictionary to mean thus: “A detailed statement of the mutual demands in the nature of debit and credit between parties, arising outof contracts or some fiduciary relation. A statement in writing, of debitsand credits, or of receipts and payments, a list of items of debits andcredits, with their respective dates. A statement of pecuniarytransactions; a record or course of business dealings with parties; a listor statement of monetary transactions, payable, accounts receivable,etc. in most cases showing a balance or result of comparision betweenitems of an opposite nature”. In P. Ramanatha Aiyar’s Law Lexicon,“account” has inter alia been defined to mean: (i) a statement ofmoneys received and paid with calculation and balance, (ii) a formalrecord of debts and credits relating to the person named or captionplaced at the head of the ledger account, (iii) computation, and (iv) astatement of fact or occurrence. Thus, the expression “account” also takes within its ambit a statement of pecuniary transactions, a recordor course of dealings with parties as well as computation. Theexpression “accounts”cannot be read to mean ‘books of account’ whichare statutorily required to be maintained by certain classes ofassessees, but has to be given a wider meaning. 21. It is the case of thepetitioner that he does not maintain any personal books of account ashe is statutorily not required to maintain the same. In effect andsubstance, therefore, the petitioner seeks to equate the expression“accounts” with “books or books of account” as contemplated undersection 2(12A) of the Act. However, as rightly submitted by the learnedcounsel for the respondents, the expression used in the sub-section is“accounts” and not “books of account”, and had the legislature sointended, it would have employed the expression “books of account”instead of “accounts”. In CBI v. V.C. Shukla (supra), the SupremeCourt though dealing with a case relating to section 34 of the IndianEvidence Act, had occasion to construe the scope and ambit of theexpression “account”. The Court held thus: “20. Mr Sibal, the learnedcounsel for the Jains, did not dispute that the spiral notebooks and thesmall pads are “books” within the meaning of Section 34. He, however,strongly disputed the admissibility of those books in evidence under theaforesaid section on the ground that they were neither books ofaccount nor were they regularly kept in the course of business. Hesubmitted that at best it could be said that those books werememoranda kept by a person for his own benefit. According to MrSibal, in business parlance “account” means a formal statement ofmoney transactions between parties arising out of contractual orfiduciary relationship. Since the books in question did not reflect anysuch relationship and, on the contrary, only contained entries of moniesreceived from one set of persons and payment thereof to another set ofpersons it could not be said, by any stretch of imagination that theywere books of account, argued Mr Sibal. He next contended that even ifit was assumed for argument’s sake that the above books were books ofaccount relating to a business still they would not be admissible underSection 34 as they were not regularly kept. It was urged by him thatthe words “regularly kept” mean that the entries in the books werecontemporaneously made at the time the transactions took place but acursory glance of the books would show that the entries were madetherein long after the purported transactions took place. In support ofhis contentions he also relied upon the dictionary meanings of thewords “account” and “regularly kept”. 21. The word “account” has beendefined in Words and Phrases, Permanent Edn., Vol. I-A at pp. 336 to338 to mean (i) a claim or demand by one person against anothercreating a debtor-creditor relation; (ii) a formal statement in detail oftransactions between two parties arising out of contracts or somefiduciary relation. At p. 343 of the same book the word has also beendefined to mean the preparation of record or statement of transactionslike; a statement and explanation of one’s administration or conduct inmoney affairs; a statement or record of financial transactions, areckoning or computation; a registry of pecuniary transactions or areckoning of money transactions; a written or printed statement ofbusiness dealing or debits and credits; or a certain class of them. It isthus seen that while the former definitions give the word “account” arestrictive meaning the latter give it a comprehensive meaning.Similarly is the above word defined, both restrictively and expansively,in Black’s Law Dictionary (Sixth Edn.) to mean: “A detailed statementof the mutual demands in the nature of debit and credit between parties, arising out of contracts or some fiduciary relation. A stateme