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In 267ITR345 the assessing officer sought various information to complete assessment correctly and such information could not be supplied by the assessee as the accounts were not maintained in such fashion. Also the business transactions were reported to be of huge size, which were conducted from 48 locations. The assessing officer without even himself examining the account books mooted a proposal for special audit to his Commissioner. The assessee went in writ before Calcutta High Court, which held that primarily the assessing officer should examine either himself or get the accounts examined by some other official subordinate to him and then apply his mind to form an opinion about the nature and complexity of the accounts. In the absence of any such examination of account books the High Court held against the revenue.

In upholding this order the Supreme Court in 287ITR91 held that the expression “complexity” in section 142(2A) would mean the state or quality of being intricate or complex or that it is difficult to understand. Difficulty in understanding would, however, not lead to the conclusion that the accounts are complex in nature. The formation of opinion under section 142(2A) that the accounts of the assessee require an expert audit should indisputably be based on objective considerations. No order can be passed on whims or caprice. All that is difficult to understand should not be regarded as complex. What is complex to one may appear simple to another. It depends upon one’s level of understanding or comprehension. Sometimes, what appears to be complex on the face of it, may not be really so if one tries to understand it carefully. Therefore, special audit should not be directed on a cursory look at the accounts. There should be an honest attempt to understand the accounts of the assessee. Also it held that the assessee should be is put to sufficient notice and heard before ordering a special audit. And for that matter for special audit reckoning u/s 142(2A) the assessee is entitled to dual opportunity of being heard one by the assessing authority before a reference and second by the approving authority vide 423ITR227.

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