Can Special Audit u/s 142(2A) be imposed in a reopened case u/s 147?

[CA Pradip Kedia]

The pre requisite for reopening is that there need to exist definite belief of quantified amount having escaped assessment based on reasons or evidences on record. It is trite that the burden of proving escapement is also on revenue. Therefore, in so far as quantified escapement based on demonstrable evidence is concerned, the special audit can not possibly be imposed since object and phraseology of S. 147 and S. 142(2A) cannot hang together.

Nevertheless, once validly reopened, the AO is also entitled u/s 147 to reassess 'any other income chargeable to tax which has escaped assessment which 'comes to his notice' subsequently in the course of proceedings u/s 147 alongside.

The debate perhaps arises here in respect of other income. The courts have consistently held that while other income can be reassessed, the roving enquiry for digging out possible other income can not be unleashed. What is set aside is underassessment and not whole of previous assessment. The jurisdiction of AO in respect of 'other income' is limited to what 'comes to his notice' which denotes sort of passiveness and shuns being proactive. He is not expected to embark of all kind of fishing enquiries on every items of income using S. 147 as a tool.

The special audit u/s 142(2A) is permitted to be invoked where books and other records are found to be voluminous or complex etc. and it is difficult to determine the correct assessed income without the additional help.

Notably, While S. 143(2)(ii) permits making equiry which he considers  "expedient"  to probe the return filed under S. 139 or S. 142(1) of the Act in the course of regular assessment, S. 147 can be invoked on after holding 'reason to believe' of escapement based on definite and relevant material and thus operates in a different field vis a vis regular assessement.

A question thus arises whether it is befitting for the AO instructed under law to engage in over reach of judicial power and  expose the Assessee to onerous special audit to dig to hilt and find out possible 'other income' probably escaped?

Another pertinent question arises here is whether the ITAT has the power to examine the action of AO in imposing special audit and consequently invalidate the action of 142(2A)?  If that being so, additional 60 days entitled to AO after receipt of special audit report for completion of assessment stands forfeited and may lead to lapse of time limit for completing reassessment in many cases !

OR WRIT IS THE ONLY REMEDY ?