Section 136 — the law in short
What the courts have decided on section 136, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Sahara India (Firm) v CIT
Supreme CourtCuts both ways
The AO ordered a special audit of my books without hearing me first. Is that direction valid?
No. A direction under s.142(2A) carries serious civil consequences, so the assessee must be given a reasonable opportunity of being heard before it is issued, even though the section as it then stood said nothing about a hearing. The post-audit hearing under s.142(3) is no substitute, because it reaches only the audit material and not the validity of the direction.
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Karti P. Chidambaram v Deputy Director of Income Tax (Investigation)
High CourtHelps taxpayerUnder appeal
The Deputy Director (Investigation) has filed a complaint under s.276C(1) and s.277 based on material seized from third parties, with no assessment or reassessment order against me. Can that prosecution stand?
On this judgment, no. Although the Deputy Director can launch a prosecution under s.279 and although P. Jayappan holds that a prosecution need not await the assessment, the Madras High Court held that this is so where the complaint rests on the assessee's own statements under s.132(4) and incriminating material seized from him; where the material is collected from third parties and the prosecution itself treats it as merely corroborative, the Department must wait for the Assessing Officer's finding, and a complaint launched in the meantime is premature. The revisions were allowed and the prosecution held not maintainable, with liberty to the Department to act after a finding under s.153.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
