77. Inserted by the IT (Second Amdt.) Rules, 1977.

Object and purpose of getting audit report under both section 142(2A) and section 44AB are almost same; special audit under section 142(2A) can be resorted to in case of any assessee, if conditions mentioned therein are fulfilled, irrespective of limit of annual turnover, whereas compulsory audit under section 44AB is required in cases where income of assessee exceeds limit stipulated therein - West Bengal State Co-operative Bank Ltd. v. Joint CIT [2004] 138 Taxman 238/267 ITR 345 (Cal.). Power to direct audit cannot be exercised after a mere cursory look at the accounts; there should be an honest attempt to understand the accounts - Swadeshi Cotton Mills Co. Ltd. v. CIT [1988] 171 ITR 634 (All.). Power can be exercised even if accounts have been audited under any other law - Jagatjit Sugar Mills Co. Ltd. v. CIT [1994] 210 ITR 468/74 Taxman 8 (Punj. & Har.). See also Gurunanak Enterprises v. CIT [2003] 259 ITR 637/130 Taxman 23 (Delhi). A direction for special audit where assessee has filed only provisional accounts is valid - U.P. State Handloom Corporation Ltd. v. CIT [1988] 171 ITR 640 (All.). For guidelines on selection of cases, refer Instruction Nos. 1076, dated 12-7-1977, 1415, dated 23-9-1981 and 1770, dated 19-8-1987. Reasons need not be recorded for ordering special audit - Ramesh Chand Industries Ltd. v. Union of India [1998] 100 Taxman 570 (Delhi). Where prima facie case is made out, order cannot be stayed - Narinder Singh Atwal v. Dy. CIT [1998] 231 ITR 641 (Cal.). No notice need be given before issuing directions under section 142(2A) - Jhunjhunwala Vanaspati Ltd. v. Asstt. CIT [2004] 137 Taxman 214 (All.). [Per contra : Dy. CIT v. Muthootu Mini Kuries [2003] 128 Taxman 240 (Ker.)]. Where for auditing books of account of assessee, Deputy Commissioner passed order under section 142(2A) without giving an opportunity of hearing to assessee and refusing assessee’s request for supply of reasons therefor, action of Deputy Commissioner was vitiated in law - Rajesh Kumar v. Dy. CIT [2006] 157 Taxman 168 (SC). When power of special audit under section 142(2A) is sought to be exercised, Assessing Officer must invariably give opportunity of hearing to assessee to explain away his doubt; further, Commissioner should not give any approval mechanically - West Bengal State Co-operative Bank Ltd. v. Joint CIT [2004] 138 Taxman 238/267 ITR 345 (Cal.). [Per contra : YUM Restaurants India (P.) Ltd. v. CIT [2005] 146 Taxman 196 (Delhi)/UP Financial Corpn. v. Jt. CIT [2005] 147 Taxman 21 (All.).] For details, see Taxmann’s Master Guide to Income-tax Rules.