Gujarat High Court
Vraj Corporation vs Office Of The Assistant Commissioner Of ... on 22 July, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10388 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
==========================================================
Approved for Reporting Yes No
✔
==========================================================
VRAJ CORPORATION
Versus
OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE
3(1)(1)
==========================================================
Appearance:
MS NUPUR D SHAH(10233) for the Petitioner(s) No. 1
MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 22/07/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Ms. Nupur Shah for the petitioner and learned Senior Standing Counsel Ms. Maithili Mehta for the respondent.
2. Rule returnable forthwith. Learned Senior Standing Counsel Ms. Maithili Mehta waives Page 1 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025 NEUTRAL CITATION C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025 undefined service of notice of Rule for the respondent.
3. Having regard to the controversy arising in this petition which is in narrow compass, with the consent of the learned advocates for the parties, the matter is taken up for hearing.
4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the legality and validity of the notice dated 7.4.2022 issued u/s. 148 of the Income Tax Act, 1961 [for short 'the Act']
5. The brief facts of the case are as under:
5.1 The petitioner filed return of income for Assessment Year 2018-19 on 6.10.2018 declaring total income of Rs.93,28,510/-. 5.2 The case of the petitioner was selected for Complete Scrutiny under CASS under Page 2 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025 NEUTRAL CITATION C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025 undefined faceless E-Assessment Scheme, 2019 by issuing notice dated 22.9.2019 under Section 143(2) of the Act.
5.3 Thereafter, notices under Section 142(1) of the Act were issued, which were replied by the petitioners and ultimately Assessment Order under Section 143(3) read with Section 143(3A) and Section 143(3B) of the Act were framed on 31.3.2021, determining total income at Rs. 93,28,510/- being return income as assessed income.
5.4 The petitioner, thereafter, received notice dated 21.3.2022 under Section 148A(b) of the Act on the ground that as per the Tax Audit report filed on 3.10.2018, liabilities in the nature of Salary of the Employees, Audit fees, Telephone expenses, TDS on interest, CGST and SGST amounting to Page 3 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025 NEUTRAL CITATION C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025 undefined Rs.25,26,374/- were unpaid and hence, as per the provisions of Section 43(B) of the Act, the same is required to be dissallowed. 5.5 The petitioner by way of reply dated 24.3.2022 explained in detail with regards to the expenses which are sought to be dissallowed under Section 43(B)of the Act.
However, respondent by the impugned order dated 7.4.2022 passed under Section 148A(d) of the Act, rejected the reply of the petitioner and observed that it is a fit case to re-open the assessment in view of the information received from Insight Portal.
6. Learned advocate Ms. Nupur Shah for the petitioner submitted that the impugned orders and the notice for re-opening are contrary to the facts and the Audit Report filed by the petitioner. It was submitted that as per the Page 4 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025 NEUTRAL CITATION C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025 undefined Form 3CB Auditor's Report as well as Form 3CD, it is clearly stated in the report as well as in the Form that though the amount was regarding salary of employees, service tax, audit fees, provisions for telephone expenses, TDS on interest, unpaid GST as on 31.3.2017, the same was paid in the subsequent period and before the due date of filing of report and, therefore, there is no question of application of Section 43(B) of the Act. It was further submitted that during the regular course of assessment, the Assessing Officer has scrutinized the same issue and, therefore, the impugned notice is nothing but a change of opinion which is not permissible as per the decision of the Hon'ble Apex Court in case of Commissioner of Income Tax, Delhi vs M/S. Kelvinator of India Ltd, reported in 320 ITR 561 (SC). It was further submitted that there Page 5 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025 NEUTRAL CITATION C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025 undefined is no failure on the part of the petitioner to disclose wholly and truly all material facts on record.
7. It was further submitted that there is no failure on the part of the petitioner to disclose fully and truly all relevant material facts and the information received from Insight Portal by the respondent Assessing Officer clearly shows that such information is contrary to the Audit report filed by the petitioner.
8. On the other hand, learned Senior Standing Counsel Ms. Maithili Mehta could not controvert the fact that the Audit report which is filed by the petitioner in Form 3CB and in Form 3CD clearly shows that the amount which was unpaid, remained unpaid at the end of Financial Year 2017-18, was duly paid in Page 6 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025 NEUTRAL CITATION C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025 undefined the subsequent period.
9. Having heard the learned advocates for the respective parties and considering the facts of the case, it appears that it is a clear case of non-application of mind on the part of the respondent Assessing Officer while passing the impugned order under Section 148(A)(d) of the Act whereby the Assessing Officer has referred to and relied upon only the Insight Portal information ignoring the reply filed by the petitioner as well as material available on record in form of Form 3CB and 3CD, which clearly show that the Assessee is following Mercantile Accounting System and the unpaid expenses in form of salary payable of Rs.1,04,913/- was paid on 10.4.2017 and current year's unpaid amount of Rs. 1,32,234/- was paid on 9.4.2018. Unpaid audit fees was debited to Profit & Loss Account was shown of Page 7 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025 NEUTRAL CITATION C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025 undefined Rs.75,000/-, has been transferred to the Account under the head Sundry Creditors for Expenses". Provisions of telephone expenses is on estimated basis and the provisions of Rs. 2470 has been reversed. Similarly, TDS on interest under Section 194(A) was paid on 20.4.2017 and current year TDS was paid on 28.4.2018 and the current year amount of unpaid TDS was paid under Section 194(C) on 7.9.2018. The amount of CGST and SGST was adjusted from Input Tax Credit in subsequent year. Therefore, there is no unpaid expenses as stated in the Audit report. Inspite of such clear note placed by the auditor, the respondent Assessing Officer making observation on the basis of information received from the Insight Portal has erred in arriving at conclusion that it is a fit case to re-open the assessment or such transactions Page 8 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025 NEUTRAL CITATION C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025 undefined of Rs.25,26,374/- being unexplained though the same was already explained in the Audit report filed by the petitioner along with the return of income.
10. In view of the foregoing reasons, the impugned order passed under Section 148A(d) as well as the impugned notice dated 7.4.2022 issued under Section 148 of the Act, are hereby quashed and set-aside. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) SAJ GEORGE Page 9 of 9 Uploaded by SAJ GEORGE(HC01069) on Thu Jul 31 2025 Downloaded on : Sat Aug 02 00:09:53 IST 2025