9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (4) TMI 406 - AT - Income TaxAddition u/s. 69A r.w.s. 115BBE - cash deposits in bank of the assessee during demonetization - HELD THAT - The assessee has explained source of cash deposits in his bank accounts i.e. the cash was deposited by his employer Jitendra Pal. The assessee further explained that the entire cash deposit in the bank account of the assessee was subsequently transferred to Jitendra Pal through banking channel. To substantiate his contention the assessee has furnished his saving bank account statements from SBI and ICICI Bank Ltd. The assessee has also placed on record bank statements of Jitendra Pal. The source explained by the assessee for cash deposits is plausible. Hence we deem it appropriate to restore this issue to the AO for limited purpose of quantification of amount transferred by the assessee from his bank accounts maintained with SBI and ICICI Bank Ltd. to Jitendra Pal. To the extent amount transferred from aforementioned saving bank accounts of the assessee to Jitendra Pal is proved no addition is warranted. AO has invoked the provisions of section 115BBE. The provisions of section 115BBE were amended w.e.f. 15.12.2016 to increase the rate of tax from 30% to 60%. In Smile Microfinance Ltd. 2024 (11) TMI 1444 - MADRAS HIGH COURT has held that the revised rate of tax @60% would be effective only from 01.04.2017. Accordingly prior to 01.04.2017 the rate of tax applicable would be 30%. Hence for AY 2017-18 the rate of tax applicable would be prior to amendment. The revised rate of tax cannot be applied retrospectively. Thus after verification of amount transferred to Jitendra Pal in any addition u/s. 69A of the Act survives the same would be subject to tax at the rate as was applicable prior to amendment i.e. 30%.
ISSUES PRESENTED and CONSIDERED
The core legal issue considered in this judgment is the addition of Rs. 26,18,000/- under Section 69A of the Income Tax Act, 1961, made by the Assessing Officer (AO) due to cash deposits in the assessee's bank accounts during the demonetization period. The question is whether the source of these deposits, claimed to be from the employer Jitendra Pal, is satisfactorily explained and whether the subsequent transfer of these amounts back to the employer negates the addition under Section 69A. Additionally, the applicability of the amended tax rate under Section 115BBE is questioned, specifically whether the increased rate of 60% applies retrospectively to the assessment year 2017-18. ISSUE-WISE DETAILED ANALYSIS 1. Addition under Section 69A of the Income Tax Act Relevant legal framework and precedents: Section 69A of the Income Tax Act allows for the addition of unexplained money found in the possession of the assessee, which is not recorded in the books of accounts, as the income of the assessee. The burden of proof lies on the assessee to satisfactorily explain the source of such money. Court's interpretation and reasoning: The Tribunal considered the explanation provided by the assessee that the cash deposits were made by his employer, Jitendra Pal, and subsequently transferred back to him. The Tribunal found the explanation plausible, especially considering the documentary evidence provided, including bank statements. Key evidence and findings: The assessee provided bank statements from State Bank of India and ICICI Bank Ltd., showing the deposits and subsequent transfers to Jitendra Pal. The Tribunal noted that these documents were presented to both the AO and the CIT(A) but were not adequately appreciated. Application of law to facts: The Tribunal decided to restore the issue to the AO for the limited purpose of quantifying the amounts transferred from the assessee's bank accounts to Jitendra Pal. The Tribunal held that to the extent these transfers are verified, no addition under Section 69A is warranted. Treatment of competing arguments: The Department's representative defended the addition, but the Tribunal found the assessee's explanation and evidence sufficient to warrant further verification rather than outright dismissal. Conclusions: The Tribunal concluded that the issue should be remanded to the AO to verify the transfers. If verified, the addition under Section 69A would not be justified. 2. Applicability of the amended tax rate under Section 115BBE Relevant legal framework and precedents: Section 115BBE deals with the tax rate applicable to income referred to in sections like 69A. The amendment increased the tax rate from 30% to 60% effective from 15.12.2016. The precedent from the Hon'ble Madras High Court in Smile Microfinance Ltd. vs. ACIT clarified that the increased rate applies only from 01.04.2017. Court's interpretation and reasoning: The Tribunal relied on the precedent to determine that the increased rate of 60% does not apply retrospectively to the assessment year 2017-18. Key evidence and findings: The Tribunal noted the timing of the amendment and the applicable tax rates before and after the amendment. Application of law to facts: The Tribunal held that any addition under Section 69A for the assessment year 2017-18 should be taxed at the pre-amendment rate of 30%, not the revised rate of 60%. Conclusions: The Tribunal concluded that the revised tax rate of 60% cannot be applied retrospectively to the assessment year 2017-18, and any surviving addition under Section 69A should be taxed at 30%. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "The source explained by the assessee for cash deposits is plausible. Hence, in the facts of the case, I deem it appropriate to restore this issue to the AO for limited purpose of quantification of amount transferred by the assessee from his bank accounts maintained with SBI and ICICI Bank Ltd. to Jitendra Pal." Core principles established: The Tribunal emphasized the need for proper verification of alleged transactions before confirming additions under Section 69A. It also reinforced the principle that amendments to tax rates should not be applied retrospectively unless explicitly stated. Final determinations on each issue: The appeal was allowed for statistical purposes, with the issue remanded to the AO for verification of the transfers. The applicable tax rate for any surviving addition under Section 69A was determined to be 30%, as the amendment to Section 115BBE does not apply retrospectively to the assessment year in question.
|
