TaxTMI 
TaxTMI 
2023 (5) TMI 1279
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....axation Law (Second Amendment) Act, 2016 dated 15.10.2016 while the search operation was conducted on 16.08.2016 at the premises of the assessee i.e. before such amendment came into effect. Thus, the provisions set out in the Second Amendment Act should be applied prospectively and not retrospectively. The Hon'ble CIT(A) has erred in interpreting that the same is retrospective in nature i.e. from A.Y. 2017-18 and thus the order passed deserves to be quashed. 2. In law & as per facts and in the circumstances of the assessee case, the Hon'ble CIT(A) has erred in upholding the levy of tax u/s 115BBE at the rate of 60% by treating the same as retrospective in total disregard of the decisions relied upon by the assessee. 3. The assessee craves leave to add, amend, alter or modify the ground or grounds of Appeal on or before the hearing." 3. The solitary grievance of the assessee in this appeal is that whether provisions of section 115BBE would be applicable to tax the unexplained money being undisclosed gold, Jewellery found during the course of search, when the date of search is 16.08.2016? 4. Learned Counsel for the assessee argued that the issue ....
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....respective of whether the undisclosed assets found/taxed are prior to or after the demonetization period. Therefore, if any income from AY 2017-18 is taxed u/s 68 to 69D of the Act, the provision of section 115BBE of the Act would apply to all such incomes. 6. After giving our thoughtful consideration to the submission of the parties and perusing the judicial decisions relied upon by the Ld. Counsel, we find that the issue involved in the present appeal is no longer res integra. The question as to whether provisions of section 115BBE would be applicable to tax the unexplained money being undisclosed gold, Jewellery found during the course of search, when the date of search is 16.08.2016 ,was considered by various judicial forums across India. The said issue is considered by Co-ordinate Bench of ITAT, Indore in ITA No.677/Ind/2019, wherein it was held as follows: "11. Allowing the appeal on the chargeability of tax as per normal rates instead of amended provision of Section 115BBE of the Act is the subject matter before us. The assessee has challenged the chargeability of tax @ 77.25% by invoking the amended provision of Section 115BBE of the Act on account o....
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.... of this Act in computing his income referred to in clause (a) of sub-section (1).]" After the amendment total income includes additional income as voluntarily declared by the assessee in the return of total income whereas the amount of addition made by the assessing officer included both the amount, and the provision of section 115BBE of the Income Tax Act was applied. Therefore, the assessee made out the following case against the order passed by the Ld. assessing officer: "2.2.5] That provision of section 68, 69, 69A, 69B, 69C and 69D of the Income Tax Act is attracted when the additional income as offered or amount as added attract the provision of sections 68, 69, 69A, 69B, 69C and 69D of the Income Tax Act. The present case in hand, the assessing officer made addition to the total income of the respondent assessee by invoking the provision of section 69B of the Income Tax Act "69B. Where in any financial year the respondent assessee has made investments or is found to be the owner of any bullion, Jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such b....
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....ue terms only. 2.5.1] That while filing the return the respondent assessee company included the surrender amount of Rs. 11,34,97,915/- under the head "Business Income" and paid tax at applicable normal rate of 34.60%. 2.5.2] The Assessing Officer treating the difference in stock as "Unexplained Investment" and covered the same under deeming provisions of section 69B of the Income tax and after applying the provisions of section 115BBE tax @ 77.25% . 2.5.3] That the issue in this ground is that under which head excess stock found in the Search & Survey is to be taxed ,whether under the head income from business or treated as unexplained investment by applying deeming provisions of section 69B of the Act. 2.5.4] That during the course of Search Proceedings vis-a-vis assessment proceedings the respondent assessee has explained before the Ld. A.O. that surrender of Excess Stock was in relation to business activities and it had direct nexus with business activities, accordingly the respondent assessee company included the same under the head "Business Income"." 14. It is also a fact that the Ld. assessing officer has not brought on record any....
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.... having only source of income from Trading and Manufacturing of jewellery. The additional income was offered on account of difference in the stock as per books of accounts and as actually found during the course of search. The difference in stock as fund was also related to the business of the assessee. I therefore hold that additional income offered and addition made was on account of business income of the assessee and is therefore liable to be taxed under the head of income from business and profession only. The provisions of section 115BBE of the Income Tax Act are applicable where addition is made under section 68, 69, 69A, 69B, 69C and 69D i.e. from residuary category w.e.f 01.04.2017. However, in the present case in hand, additional income was offered and even addition was made on account of difference in the stock which was liable to be taxed under the head of income from business and profession only and valuation of stock was done on the basis of various observations drawn during the course of search & survey which took place on 28.09.2016 & 15.11.2016 respectively. Since, the search in the case of assessee was carried out on 28.09.2016 and additions were made conseq....
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....rievance of it being thus effective for FY 2016-17 or, w.e.f. 01/4/2016. Enacting it mid-year and, further, making it applicable "at once", becomes meaningless if the same is to take effect retrospectively, or is made effective from a later date (01/4/2017), which could in that case be by Finance Act, 2017. True, the amendment, where so read, does gives rise to a peculiar situation inasmuch as two tax rates would obtain for the current year, i.e., one from 01/04/2016 to 14/12/2016, and another from 15/12/2016 to 31/03/2017, but, then, that is no reason to read retrospectively where the applicable date is clear and, further, there is nothing to suggest retrospectively. Further, extraordinary and supervening circumstance of the Demonetization Scheme, 2016, brought out by the Government of India in November, 2016, explains the urgency in bringing an amendment mid-year. Further, the tax rate being in respect of incomes which are imputed with reference to a transactions, it is possible to administer the same, another aspect of the matter that stands considered by us. That is, a tax rate for transactions made up to 14/12/2016, and another for those thereafter. Subsequent mention of the a....