FINALLY CRACKED THE CODE.....
After many days and days of trouble shooting and contact to Apple Phone Support (who wasn't able to help me out).... I finally managed to google the following result from an apple support link:
http://support.apple.com/kb/TS2090
In my case the problem seemed to be that If the HDMI cable accidently is being removed (or pulled out) while both the TV and the Apple TV is powered on, the Apple TV might stop playing audio which it did in my case.
The following worked for me. disconnect the TV and the Apple TV from the power source (simple power off will not work). Wait for 10 seconds... Then first conntect the TV back to the power source... wait 10 seconds and then connect the Apple TV back to the power source. VOILA!!!
Cheers, Mike