Case Law Details

Case Name : SC & Associates Chartered Accountants Vs Union of India & Others (Delhi High Court)
Appeal Number : W.P.(C) 5292/2012
Date of Judgement/Order : 25/09/2012
Related Assessment Year :
Courts : All High Courts (4258) Delhi High Court (1296)

This Court is of the opinion that there has been inordinate delay in fixation of the writ petitioner’s fee. The facts would reveal that the petitioner’s services were availed more than 6 years ago and the final report of its special audit received on 22.09.2006.

The facts would also show that the assessment proceedings in respect of the special audit too have been completed. In any event there is no reason why the department dragged its feet and chose not to release the fee of the petitioner after fully availing its services. To add insult to injury, the petitioner has had to approach this Court to get what even today it claims to be wrong fixation of fee. However, the grievance which has arisen on account of claim for being under paid cannot be gone into in the present proceedings but at the same time this Court is of the opinion that for the inordinate delay in fixation of the fee, which cannot be countenanced, the petitioner should be appropriately restituted. As far as the writ petitioner’s grievance of being under paid is concerned, the concerned superior authority i.e. Chief Commissioner or any officer designated in this regard, as the case may be, shall consider the appeal or representation against the order of the fixation and take consequential action, if any, within six weeks provided the writ petitioner prefers the appeal or representation within a week. As regards the delay, the Court is of the opinion that the respondent shall pay interest @ 8% per annum on the sum of Rs. 12,96,541/- for the period 01.01.2007 till 24.09.2012 when the amount was actually paid. The writ petitioner’s rights to claim any further amount either by way of balance fee or interest thereon are expressly reserved. Having regard to these circumstances the Court directs payment of Rs. 50,000/- as costs to the writ petitioner. The costs shall be paid within two weeks.

IN THE HIGH COURT OF DELHI AT NEW DELHI

 Date of Decision: 25th September, 2012

 W.P.(C) 5292/2012

SC & ASSOCIATES CHARTERED ACCOUNTANTS

Versus

UNION OF INDIA & OTHERS

CORAM:

MR. JUSTICE S. RAVINDRA BHAT

MR. JUSTICE R.V. EASWAR

ORDER

S. RAVINDRA BHAT,J: (OPEN COURT)

The writ petitioner is aggrieved by the fact that the income tax authorities had engaged its services to conduct special audit in 2006 on the basis of a reference on 30.3.2006 under Section 142(2A) by the Income Tax Act, 1961 but despite repeated reminders did not care to fix its remuneration and pay the fee. It, therefore, seeks an appropriate direction for fixation of fee and its payment.

2. The facts in brief are that the petitioner was appointed as special auditor under Section 142(2A) of the Act by order dated 30.03.2006. It completed the task and submitted its report on 22.09.2006 and apparently also submitted the bill to the income tax department around that time. The writ petition narrates the series of representations made after September, 2006 i.e. 22.11.2006, 25.09.2007, 04.03.2008, 18.03.2008, 29.08.2008 and 20.09.2008 by payment of the bill for the audit services. Its requests were unsuccessful and eventually it was constrained to move C.M. No.19286/2011 before this Court in W.P. (C) No.4297/2007 for appropriate direction. The Court on 07.12.2011 disposed of the application and permitted the writ petitioner to file a separate proceeding which it promptly did on 14.12.2011 and the very same day the Court disposed of the writ petition itself to consider the representation and determine and release the professional fee under Section 142(2D) of the Act and in the event of any surviving grievance, granted liberty to approach this Court.

3. The writ petitioner made further representation on 02.01.2012 and again on 03.02.2010; these two representations were of no avail and eventually it had to prefer the present proceedings.

4. By order dated 14.12.2011 this Court had directed the respondent in the following terms: –

“The assessee, in whose case special audit was directed, has filed W.P.(C) No.4297/2007. In the said writ petition on 04.3.2008 the following order was passed: –

“On 21st August, 2007 a last opportunity was granted to the Respondent to file a counter affidavit.

On 16th January, 2008 again a last opportunity was granted to the Respondent to file a counter affidavit.

The Office report is that counter affidavit has not yet been filed.

Learned counsel for the Petitioner says that he has also not received the copy of the counter affidavit.

Under the circumstances, we issue Rule D.B.

CM No.8050/2007

No reply has been filed to the application for interim relief. Under the circumstances we stay the recovery of the amount of fees of the auditor under Section 142 (2A) of the Income Tax Act, 1961 since it is stated that fee of the auditor is more than Rs. 20 lacs.

We make it clear that the special auditor may recover the amount from the Income Tax Department but whether the amount has to be recovered from the Petitioner or not, will be decided at the time of final hearing of the writ petition.

Learned counsel for the Petitioner prays for a stay of recovery of the demand arising out of the assessment order dated 20th November, 2006. It is not clear from the record whether the Petitioner has approached the statutory authorities for any such relief. The Petitioner in this regard may file an appropriate application giving the full facts.

CM stands disposed of.”

The aforesaid order is clear that the chartered accountant/auditor appointed under Section 142(2A) of the Income Tax Act, 1961 can recover the amount from the Income Tax Department but whether the amount can be recovered from the petitioner therein, i.e. S.C.Sehgal, will be decided at the time of the final hearing of WP(C) No.4297/2007. The said writ petition was admitted and Rule DB was issued as the respondent-Revenue had failed to file counter affidavit.

The petitioner herein M/s. S.C. and Associates were appointed as the special auditors under section 142(2A) of the Act. They have filed the present writ petition for non-payment of their dues/bills. It is noticeable that in the present writ petition the petitioners have not enclosed any of their bills or even their reports. Some letters had been enclosed. The last letter was written by the petitioner to the  Commissioner of Income Tax on 29.9.2008. Thereafter no letter has been written. In these circumstances, it will be appropriate if the petitioner first enters into correspondence and make their claim before the authorities concerned. If there is no response or in case of an adverse order, it will be open to the petitioner to approach this Court. If the petitioner files a fresh writ petition, they should enclose the relevant papers and documents.

The writ petition is accordingly disposed of.”

Learned counsel for the respondent submits that pursuant to the above the petitioner’s fee was fixed by an order dated 21.09.2012; a copy of that order has been produced claiming to be in compliance; a cheque for Rs. 12,96,541/- was prepared and made over to the petitioner on 24.09.2012. The learned counsel for the Revenue has produced a copy of the cheque as well as forwarding letter again dated 24.09.2012. Mr. Shambhu Singh learned counsel for the petitioner, says that the fixation of fee was not as per the norms prescribed by ICAI in terms of Section 142(2D). It is submitted that the writ petitioner was substantially under-paid and this Court ought examine and determine the fee. Learned counsel for the Revenue on the other hand contains that the fixation of fee is in accordance with the norms applicable which prevailed at that point of time and the order of the Commissioner is appealable.

5. This Court is of the opinion that there has been inordinate delay in fixation of the writ petitioner’s fee. The facts would reveal that the petitioner’s services were availed more than 6 years ago and the final report of its special audit received on 22.09.2006. The facts would also show that the assessment proceedings in respect of the special audit too have been completed. In any event there is no reason why the department dragged its feet and chose not to release the fee of the petitioner after fully availing its services. To add insult to injury, the petitioner has had to approach this Court to get what even today it claims to be wrong fixation of fee. However, the grievance which has arisen on account of claim for being under paid cannot be gone into in the present proceedings but at the same time this Court is of the opinion that for the inordinate delay in fixation of the fee, which cannot be countenanced, the petitioner should be appropriately restituted. As far as the writ petitioner’s grievance of being under paid is concerned, the concerned superior authority i.e. Chief Commissioner or any officer designated in this regard, as the case may be, shall consider the appeal or representation against the order of the fixation and take consequential action, if any, within six weeks provided the writ petitioner prefers the appeal or representation within a week. As regards the delay, the Court is of the opinion that the respondent shall pay interest @ 8% per annum on the sum of Rs. 12,96,541/- for the period 01.01.2007 till 24.09.2012 when the amount was actually paid. The writ petitioner’s rights to claim any further amount either by way of balance fee or interest thereon are expressly reserved. Having regard to these circumstances the Court directs payment of Rs. 50,000/- as costs to the writ petitioner. The costs shall be paid within two weeks.

6. The Court hereby directs the Chief Commissioner to conduct an inquiry and fix responsibility of the person or persons who was/were responsible for the delay and the said costs shall be deducted from the salary of the concerned person or persons. The action taken report in this regard for compliance with these directions be filed within eight weeks.

S. RAVINDRA BHAT, J

R.V.EASWAR, J

SEPTEMBER 25, 2012

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