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2023 (5) TMI 1279 - AT - Income TaxUnexplained money being undisclosed gold, Jewellery found during the course of search - Applicability of section 115BBE when the date of search is 16.08.2016 - As argued on the date of search i.e. 16.08.2016, the amendment to section 115BBE of the Act which is applied by the assessing officer was yet to come into the statute as the said amendment came into effect after demonetization by Taxation Laws (Second Amendment) Bill 2016 which is effective from 01.04.2017,hence provision of section 115BBE of the Act has been applied retrospectively - HELD THAT - We note that case of the assessee, under consideration is that the amendment in section 115BBE came into force only on 15.12.2016 whereas the search was conducted on 16.08.2016 and the assessee has paid tax @ 30%. Since the search in the case of the assessee was carried out before the amendment the addition ought to have been made in terms of the prevailing provision and therefore, the addition made by the assessing officer invoking section 115BBE, provision of which came into force only on 01.04.2017, is not sustainable. Therefore, we allow the appeal of the assessee.
Issues Involved:
1. Retrospective applicability of the amendment to Section 115BBE. 2. Levy of tax under Section 115BBE at the rate of 60%. Summary: Issue 1: Retrospective Applicability of the Amendment to Section 115BBE The assessee contended that the amendment to Section 115BBE, effective from 01.04.2017, should not be applied retrospectively to their case as the search operation was conducted on 16.08.2016. The Learned Counsel for the assessee argued that the amendment was intended to address issues post-demonetization and should not apply to assets found before this period. The Counsel relied on judicial pronouncements, including Karimtharuvi Tea Estate Ltd. v. State of Kerala (1966) and CIT(Central)-I, New Delhi v. Vatika Township (P.) Ltd., to support their argument that the amendment should be applied prospectively. The Revenue, however, argued that the amendment is applicable from AY 2017-18 and covers all sections from 68 to 69D of the Act, irrespective of whether the undisclosed assets were found before or after demonetization. The Revenue maintained that the amendment is not retrospective as it applies to the impugned assessment year AY 2017-18. The Tribunal, after considering the submissions and judicial decisions, found that the issue of whether Section 115BBE would apply to tax unexplained money found during a search conducted before the amendment date has been addressed by various judicial forums. The Tribunal cited the ITAT Indore decision in ITA No.677/Ind/2019, which held that the amendment to Section 115BBE, effective from 01.04.2017, should not apply to searches conducted before this date. The Tribunal also referenced the ITAT Jabalpur decision in the case of Sandesh Kumar Jain, where it was held that the amendment should be applied prospectively and not retrospectively. Issue 2: Levy of Tax Under Section 115BBE at the Rate of 60%The Tribunal noted that the assessee's case was that the amendment to Section 115BBE came into force on 15.12.2016, while the search was conducted on 16.08.2016, and the assessee had paid tax at the rate of 30%. The Tribunal held that since the search was conducted before the amendment, the addition should be made according to the prevailing provisions at that time. The Tribunal found that the assessee's issue was covered by precedents, including the decisions of the ITAT Indore and ITAT Jabalpur, which supported the assessee's argument that the amendment should not be applied retrospectively. In conclusion, the Tribunal allowed the appeal filed by the assessee, ruling that the addition made by the Assessing Officer invoking Section 115BBE, which came into force on 01.04.2017, was not sustainable. The Tribunal directed that the tax should be calculated at the normal rate applicable to the assessee. Order pronounced on 08/05/2023 in the open court.
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