1. Heard learned counsel for the parties.
2. The petitioner has filed the present writ application challenging the order dated June 28, 2002 (annexure 1 to the writ application), by which appointment of an auditor to audit its books of account for the block assessment period from April 1, 1990 to June 6, 2000, has been made.
3. The petitioner has challenged the appointment of the auditor on the ground of non-fulfilment of the requirements as contained under section 142(2A) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
4. Elaborating the submission, learned counsel for the petitioner submitted that the regular assessment proceeding has already been concluded by the assessing authority and some undisclosed income has also been included and the matter is pending before the appellate authority and in that view of the matter the appointment of the auditor is not permissible in law. He further submitted that even assuming that it is permissible under section 158BC of the Act, the requirements of the said section have not been fulfilled in this case.
5. Learned counsel appearing for the Department, on the other hand, contended that in law regular assessment proceedings and block assessment proceedings can both continue together. In this case, in pursuance of the seizure, the authorities having been prima facie satisfied that a case for block assessment has been made out, issued a notice under section 158BC of the Act. Thus, as the proceeding for block assessment is pending, the respondent authority is competent to pass the aforesaid order in terms of the aforesaid provision.
6. Section 142 of the Act deals with inquiry before assessment and section 142(2A) empowers the assessing authority during the pendency of the assessment proceeding to appoint the auditor to audit the accounts regard being had to the nature and complexity of the accounts of the assessee and the interests of the Revenue. Sections 143 and 144 of the Act contain provisions with regard to regular assessment and best judgment assessment. Section 158BC of the Act contains a special procedure with regard to block assessment. In other words, while section 143 of the Act deals with the disclosed income, section 158BC deals with undisclosed income. There are two basic requirements for appointment of an auditor as is evident from section 142(2A) of the Act. The first requirement is that a proceeding should be pending before the assessing authority. In this case, the proceeding is pending under section 158BC of the Act for block assessment and as such the first requirement is satisfied. The second requirement is that while appointing the auditor, the appointing authority has to take note of the nature and complexity of the case and the interests of the Revenue. On search, the authorities, having found a prima facie case for block assessment, came to the conclusion that it was necessary to appoint the auditor to audit the accounts. The satisfaction is of the authority concerned to order for appointment of auditor. This court in writ jurisdiction cannot judge the satisfaction of the authority when it has ordered for appointment of an auditor after taking note of the nature of the controversy in the matter.
7. In our view, the appointment of auditor does not suffer from any legal infirmity justifying interference in writ jurisdiction. Accordingly, the writ application is dismissed. However, the assessing authority will fix the remuneration which is to be paid to the auditor in this case.