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TMI Blog2017 (3) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... and refreshment, etc. for a person to render quality work is illogical. In any case, the billing is not for 24 hours a day but for a part thereof. Therefore, to assume that the time billed was not exclusively for the professional work is without basis and untenable. Chartered Accountants are not automatons who, without having access to food or being able to attend to all other necessities, would churn out good quality reports after analysing voluminous records. Notably, the work experience of the partners ranges from 3 to 27 years while the range permissible billing rate is between 3,500/- to 7,500/- and the rate of sitting could have been correspondingly adjusted as per their regular sitting hours or accepted degree of competence; instead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 passed by the respondent No.1/Commissioner of Income Tax, Central-II under Section 142(2D) of the Income Tax Act, 1961 (hereinafter to be referred as 'the Act') read with Rule 14B of the eponymous Rules of 1962. 2. The petitioner was engaged by the respondents to conduct a special audit for seven years i.e. Assessment Years (AY) 2005-06 to 2011-12 of the auditee company/ M/s Micromax Informatics Limited. Its report was submitted in three volumes and an addition of over ₹ 720 crores was made to the returns of the auditee/ assessee. It is not in dispute that the report was termed as 'very good' by the Assessing Officer (AO). 3. For their professional services, the petitioner submitted a bill to the respondents detailing 1078 hour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners have disputed the computation and consequential order. However, pending the adjudication of their dispute, they had agreed to accept the aforesaid amount without prejudice to their rights and contentions. 4. The petitioners contend that insofar as 1078 man hours were certified by the clients/auditee, there was no plausible reason for respondent No.1 to restrict it to only 709 hours. Furthermore, 237 hours were spent at the office of the petitioner in analysing, compiling and preparing the three voluminous report (compiled in three volumes). The petitioner contends that spending 9 to 10 hours on an average basis is not extraordinary and clubbing all the billed hours to be payable at an average rate of ₹ 4,000/- is unreasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the perusal of bills submitted by the auditor, it has been noticed that auditors have spent 1070 hours in tax payer's premises and 237 hours in their own office. They have not taken into account the time spent on lunches, refreshments etc., which should have been discounted from bill. The bills submitted are on estimated basis only. It is also a fact that special auditing is a team work lead by one of the main partner. Accordingly, I am of the considered view that the man hours for which team was wholly and exclusively working for audit work can reasonably be estimated at 85% of the time spent by the main partner and all other persons are assisting him in completing the audit work. So the estimated time is computed at 709 hours (i.e. 85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not for 24 hours a day but for a part thereof. Therefore, to assume that the time billed was not exclusively for the professional work is without basis and untenable. Chartered Accountants are not automatons who, without having access to food or being able to attend to all other necessities, would churn out good quality reports after analysing voluminous records. It is noteworthy that the quality of the report has been assessed as 'very good' by the AO. An addition of over ₹ 720 crores has been made to the income tax of the auditee. The work was rendered by the petitioner's four partners, Chartered Accountants and other personnel i.e. by qualified assistants and semi-qualified assistants, however, the impugned order questions the bi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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