1998 (4) TMI 92 - HC - Income Tax

Summary

Issues:
1. Jurisdiction of the order under section 142(2A) of the Income-tax Act, 1961.
2. Liability of the appellants to pay fees and charges to the special auditor.
3. Observations made by the learned single judge regarding payment of fees.

Jurisdiction Issue:
The appellants appealed against an order passed by a learned single judge concerning an order under section 142(2A) of the Income-tax Act, 1961. The appellants contended that the order was passed without jurisdiction as it lacked the prior approval of the Chief Commissioner of Income-tax as required by the Act. The learned single judge had issued an interim order staying the assessment proceedings for the assessment year 1995-96. The appellants argued against being burdened with the payment of fees and other charges to the special auditor.

Liability Issue:
The respondents produced original records indicating that the prior approval of the Commissioner of Income-tax was sought for appointing a special auditor under section 142(2A) of the Act. The special auditor had already commenced the auditing work, and the appellants had allegedly agreed to the payment of Rs. 30 lakhs and other charges to the auditor. The respondents argued that the appellants were estopped from challenging the payment terms after agreeing to them.

Observations on Payment of Fees:
After hearing detailed arguments, the court declined to interfere with the order of the learned single judge. The court found the order to be well-reasoned and protective of the parties' interests at that stage of litigation. The court noted that the question of the appellants' liability to pay fees and charges to the special auditor would be considered at the final hearing of the writ application. The court emphasized that the ultimate liability of the appellants to pay the auditor's fees would depend on the final outcome of the writ application, ensuring that the appellants would not be aggrieved by the payments made to the auditor.

In conclusion, the appeal and the application for stay were disposed of without any order as to costs. The court clarified that its decision should not be construed as an expression of opinion on the case's merits. Additionally, since the respondents did not file an affidavit-in-opposition to the stay application, the allegations therein were not deemed admitted. All parties were directed to act on a Xerox signed copy of the court's order.