M/S SAHARA AIRLINES LTD. vs. COMMISSIONER OF INCOME TAX DEL

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W.P.(C)/9012/2006HC DelhiDLHC01074955200606 July 2026Bench: HON'BLE MR. JUSTICE RAJNEESH KUMAR GUPTA,HON'BLE MR. JUSTICE DINESH MEHTA2 pages
AI SummaryWithdrawn

What did the High Court hold?

The Delhi High Court held that since Sahara Airlines Ltd. has gone into liquidation, and the subsequent company, Jet Airways, which took over Sahara Airlines Ltd., has also gone into liquidation, conducting a special audit would serve no fruitful purpose. Consequently, the Department was permitted to finalize the Assessment Order without the special audit. The writ proceedings were closed, with liberty granted to the respondent-Department to apply for revival of the writ petition or seek requisite directions/clarifications if the occasion arises. The writ petition was disposed of accordingly.

What were the facts?

The petitioner, M/s Sahara Airlines Ltd., filed a writ petition challenging an order dated March 14, 2006, passed by the respondent (Commissioner of Income Tax) directing a special audit under Section 142(2A) of the Income Tax Act, 1961, for the assessment year 2003-04. An interim order was passed on May 23, 2006, preventing the final assessment order. On January 13, 2026, the petitioner informed the court that Sahara Airlines Ltd. was taken over by Jet Airways, which subsequently went into liquidation. The respondent sought time to ascertain if the Department could proceed against the erstwhile Sahara Airlines Ltd. On July 6, 2026, the respondent informed the court that due to the liquidation of both Sahara Airlines Ltd. and Jet Airways, a special audit would serve no fruitful purpose.

What were the issues?

1. Whether the special audit directed under Section 142(2A) of the Income Tax Act, 1961, for assessment year 2003-04 is required to be proceeded with, given the subsequent liquidation of the assessee company and the company that took it over. Assessee's Contention: The petitioner implicitly argued that the special audit is no longer necessary or feasible due to the liquidation of Sahara Airlines Ltd. and Jet Airways. Revenue's Contention: Initially, the revenue sought time to ascertain its position. Subsequently, on instructions, the revenue conceded that conducting the special audit would serve no fruitful purpose due to the liquidation of both entities.

Which sections of the Income-tax Act were involved?

Section 142(2A)

AI-generated summary — verify with the full judgment below

$~21 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 9012/2006

M/S SAHARA AIRLINES LTD.

.....Petitioner Through: Mr. Satyen Sethi, Mr. Arta Trana Panda & Ms. Gargi Sethee, Advs.

versus

COMMISSIONER OF INCOME TAX DEL & ANR. .....Respondents Through: Mr. Ruchir Bhatia, SSC with Mr. Anant Mann, JSC.

CORAM:

HON'BLE MR. JUSTICE DINESH MEHTA

HON'BLE MR. JUSTICE RAJNEESH KUMAR GUPTA

O R D E R %

06.07.2026 1. The present writ petition has been filed by the petitioner challenging the order dated 14.03.2006 passed by respondent no.2 requiring the petitioner to get the special audit under Section 142(2A) of the Income Tax Act, 1961, for the assessment year 2003-04. 2. An interim order was passed by this court on 23.05.2006, which was made absolute on 21.01.2008. The relevant part of the order dated 23.05.2006 is reproduced hereinfra:- “In the meantime, while the proceedings can continue, no final assessment order shall be made by the respondent.” 3. On 13.01.2026, learned counsel for the petitioner informed the court that Sahara Airlines Limited was taken over by the Jet Airways which too has gone into liquidation. In response thereof, Mr. Ruchir Bhatia, learned Senior Standing Counsel sought time to complete instructions as to whether This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/07/2026 at 12:26:48

the Department can and/or proposes to proceed against the erstwhile Sahara Airlines Limited. 4. Today, Mr. Anant Mann, learned Junior Standing Counsel for the respondent-Department on instructions, informs that since Sahara Airlines Ltd. has gone into liquidation and the subsequent company which had taken over Sahara Airlines Ltd. viz. Jet Airways too has gone into liquidation, no fruitful purpose would be served in conducting a special audit. 5. The Department may therefore, finalize the Assessment Order without the special audit. 6. The writ proceedings are closed with a liberty to the respondent- Department to apply for revival of the writ petition or seek requisite direction/clarification from the Court, if occasion so arises. 7. The writ petition stands disposed of accordingly.

DINESH MEHTA, J.

RAJNEESH KUMAR GUPTA, J. JULY 6, 2026/sid This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 08/07/2026 at 12:26:48

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