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TMI Blog2023 (7) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... med the assessment-order as erroneous-cum-prejudicial to the interest of revenue and therefore the revision- order passed by PCIT is a valid order in terms of section 263. Decided against assessee. - ITA No. 125/Ind/2022 - - - Dated:- 2-12-2022 - MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER For the Appellant : Shri Prakash Jain and Ms. Shreya Jain, ARs For the Respondent : Shri P.K. Mitra, CIT-DR ORDER Per B.M. Biyani, A.M.: Feeling aggrieved by revision-order dated 24.03.2022 passed by learned Pr. Commissioner of Income-Tax, Indore-1 [ Ld. PCIT ] u/s 263 of Income-tax Act, 1961 [ the Act ] , which in turn arises out of assessment-order dated 29.12.2019 passed by learned DCIT/ACIT-2(1), Indore [ Ld. AO ] u/s 143(3) for Assessment-Year [ AY ] 2017-18, the assessee has filed this appeal on following grounds: 1. That impugned order passed by the Ld. Pr. CIT, Indore-1 is bad in law, without jurisdiction, it is based on incorrect interpretation of law and without allowing proper and reasonable opportunity of being heard, moreover the facts have also been incorrectly construed. 2. That on the facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 115BBE even though there is no loss to the revenue as on the date of survey and so also on the first day of financial year 2016-17 the rate of tax u/s 115BBE was 30% plus cess @ 3% which is paid by the assessee and charged in assessment order passed u/s 143(3). 2. Heard the learned Representatives of both sides at length and case records perused. 3. The assessee-company submitted return of income on 24.10.2017 declaring a total income of Rs. 11,50,350/-, which was subjected to scrutiny- proceeding and finally assessed by Ld. AO vide assessment-order dated 29.12.2019 at the returned income. Subsequently, Ld. PCIT examined the records of proceeding conducted by Ld. AO and found the assessment-order as erroneous-cum-prejudicial to the interest of revenue for the sole reason that a survey was conducted upon the assessee on 19.09.2016 on the basis of which the assessee admitted and declared income of Rs. 1,68,030/- on account of excess-stock and of Rs. 9,21,460/- on account of excess-cash but the assessee offered those income at normal tax and the Ld. AO too assessed at normal tax, although they were taxable u/s 69A / 69 of the act and consequently chargeable at a higher ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son that the Ld. PCIT has also made following conclusion and passed revision-order: 4.1 Thus, it is clear from the aforesaid statement that the surrender on account of excess cash as well as excess stock has been made out of unexplained sources which was never disclosed to the department. Nowhere the assessee submitted that this suppressed income is out of business income . Not only that it has also been clearly stated in the statement that no pressure etc. was applied for recording his statement. Therefore, the submission of the assessee that excess cash and excess stock are nothing but out of business income is factually incorrect and therefore, the same cannot be accepted. 9. Now we proceed to check whether the Statement of assessee fits in the clutches of section 69 / 69A or not. Section 69 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No.3, 5 and 6 we find that assessee has categorically accepted that he is unable to explain the source of excess cash, excess stock and unaccounted receivables . There is no other evidence brought on record by the assessee to show that some unaccounted purchases for the year or unaccounted sales or unrecorded sales happened during the year or details of the debtors which can show the nexus of the surrendered income as business income for the year under consideration. 11. We observe that the issue, facts and law involved in this decision are exactly same as of the present appeal before us. Therefore, this decision is directly applicable and we are bound to follow the same which is from ITAT, Indore itself. Respectfully following this, we do not find any fallacy in the conclusion taken by Ld. PCIT that the impugned incomes relatable to excess- stock and excess-cash clearly attract section 69 / 69A of the Act and consequently section 115BBE as well. 12. Ld. AR has placed reliance on certain decisions including the decision of Hon ble Co-ordinate Bench of ITAT, Indore in Rakesh Khandelwal Vs. PCIT, ITA No. 204/Ind/2019 dated 29.01.2020 to canvas that (i) where the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee s case was conducted on 19.09.2016 which is prior to 15.12.2016 and therefore the higher rate of tax is not applicable to it, the tax-rate of 30%+3% Cess as existing in section 115BBE as on 01.04.2016 shall apply. To resolve this controversy, a lengthy discussion on the scheme of Income-tax Act, 1961; particularly the framework of previous year, assessment- year, the parliamentary system of prescribing tax-rates, etc. is required; but we have the benefit of a direct decision rendered by Hon ble Kerala High Court in WA No. 984 of 2019 Maruthi Babu Rao Jadav Vs. The Assistant Commissioner of Income-tax, Central, Circle, Kozhikode, dated 23.09.2020 in which the Hon ble High Court has already analysed such framework at length and was pleased to decide that the higher rate of tax would apply to whole Previous-Year 2016-17 related to Assessment-Year 2017-18. The relevant paragraphs of the decision are reproduced below: The writ petition sought for a declaration that the amendments made by the Taxation Laws (Second Amendment) Act, 2016, to Section 115BBE of the Income Tax Act, 1961 enhancing the rate of income tax, for specified incomes which are unexplained, to 60% and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reliance is also placed on the Full Bench decision of the Patna High Court in Loknath Goenka v. C.I.T [2019 417 ITR 521(Patna)]. 11. Before we look at the amendments carried out, on facts, there were two seizures of cash made on 02.08.2016 and 03.11.2016 respectively of Rs. 1,05,03,500/- and Rs. 1,24,68,750/- both in the F.Y 2016-2017. The persons from whom the cash was seized as also the appellant herein admitted that it belonged to the appellant who carries on trading in gold bullion. The appellant not having produced any books of accounts or cash flow statements failed to establish the source of the money seized; which was included in the total income under Section 69A of the IT Act. The writ petition or the appeal does not challenge such inclusion. On the said amounts tax was imposed @60% under Section 115BBE and surcharge @25%. The amendments to the Finance Act were by the 2nd Amendment Act dated 15.12.2016. The enhancement of tax under Section 115BBE was made effective only from 01.04.2017; the commencement of the assessment year 2017-2018, in which the assessments of the previous year are carried out. 12. The assessee contends that the seizures were made prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016 stood amended by which 115BBE was omitted from the 3rd proviso. After the 6th proviso yet another proviso was inserted which provided for the 'advance tax' computed under the first proviso, in respect of any income chargeable to tax under Section 115BBE(1)(i), to be increased by a surcharge for the purposes of the Union, calculated @25%. Hence there is no new liability of surcharge created and it is a mere enhancement of the rate of surcharge. 15. In the financial year 2016-17 itself the tax as provided under section 115BBE and the surcharge on advance tax was available as discernible from the IT Act and Finance Act, 2016 as it stood on 1.4.2016 itself. A major misdemeanor leading to assessment of income as accrued under Section 69A invites the consequences of Section 115BBE and surcharge provided under Section 2(9) of the Finance Act, 2016. When it stands enhanced from 01.04.2017, for every assessment carried out in that year, related to the previous year, the rates as applicable on 01.04.2017 has to be applied. There being no new liability created or obligation imposed, the arguments raised by the appellant's counsel fails. The appellant cannot have a content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any time increase any of the duties or taxes referred to in those Articles by a surcharge for the purpose of the Union and the whole proceeds of any such surcharge shall form part of the consolidated Fund of India. Article 270 provides for taxes levied and collected by the Union and distributed between the union and these states. Caluse (1) says that tax on income other than agricultural income shall be levied and collected by the Government of India and distributed between the Union and the states in the manner provided in clause (2). Article 269 deals with taxes levied and collected by the Union but assigned to the States. The provisions of Articles 268 which is the First one under the heading distribution of revenue between the union and the states relate to duties levied by the Union but collected and appropriated by the states. Thus these Articles deal with the levy, collection and distribution of the proceeds of the taxes and duties mentioned therein between the Union and the state. The Legislative power of Parliament to levy taxes and duties is contained in Articles 245 and 246(1) read with the relevant entries in list I of the Seventh Schedule. 17. In the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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