Prospective application of section 115BBE enhanced rate limits tax on unexplained money to the lower rate for earlier years

Unexplained money sustained under section 69A could not be taxed at the enhanced rate under section 115BBE for Assessment Year 2017-18, because the higher 60% rate was held to apply prospectively from Assessment Year 2018-19 onwards. The tax on the sustained addition was therefore restricted to 30%, and the assessee obtained partial relief on the applicable rate.

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Issues: Whether the cash deposit treated as unexplained money could be subjected to the enhanced rate of tax under section 115BBE for the assessment year in question, and whether the assessee was entitled to relief on the rate applicable.

Analysis: The assessee's cash deposit of Rs. 2,00,000 was sustained as unexplained money under section 69A. The decisive question was the applicable rate of tax under section 115BBE. Following the cited High Court ruling, the enhanced rate of 60% was held to apply only from Assessment Year 2018-19 onwards and not to earlier years. Since the year under appeal was Assessment Year 2017-18, the higher rate could not be applied to the impugned deposit.

Conclusion: The tax on the sustained addition was restricted to 30% and the assessee was granted partial relief on the rate of tax.

Ratio Decidendi: The enhanced rate under section 115BBE is prospective and cannot be applied to transactions falling in an assessment year prior to its operative reach.

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