S. C. Sehgal Vs UOI & Ors. (Delhi High Court)
The Delhi High Court considered a writ petition challenging the Assessing Officer’s order dated 30.03.2006 directing a Special Audit under Section 142(2A) of the Income Tax Act, 1961. Despite service of hearing notice, the petitioner did not appear.
The Court noted that the audit had already been completed, rendering the challenge effectively infructuous. An earlier Division Bench order dated 04.03.2008 had stayed recovery of the auditor’s fee, stated to exceed Rs.20 lakh, from the petitioner while directing that the issue of who should ultimately bear the fee would be decided at final hearing.
The Court took note of the proviso to Section 142(2D), inserted with effect from 01.06.2007, under which the auditor’s fee is to be borne by the specified income-tax authority. Since the auditor in the present matter had been appointed before 01.06.2007, the Court noted that the applicable position regarding the audit cost required consideration.
Having regard to the petitioner’s non-appearance, the amendment’s spirit, and the fact that the audit was conducted pursuant to the Assessing Officer’s order, the Court closed the proceedings and directed that the audit fee of Rs.20 lakh be borne by the Union of India.
