2024 (6) TMI 1301 - HC - Income Tax

Validity of Revision u/s 263 - whole cash deposit which remained unexplained should have been added u/s 68 and charged by applying tax rate u/s 115BBE - ITAT allowed the appeal of the assessee by accepting the case of the assessee that the seized cash was already added in the hands of the Director of assessee in assessment order for AY 2014-2015 passed u/s 143 (3) HELD THAT - As 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 and tax was also paid by the Director. Tribunal has considered this aspect while allowing the appeal of the assessee challenging the order u/s 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. Tribunal therefore, was justified in holding that order the passed by the AO was not at all prejudicial to the interest of Revenue as the amount of Rs. 15.50 lakhs was already taxed in the hands of individual Director. 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.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under Article 227 of the Constitution of India for Assessment Year 2017-2018; Validity of order under section 263 of the Income Tax Act, 1961; Recalling and modifying Tribunal's order; Allegation of mistake apparent on record; Prejudice to interest of Revenue due to erroneous assessment order; Double taxation issue regarding seized cash of Rs. 15.50 lakhs.

Analysis:
The petitioner challenged the Income Tax Appellate Tribunal's order dated 21.08.2023, which upheld the appeal of the assessee regarding the addition of Rs. 15.50 lakhs under section 68 of the Income Tax Act, 1961. The Tribunal found that the amount seized from the Director was already taxed in his individual capacity, and the entry in the company's books was reversed accordingly. The Tribunal dismissed the Revenue's Misc. Application seeking to recall the order, citing that the assessment order was not prejudicial to the Revenue's interest as the amount was already taxed. The Tribunal's decision was based on the principle that the same amount cannot be taxed twice, and the Revenue's attempt to revive the order was not permissible under the law.

The petitioner contended that the Tribunal erred in allowing the appeal without considering that the seized cash belonged to the company, not the Director. However, the Tribunal held that the amount was properly taxed in the Director's hands, and the company's entry was reversed due to the assessment order in the Director's case. The Tribunal's decision was justified as the amount was already taxed, and there was no mistake apparent in the appellate order to invoke section 254(2) of the Act. Therefore, the petition was dismissed for lack of merit, with no costs awarded.

In summary, the judgment revolved around the challenge to the Tribunal's order under Article 227, the validity of the order under section 263 of the Income Tax Act, and the issue of double taxation regarding the seized cash. The Tribunal's decision was based on the principle that the same amount cannot be taxed twice, and the Revenue's attempt to recall the order was deemed impermissible. The Tribunal's findings were upheld as the amount was properly taxed in the Director's hands, leading to the dismissal of the petition for lack of merit.