TaxTMI 
TaxTMI 
2023 (4) TMI 226
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....licable to A.Y. 2017-18.'' 2.1 Brief facts of the case are that the AO invoked the provisions of Section 145(3) of the Act and concluded that there was defects and anomalies in the reply/ submissions filed by the assessee and consequently the AO made an addition of Rs.33,98,989/- by holding that during the year under consideration, the assessee company has deposited total cash amounting to Rs.36,92,500/- in SBN during demonetization period on 16-1-2016 in his saving bank account No. 3642000100144701 maintained with Karnataka Bank Ltd. During the assessment proceedings, the assessee was asked to furnish statement of monthly cash deposits during the F.Y. 2016-17 and 2015-16 and quantify the income declared with the cash deposited in his bank account(s). In response to this, the assessee furnished the details which are reproduced as under:- Details of cash deposit in Bank 1 (a) Total cash deposit in bank F.Y. 2015-16 0 (b) Total cash deposit in Bank from 01-04-2015 to 08-1-2015 0 (c) Total cash deposit in bank from 09-11-2015 to 31-12-2015 0 2 (a) Total cash deposit in Bank F.Y. 2016-17 36,92,500/- ....
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....seems to be cooked up and in view of this, the cash sale on 08-11-2016 as claimed by the assessee was never ever happened in a very few hours before declaring demonetization. Nor the assessee produced any purchase bills in support for verification so that the fact may be verified. 2.2 During the appellate proceedings, the ld. CIT(A) after considering the written submissions filed by the assessee which are at para No. 4.2 of the impugned order, dismissed the appeal of the assessee, thereby upholding the addition made by the AO. The operative portion of the order of the ld. CIT(A) is contained in para 4.3 and the same is reproduced herein below. ''4.3 I have carefully considered the matter. Assessee is stated to have started its own Jewellery business from November, 2015 and claimed to have made regular purchases of jewellery from M/s. Nakshatra Brands Ltd Mumbai. For the period from 01.04.2016 to 31.03.2017, the assessee claimed to have purchased mix jewellery worth Rs.4,86,30,978.00 from M/s Nakshatra Brand, Mumbai. But there seems to be hardly any sale which was commensurate with the purchase. According to the AO, total sales for the whole year was Rs.62,66,499/- Out o....
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....t since the tax on profit out of sales out of sales of Rs.33.98,989/- was already subject to tax, the AO doubly taxed assessee's income. In this regard, since claim of sale of Rs 33,98,989/- is treated as bogus, the AO is directed to reduce the profit declared by assessee on this part of the sales claimed in proportion to turnover declared. This aspect of argument is allowed. 4:33 At another part of written submission, the appellant argued that tax rate prescribed u/s 115BBE is not applicable in A.Y. 2017-18. In this regard, it is seen that the Taxation Laws (Second Act) 2016 says that the amendment will be applicable from 01.04.2017. Therefore, the same will be applicable in A.Y. 2017-18. Unless any Hon'ble High Court or Hon'ble Court adjudged the amendment to be unconstitutional, have no authority to say that tax rate will not be applicable in AY. 2017-18. This aspect of argument is rejected. Appeal is treated as partly allowed. Addition of Rs.33,98,989/- is confirmed AO is also directed to give relief per para 4.3.2 of this order.'' 2.3 Now before us, the ld. AR has filed the written submission in respect of both the grounds whi....
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....nsidered to be too large or against the human probability. d. The observation of AO that assessee has not segregated trading/ P&L A/c for both the business and that books of accounts for AY 2018-19 was not audited has no relevance for the AY under consideration considering the fact that in the year under consideration assessee did not carry out any real estate activity. All the activities of the year is of jewellery business and therefore, the observation of AO that the segregated trading/ P&L A/c is not made has no impact. Further non audit of accounts for AY 2018-19 has no relevance for the AY under consideration. e. The AO incorrectly stated that the assessee has not furnished bills/ vouchers of sales made on 08.11.2016 whereas the same were furnished vide submission dt. 27.11.2019 as per the table given at Pg 9 of the CIT(A) order. f. The observation of Ld. CIT(A) that books are manufactured is without basis. Further his observation that filing of VAT return, paper evidence of purchase & sale are not proof of actual transaction having taken place without bringing any material on record that purchase & sales are not genuine cannot be viewed against the....
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....68 or u/s 69A of the Act. ACIT Vs. Hirapanna Jeweller (2021) 202 DTR 337/ 189 ITD 608 (Visakha) (Trib.) Assessee having accounted the high denomination notes deposited in bank as cash sales in its books of accounts and produced the sales bills for the same and the AO having accepted the sales & the stock and found no defect in the purchases or sales which match with the inflow/outflow of stock, addition u/s 68 could not be made in respect of the same amount. PCIT Vs. Agson Global (P) Ltd. (2022) 210 DTR 225 (Del.) (HC) Having regard to the extensive material which has been examined by the Tribunal, in particular, the trend of cash sales and corresponding cash deposited by the assessee with earlier years, the Court is of the view that there was nothing placed on record which could have persuaded the Tribunal to conclude that the assessee had in fact earned unaccounted income i.e., made cash deposits which were not represented by cash sales. Therefore, the Tribunal correctly found in favour of the assessee and deleted the addition made by CIT(A) u/s 68. CIT Vs. Kailash Jewellery House ITA No. 613/2010 order dt. 09.04.2010 (Delhi) (HC) ....
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....account or the source of fund utilised in repaying the loan is doubtful. That being the case, the addition under section 69A of the Act cannot be made. In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted. '' ''Ground No. 2. The Ld. CIT(A), NFAC has erred on facts and in law in taxing the above amount @ 60% by not accepting the contention of assessee that section 115BBE substituted by Taxation Laws (Second Amendment Act), 2016 which received the assent of President on 17.12.2016 and made applicable from 01.04.2017 is not applicable to AY 2017- 18. Facts & Submission:- 1. The assessee before the Ld. CIT(A) stated that section 115BBE is not applicable in AY 2017-18. The Ld. CIT(A), however, held that the amendment is made applicable from 01.04.2017 i.e. AY 2017-18 and therefore, unless the Hon'ble High Court or Apex Court adjudged the amendment to be unconstitutional, he has no authority to say that this section is not applicable in AY 2017-18. 2. It is submitted that substituted section 115BBE by Taxation Laws (Second Amendment Act), 2016 received the assent of President on 17.12.2016. The section is made applicabl....
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....983 and Taxation Case No. 28 of 1986 respectively. ..........17. Reading the judgment of the Apex Court in the case of Kesoram Industries and Cotton Mills Ltd. vs Wealth Tax Commissioner (Central), Calcutta AIR 1966 SC 1370 harmoniously with the Constitution Bench judgment of the Apex Court in the case of Karimtharuvi Tea Estate Ltd AIR 1966 SC 1385, this Court would observe that the argument advanced by Counsel for the assessees (Amicus Curriae) as well as the Department can be made only in respect of a rate prescribed under a Finance Act or an Act providing a surcharge if the same is brought into force on the lst of April of the assessment year in which assessment for the previous year is being done as the same would only provide for ascertaining the rate, for existing liability under the Income Tax Act. But that is not the case here. Under the new provision, i.e. Section 64(1)(iii) a new liability has been prescribed and not the rate for ascertaining the liability. Such new liability under the Income Tax Act cannot be given a retrospective effect. Such liability can only be fastened on an individual if the same was existing at the time of accrual and not at the time of ....
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....ws (Second Amendment Act ) Bill, 2016 receives the assent of President and thus this clause was specifically made effective only where the searches took place on or after 15.12.2016. Section 115BBE inserted by the same Amendment Act is specifically made effective from 01.04.2017. Thus from the analogy of section 271AAB it is evident that section 115BBE is also applicable where income referred to in that section is assessed on or after 01.04.2017 i.e. AY 2018-19. Hence the substituted section 115BBE is not applicable for AY 2017-18. 4. It is a settled proposition of law that legislations which modify accrued rights or which impose obligations or imposed new duties or attach a new disability have to be treated as prospective. This is so held by the Hon'ble Supreme Court in case of CIT Vs. Vatika Township Private Limited (2014) 109 DTR 33 where the Hon'ble court has given the following finding for deciding whether a provision has prospective operation or retrospective operation:- "39(e) There is yet another very interesting piece of evidence that clarifies the provision beyond any pale of doubt, viz. understanding of CBDT itself regarding this provision. It is contai....
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....nt. On the contrary, imposing a retrospective levy on the assessee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. 40. The aforesaid discursive of ours also makes it obvious that the conclusion of the Division Bench in Suresh N. Gupta treating the proviso as clarificatory and giving it retrospective effect is not a correct conclusion. Said judgment is accordingly overruled." In view of the above discussion it is clear that the amendment made in section 115BBE by Taxation Laws (second Amendment) Act 2016 which received the assent of President on 17.12.2016 and made effective from 01.04.2017 would apply in FY 2017-18 i.e. AY 2018-19. Thus the amended section is not applicable for AY 2017-18 and therefore tax charged by AO on the cash deposited @ 60% instead of taxing it under the regular provisions of the Act is not as per law.'' 2.4 During the course of hearing, the ld. DR relied upon the order of the ld. CIT(A) and also relied upon the decision in the case of Sanjay Kapur vs ACIT [2022] 138 taxmann.com 207 (SC). 2.5 The Bench has heard both the parties and perused the materials a....