Gujarat High Court
Commissioner Of Income Tax Rajkot Iii vs Orchev Pharma Pvt. Ltd....Opponent(S) on 1 July, 2014
Bench: M.R. Shah, K.J.Thaker
O/TAXAP/505/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 505 of 2014
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COMMISSIONER OF INCOME TAX RAJKOT III....Appellant(s)
Versus
ORCHEV PHARMA PVT. LTD....Opponent(s)
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Appearance:
MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE K.J.THAKER
Date : 01/07/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal dated 31.12.2013 passed in ITA No.820/RJT/2010 for the AY 200607, the Revenue has preferred present Tax Appeal to consider the following substantial questions of law.
A. Whether the ITAT is justified in law as well as on facts in deleting the addition of Rs. 60,00,900/ made by the Assessing Officer on account of difference in value of work in progress?
B. Whether the ITAT is justified in law as well as on facts in deleting the addition of Rs. 1,92,419/ being shortage of cash found during the course of survey?
C. Whether the ITAT is justified in law as well as on facts in considering the statement made by the Managing Director of the assessee Company under Section 132(4) and 131(1A) of the Act even though same was going to the root of the matter while dismissing the appeal filed by the Department?
2.0. Now, so far as proposed question no. B is concerned i.e. with respect to deleting the addition of Rs. 1,92,419/ being shortage of cash found during the course of survey is concerned, the learned Page 1 of 3 O/TAXAP/505/2014 ORDER Tribunal has dealt with same in para 12 to 14, which reads as under:
"12.We have heard both the parties. Shortage of cash amounting to Rs.1,92,419/ was detected on physical verification of cash at the time of survey. The Assessing Officer treated the aforesaid shortage as income from unexplained sources and accordingly taxed the same.
13. On appeal the Ld. CIT(A) has deleted the impugned additions with following observations:
"So far as addition of Rs.1,92,419/ made on account of deficit cash in concerned the AR of the appellant submitted that, during the course of survey, itself it was submitted that, cash given to one of the directors for meeting factory expenses and salary to labourers were not posted in the books. The same were duly posted and during the course of assessment proceedings complete cash books was produced before the Assessing Officer. However, the Assessing Officer made the addition mechanically without appreciating the facts and circumstances of the case. Since, there is no discussion in the assessment order, the appellant's submission was forwarded to the Assessing Officer for his comments on the same. The Assessing Officer vide reply dated 16.11.2009 submitted that, since the issue is subject matter of record, no comments are offered and the claim of the appellant that, after posting certain expenditure, there remains no cash difference. However, the Assessing Officer has not offered his comments on the same. After having gone through the appellant's cash book and since the Assessing Officer's report is silent on this aspect, I have no alternative but to consider the appellant's submission and therefore, the addition Rs. 1,92,419/ made by the Assessing Officer is directed to deleted."
14. Shortage of cash found at the time of survey does not constitute income of the assessee. The Ld. CIT(A) has observed that the assessee has explained even at the time of survey that the said sum was given to the one of its directors for meeting certain expenses. The Ld. CIT(A) called for a report in this behalf from the Assessing Officer. The Assessing Officer has not submitted any comments to the CIT(A). The Ld. CIT(A) has accordingly deleted the impugned addition. In our view, the order passed by the CIT(A) deleting the impugned addition is reasonable on the facts and in the circumstances of the cases. Ground no.2 is dismissed."
Page 2 of 3O/TAXAP/505/2014 ORDER 3.0. Considering the above, when there are concurrent findings of fact given by the learned CIT(A) as well as learned Tribunal and so called shortfall of Rs. 1,92,419/ was explained by the assessee, we are of the opinion that both the learned CIT(A) as well as learned Tribunal are justified in deleting the addition of Rs. 1,92,419/ which was made by the AO on account of deficit cash at the time of search. We see no reason to interfere with the same. Hence, present appeal so far as question no. B is concerned, is hereby dismissed.
4.0. Now, so far as proposed question nos. A and C are concerned, Shri Pranav Desai, learned advocate for the appellant has vehemently submitted that neither learned CIT(A) nor learned Tribunal have appreciated that the floating amount of Rs.60,00,900/ which was found at the time of survey was neither reflected as finished stock or raw materials and said floating amount of Rs.60,00,900/ has not been accordingly dealt with and considered. Notice on the aforesaid two questions returnable on 04.08.2014.
sd/ (M.R.SHAH, J.) sd/ (K.J.THAKER, J) Kaushik Page 3 of 3