2012 (10) TMI 180 - HC - Income Tax

Delay in fixation of special audit fee - Held 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. Thus for the inordinate delay in fixation of the fee, which cannot be countenanced, the petitioner should be appropriately restituted. The concerned superior authority i.e. Chief Commissioner or any officer designated in this regard 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 - 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 favour of auditor.

Summary

Issues:
1. Delay in fixation and payment of fee to the special auditor appointed under Section 142(2A) of the Income Tax Act, 1961.
2. Allegation of underpayment and incorrect fee fixation by the income tax authorities.
3. Grievance redressal mechanism for fee disputes under Section 142(2D) of the Act.
4. Responsibility for the delay in fee fixation and payment.

Issue 1: Delay in Fixation and Payment of Fee
The petitioner, a special auditor appointed under Section 142(2A) of the Income Tax Act, 1961, was aggrieved by the delay in fixing and paying its remuneration for services rendered in 2006. Despite completing the audit and submitting the report in September 2006, the income tax department did not address the petitioner's repeated requests for fee fixation and payment. The court acknowledged the inordinate delay, highlighting that over six years had passed since the services were availed, and the assessment proceedings were completed. The court found the delay unacceptable and ordered restitution to the petitioner. It directed the respondent to pay interest on the due amount and awarded costs of Rs. 50,000 to the petitioner.

Issue 2: Allegation of Underpayment and Incorrect Fee Fixation
The petitioner claimed that the fee fixed by the income tax authorities in 2012 was not in line with the norms prescribed by the Institute of Chartered Accountants of India (ICAI) under Section 142(2D). The petitioner contended that it was underpaid and sought a review of the fee fixation by the court. On the other hand, the revenue authorities argued that the fee was fixed as per applicable norms at the time and was subject to appeal. The court noted that it could not address the underpayment claim directly in the present proceedings but directed the concerned authority to consider any appeal or representation against the fee fixation within six weeks. The court ordered interest payment on the due amount and reserved the petitioner's right to claim further amounts or interest.

Issue 3: Grievance Redressal Mechanism
The court emphasized the importance of the grievance redressal mechanism under Section 142(2D) of the Act for fee disputes involving special auditors. It directed the superior authority, such as the Chief Commissioner, to review any appeal or representation against the fee fixation and take necessary action within six weeks if the petitioner submits the appeal promptly. The court ensured that the petitioner's rights to claim additional amounts or interest were preserved, highlighting the significance of the statutory appeal process in fee disputes.

Issue 4: Responsibility for Delay
In response to the delay in fee fixation and payment, the court directed the Chief Commissioner to conduct an inquiry to identify the person or persons responsible for the delay. The court ordered that the costs awarded to the petitioner would be deducted from the salary of the individual(s) found responsible for the delay. The court set a deadline of eight weeks for filing an action taken report on compliance with these directions, emphasizing accountability for delays in fee-related matters.

This judgment from the Delhi High Court addressed the issues of delay in fee fixation and payment to a special auditor under the Income Tax Act, allegations of underpayment, the grievance redressal mechanism for fee disputes, and assigning responsibility for delays. The court emphasized prompt resolution of fee disputes, preservation of the petitioner's rights, and accountability for delays in fee-related matters.