9911796707
TMI Blog2025 (1) TMI 1110X X X X Extracts X X X X X X X X Extracts X X X X ..... he machinery / applicability of the rate of tax is charged in accordance with the Schedule of Income Taxes as declared by the Parliament on a year- to-year basis. Respectfully, following the decision of Chandan Garments Private Limited [ 2023 (7) TMI 973 - ITAT INDORE] no merit in the appeal of the assessee and we are inclined to hold that the higher rate of tax prescribed in Section 115BBE of the Act is applicable to the whole previous year 2016-17 relevant to A.Y. 2017-18 - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,50,00,000, the assessee repiled that it was out of Opening Cash balance as on 01.04.2016. As the assessee expressed its inability to produce confirmation from the parties, the AO issued summons/notices to all the parties to explain the nature of transactions, to produce the ledger extract of the assessee in their books for the F.Y. 2015-16 and 2016-17, mode of payment, copy of ITR for A.Y. 2017-18 and to confirm that cash payment have been made. 5.2 In response to above summons/notices, two parties namely Sunil Forging & Steel Industries Unit II and Diamond Steel and Engineering Company replied that they have not purchased anything from the assessee and have indeed supplied goods to them. The third party Sree Spectra Media replied that it has given cash to the assessee during the F.Y. 2016- 17 but did not furnish any further details. The summons/notices to all the other parties remained unanswered. As the assessee failed to prove the source of cash deposits, the AD treated the amount of Rs. 1,30,50,000 as unexplained cash credit u/s 68 of the Act and taxed them the rate as mentioned in Section 115BBE of the Act. Aggrieved by the addition, appellant is in appeal before thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a smoke screen as to create an impression that they are actually realisation of sale proceeds of earlier years. 5.5. In order to create the smoke screen, the appellant has furnished the names of 20 parties before the Ld. AO and shrugged off the responsibility to produce concrete evidences which are basic to prove that they are indeed genuine. In response to the notices issued by the AO, two of the parties have already responded to the AO saying that they did not have any purchases from the appellant and has only made sales. None of the other parties except Sree Spectra Media have confirmed cash payments to the appellant during the year. It is well known that section 40A(3) of the I.T. Act prohibits payment in cash exceeding Rs 20,000 in the course of purchase. It is improbable that so many parties would make payments to the appellant thereby attracting the rigours of section 40A(3) upon themselves. Hence, realisation of cash from them is illogical and appears to be fabricated by the appellant in its books of accounts. 5.6. On examination of the Balance Sheet of the appellant, it is seen that Trade receivables on 31.12.2016 is Rs. 2,18,73,573 and that as on 31.03.2017 is Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of section 68, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is prima facie evidence against the assessee, viz., the receipt of money, and if he fails to rebut the same, the said evidence being unrebutted, can be used against him by holding that it is a receipt of an income nature. 5.9. The credits have appeared in the books of the appellant, so it is the responsibility of the appellant to conclusively prove that they are genuine, the parties are identifiable and they had the creditworthiness, but in this case the appellant shrugged off the onus cast upon it to produce details like confirmation, creditworthiness etc., of the parties. Having failed to do so, onus has not been discharged and the credits remained unexplained. 5.10. Thus, respectfully following the above decisions of the Hon'ble Apex Courts and various other courts on the issue and also considering the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Garments Private Limited (supra) is to the following effect : "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 adopted one of the permissible view, the assessment-order cannot be said to be erroneous; or (ii) where the AO has conducted enquiry during assessment proceeding but not discussed the outcome in assessment-order, the PCIT cannot make revision u/s 263 to substitute his own view. We certainly agree with such views but the facts of present appeal are different and do not warrant application of those decisions for the very reason that the Ld. DR carried us to the assessment-order wherein the Ld. AO has made following reporting on the impugned issue: "Survey u/s 133A had been carried out in the case on 19.09.2016. Unaccounted income of Rs. 10,89,490/- was disclosed during the survey on account of excess cash found of Rs. 9,21,460/- and excess stock found Chandan Garment of Rs. 1,68,030/- has been incorporated as taxable income by the assessee in the ITR filed besides its regular income for the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the surcharge provided in the Finance Act, 2016 to 25% for income covered under Section 69A, to be prospective. The above referred enactments are herein after referred to as the '2nd Amendment Act', 'IT Act' and the 'Finance Act'. The 2nd Amendment Act was dated 15.12.2016 and the amendment to Section 115BBE was specified to be effective from 01.04.2017. The amendment enhancing the rate of tax was incorporated in the I T Act and that of surcharge in the Finance Act. On declaration, consequential relief is sought against Ext.P2 assessment order levying tax at the enhanced rate of 60% and surcharge @25% on the 'advance tax'. The learned Single Judge rejected the writ petition by a cryptic judgment relying on Commissioner of Income Tax v. S.A.Wahab.((1990) 182 ITR 464 (KER)). 2. The learned Counsel Sri.Vishnu S Arikkattil appearing for the appellant would co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 the amendment. The affidavits admitting the ownership of amounts seized were also submitted prior to the amendment. The assessee was not aware of the enhanced tax liability when the admissions were made before the authorities. The assessee has also made an attempt to relate the amendments to the demonetization of the specified currencies announced on 08.11.2016 which contention we reject at the outset. The subject amendments which are relevant for our consideration have no direct link with the demonetization introduced or the taxation and investment regime of Pradhaan Mantri Garib Kalyan Yojana 2016 brought in under Chapter IX A of the 2nd amendment Act. The 2nd amendment Act as is clear from the Statements of Objects and Reasons, was to curb, evasion of tax and black money as also plug loopholes in the IT Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contention that he committed the misconduct on the expectation that if he were caught he would have to shell out only lesser amounts as tax and surcharge. There is no right accrued on the assessee to commit an offence on the expectation of a lesser penalty. 16. It was also argued that Income Tax at the rate or rates specified, as prescribed in any Central Act to be charged for any assessment year, shall be so charged in respect of the total income of the previous year as per Section 4 of the IT Act. However, there is no such provision to enable a surcharge to be so taxed, on the Finance Act prescribing an enhanced rate at the commencement of an year. The said contention however, cannot be sustained especially looking at the decision of the Hon'ble Supreme Court in CIT Kerala v. K Srinivas. [(1972) 4 SCC 526]. The facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by Finance Act, 2016 and the rate stood enhances by Finance Act 2017. The Income Tax even as per the Finance Act has to be at the rate specified in Part I of the 1st Schedule which shall be increased by surcharge for purposes of the Union. Surcharge hence partakes the character of Income tax and Article 271 itself empowers the Parliament, at any time to increase any of the duties or taxes by a surcharge for the purpose of the Union and it forms part of the consolidate fund. So when a surcharge is imposed it is in effect an enhancement of the tax or duty. The provisions in the Finance Act also employs the words 'the income tax computed … shall be increased by a surcharge. Section 4 of the IT Act squarely applied to the surcharge imposed. The judgement of the Learned Single judge is affirmed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (2) of section 174 or section 175 or sub-section (2) of section 176 or deducting income-tax under section 192 from income chargeable under the head "Salaries" or computation of the "advance tax" payable under Chapter XVII-C in a case not falling under section 115A or section 115B or section 115BB or section 115BBB or section 115E or section 164 or section 164A or section 167B, the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year, and for the purposes of computation of the "advance tax" payable under Chapter XVII-C in a case falling under section 115A or section 115B or section 115BB or section 115BBB or section 115E or section 164 or section 164A or section 167B, the rate or rates specified in section 115A or section 115B or section 115BB or section 115BBB or section 115E or section 164 or section 164A or section 167B, as the case may be, or the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year, whichever is applicable ; (ii) for the purposes of deduction of tax under sections 193, 194, 194A, 194B, 194BB and 194D, the rate or rates of income-tax specifi ..... 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