Delhi High Court asks Patanjali to Co-operate with Special Audit [Read Judgment]

A two-judge bench of the Delhi High Court, while dismissing a petition by the Patanjali Ayurveda Ltd, directed them to co-operate with the Special Audit proposed by the income tax department.

The income tax return filed by the petitioner, Patanjali Ayurveda Ltd in the year 2011 was subjected to scrutiny by the Assessing Officer. in 2013, the revenue sent a notice to the petitioner proposing to conduct a special audit for the relevant year. The petitioners responded that there were no complexities in its accounts and that the proposal outlining the nine points on which special audit was proposed, had been adequately explained during the course of the assessment proceedings. Later, an order was passed issuing a direction to conduct the special audit.

The petitioner filed a writ petition before the High Court contending that the books of accounts were also produced in the course of hearing along with supporting vouchers. It was submitted that the accounts were duly audited by a qualified Chartered Accountant, tax audit report along with all annexures were also filed in the course of hearing, the profit & loss account, balance sheet was properly drawn and were in agreement with the books of accounts on the basis of which true profit can be ascertained, the balance sheet can be perused in respect of share capital and loans and advances received, short term and long term investments made on the basis of which a fair assessment order can be passed.

Dismissing the plea of the petitioners, the bench comprising Justices Ravindra Bhatt and Prateek Jalan observed that far from the case showing non-application of mind, the AO has carefully outlined what were the salient aspects in the accounts and returns of the assessee that needed to be looked into and made the impugned order directing special audit.

“The assessee has not alleged any malafides. In view of these reasons, the court is of the opinion that the writ petition has no merit. Consequently, the interim orders which operated for these last 5 years are vacated. The assessee is directed to co-operate with the Special Auditor. The period during which the interim order operated shall be excluded for the purpose of calculating the period for completion of such special audit. The writ petition is dismissed, but subject to the above observations,” the bench said.