Swatanter Kumar, J.Central Warehousing Corporation was established by an Act of Parliament, namely the Warehousing Corporation Act, 1962. The primary purpose of this Corporation was warehousing of agricultural produce and other commodities. The income of the Corporation was exempted from tax u/s 10(29) of the Income Tax Act, 1961 (hereinafter referred to as the) up to the assessment year 2002-2003, under various instructions issued by the Central Board of Direct Taxes, New Delhi, last being dated 27th August, 2002. In normal course of its business, the Corporation has set up godowns and warehouses at various places in the country for the purposes of providing modern and scientific facilities for storage of agricultural and other commodities. It is further the case of the petitioner that they are subject to audit by the statutory auditors appointed by the Central Government of India on the recommendations of Comptroller and Auditor General of India. The accounts of the Corporation are liable to be placed before the Parliament. In terms of Section 11 of the Warehousing Corporation Act, the Corporation submits programme of its activities and financial estimate to the Central Government for approval. In the normal course of its business, the activities carried out are long, medium and short term storage of goods. The nature of work undertaken by the Corporation are CFSs (Container Freight Station) and ICDs (Inland Clearance Depots) and performs the following activities under these two classes :-

"The following activities are performed in a CFS/ICD.

i) Receipt and dispatch of containerisable export cargo;

ii) Stuffing/destuffing and aggregation/delivery of import cargo;

iii) Custom clearance and examination of export cargo;

iv) Safe and scientific storage of valuable cargo and containers; and

v) Storage of destuffed cargo."

2. It is the case of the petitioner that the income from these activities of the Corporation being exempted u/s 10(29) of the, and thus there would be no occasion for the tax authorities to pass any further orders including an order u/s 142 of the.

3. The petitioner filed a return for the assessment year 1998-1999 and the Joint Commissioner of Income Tax (Special Range), vide his letter dated 20th October, 2000 felt that having regard to the nature and complexity of accounts and the interest of the Revenue, he was of the opinion that it was a fit case for audit u/s 142(2A) of the. Consequently, he directed the account of the Corporation/assessed to be audited by M/s. Jain Kapila Associates, and to submit their report in form 6 (b) read with Rule 14 (a) of the Income Tax Rules, 1962 with particular attention to the points raised in the order. In clause (c) of Para 4 of the letter, special reference was made as to whether the business activities carried on in the CFS/ICD stations are covered by Section 11 of the Warehousing Corporation Act. Petitioner/Corporation vide its letter dated 13th November, 2000 addressed to the Chairman, Central Board of Direct Taxes and 14th November, 2000 to the Chief Commissioner of Income Tax, prayed for cancellation of the order as well as blocking of the proceedings initiated by the Assessing Officer in terms of its direction dated 30th October, 2000. Having failed to get any relief from the said higher authorities, the petitioner/Corporation has filed the present writ petition under Article 226 of the Constitution of India, praying for quashing of the order dated 30th October, 2000. The contention raised on behalf of the petitioner is that the impugned order is not in conformity with the provisions of Section 142(2A) of theand the accounts of the petitioner are in no way complex so as to justify appointment of a special auditor. It is also contended that income of the petitioner/assessed being exempted in relation to the afore-mentioned activities, u/s 10(29) of the, and the fact that the Corporation was carrying on similar activity for all these years and no accounts were ever examined, there is no justification whatsoever in passing the impugned order.

4. The respondents filed a counter affidavit and stated that the Warehousing Corporation has been claiming exemption u/s 10(29) of the on the footing that it is an authority constituted under the law for marketing of commodities, but extent of exemption has been a matter of dispute. It requires to be looked into by the authorities, whether the exemption is permissible, to the Corporation as exemption is admissible only to certain incomes. Even if part of the income of the Corporation falls within that exemption, its extent must be examined so as to correctly determine the receipts on the general principles of assessment. The petitioners were unable to provide these break-ups in the receipts as well as the expenses and considering the volume of their accounts and for the reasons indicated in the order, it was necessary to direct a special audit. In the reply, special reference has been made to the assessment year 1997-98. It was deducted that the Corporation had been dealing in 87 items of commodities including alcohol, cigarettes, air-conditioners, refrigerators, arms and ammunitions and other luxury items. The claim of the Corporation was that these commodities were exempted from taxation u/s 10(29) of the, however it did not produce the relevant notification supporting its claim. For the same year, the Corporation had filed a balance-sheet showing a gross turn over of Rs. 238.68 crores and a net profit of Rs.8.94 crores and no separate profit and loss accounts were drawn up for the said assessment year i.e. for the warehousing business and the business of CFSs and ICDs . Being totally dissatisfied with the accounts of the Corporation, the Assessing Officer had proceeded on the basis that some part of the activities of the petitioners were entitled to exemption, and thus allocated expenses on pro rata. The Corporation/assessed had challenged the said order, which was affirmed by the Commissioner of Income Tax (Appeals) and an order u/s 143(3) was passed after granting hearing to the petitioners. For the assessment year 1998-1999, the return was filed on 30th November, 1998 which shows a loss of Rs. 154.64 crores which is based on a consolidated profit and loss account with a gross turn over of Rs.253.31 crores and a net profit of Rs.67.72 crores, as reflected in the balance-sheet. During this year the accounts were maintained in the same way as the previous year. The order of the Assessing Officer for the assessment year 1997-1998, in relation to dividing on estimate basis the expenses of the assess on pro rata basis was confirmed by the Commissioner of Income Tax (Appeals) for the year 1997-1998 while for the year 1995-1996, the assessed even did not file any appeal. While relying upon the circular 204 dated 24th July, 1976 and Board Instructions 1076 dated 17th August, 1976, the respondents claimed to have taken the action and passed the order u/s 142(2A) of the. According to the respondents, the order is in consonance with the provisions of law and pray for dismissal of the writ petition.

5. The nature of business of the Corporation, its statutory character would not be a very material factor to be taken into consideration for determining whether the order dated 30th October, 2000 passed by the authorities u/s 142(2A) of the, suffers from any error of law or jurisdiction. The provisions of Section 142(2A) clearly vests the power in the Assessing Officer to direct the assessed to get the accounts audited by an accountant as defined in the Explanation to the sub-section 2 of Section 288 at any stage of the proceedings before him and when he is of the opinion that having regard to the nature and complexity of the accounts of the assessed and the same is in the interest of the Revenue, to do so with prior approval of the Chief Commissioner or Commissioner of Income Tax. The scope of judicial review of such an opinion of the Assessing Officer would fall within a very limited jurisdiction as the Assessing Officer would be the best person who would have to record his opinion in the following manner and at the stages indicated:-

(a) Having regard to nature and complexity of the accounts of the assessed;

and

(b) It is in the interest of the Revenue;

(c) The Assessing Officer would have to form an opinion in regard to these ingredients at any stage of the proceeding before him.

6. Once such an opinion is recorded by the Assessing Officer, he could direct the assessed for a special audit in terms of these provisions subject to previous approval of the Chief Commissioner or Commissioner of Income Tax.

7. The expression accounts used in Section 142(2A) is not merely the books of accounts of the assessed. It could include the books of accounts, balance-sheets and all other records which are available to the Assessing Officer during the course of assessment proceedings. A Division Bench of this Court in the case of Rajesh Kumar Prop. Surya Trading v. The Deputy Commissioner, Income Tax in the case of W.P.(C) No. 921-924/2005 decided on 3rd February, 2005 held as under:-

"We also find no merit in the contention raised on behalf of the petitioner that the expression `accounts of the assessed can only refer to the books of accounts of the assessed and not the other records available before the Assessing Officer for examination or otherwise. The complexity of accounts of the assessed is to be determined not only by the books of accounts, but even by other documents which are available, the course of an assessment and at any stage subsequent thereto may become available to the Assessing Officer. To give a narrow meaning to the expression accounts so as to confine it to the books of accounts, submitted by the assessed simplicitor, would amount to giving an interpretation which would completely defeat the very object of the Section. The mere fact that the petitioners have submitted audited account and Therefore there is no occasion for directing special audit, is also of no help to the petitioners. Submission of audited accounts per se would not oust the jurisdiction or authority of the Assessing Officer to pass such a direction. Of course, he is expected to issue the directions after due application of mind and in accordance with the principles afore-narrated. The Assessing Officer while applying his mind, to the facts and circumstances of the case, need not confine himself only to the books of accounts submitted by the assessed, but can take into consideration such other documents related thereto and which would be part of the assessment proceedings. In the case at hand, the books of accounts as well as other records seized during the search and seizure on 18.12.2002 have rightly been considered by the Assessing Officer before issuing the impugned direction."

8. In the case of Joint Commissioner of Income Tax Vs. I.T.C. Ltd. and Another, it was the case of the assessed that they had 43 branches all over the country and they had added 81.42 crores to the plant and machinery, 2.5 crores to motor vehicles, Rs.14.86 crores to land and Rs.6.69 crores to the building. The Court held that the formation of opinion by the Assessing Officer, that nature and complexity of accounts was such that it was not possible for the Assessing Officer to justify the correct assessment of income and to examine the correctness of the accounts, the Assessing Officer was right in appointing special auditor with previous approval. The Rajasthan High Court in the case of Pani Devi Vs. Union of India (UOI) and Others, , stated the principle that the provisions of Section 44AB which cast an obligation on persons carrying on business to have their accounts audited, are no way in conformity with the provisions of Section 142(2A) of the. General audit as contemplated u/s 44AB is obligation of the assessed, while special audit is contemplated u/s 142(2A) is a power vested in the Assessing Officer to direct special audit over and above the general audit, provided the Assessing Officer was satisfied that ingredients of Section 142(2A) of thewere satisfied. Thus, the argument on behalf of the petitioner that their accounts were duly audited and were counter checked by the Comptroller and Auditor General of Indias nominee would no way further the cause of the petitioner. It is in fact the own case of the petitioner that they have branches all over India amongst others, and they are involved in the activities of CFS/ICD. It is also the conceded case that in terms of the notification of the government, part of the income of the assessed is exempted from tax while other part of it is taxable. The Assessing Officer had called upon the petitioner to bifurcate the heads in terms of his orders, during the assessment proceedings which the assessed failed to do so, and Therefore the appointment of a special auditor by the Assessing Officer cannot be stated to be an arbitrary exercise of power. Equally unfounded is the contention of the petitioner that the Assessing Officer had not examined the books of accounts of the Corporation and as such the impugned order is beyond the jurisdiction vested in the Assessing Officer u/s 142(2A) of the. The Corporation had filed its return, balance-sheet, statements and profit and loss accounts before the Assessing Officer and it also produced certain documents. After examining all these records, the Assessing Officer had noticed that having regard to the nature and complexity of the accounts as well as in the interest of the Revenue, appointment of special auditor was necessary. We have already noticed that the expression accounts cannot be given a limited interpretation so as to restrict it to the ledger or cash books of the Corporation but it would essentially include all other records which are before the Assessing Officer during the assessment proceedings. The petitioner/Corporation has shown huge losses running into crores which created a doubt and the Assessing Officer, on the basis of the record, formed an opinion required u/s 142(2A) of the. The ingredients thereof have been specifically spelled out in the impugned order.

9. A Division Bench of this Court in the case of Gurunanak Enterprises and Bhagya Rekha Enterprises Vs. The Commissioner of Income Tax and Another, held that where the petitioner, a sole proprietary concern was the sole selling agent for and on behalf of an organising agent authorised by the State Government to conduct lottery business, and tickets were sold to different stockists in the States in India, which according to the Revenue involved a highly specialised and complex accounting system, it was necessary to order special audit, and the Court held as under :-

" A bare perusal of the provision would show that the opinion of the Assessing Officer has to be formed only by having regard to : (i) the nature and complexity of the accounts of the assessed; and (ii) the interest of the Revenue. The word "and" signifies conjunction and not disjunction. In other words, the twin conditions of "nature and complexity of the accounts" and "the interests of the Revenue" are the pre-requisites for exercise of power u/s 142(2A). Although the object behind enacting the said provision is to assist the Assessing Officer in framing the assessment when he finds the accounts of the assessed to be complex and is to protect the interests of the Revenue recourse to the said provisions cannot be had by the Assessing Officer merely to shift his responsibility of scrutinising the accounts of an assessed to determine his true and correct income, on to an auditor. True that an order under the said provision cannot be passed on the ipse dixit of the Assessing Officer merely because he finds some difficulty in understanding the accounts. There has to be a genuine and honest attempt on his part to understand the accounts of the assessed, appreciate the entries therein and if in doubt, seek Explanation from the assessed or his representative, rather than pass on the buck to the special auditor. A cursory look at the books of account is not sufficient. It needs little emphasis that the opinion required to be formed by the Assessing Officer for exercise of power u/s 142(2A) must be based on objective consideration and not on the basis of subjective satisfaction....

...It is, thus, clear from the decisions referred to supra that before exercising the power to direct special audit u/s 142(2A) the Assessing Officer must form an opinion with regard to twin conditions, namely, the nature and complexity of the accounts and the interests of the Revenue, with added approval of the Chief Commissioner or the Commissioner, as the case may be. Both these conditions would of course depend upon the facts of each case. Further, power under the section is not be lightly exercised and has to be based on objective criteria and an honest and sincere effort should be made to understand the accounts of the assessed since an order under the provision not only entails heavy monetary burden on an assessed, it causes a lot of inconvenience to him as well."

10. Learned Counsel for the petitioner relied upon the judgment of the Calcutta High Court in the case of West Bengal State Co-operative Bank Ltd. Vs. Joint Commissioner of Income Tax and Others, and Bata India Limited v. Commissioner of Income Tax 2002 257 ITR 263. There is no doubt that in both these cases both the courts had taken the view that order u/s 142(2A) of the was not called, for but facts of these cases are entirely different. In those cases, the Assessing Officer had not examined the books of accounts and had formed an opinion as contemplated u/s 142(2A) of the without proper application of mind. While in the case of Bata India, the Court found that it was only the doubt of the Assessing Officer which had been equated to the complexity of accounts and the satisfaction has not been recorded upon objective considerations. In fact, the authorities did not find any fault with the two audit reports filed by the petitioner along with the return in that case. These cases are of no help to the petitioner because it is only after perusing the records of the assessed, raising queries for the year in question as well as for such years and having failed to get any satisfactory answer and keeping in view the complexity and nature of accounts and interest of the revenue, that such a direction has been made by the Assessing Officer. We have already noticed that on the own showing of the assessed they have a huge business of different kinds, part of which is taxable while part of which is exempted from taxation. The losses of one are being set up against the other and without proper bifurcation thereof being shown to the Assessing Officer much less to his satisfaction. The Assessing Officer formed his opinion and submitted the same for previous approval of the competent authority which was admittedly granted. We may also refer to the judgments of the Allahabad High Court in the case of Sahara India Mutual Benefit Company Limited v. Commissioner of Income Tax : [2004]269ITR563(All) where the petitioner had more than 1200 branches, a large number of depositors by itself would show the complexity of the accounts and order of the Assessing Officer was held to be proper. As far as the contention of the petitioner that there should be compliance to the principles of natural justice, before such an order is passed, is again without merit. Firstly, we are unable to appreciate what prejudice the petitioner/corporation has suffered as a result of the impugned order. Secondly it is also clear from the record, that the Assessing Officer had discussed the matters with the petitioner before passing the impugned order. In fact, in the representations as well as the replies submitted by the assessed itself, no ground was raised in regard to the violation of the principles of audi alteram partem and in fact it was stated that the order u/s 142(2A) of the should be kept in abeyance. It was admitted in the letter dated 14th November, 2000 that the Assessing Officer had issued notice for hearing of the case. Even in these documents no averments have been made which could ex facie show that the opinion or satisfaction recorded by the Assessing Officer lacks objectivity and is not in consonance with the principles enunciated in Section 142(2A) of the. In the impugned order, the Assessing Officer, has clearly stated the complexity in the accounts, the points which the special auditor should deal in his report specifically and that the order was being passed in the interest of the Revenue.

11. For the reasons aforestated, we find no merit in this petition and same is dismissed, while leaving the parties to bear their own costs.