A division bench of justices M R Shah and B N Karia allowed the I-T Department to go ahead with special audit of the group of companies owned by the controversial 'godman' asaram, and his institution, Sant Asaram Ashram.
The ashram floated several shell companies which indulge in money laundering, the notice alleged.
With the court dismissing the petition, the department will be able to carry out a special audit as provided under section 142 (2)(A) of the Income Tax Act.
The self-styled godman is in jail, facing trials in the two cases.