DHANESH GUPTA & CO. Vs. UNION OF INDIA

JUDGEMENT

(1.) THESE petitions are essentially against the order made by CIT under the provisions contained in s. 142(2D) of the IT Act, made earlier under s. 142(2A) of the Act whereby a chartered accountant was appointed as a special auditor to examine the matters and to submit a report. It is mentioned in the order that a search under s. 132 of the Act was conducted on give a true and correct picture of the income of the assessees for the years covered under the block period. The reasons have been given by the officer in detail and for the said reasons that the accounts of the assessees being of a complex nature, a special auditor was appointed. The special audit was required for the following purposes :

(2.) M /s Dhanesh Gupta and Co. was nominated as an special auditor. After the exercise was completed by the said chartered accountant, the said chartered accountant submitted a bill, a copy of which is placed on record at p. 34 of WP (C) 1775 of 2000, raising a bill of Rs. 9,81,540 including service -tax. After the bill was submitted, the order was made matter regarding fixation of the remuneration of the auditor. The order speaks about the maintenance of a diary of work done with details of time allocation of the audit work. The CIT after careful consideration of all the aspects of the cases and work done by the auditors fixed the fees at Rs. 5 lakhs. Sec. 142(2D) reads as under :

(3.) BEFORE us, it was submitted by the counsel for the assessee that the bill is not only inflated but is without any basis. He further submitted that there is nothing on record to show that the chartered accountant or the team worked for the particular number of hours as indicated in the bill. As against this the chartered accountant in WP(C) No. 6312 of 2000 has stated that he had placed before the AO all the details of the work and has also pointed out that considering the nature of the work, his bill was according to the professional standards and there was no reason for the CIT to interfere 2000, which was forwarded to the CIT in response to his letter for fixation of fees. He explains as to why the bill was appropriate in the following paragraphs of his letter :