SC nullifies order for special audit u/s 142(2A) as order approving audit wasn’t communicated to assessee

Case Details: Rajiv Gandhi Proudyogiki Vishwavidyalaya v. Union of India - [2023] 146 taxmann.com 353 (SC)

Judiciary and Counsel Details

• • Sanjiv Khanna & M.M. Sundresh, JJ.
  • Sumit Nema, Sr. Adv. Piyush Parashar, Gagan Tiwari, Chanakya Sharma & Ms Chetna Bhargava, Advs. Harsh Parashar, AOR for the Appellant.
  • Arijit Prasad, Sr. Adv. Balbir Singh, ASG Rajan Kumar Choursia, Mrs Alka Agarwal, Ms Monica Benjamin, Advs. & Raj Bahadur Yadav, AOR for the Respondent.

Facts of the Case

Petitioner-University set up by the state of Madhya Pradesh, was served a show-cause notice under section 142(2A) for initiating a special audit. In response, objections raised by the petitioner were submitted to the revenue. Considering such reasons and explanations, an order confirming the special audit was passed but never served to the petitioner.

A writ petition to the Madhya Pradesh High Court was filed but all in vain. Aggrieved by the order, a petition was filed to the Supreme Court of India.

Supreme Court Held

The Apex Court held that the order under section 142(2A) was neither communicated to the petitioner nor uploaded on the portal. The written order was only placed in the order sheet file of the revenue.

The order needs to be communicated so that the petitioner gets to know the reasons for such an audit. This non-communication violates the fundamental option of the petitioner to challenge the order with higher authorities since the petitioner does not have possession of the order.

Therefore, the department was directed to issue a fresh notice or earlier issued notice which needs to be communicated to the petitioner and accordingly passed the ruling in the assessee’s favor.