TaxTMI 
TaxTMI 
2025 (6) TMI 2108
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....nt u/s 133A on 28.09.2016). The case of assessee was selected under compulsory scrutiny and notices u/s 143(2)/142(1) were issued which were complied by assessee. Finally, the AO completed assessment vide assessment-order dated 20.12.2019 after making a disallowance of Rs. 44,108/- and determining total income at Rs. 16,42,198/- and tax liability at Rs. 2,99,656/- as per normal tax rates. 2.1 Subsequently, the AO being of the view that the assessment-order suffered from an apparent mistake in as much the normal tax rate has been wrongly applied to the surrendered income of Rs. 10,00,500/- instead of higher rate prescribed u/s 115BBE, issued a show-cause notice dated 29.01.2020 to assessee proposing for rectification of assessment-order. Ultimately, finding no response from assessee, the AO passed rectificationorder dated 11.02.2020 whereby the working of tax is made at a higher rate of 60% (plus Surcharge and Cess as applicable) u/s 115BBE. Aggrieved, the assessee filed first-appeal to CIT (A) but did not get any success. Now, the assessee has come in next appeal before us. 3. Originally, the assessee-HUF filed Form No. 36 in wrong name of "Shailesh K....
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....ither raised any objection qua the nature of income during scrutiny proceeding nor mentioned sections 68 to 69D in assessment-order, the AO is very much wrong in adopting the route of rectification for applying section 115BBE. Relying upon following two decisions, she submitted that the rectification is not possible in such a situation as held by Hon'ble Courts: (a) CIT, Ludhiana Vs. M/s Hero Cycle Pvt. Ltd. (1997) 228 ITR 463 (Supreme Court) (b) ACIT Vs. Shri Sudesh Kumar Gupta, ITA No. 976/JP/2019, order dated 09.06.2020 (ITAT, Jaipur Bench) 6. Per contra, Ld. DR for revenue defended the rectification done by AO. He referred following para of assessment-order passed by AO: "4. During the course of survey action u/s 133A of the IT Act, assessee has declared an amount of Rs. 10,00,500/- on account of unexplained deposit in bank. Therefore, tax shall be payable as per provisions of Section 115BBE of the IT Act." Then, he referred following para of rectification-order passed by AO: "In order u/s 143(3) dated 20/12/2019 it was mentioned that the tax shall be payable as per provisions of section 115BBE of the Income-tax Act on amount ....
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....lier Para. Now, we re-produce the order of first-appeal passed by CIT(A): "I have gone through the submission of the appellant along with the case laws and the rectification order. As per the rectification order, it was mentioned in the assessment order u/s 143(3) dated 20/12/2019 that the tax shall be payable as per provisions of section 115BBE of the income tax Act on the amount of Rs. 10,00,500/- being unexplained deposit in bank account. However, while computing the tax, normal rate of tax has been applied instead of tax calculation as prescribed for the income assessed as per provision of section 115BBE. Having this fact on record, it is clear that a mistake in computing the tax liability has occurred. Further, this mistake is apparent from the record within the meaning of section 154 of the IT Act. Thus, this mistake can be rectified u/s 154 of the IT Act. Further, I don't find any irregularity in the rectification-order against which this appeal lies. Accordingly, this ground of appeal is dismissed." 9. On a careful consideration, we find that the CIT (A) has very neatly set out the facts of the controversy and his adjudication. As discussed in earlier p....
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....f deposit in bank a/c. Further, the Karta of assessee-HUF stated that he was unable to explain the source of income and that he accepted income from undeclared sources. Nowhere in the statements, the assessee stated that the said income was earned from business of money lending. Further, during assessment proceedings also, no iota of proof was submitted to AO to show that the surrendered income was earned from business of money lending. Therefore, the claim of assessee that it represented business income remains unsubstantiated. Hence, the AO's approach to assess the impugned income as unexplained and apply tax rate u/s 115BBE is correct and we uphold the same. Consequently, this ground raised by assessee is also dismissed. Ground No. 3: 13. This is the last ground in which the assessee claims that the amendment is section 115BBE which prescribed 60% tax rate was applicable prospectively and not applicable to the income of Rs. 10,00,500/- surrendered in present case on 28.09.2016 which would be taxable @ 30% at pre-amended tax rate in section 115BBE. 14. Ld. AR submitted that the section 115BBE originally provided 30% tax rate, which was subsequently enhanced to ....
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....ttil appearing for the appellant would contend that even going by the decision in Karimtharuvi Tea Estate ltd. v. State of Kerala (AIR (1966) SC 1385) an amendment made on the 1st day of April of any financial year would apply to the assessments of that year. That is, if an amendment is brought into force on 01.04.2017, as is the case here, it can only apply to the assessment made in 2018-2019 (Assessment Year) of the income accrued for the previous financial year; which is 2017-2018. The learned Counsel would seek to draw a distinction in so far as a modification of the rate as brought out in the Finance Act and a substantive provision altering accrued rights or creating new liabilities, on the 1st of April of an year. In the former, it could apply to the assessments of the previous year, made in that financial year, but a substantive amendment not relating to the rates, could only be applied to the assessments of that financial year and not of the previous year. Reliance is placed on the Constitution Bench decision of the Hon'ble Supreme Court in C.I.T Vs. Vatika Township Private Ltd. (2015) 1 SCC 1. The learned Counsel would also place before us a number of decisions of the ....
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....ensure that defaulting assessees are subjected to higher tax and stringent penalty provision. Both the measures spoken of herein were to further the said objects and there cannot be any nexus assumed nor is it discernible. 13. Section 115BBE was inserted by Finance Act 2012 w.e.f 01.04.2013. As on 01.04.2016 the financial year in which the subject seizures occurred Section 155BBE provided for 30% tax on income referred to in Sections 68, 69, 69A, 69B, 69C and 69D. The same was amended by the 2nd Amendment Act; w.e.f. 01.04.2017, enhancing the rate to 60%. Hence there was no new liability created and the rate of tax merely stood enhanced which is applicable to the assessments carried on in that year. The enhanced rate applies from the commencement of the assessment year, which relates to the previous financial year. 14. Likewise it was by Chapter II with heading 'Rates of Income Tax', as provided in the Finance Act 2016, that a surcharge was introduced by way of the 3rd proviso of Section 2(9) of that Finance Act. This comes into effect from the Financial Year 2016- 2017; which is the year in which the subject seizures were occasioned. The proviso refers to....
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....SCC 526]. The facts are not relevant to the issue raised here and we need only look at the declaration as to the nature of a surcharge imposed in the Finance Act. The legislative history with respect to the concept of surcharge was traced by the Court, which, for the first time was found to have been recommended, in the report of the Committee on Indian Constitutional Reforms Volume I Part I. The word surcharge was used compendiously for the special addition to taxes on income imposed in September 1931. It was held so in paragraph 7 and 8. 7. The above legislative history of the Finance Acts, as also the practice, would appear to indicate that the term "Income tax" as employed in Section 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Article 271 of the Constitution. The phraseology employed in the Finance Acts of 1940 and 1941 showed that only the rates of income tax and super tax were to be increased by a surcharge for the purpose of the Central Government. In the Finance Act of 1958 the language used showed that income tax which was to be charged was to be increased by a surcharge fo....
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....e Learned Single judge is affirmed for the reasoning herein above and the writ appeal would stand dismissed without any order as to costs." Hon'ble Madras High Court in W.P. (MD) No. 2078 of 2020, S.M.I.L.E. Microfinance Ltd Vs. ACIT, Madurai - favouring assessee: "16. The next contention raised by the Learned Senior Counsel is that the under section 115BBE the rate of tax imposed is increased from 30% to 60% and the same is applicable with effect from 01.04.2017 onwards as per the amendment. Therefore, the same is applicable to any transaction from 01.04.2017 onwards and nor prior to any transactions prior to 01.04.2017. Since in the present case all alleged transactions are for the period from 08.11.2016 to 30.12.2016, hence the erstwhile rate of tax 30% only is applicable. But the contention of the revenue is that the amendment was with effect from 01.04.2017 and hence the same is applicable for the financial year 2016-2017 and the assessment year 2017-2018. Further the amendment to section 115BBE is directly related to demonetization which would be evident from objects and reasons for such amendment. In order to consider the same, the objects and reasons ....