Section 142(2A)

Section 142(2A) — the law in short

What the courts have decided on section 142(2A), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• 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.
• PCIT v Praveen Sawhney High CourtHelps taxpayerNo later treatment found
  The Department says my search assessment is in time because it made a reference to a foreign tax authority and gets a year excluded under s.153B. The reference was for years the treaty did not cover. Does the exclusion still apply?
  No. Clause (ix) of the Explanation to s.153B excludes the time taken on a reference for exchange of information only where the reference is made in terms of the agreement under s.90 or s.90A. A request made outside what the treaty permitted is not such a reference, gives no exclusion, and the assessments were time-barred. Twenty-nine Revenue appeals were dismissed.
• Manipal Education and Medical Group India Pvt Ltd v ACIT — where the s.148 reassessment falls, the s.144BA(1) and (2) GAAR notices issued inside it fall with it as consequential High CourtHelps taxpayerNo later treatment found
  The GAAR reference in my case was made inside a reassessment. If I succeed in getting the s.148A(d) order and the s.148 notice set aside, do the s.144BA notices go too, or do I have to fight them separately?
  They go with it. In a writ petition in which the Revenue itself accepted, through the Additional Solicitor General, that the matter should be remanded to the stage before the s.148 notice because the principles of natural justice had been violated, the Karnataka High Court set aside the s.148A(d) order and the s.148 notice, both dated 31 March 2022, and then quashed "all actions initiated pursuant to the above under Section 142(2A), Section 144BA(1) and Section 144BA(2) of the Act, being consequential" — naming a notice dated 21 March 2023, an order dated 30 March 2023, a notice dated 24 March 2023 for invocation of Chapter X-A and a further notice dated 26 April 2023. The matter was remanded to the Assessing Officer to begin again from the s.148A(b) stage, with thirty days to reply, and all contentions of both parties kept open.
• Nokia India P Ltd v Addl CIT High CourtHelps departmentNo later treatment found
  The special audit direction was passed inside the limitation period but served on me afterwards. Does the section 153 exclusion run from the date of the order or from the date I received it?
  From the date of the order. The Delhi High Court held that the starting point of the exclusion in clause (iii) of Explanation 1 to section 153 is the date on which the Assessing Officer directs the assessee to get the accounts audited, and not the date on which the assessee receives that direction. It also held that an order under section 142(2A) is communicated for this purpose when it is sent out, so a direction signed and despatched on the last day of limitation is in time even though it reaches the assessee later. The writ petition was dismissed and the assessment proceedings were held not to have abated.
• Delhi Development Authority v Union of India High CourtHelps taxpayerSuperseded by amendment
  The Assessing Officer has directed a special audit under s.142(2A) reciting that my accounts are voluminous and need detailed verification. Is that enough?
  No — not on that reasoning. Section 142(2A) is not a provision by which the Assessing Officer delegates to a chartered accountant the scrutiny and verification he is himself required to do. The reasons recorded must be genuine and must have a nexus with the statutory requirements, and where the officer lifted the assessee's own notes of accounts verbatim as his reasons, that disclosed non-application of mind and the directions were quashed for every year. Note the amendment: for the years before this Court (AY 2003-04 to 2009-10) the section spoke only of the nature and complexity of the accounts and the interests of the revenue, and the holding that a large number of entries is not by itself complexity is a construction of that text. The section as it now stands, substituted by the Finance Act 2023 with effect from 1 April 2023, lists volume of the accounts as an independent trigger.
• Amit Jain v DCIT, Circle (International Taxation), Jaipur ITATHelps taxpayerNo later treatment found
  I asked the Assessing Officer for more time on a section 142(1) notice and then filed the reply within the time I had asked for. He has still levied Rs 10,000 under section 272A(1)(d). Is that sustainable?
  No, on these facts. Where the assessee answered the notice by filing an adjournment request, and the Assessing Officer never rejected that request by a speaking order, the notice was attended to and there is no 'failure to comply' at all — the Tribunal deleted the Rs 10,000 penalty without needing to reach section 273B.
• Statutory position — section 158BE: the block assessment is barred twelve months from the end of the QUARTER, not the month CBDT Circulars & InstructionsCuts both ways
  The last panchnama in my client's search is dated 9 April 2025. By when must the block assessment order be passed?
  Twelve months from the end of the QUARTER in which the last of the authorisations was executed — so, on those facts, from the end of the quarter ending 30 June 2025, which gives 30 June 2026, subject to the exclusions and extensions in the section. The old Chapter ran the period from the end of the MONTH; the substituted section 158BE runs it from the end of the quarter, which can add up to nearly three months to the department's time.

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.