2023 (8) TMI 1481 - AT - Income Tax

Rectification of mistake - validity of order u/s 263 passed by the ld. Pr.CIT, Valsad challrnged - unexplained physical cash as available with the assessee on the date of deposit - HELD THAT - 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 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 ld PCIT. The revenue in the 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 sum 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.

Summary

Issues:
Rectification of Tribunal order under Section 254(2) for AY 2017-18.

Analysis:
The Miscellaneous Application (MA) filed by the revenue sought rectification in the Tribunal's order dated 22/12/2022 for AY 2017-18. The revenue argued that the order was factually incorrect and needed rectification based on the assessee's failure to explain the availability of cash during the demonetization period. The revenue contended that the Tribunal did not address this crucial issue, leading to a mistake apparent in the order. The revenue requested suitable correction or recall of the order for fresh adjudication. On the contrary, the assessee's Authorized Representative supported the Tribunal's order, stating that the revenue's review request was beyond the scope of Section 254(2) of the Income Tax Act. The assessee's representative highlighted that the Tribunal had already made a categorical finding that the amount in question had been taxed in the hands of the individual Director, not the assessee company, and thus, the assessment order was not prejudicial to the revenue's interest. The Tribunal's order did not require rectification or interference, as per the assessee's representative's argument.

Upon careful consideration of both parties' submissions and the record, including the Tribunal's order, the Tribunal found that the core issue was whether the assessment order was erroneous and prejudicial to the revenue's interest under Section 263. The Tribunal had already determined that the order was not prejudicial as the amount had been taxed in the Director's hands, a fact accepted by the Assessing Officer initially. The revenue's attempt to revive the order was deemed impermissible under Section 254(2). The Tribunal reiterated that the amount could not be taxed twice, as the company had adjusted the cash balance in its books, crediting the amount and debiting it from the seized cash. Consequently, the Tribunal dismissed the revenue's Miscellaneous Application, finding no merit in the arguments presented.

In conclusion, the Tribunal dismissed the revenue's Miscellaneous Application seeking rectification of the Tribunal's order under Section 254(2) for AY 2017-18, as the Tribunal had already determined that the assessment order was not prejudicial to the revenue's interest, and the issue of cash availability had been adequately addressed in the initial order.