2023 (7) TMI 1084 - AT - Income Tax

Tribunal upholds unexplained money, enhanced tax rate under Income Tax Act

The Tribunal partly allowed the appeal, sustaining Rs. 50,00,000/- as unexplained money under section 69A of the Income Tax Act. Additionally, the ... Unexplained money u/s.69A - Cash receipt claiming to be marriage gift and therefore exempt - HELD THAT:- Admittedly, this cash was deposited by assessee during demonetization period whereas the claim of assessee is that this was received as gifts in cash in marriage on 07.12.2015. There is no direct evidence available with the assessee to substantiate his claim but going through the customary system in Indian society, we agree with the observations of CIT(A) that no economic transaction can be divorced from the underlying social cultural factors. It is customary in Indian society and according to status one receives gifts in marriage. Hence, we further want to estimate by looking into the fact that assessee might not have received cash gift of Rs. 1,00,00,000/- and CIT(A) has already allowed relief of Rs. 30,00,000/-, we want to make a further estimate and delete the amount of Rs. 20,00,000/- further. Thereby, the total deletion is i.e., deleted by CIT(A) of Rs. 30,00,000/- plus deletion now by the Tribunal of Rs. 20,00,000/-, aggregate comes to Rs. 50,00,000/-. Hence, we sustain the balance of Rs. 50,00,000/- as unexplained money u/s.69A - First two grounds raised by the assessee are partly allowed as indicated above. Applicability of provisions of section 115BBE - We are of the view that in the instant case before us the provisions of Section 115BBE of the Act as amended by second amendment Act by the Taxation Laws (second amendment) Act, 2016 will apply w.e.f 01.04.2017 on enhanced rate of tax @60% instead of @30%. The enhanced rates applies from the commencement of the assessment year relevant to previous financial year. In this case, this applies to Financial Year 2016-17 relevant to Assessment Year 2017-18. Hence, we find no force in the arguments of the Ld. Counsel and hence same are rejected. This issue is decided in favour of Revenue and against assessee. Issues Involved:1. Addition of Rs. 70,00,000/- as unexplained money u/s 69A of the Income Tax Act.2. Applicability of provisions of section 115BBE of the Income Tax Act.Summary of Judgment:Issue 1: Addition of Rs. 70,00,000/- as Unexplained Money u/s 69AThe assessee, a non-resident individual, claimed that cash deposits totaling Rs. 1,07,00,000/- were marriage gifts and hence exempt. The Assessing Officer (AO) added Rs. 1,00,00,000/- as unexplained money u/s 69A, noting that the assessee failed to provide substantial evidence for the claimed marriage gifts. The CIT(A) partially accepted the assessee's explanation, deleting Rs. 30,00,000/- and sustaining Rs. 70,00,000/- as unexplained money.The Tribunal further reduced the unexplained money by Rs. 20,00,000/-, acknowledging the customary practice of receiving marriage gifts in Indian society. Consequently, Rs. 50,00,000/- was sustained as unexplained money u/s 69A.Issue 2: Applicability of Provisions of Section 115BBEThe assessee argued that the enhanced tax rate under section 115BBE (60% and 25% surcharge) should not apply as the amendment was effective from AY 2018-19. The Tribunal, referencing the Hon'ble Kerala High Court's decision in Maruthi Babu Rao Jadav vs. ACIT, held that the enhanced tax rate applies from AY 2017-18, covering the relevant financial year 2016-17. Therefore, the Tribunal upheld the application of the enhanced tax rate under section 115BBE for the assessee's case.Conclusion:The appeal was partly allowed. The Tribunal sustained Rs. 50,00,000/- as unexplained money u/s 69A and upheld the application of the enhanced tax rate under section 115BBE.