The Bombay High Court in the case of Multi Commodity Exchange of India v. DCIT by its Bench constituting of Justices Akil Kureshi and B.P. Colabawalla held that for the assessment years 2010-11 and 2011-12 unamended provisions of Section 142(2A) would apply which led to dismissing the petition.
The petitioner is a recognized Commodity Exchange, a public limited company registered under the Companies Act, 1956 and was issued a show cause notice on 5.09.2018 upon calling upon the petitioner why petitioner’s accounts for the A.Y. 2015-16 should not be sent for special audit. Upon receipt of the said notice, it was contended that there was no honest attempt on the part of the AO to understand the books of accounts of the assessee company.
The petitioner before the Hon’ble Court has challenged the order passed by Deputy Commissioner of Income Tax (DCIT) who ordered a special audit of the petitioner’s accounts for the A.Y. 2015-16 in terms of Section 142(2A) of the Income Tax Act, 1961.
The widening of the scope of Section 142(2A) inserted by Finance Act, 2013 w.e.f. 1.06.2013 was discussed. Doubts about the correctness of the accounts, multiplicity of transactions and specialized nature of business activities are some of the additional grounds, now recognized by the legislature for special audit.
After going through the scope of Section 142(2A) of the Income Tax Act, 1961, the Hon’ble Court held that “the Court did not decide the petitioner’s objection to the special audit on merits, instead proceeded on consensus. Secondly, the assessment years involved in the said orders besides others were 2010-11, 2011-12 and 2014-15. For the assessment years, 2010-11 and 2011-12 unamended provisions of Section 142(2A) would apply.” Hence, the Court did not find any merit in this petition.
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