Gujarat High Court
Assistant Commissioner Of Income Tax, ... vs M/S Vapi Care Pharma Private Limited on 10 June, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/8225/2024 ORDER DATED: 10/06/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8225 of 2024
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ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI
Versus
M/S VAPI CARE PHARMA PRIVATE LIMITED
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Appearance:
MRS KALPANA K RAVAL(1046) for the Petitioner(s) No. 1
for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 10/06/2024
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. Karan Sanghani for the petitioner.
2. By this petition under Article 227 of the Constitution of India, the petitioner has challenged the order dated 21.08.2023 passed by the Income Tax Appellate Tribunal, Surat Bench, Surat (For short the Tribunal") in MA Page 1 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined No. 18/SRT/2023 arising out of ITA No.94/SRT/2022 for Assessment Year 2017-2018.
3. Brief facts of the case are that the assessee filed its revised return of income for AY 2017-2018 on 26.11.2018 declaring loss of Rs.9,38,820/-. Thereafter the case of the assessee was selected for scrutiny assessment through CASS. Assessment Order under section 143(3) of the Income Tax Act, 1961 (For short "the Act") was passed on 10.12.2019 accepting the total loss of Rs. 9,38,820/-.
4. Thereafter, PCIT Valsad passed order dated 27.03.2022 under section 263 of the Act holding that whole cash deposit of Rs. 15,50,000/- which remained unexplained should have been Page 2 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined added under section 68 of the Act and charged by applying tax rate under section 115BBE of the Act.
5. However, it was the case of the assessee that during the course of search, cash of Rs. 15.50 lakh was seized by searched party from the residence of Director of assessee and the assessee company had reduced the cash balance by passing an accounting entry by crediting Rs. 15.50 lakh and debiting Rs. 15.50 lakh to the cash seized in search. However, the department treated the seized cash of Rs. 15.50 lakh as belonging to Shri Kamal J. Shah, Director of the assessee company and made addition thereof. Shri Kamal J. Shah accepted the addition and paid the tax Page 3 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined accordingly. On adding such amount in the hands of the Director in respect of such cash, the assessee reversed the entry and had shown the cash in the hands of Shri Kamal J. Shah and the closing balance as on 8.11.2016 was of including Rs. 15.50 lakh.
6. The Assessing Officer during the assessment proceedings called for the details of cash deposited during demonetization period, nature and source of cash deposited from 9.11.2016 to 31.12.2016 and the cash in hand as on 8.11.2016. The Assessing Officer accepted the contention of the assessee that Rs. 15.50 lakh was already taxed in the hand of Shri Kamal J. Shah in the assessment order for the AY 2014-2015 as per the stand Page 4 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined of the department and does not need to be added to the income of the company again.
7. The assessee preferred appeal before the Tribunal who by order dated 21.12.2022 allowed the appeal of the assessee by accepting the case of the assessee that the seized cash of Rs. 15.50 lakh on 19.06.2013 was already added in the hands of the Director of assessee in assessment order for AY 2014-2015 passed under section 143(3) of the Act dated 28.03.2016.
8. Thereafter Revenue filed Misc.
application No.18/SRT/2023 before the Tribunal to recall the records and modify and rectify the order passed in ITA No.94/SRT/2022 dated 21.12.2022. Page 5 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024
NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined
9. The Tribunal dismissed the Misc.
Application filed by the Revenue vide order dated 21.08.2023 finding no merit in the application.
10. Being aggrieved by the impugned order, the petitioner department has preferred the present petition.
11. Learned advocate Mr. Sanghani for the petitioner submitted that the Tribunal has committed an error as there is mistake apparent on record to the effect that the Principal Commissioner of Income Tax while passing order under section 263 of the Act has rightly come to the conclusion that there was no cash balance of Rs. 15.50 lakhs available with respondent Page 6 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined assessee as the said amount was seized by the Income Tax department in the year 2013 and was never returned. It was therefore, submitted that the Tribunal has committed an error in allowing the appeal filed by the respondent assessee challenging the order under section 263 of the Act without considering such aspect. It was further submitted that the Tribunal while dismissing the Misc. Application for rectification of such mistake apparent on record did not consider the aspect of the amount of Rs. 15.50 lakh not being available with the respondent assessee as according to the respondent assessee the said amount seized from the Director of respondent assessee Page 7 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined company belonged to respondent assessee.
12. It was submitted that as such the Tribunal could not have allowed the appeal filed by the respondent assessee challenging order passed under section 263 of the Act as the assessment order passed by Assessing Officer under section 143(3) of the Act was erroneous and prejudicial to the interest of the Revenue as there was no explanation tendered by the respondent assessee for deposit of amount of Rs. 15.50 lakh seized by the department from the Director of the respondent assessee company in the year 2013 as the said amount was never returned to the respondent assessee Page 8 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined company.
13. The Tribunal while dismissing the Misc. Application has held as under:
"4. We have considered the submission of both the parties and perused the record carefully including the order of Tribunal dated 21/11/2022. We find that in the present appeal, the assessee has challenged the validity of order under Section 263 passed by the ld. Pr.CIT, Valsad. The core issue while adjudicating appeal was, if the twin condition of Section 263 whether the assessment order passed by assessing officer was erroneous and in so far as prejudicial to the interest of revenue. We find that while adjudicating the appeal of assessee, we have already took a view that the order passed by the Assessing Officer was not at all prejudicial to the interest of revenue as the impugned amount of Rs. 15.50 lacs were already taxed in the hands of individual Director. This fact was initially accepted by the assessing officer while passing the assessment order, though, the assessment order was revised by Id PCIT. The revenue in the Page 9 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined present application is seeking revive of the order, which is not permissible under section 254(2). So far as specific plea raised in the present application that there is no clear finding about the availability of cash in the hand of assess company is concerned, we find that once we impliedly accepted the plea of the assessee that same amount cannot be taxed twice. And that assessee company reduced the cash balance by passing the accounting entry by crediting Rs. 15.50 lacs and debiting the same amount to the cash seized in the search. Thus, we do not find any merit in this present Misc. application and we dismiss the same."
14. Considering the above facts and circumstances as well as findings of the Tribunal, it is apparent that the amount of Rs. 15.50 lakhs was seized from the residence of the Director of respondent assessee company and addition was also made in hands of the Director in his individual capacity Page 10 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined and tax was also paid by the Director. The Tribunal has considered this aspect while allowing the appeal of the assessee challenging the order under section 263 of the Act. It also appears from the record that the contention of the assessee company that amount of Rs. 15.50 lakh belonged to it was not accepted by the Income Tax department and therefore, the entry passed by the assessee company in the books of accounts reducing the cash balance was reversed because of the assessment order passed in the case of the Director.
15. The Tribunal therefore, was justified in holding that order the passed by the Assessing Officer was not at all prejudicial to the interest Page 11 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024 NEUTRAL CITATION C/SCA/8225/2024 ORDER DATED: 10/06/2024 undefined of Revenue as the amount of Rs. 15.50 lakhs was already taxed in the hands of individual Director.
16. In such facts and circumstances, we are of the opinion that there is no error in dismissing Misc. Application filed by the Revenue in absence of any mistake apparent in the appellate order passed by the Tribunal so as to invoke the provisions of section 254(2)of the Act.
17. The petition therefore being devoid of any merit is accordingly dismissed. No order as to costs.
(BHARGAV D. KARIA, J) (NIRAL R. MEHTA,J) RAGHUNATH R NAIR Page 12 of 12 Downloaded on : Fri Jun 28 21:14:51 IST 2024