2023 (5) TMI 1004 - AT - Income Tax

Unexplained cash deposit in two separate bank accounts - HELD THAT - CIT(A) not accepted the explanation of the assessee that cash deposit in the bank account was out of past savings as there was cash withdrawal of Rs. 50,000/- and Rs. 80,000/- only. Remaining additions were upheld by ld CIT(A) by taking view that assessing officer made addition as no evidence was furnished about agriculture income and past savings. CIT(A) further held that the assessee has not shown agriculture income in his return of income and upheld that addition to the extent of Rs.5.00 lakhs only. Before us assessee has not filed any evidence of agriculture income or any evidence about the retiring benefits from GSRTC. Also noted that the CIT(A) has already granted the substantial relief from addition of cash deposits, therefore, no reason to grants further relief to the assessee. Hence, ground No.1 of the appeal is dismissed. Taxing the addition u/s 115BBE - CIT(A) confirmed the action of assessing officer in taxing the addition at higher rate by simply holding that section 115BBE was inserted by Finance Act 2012, w.e.f. 01.04.2014 - HELD THAT - We direct the assessing officer to tax the addition at the normal rate of tax applicable prior to Second Amendment Act 2016. In the result, ground No.2 of the appeal is allowed.

Summary

Issues Involved:
1. Sustaining the addition of Rs. 5,00,000 out of Rs. 16,60,000 made under Section 69A of the Income Tax Act.
2. Retrospective application of the higher tax rate specified in Section 115BBE.

Issue 1: Sustaining the addition of Rs. 5,00,000 under Section 69A of the Act

The assessee, a retired employee, filed his return of income for AY 2017-18. The case was selected for scrutiny due to large cash deposits during the demonetization period. The Assessing Officer (AO) noted cash deposits of Rs. 16.60 lakhs and asked the assessee to explain the source. The assessee claimed part of the deposits were from past savings and a loan withdrawal. However, the AO found inconsistencies and added Rs. 16.60 lakhs to the income under Section 115BBE.

On appeal, the NFAC/Ld. CIT(A) granted partial relief, deleting Rs. 11.60 lakhs but upholding Rs. 5.00 lakhs, citing lack of evidence for agricultural income and past savings. The Tribunal upheld this decision, noting no additional evidence was provided by the assessee.

Issue 2: Retrospective application of Section 115BBE

The assessee contested the application of the higher tax rate under the Second Amendment Act 2016, arguing it should not apply retrospectively. The Tribunal referenced the case of DCIT Vs Punjab Retails Pvt Limited, which established that amendments to Section 115BBE effective from 01.04.2017 should not apply to periods before this date. The Tribunal directed the AO to tax the addition at the normal rate applicable before the amendment.

Conclusion:

The appeal was partly allowed. The addition of Rs. 5,00,000 under Section 69A was upheld, while the higher tax rate under Section 115BBE was not applied retrospectively, directing the AO to apply the normal tax rate.