Income Tax

Which Accounts can be made subject to Special Audit under section 142(2A) by Assessing Officer?

The amendment in the taxation laws in 1975, brought in to existence the sub-section (2A) to section 142 of the Income tax act of India. This inserted part gives the assessing officer the power to instruct the income tax assesse to get his accounts checked by a qualified accountant as referred in the rule.

Income tax assessment in India

An income tax assesse is the one who is under the purview of the income tax department of India, for the taxes he/she has to pay to the government. After payment of the taxes, the filing of online income tax return ensures that all tax balances are correct. There are provisions for all individuals for online ITR filing whether a salaried person or a businessmen.

Section 142(2A)

The section 142(2A) is mostly concerned with businesses where for the payment of income tax it is mandatory to keep a valid record book of all transaction. The tax calculation for these businesses is quite complicated as a multitude of taxes are involved and their computation takes place under acts such as Value added tax act , services tax act etc. For registering the business under services a person has to get started by filling the service tax registration form. The Section 142(2A) is basically meant for business related individual or groups where there is high chances to puppet the income by manipulating book of accounts.

An insight of Section 142(2A)

The income tax act 1995 clearly states that in any stage of income tax proceedings by an assessing officer, if he feels the account of assesse being of a bit complex nature, he could have an opinion of order for a special audit. This order may be with the prior approval of the commissioner, and would instruct the assesse would carry out the audit of his income through an accountant which complies with the definition in sub- section (2) of section 288 and that too nominated by the commissioner. This accountant has to submit a report after the completion of the audit.

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This audit is regarded as special audit for the fact that it is above all other audits, and the situation that the firm has already been audited under income tax or any other law cannot hinder this procedural audit.

Where it can be encompassed?

This special audit cannot be given approval, in the case if the assesse furnishes an accounts book where he/she maintains all the transaction records which would appear as of complex nature to the assessing officer. So a book of records is treated as ultimate and above the Section 142(2A)

A lot of people specially businesses fiddle through their book of accounts , such a behavior if caught by the assessing officer ,then special audit on them in lieu of absence of transaction records could impose heavy penalty on them. Hence, proper payment of taxes and ITR filing online or offline should be practiced by all those who are eligible for it.

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