Sahara India (Firm) vs Commissioner of Income Tax and Another

When the matter was taken up, learned Counsel for the petitioner placed reliance on a decision of this Court in Rajesh Kumar and Others Vs. D.Commissioner of Income Tax and Others, . According to learned Counsel for the petitioner, before any direction can be issued u/s 142(2A) of the Income Tax Act, 1961 (in short "the Act") for special audit of the accounts of the assessee, there has to be a pre-decisional hearing and an opportunity has to be granted to the assessee for the purpose. A close reading of the decision shows that the observations in this regard appear to have been made in the context of the assessments in terms of Section 158BC (block assessment) of the Act. Such assessments are relatable to a case when raid has been conducted at the premises of an assessee. Had that been so, limited to the facts involved in that case, we would have negatived the contentions of learned Counsel for the petitioner. But, certain observations of general nature have been made. The effect of these observations appear to be that in every case where the assessing officer issues a direction in terms of Section 142(2A) of the Act, the assessee has to be heard before such order is passed. This does not appear to us to be the correct position of law. Therefore, we refer the matter to a larger Bench. The records be placed before the hon'ble Chief Justice of India for constituting an appropriate Bench.

In the meantime, however, the order directing special audit shall be operative and assessment proceedings, if any, shall continue subject to the outcome of the present petition.