Income-tax---

----Assessment---Auditing---Condition precedent for getting accounts verified---Sanction of CIT---Order of CIT nominating particular firm to act as accountant does not amount to sanction---Petition challenging validity of S.142(2A)---Order passed staying proceedings under S.142(2A)---Indian Income Tax Act, 1961, S. 142.

Held, that prima facie the order asking the writ petitioner to get its accounts audited in terms of section 142(2A) of the Income Tax Act, 1961, was not passed in consonance with the provisions of the section. From a plain reading of the order, it did not appear that the Assessing Officer had formed his opinion for getting the accounts verified .under the section, nor did it appear from the order, that any prior approval was obtained from the Chief Commissioner or Commissioner of Income-tax. An order, dated March 18, 1998, had been passed by the Commissioner of Income-tax, whereby he had nominated G. P. Agarwal & Co. to act as an accountant within the meaning of subsection (2A) of the section 142 of the Income Tax Act, 1961. This could not be termed as an approval as required under the section. Besides, the vires of the section had also been challenged. Hence, the proceedings under section 142(2A) had to be stayed. The interim order would continue till June 18, 1998, or until further order whichever was earlier.

Dr. D. Pal and P.K. Pal, Senior Advocates with Ms. M. Seal for Petitioner.

R. N. Mitra and J. C. Saha for Respondents.

JUDGMENT

By consent of the parties this writ application is treated as a new application. The respondents shall file affidavit-in-opposition by May 14, 1998, reply by June 8, 1998. The matter will appear in the list on the top before the appropriate Bench on June 11, 1998. Since the vires of section 142(2A) of the Income Tax Act, 1961, have been challenged in this petition, a notice together with a copy of the petitioner shall be served upon the learned Attorney-General of India by the learned Advocate on record for the writ petitioner and shall file affidavit of service at the time of hearing.

In the meantime, there will be an order in terms of prayer (f) of the petition. This interim order will continue till June 18, 1998, or until further order, whichever is earlier. The interim order is passed for the following reasons:

In my prima facie view the impugned order which is sought to be challenged asking the writ petitioner to get its accounts audited in terms of the aforesaid section 142(2A) is not passed in consonance with the provisions of the aforesaid section. From the plain reading of the impugned order, it does not appear to me that the Assessing Officer has formed his opinion as to necessity for getting the accounts verified under the aforesaid section, nor it appears from the impugned order, any prior approval was obtained from the Chief Commissioner or Commissioner of Income-tax. ~An order dated March 18, 1998, has been passed by the Commissioner of Income-tax, whereby he has nominated G.P. Agarwal & Co., to act as an accountant. within the meaning of subsection (2A) of section 142 of the Income Tax Act, 1961. In my view, this cannot be termed as an approval as required under the aforesaid section. Besides, the vires of the aforesaid section has also been challenged. Therefore, in my opinion, there is a prima facie strong case made out by the petitioner which is required to be gone into by this Court finally after completion of filing of affidavits. Mr. Mitra, learned lawyer, has drawn my attention to the orders passed by Justice M.H.S. Ansari on the very same subject-matter, whereby the auditing job was not stayed by this Court and the auditing was allowed to be continued. I have not been shown the nature of the impugned order challenged in that petition. Therefore, unless the nature of the impugned order in that case is placed before me, I cannot follow the interim order passed by Justice Ansari on January 28, 1998, and on March 10, 1998. As I have already observed prima facie, the impugned order is not in accordance with the provision of the aforesaid section 142(2A). I think it fit to grant the aforesaid interim relief.

All parties are to act on a signed xerox copy of this dictated order on the usual undertaking.

M.B.A./4010/FCOrder accordingly.