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
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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
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Approved for Reporting Yes No
✔
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VRAJ CORPORATION
Versus
OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE
3(1)(1)
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Appearance:
MS NUPUR D SHAH(10233) for the Petitioner(s) No. 1
MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1
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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
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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
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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
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C/SCA/10388/2022 JUDGMENT DATED: 22/07/2025
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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
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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
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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
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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
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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
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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
