Case Details: Income DCIT vs. Patanjali Ayurved Ltd. - [2025] 174 taxmann.com 170 (Delhi-Trib.)
Judiciary and Counsel Details
- Anubhav Sharma, Judicial Member & S. Rifaur Rahman, Accountant Member
- S.S. Nagar, Adv. & Gaurav Sachdeva, CA for the Appellant.
- Javed Akhtar, CIT-DR for the Respondent.
Facts of the Case
The assessee-company was engaged in trading and manufacturing of Fast Moving Consumer Goods (FMCG). While completing the scrutiny assessment, the Assessing Officer (AO) issued a show cause notice to the assessee to explain why a special audit should not be conducted. After considering the response, the AO referred the case to the CIT for approval to conduct a special audit. The CIT granted approval, and the special audit was conducted.
The assessee contended that the satisfaction for reference to Special Audit has to be recorded only by the AO and no one else. In the present case, the satisfaction was recorded by the AO and indirectly by the CIT as well and then approved by the CIT himself. Thus, the order of special audit was illegal and void ab initio.
ITAT Held
The Delhi Tribunal held that the satisfaction for reference to Special Audit has to be recorded by the AO and nobody else. In the instant case, the satisfaction was initially recorded by the AO and subsequently by the CIT as well. Subsequently, the CIT himself approved such satisfaction. Such action is not mandated in terms of section 142(2A).
Further, in terms of Section 142(2C), the initial period for furnishing the Special Audit Report has to be specified by the AO and not by the CIT, as has happened in the instant case. Since due procedure as mandated under the provisions of section 142(2A) and section 142(2C) has not been followed in this case, the order was rightly held to be void ab initio.
List of Cases Referred to
- Unitech Limited v. Addl. CIT ITA No. 5180 (para 4)
- Anirudh Sinhji Karan Sinhjl Jadeja v. State of Gujarat [1995] 5 SCC 302 (para 6.5)
- CIT v. SPL’S Siddhartha Ltd. [2012] 17 taxmann.com 138/204 Taxman 115/345 ITR 223 (Delhi) (para 6.5)
- ACIT v. Soul Space Projects Ltd. ITA No. 193/Del/2015 (para 6.6)
- Pr. CIT v. Soul Space Projects Ltd. [2023] 157 taxmann.com 272/[2024] 460 ITR 642 (Delhi) (para 6.7).
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