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TMI Blog2025 (1) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... and notices under Sections 143(2) and 142(1) of the Act were issued. During the demonetization period, the assessee deposited Rs. 50,000/- on 23.12.2016 and Rs. 1,50,00,000 on 30.12.2016 in Rs. 500/- and Rs. 1,000 notes into its bank account. During the course of assessment, the assessee was asked to explain the source of these deposits but failed to provide satisfactory evidence. Summons under Section 131 of the Act and letters under Section 133(6) were issued to various parties, out of them, two parties, namely, Sunil Forging & Steel Industries and Diamond Steel and Engineering Company, denied giving any cash to the assessee and a third party, Sree Spectra Media, claimed to have provided cash but did not furnish complete information. Other parties did not respond. After verifying all the information available on record, the Assessing Officer completed the assessment treating the total amount of Rs. 1,30,50,000/- as unexplained cash deposits under Section 68 and added it to the income of the assessee and thereafter, levied tax at 60% under Section 115BBE of the Act and accordingly, passed assessment order u/s 143(3) of the Act dt.23.12.2019. 4. Aggrieved with such assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Return, Financial statements etc It is the contention of the appellant that the amounts has already been offered for taxation as sales proceeds during the previous years and taxing them again will amount to double taxation, It was also the contention of the appellant that & is the responsibility of the AO to prove that the credits are unexplained. In its reliance, appellant has quoted the Hon'ble Supreme Court decision in the case of CIT vs Orissa Corporation (P) Ltd. 159 ITR 78 and Mis Essan Remedies Ltd. vs DCIT ITA No. 256/Del/04. 5.4 I have carefully considered the facts of the case and the contention of the appellant. The Govt. of India announced the demonetisation scheme on 08.11.2016 and the last date for depositing specified bank notes was 30.12.2016. It is seen that appellant has deposited a huge amount of Rs. 1,50,00,000 on 30.12.2016 in its account with Andhra Bank. When asked for explanation as to the huge deposits of cash during the demonetisation period, the appellant has been repeatedly claiming that they were from realisation of Sundry Debtors and names of the Sundry Debtors were also furnished. The appellant has produced the cash book for the year which show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to prove that the negligible change in sundry debtors as per closing balance sheet dates despite claim of huge realisation during the year is due to accumulation of sundry debtors for the current year. No sales ledger has been produced by the appellant neither before the AO nor in present appeal proceedings. 5.7. The appellant has relied on the Hon'ble Supreme Court decision in the case of CIT vs. Orissa Corporation (P) Ltd. 159 ITR 78 and also the Hon'ble Delhi ITAT bench decision in the case of M/s Essan Remedies Ltd. vs DCIT ITA No. 256/Del/04. In the former case, the Hon'ble Apex Court upheld the action of the lower authorities in deleting the addition as the assessee has produced before the Department letter of confirmation, the discharged hundis and particulars of the different creditors and general index numbers. No such confirmations have been produced by the appellant. Two of the parties responded to the AO that they have indeed not paid cash to the appellant and there was only sales made by them. Hence the said case law is not applicable to appellant's case. Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More 82 ITR 540 (SC) has held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al purpose, the appeal of the appellant is dismissed. Order passed u/s 250 r.w.s 251 of the I.T. Act, 1961." 5. Aggrieved by the order of LD.CIT(A), the assessee is now in appeal before us. 6. Before us, the ld.AR for the assessee has submitted that the Assessing Officer has charged the higher rate of taxes as provided u/s 115BBE of the Act despite the fact that the amendment in the Act came into effect from 01.04.2005. For these purposes, he has drawn our attention to para 3.5 of the order passed by the Assessing Officer, which is to the following effect : "3.5 Tax rate applicability in the present case: As per the provisions of section 115BBE of the Income-tax Act, 1961, where the total income of an assessee determined by the assessee includes any income referred to in section 69A, the income tax payable shall be the aggregate of the amount of income tax payable shall be the at the rate of 60%. Accordingly, the tax payable on the total income determined is levied at 60%." 7. The ld.AR further submitted that, on appeal, the LD.CIT(A) has also upheld the applicability of the higher rate of taxes. The ld.AR further submitted that the above issue has been considered by various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigator. In the present case, it is quite apparent from assessment-order that the Ld. AO has not made requisite enquiry to ascertain the nature and tax implications of the impugned incomes, he has simply shut the point by saying that the assessee has incorporated incomes in ITR. Therefore, the decisions relied upon by Ld. AR do not support the assessee's stand. 13. Having said so, we now turn to Ground No. 7 wherein the assessee raises an alternative claim that the present case of Assessment-Year 2017-18 relates to the Previous-Year 2016-17 and the rate of tax u/s 115BBE was 30%+3% Cess as on first day of the Previous-Year i.e. 01.04.2016, therefore the tax-rate of 30%+3% Cess shall apply to the present case and not the higher rate, hence the assessment-order does not cause prejudice to the interest of revenue. The reason of projecting such a claim by assessee is that the higher rate of tax was prescribed in section 115BBE through an amendment made vide Taxation Laws (Second Amendment) Act, 2016 and the said amendment received assent of the President of India on 15.12.2016 and therefore the amendment shall apply prospectively w.e.f. 15.12.2016 and not retrospectively. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017, as is the case here, it can only apply to the assessment made in 2018-2019 (Assessment Year) of the income accrued for the previous financial year; which is 2017-2018. The learned Counsel would seek to draw a distinction insofar as a modification of the rate as brought out in the Finance Act and a substantive provision altering accrued rights or creating new liabilities, on the 1st of April of an year. In the former, it could apply to the assessments of the previous year, made in that financial year, but a substantive amendment not relating to the rates, could only be applied to the assessments of that financial year and not of the previous year. Reliance is placed on the Constitution Bench decision of the Hon'ble Supreme Court in C.I.T Vs. Vatika Township Private Ltd. (2015) 1 SCC 1. The learned Counsel would also place before us a number of decisions of the Hon'ble Supreme Court in Kesoram Industries v. Commissioner of Wealth Tax, [AIR 1966 SC 1385], Guffic Chem P. Ltd v. C.I.T [2011(4) SCC 245], C.I.T v. Sarkar Builders [(2015) 375 ITR 392 (SC)], Shiv Raj Gupta v. C.I.T [(2020) 425 ITR 420(SC)] and State of Kerala v. Alex George [(2004) 271 ITR 290(SC), to further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 2012 w.e.f 01.04.2013. As on 01.04.2016 the financial year in which the subject seizures occurred Section 155BBE provided for 30% tax on income referred to in Sections 68, 69, 69A, 69B, 69C and 69D. The same was amended by the 2nd Amendment Act; w.e.f. 01.04.2017, enhancing the rate to 60%. Hence there was no new liability created and the rate of tax merely stood enhanced which is applicable to the assessments carried on in that year. The enhanced rate applies from the commencement of the assessment year, which relates to the previous financial year. 14. Likewise it was by Chapter II with heading 'Rates of Income Tax', as provided in the Finance Act 2016, that a surcharge was introduced by way of the 3rd proviso of Section 2(9) of that Finance Act. This comes into effect from the Financial Year 2016-2017; which is the year in which the subject seizures were occasioned. The proviso refers to various provisions where the advanced tax computed under the first proviso stands increased by a surcharge for the purpose of the Union. Section 115BBE is one of the provisions referred to in the 3rd proviso and in the case of individuals the surcharge was @15% where the total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been recommended, in the report of the Committee on Indian Constitutional Reforms Volume I Part I. The word surcharge was used compendiously for the special addition to taxes on income imposed in September 1931. It was held so in paragraph 7 and 8 7. The above legislative history of the Finance Acts, as also the practice, would appear to indicate that the term "Income tax" as employed in Section 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Article 271 of the Constitution. The phraseology employed in the Finance Acts of 1940 and 1941 showed that only the rates of income tax and super tax were to be increased by a surcharge for the purpose of the Central Government. In the Finance Act of 1958 the language used showed that income tax which was to be charged was to be increased by a surcharge for the purpose of the Union. The word "surcharge" has thus been used to either increase the rates of income tax and super tax or to increase these taxes. The scheme of the Finance Act of 1971 appears to leave no room for doubt that the term "Income Tax" as used in section 2 includes surcharge. 8. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spectfully following the aforesaid decision of Hon'ble Kerala High Court, we are inclined to hold that the higher rate of tax prescribed in section 115BBE is applicable to the whole previous year 2016-17 relevant to assessment-year 2017-18 and there is no merit in the contention raised by assessee. 15. In view of above discussions and for the reasons stated above, we are of the view that the Ld. PCIT has rightly termed the assessment-order as erroneous-cum-prejudicial to the interest of revenue and therefore the revision order passed by Ld. PCIT is a valid order in terms of section 263. We are thus inclined to dismiss all grounds raised by assessee in present appeal. We order accordingly. 16. In the result, this appeal of assessee is dismissed." 9. We have heard the rival submissions and perused the material on record. We find that the co-ordinate Bench of the Tribunal of Indore, while adjudicating a similar issue, has followed the decision of Hon'ble Kerala High Court in the case of Maruthi Babu Rao Jadav Vs. ACIT (W.A.No.984 of 2019 dt.23.09.2020) which was referred in its order. Even otherwise, if we look into the provisions of Income Tax Act, the rate of taxes as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement entered into by the Central Government under section 90, or an agreement notified by the Central Government under section 90A, whichever is applicable by virtue of the provisions of section 90, or section 90A, as the case may be; 10. If the above said definition is applied in the context of the assessment made by the Assessing Officer for the A.Y. 2017-18, then it is abundantly clear that the rate of taxes as applied by the Assessing Officer is in accordance with the tax provisions of the Act, and therefore, we do not find any error in the orders passed by the Assessing Officer or the LD.CIT(A). 11. Even in the absence of decision of Hon'ble High Court of Kerala in the case of Maruthi Babu Rao Jadav (supra), the bare provision of the Act - 2(37A) read with other provisions of the Act i.e., Section 68 and Section 115BBE of the Act, make it clear that the rate of taxes at which the deemed income of the assessee is required to be taxed, would be taxed, as notified by the Parliament in the Schedule of Income Tax Act for A.Y. 2017-18. In view of the above, the objection of the ld.AR is devoid of any merit. Furthermore, we may point out that the co-ordinate Bench of the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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