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TMI Blog2023 (9) TMI 1613X X X X Extracts X X X X X X X X Extracts X X X X ..... g it. Then, the Instruction dated 21.02.2017 issued by CBDT prescribed a Standard Operating Procedure for on-line verification of cash- transactions. Thus, the Press Release/Instruction do not save the assessee s case of transferring hefty cash of Rs. 49.99 lakh in bags from one place to another. The assessee himself admitted not only the ownership of cash but also to have earned from undisclosed sources of current financial year 2016-17 and it was not even the case of assessee that the impugned cash represented saving of household or past savings or savings of somebody else like his wife. Therefore, we are not convinced by AR s submission that the assessee s case deserves any relief. Being so, we uphold the addition made/upheld by lower-authorities. This ground is dismissed. AO has rightly assessed the income u/s 69A along with higher rate of tax u/s 115BBE. Levy of interest u/s 234A, 234B and 234C - In a recent decision in CIT Vs. Arun Bansal [ 2023 (6) TMI 39 - ITAT DELHI ] held on a reading of section 132B of the Act, though it transpires that the assets seized can be adjusted against any existing liability under the Act and advance tax may not be an existing liability, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000. Acting thereon, the statements of all three persons (including assessee) were recorded u/s 131 on 14.11.2016 wherein all of them (including assessee) admitted that the entire cash belonged to assessee. Accordingly, a requisition dated 14.11.2016 u/s 132A was issued. The statements of assessee were again recorded u/s 132(4) on the very same date i.e. 14.11.2016 wherein the assessee accepted that the impugned cash was not recorded in his books and it was earned from undisclosed sources. All statements are re-produced by AO in assessment-order. The cash was seized. Thereafter, the assessments of past six years from AY 2011-12 to 2016-17 were framed under special provision u/s 153A. For the relevant AY 2017-18 under consideration, which relates to the previous year 2016-17 in which the requisition dated 14.11.2016 was executed, the assessee filed regular return on 09.01.2018 declaring total income of Rs. 54,25,260/-. In the income so declared in return, the assessee included income of Rs. 47,59,000/- out of the admitted undisclosed income of Rs. 49,99,000/-. Finally, the AO completed assessment u/s 143(3) whereby (i) he made a further addition of Rs. 2,40,000/- being the differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on the decision of ITAT, Agra in Smt. Uma Agarwal (2021) 127 Taxmann.com 735 where a deposit upto Rs. 2.50 lakh was held to be acceptable for homemakers. However, the CIT(A) was not satisfied with the submission of assessee who held that the cash was found with assessee in Jaipur though the assessee belonged to Ratlam. He also held that the CBDT Press Release/Instruction as well as the decision in Smt. Uma Agarwal (supra) was applicable only for depositing demonetized currency in bank a/c but not for carrying such currency from one location to another for unknown purposes. The CIT(A) upheld addition. 8. Before us, both sides put forward their respective contentions for and against the addition, such contentions being on the same line as were made before the lower-authorities. 9. We have considered rival contentions of both sides and perused the facts of case. We find that in the Ground the assessee has mentioned that the cash of Rs. 2,40,000/- was saving of his wife. Before us, the thrust of assessee s AR is on CBDT Press Release/Instruction dated 18.11.2016 and 21.02.2017 issued during demonetization period. Therefore, for arriving at a proper conclusion, we firstly refer th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in curbing black money, this mission of black money will not succeed. Also the people who are against the black money should give information of such illegal activities going on to the Income Tax department so that immediate action can be taken and such illegal transfer of cash can be stopped and seized. Black money is a crime against humanity. We urge every conscientious citizen to help join the Government in eradicating it. (Meenakshi J. Goswami) Commissioner of Income Tax (Media and Technical Policy) Official Spokesperson, CBDT. Instruction No. 03/2017 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North Block New Delhi Dated 21st of February, 2017 Subject: - Standard Operating Procedure (SOP) to be followed by the Assessing Officers in verification of Cash transactions relating to demonetisation-regd.- Post demonetisation of 500 and 1000 notes on November 8, 2016, several malpractices has been noticed . The Income Tax Department is enquiring/seeking information and analysing instances of deposits to identify cases involving risk of tax evasion. Based upon vast amount of information of cash deposits collected and analysed by CBDT, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the black money should give information of such illegal activities going on to the Income-tax Department so that immediate action can be taken and such illegal transfer of cash can be stopped and seized. Black money is a crime against humanity. We urge every conscientious citizen to help join in the Government in eradicating it . Then, the Instruction dated 21.02.2017 issued by CBDT prescribed a Standard Operating Procedure for on-line verification of cash- transactions. Thus, the Press Release/Instruction do not save the assessee s case of transferring hefty cash of Rs. 49.99 lakh in bags from one place to another. The assessee himself admitted not only the ownership of cash but also to have earned from undisclosed sources of current financial year 2016-17 and it was not even the case of assessee that the impugned cash represented saving of household or past savings or savings of somebody else like his wife. Therefore, we are not convinced by Ld. AR s submission that the assessee s case deserves any relief. Being so, we uphold the addition made/upheld by lower-authorities. This ground is dismissed. Ground No. 3: 13. This ground challenges the levy of tax by AO u/s 115BBE at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said letter dated 17.01.2017, the assessee has clearly mentioned that the seized amount was earned during current year itself and the assessee did not have any other money to pay tax. Ld. AR submitted these facts/documents are enough evidences to infer that the impugned cash seized during search represented or sourced from assessee s business income. Therefore, the AO is not justified in treating the impugned cash as deemed income u/s 69A. (ii) The second contention raised by Ld. AR is such that the AO has imposed penalty u/s 271AAB qua the impugned income through Penalty- order dated 26.06.2019, copy of order is re-produced below for an immediate reference: Referring to Para 5, Ld. AR pointed out that the AO has imposed penalty in two parts, namely 10% of the income of Rs. 47,59,000/- admitted by assessee u/s 132(4) and declared in the return of income (+) 60% of the income of Rs. 2,40,000/- not disclosed by assessee but added by AO during assessment-proceeding. Ld. AR instantly carried us to the provision of section 271AAB which prescribes thus: Penalty where search has been initiated 271AAB. (1) The Assessing Officer or the Commissioner (Appeals) may, not- withstanding an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er/source of income of at least Rs. 47,59,000/- is proved, if not of addition of Rs. 2,40,000/- made by AO for which penalty @ 60% has been imposed. Ld. AR contended that when the AO has accepted the manner/source of income in penalty-proceeding, there is no reason to sustain the applicability of section 69A and for that matter the higher rate of tax u/s 115BBE. To support this submission, Ld. AR relied upon the decision in Basir Ahmed Sisodia Vs. ITO (2020) 116 taxmann.com 375 (SC), para No. 14 to 16, which reads as under: 13. Reverting to the findings and conclusions recorded by the Officer and which commended to the appellate authority, as well as, the High Court, it must follow that the appellant/assessee despite being given sufficient opportunity, failed to prove the correctness and genuineness of his claim in respect of purchases of marbles from unregistered dealers to the extent of Rs. 2,26,000/ (Rupees two lakhs twenty six thousand only). Resultantly, the said transactions were assumed as bogus entries (standing to the credit of named dealers who were none existent creditors of the assessee). 14. However, it has now come on record that the appellant/assessee in penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 13 unregistered dealers out of whom 12 were examined by the Officer. The Officer recorded their statements and did not find any infirmity therein including about their credentials. The dealers stood by the assertion made by the appellant/ assessee about the purchases on credit from them; and which explanation has been accepted by the appellate authority in paragraphs 17 and 19 of the order dated 13.1.2011. 15. To put it differently, the factual basis on which the Officer formed his opinion in the assessment order dated 30.11.2000 (for assessment year 1998- 1999), in regard to addition of Rs. 2,26,000/ (Rupees two lakhs twenty six thousand only), stands dispelled by the affidavits and statements of the concerned unregistered dealers in penalty proceedings. That evidence fully supports the claim of the appellant/ assessee. The appellate authority vide order dated 13.1.2011, had not only accepted the explanation offered by the appellant/assessee but also recorded a clear finding of fact that there was no concealment of income or furnishing of any inaccurate particulars of income by the appellant/assessee for the assessment year 1998-1999. That now being the indisputable position, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d recent decision of ITAT, Indore in Narendra Kumar Shantilal Jain HUF Vs. PCIT, ITA No. 124/Ind/2022, order dated 23.12.2022, wherein the Co-ordinate Bench, following the decision of 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, has held that the amendment though made on 15.12.2016, would apply to the whole previous year 2016-17, AY 2017-18. In reply, Ld. AR only gained support from following decision of CIT Vs. Thana Electricity Company (1994) 206 ITR 727 (Bombay HC) and argued that the said decision of Hon ble Kerala High Court is not binding upon ITAT, Indore Bench: 21. From the foregoing discussion, the following propositions emerge: (a) to (c) XXX (d) The decision of one High Court is neither binding precedent for another High Court nor for courts or Tribunals outside its own territorial jurisdiction. It is well settled that the decision of a High Court will have the force of binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by assessee himself were for a proposed source of income and not a real source of income, then by no stretch of imagination they can be taken as something proving the source of impugned cash. (ii) Regarding second contention, Ld. DR submitted that it is true that in Para No. 5 of penalty-order, the AO has imposed penalty in two parts, partly @ 10% and partly @60%. But on going through Para No. 4, immediately preceding Para No. 5, it is very much clear that the AO has made break-up of 10% and 60% on simpliciter reasoning that the assessee had offered undisclosed income of Rs. 47,59,000/- in the return of income but not disclosed the income of Rs. 2,40,000/- in the return of income. But, however, neither in Para No. 4 nor anywhere else in penalty-order, the AO has whispered that the assessee has specified the manner in which such income was derived and the assessee has substantiated the manner in which the undisclosed income was derived. Therefore, Ld. DR contended, the decision in Basir Ahmed Sisodia (supra) is not applicable to assessee. (iii) Regarding third contention, Ld. DR strongly relied upon the decision of Hon ble Kerala High Court in Maruthi Babu Rao Jadav (supra). He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR is simply relying upon land holdings of assessee and certain messages found in the mobile of assessee, thereby trying to impress upon us that the assessee was in the process of starting business of real estate and therefore the source of impugned cash can be inferred as business income. We hardly find any substance in such pleading. When section 69A talks of source of cash, the source has to be proved and not inferred the way Ld. AR is trying to argue. Even if we assume that the assessee was in the process of starting a business of real estate, we fail to understand how it substantiates the source of impugned cash. We are not in agreement with Ld. AR that the source of cash is explained by assessee. Therefore, the first contention is not acceptable. (ii) Regarding second contention of Ld. AR, we have perused the decision of Hon ble Supreme Court in Basir Ahmed Sisodia (supra) and find that the ratio taken by Hon ble Court is such that if the assessee has, by adducing evidences, satisfied authorities even in penalty-proceeding that certain addition was wrongly made, it will assail the addition made in assessment- order itself. There is no quarrel with this proposition. But in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. The assessee claims that survey in assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther buttress his arguments. 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2016 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 conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 surcharge was imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persuasive effect, if not binding nature. On perusal of decision of Hon ble Kerala High Court, we find that the Hon ble High Court has extensively dealt the scheme of Income-tax Act, 1961, Finance Act, Amendment Act, Section 115BBE and the previous decisions of Hon ble Supreme Court and thereafter came to a conclusion that the amendment in section 115BBE, made on 15.12.2016 via Amendment Act, would apply to entire previous year 2016-17. As already stated, the ITAT, Indore has already taken a decision in Narendra Kumar Shantilal Jain HUF (supra) order dated 23.12.2022 to follow the decision of Kerala High Court and this Bench must observe the consistency. At this stage, we would also like to take cognizance of the two decisions quoted by Ld. AR in favour of assessee for the proposition that the amendment was applicable from 15.12.2016 and not prior to that, namely (i) ITAT, Indore in DCIT Vs. M/s Punjab Retail Pvt. Ltd, ITA No. 677/Ind/2019 order dated 08.10.2021 and (ii) ITAT, Jabalpur ACIT Vs. Sandesh Kumar Jain, ITA No. 41/JAB/2020 order dated 31.10.2022. We have carefully gone through orders of those decisions and find that in none of them, the decision of Hon ble Kerala High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized cash and the assessee made a specific request to AO to adjust the seized cash against advance-tax liability. Thereafter, some more discussion took place wherein it emerged that the assessee deserves some relief in the matter of calculation of interest u/s 234B for the reason that the newly inserted Explanation does not restrict adjustment against self-assessment liability . 20. In a recent decision in CIT Vs. Arun Bansal, ITA No. 2615/Del/202 order dated 29.05.2023, the Delhi Bench of ITAT has resolved identical issue as under: 7. Undisputedly, the cash seized was in the possession of the department from the date of search itself, i.e., 01.12.2018. It is a fact that the assessee has also requested the Assessing Officer to adjust the self assessment tax liability on the income declared of Rs. 1,07,00,000/- from the seized amount. However, assessee s request was never accepted. On a reading of section 132B of the Act, though it transpires that the assets seized can be adjusted against any existing liability under the Act and advance tax may not be an existing liability, however, in our view, self assessment tax is certainly an existing liability created on 1st April once the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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