M/S SONYMONY ELECTRONICS LTD vs. THE ASSISTANT COMMISSIONER OF INCOME-TAX AND 3 ORS

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WP/1783/2007HC Bombay24 September 2007Bench: HON'BLE SHRI JUSTICE F.I. REBELLO, HON'BLE SHRI JUSTICE J.P. DEVADHAR4 pages
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What did the High Court hold?

The High Court disposed of the Writ Petition without delving into the merits of the case. The Court noted that the petitioner was not pressing the challenge to the initial appointment of the Special Auditor due to the revenue's agreement to substitute the auditor. The petitioner undertook to pay the fees to the original Special Auditor, M/s. Agrawal & Chajjed, for the work already completed, as per the terms outlined in their letter dated May 31, 2007. Furthermore, the petitioner agreed to cooperate with a newly appointed substituted Special Auditor and to pay their fees on the same terms for the special audit work to be conducted. The Court directed the concerned CIT to appoint a substituted Chartered Accountant as the Special Auditor for AY 2005-06. The operative directions included the appointment of a substituted auditor, payment of fees to the original auditor for work done, and payment of fees to the substituted auditor for future work, with the petitioner undertaking to cooperate.

What were the facts?

The petitioner, M/s. Sony Mony Electronics Ltd., filed a Writ Petition before the Bombay High Court challenging an order appointing a Special Auditor under Section 142(2A) of the Income Tax Act, 1961, for Assessment Year (AY) 2005-06. The petition also challenged the continuation of the Special Auditor who had already commenced work. The respondents were the Assistant Commissioner of Income Tax, the Additional Commissioner of Income Tax, the Commissioner of Income Tax, and the Union of India. The matter was heard by a Division Bench of the High Court.

What were the issues?

1. Whether the appointment of a Special Auditor under Section 142(2A) of the Income Tax Act, 1961, for AY 2005-06 was valid? 2. Whether the continuation of the Special Auditor, who had already partially completed the audit, was permissible? Assessee's Contentions: The petitioner's senior counsel, Mr. Andhyarujina, stated that he was not pressing the first issue regarding the validity of the initial appointment of the Special Auditor, as the revenue had agreed to substitute the appointed auditor. He further stated that the petitioner would pay the charges to the initially appointed Special Auditor, M/s. Agrawal & Chajjed, for the work already done, as per the terms in a letter dated May 31, 2007. The petitioner also agreed to pay similar charges to the substituted auditor for future work. Revenue's Contentions: The judgment records no specific contentions from the revenue regarding the issues raised, beyond their agreement to the substitution of the Special Auditor.

Which sections of the Income-tax Act were involved?

Section 142(2A)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICITON WRIT PETITION NO.1783 OF 2007 M/s.Sony Mony Electronics Ltd. A company registered under Indian Companies Act, 1956 having its Registered office at 1-8, Shreeji Apts., J.P. Road, Andheri (West), Mumbai - 400 059 .. Petitioner. Versus 1. The Assistant Commissioner of Income Tax, Circle 8(3), Aayakar Bhavan, M.K. Road, Mumbai - 400 020. 2. The Addl. CIT, Range 8(3), Aayakar Bhavan, M.K. Road, Mumbai - 400 020. 3. The CIT - VIII, Aayakar Bhavan, M.K. Road, Mumbai - 400 020. 4. The Union of India through its Advocate & Solicitors having its office at Ayakar Bhavan, M.K. Road, Mumbai - 400 020 .. Respondents. Mr.F.B. Andhyarujina, senior counsel with Ms.Pallavi Divekar & Mrs.M.N. Lund for the petitioner. Mr.B.M. Chatterjee with Mrs.P.P. Bhosale and Mr.P.S. Sahadevan for the respondents. CORAM : F.I. REBELLO & J.P. DEVADHAR, JJ. DATED : 24TH SEPTEMBER, 2007. ORAL JUDGMENT (Per J.P. Devadhar, J.) 1. Heard. Rule. Rule made returnable forthwith. By consent of parties, the Writ Petition CNR No : HCBM020179782007 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:02:15

2 is taken up for final hearing. 2. The challenge in this petition is firstly to the order appointing Special Auditor under Section 142 (2A) of the Income Tax Act, 1961 (‘Act’ for short) relating to A.Y. 2005-06, and secondly to the continuation of the Special Auditor who has already carried out Special Audit work partially. 3. After the matter was argued for some time, Mr.Andhyarujina, learned senior counsel appearing on behalf of the petitioner fairly stated that he is not pressing the first issue, in view of the fact that the revenue has acceeded to the substitution of the Special Auditor appointed in the matter. Mr.Andhyarujina further stated that the petitioners shall pay the charges payable to M/s.Agrawal & Chajjed, Chartered Accountants in respect of the work already carried out by them as per the terms set out in the letter dated 31st May, 2007 and further, the petitioners shall also pay charges on the same terms to the substituted Chartered Accountants in respect of the special audit work to be done by them. 4. In this view of the matter, without going into the merits of the case, the petition is disposed of by passing the following order : Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:02:15

3 i) The concerned C.I.T. shall appoint substituted Chartered Accountant as Special Auditors to carry out Special Audit in the case of the Petitioner relating to A.Y.2005-06. ii) The petitioners shall pay to M/s.Agrawal & Chajjed, Chartered Accountants the fees at the rate prescribed in letter dated 31st May, 2007 in respect of Special Audit already carried out by them. iii) The petitioners agree and undertake to this Court to cooperate with the substituted Special Auditor to be appointed by the C.I.T. and agree to pay to the substituted Chartered Accountants fees for the special audit at the rate prescribed in the letter dated 31st May, 2007 (Exhibit "E" to this Writ Petition). 5. The Writ Petition is disposed of in the above terms, with no order as to costs. (F.I. REBELLO, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:02:15

4 (J.P. DEVADHAR, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:02:15 Powered by TCPDF (www.tcpdf.org)

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