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TMI Blog2024 (11) TMI 1444X X X X Extracts X X X X X X X X Extracts X X X X ..... mber: B-07.00537. Being a NBFC-MFI entity, the loans were mostly made to individual members from 'Women Joint Liability Groups' for small ticket size ranging from Rs. 10,000 to Rs. 50,000 with fortnightly repayments, which is transacted in small cash denominations. There are about three lakh women borrowers taking loans from the entity in 100 branches. 4. During the demonetization period (i.e. between 08.11.2016 to 31.12.2016) the petitioner deposited the cash available with it and the cash collections of repayment from borrowers in the bank accounts of the petitioner company during the window made available for cash deposits in the bank account. On 28.03.2017 the petitioner filed an online response in the "Cash Transaction-2016" module in the filing portal of the Income Tax Department stating that "the cash deposited out of cash balance available as per cash book and loan amount repayment received from borrowers in cash". Thereafter, the petitioner filed return of income in time under section 139(1) of the Income Tax Act, 1961 (hereinafter referred to as IT Act) for Assessment Year 2017-2018 on 20.09.2017 admitting a total income of Rs. 16,07,57,770/-. Then had filed re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest u/s 2348 and 234C of the Income Tax Act, 1961. 6. The amendment to Income Tax Act prescribing the rate of 60% as per Section 115(BBE) of the Act was assented to by the President only on 15.12.2016 and the same cannot be applied retrospectively for transactions prior to 15.12.2016. Further, the respondent did not bring on record dates on which specified bank notes were deposited in the bank accounts of the petitioner which is essential for determining applicability of rate as per the amended section. Infact the assessment was completed based solely on a reply given in the "Cash Transactions-2016" module that was given even before filing the return of income. Hence the writ petition challenging the assessment order. 7. The defendant had filed counter denying all allegations except that are specifically admitted. Then stated that the factual details necessary for the case are that the petitioner/assessee is a company, engaged in the business of lending loan to individuals. The assessee filed original return of income for the assessment year 2017-18 on 20.09.2017 admitting a total income of Rs. 16,07,57,770/- and it was revised on 22.5.2018 incorporating the details of bank a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2019) 416 ITR 440 the Hon'ble Supreme Court has reiterated that writ petition ought not to be entertained when effective statutory appellate remedy was available to the petitioner. 9. Without prejudice to the above contention of statutory appellate remedy, the respondent denied the other contention of the petitioner as false and incorrect. In so far as the contention in paragraph 4 of the affidavit that during demonetization it had deposited the cash balance as on 8.11.2016 and the cash collections of repayment from borrowers in the bank accounts maintained by the petitioner during the window period (i.e. from 8.11.2016 to 31.12.2016), the respondent submitted that the available cash balance with the petitioner as per the cash book is Rs. 19,06,251/-, whereas the total amount deposited from 8.11.2016 to 31.12.2016 is Rs. 44,39,33,123/- in the form of both Specified and Non-Specified Bank notes. The specified Bank notes are erstwhile Rs. 500 and Rs. 1000/- denomination notes. The amount deposited as Specified Bank Notes is Rs. 1,18,57,000/-. The acceptance of specified notes is expressly banned by all, except for the persons notified in the Govt. Gazette. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 115BBE was applied in this case. 12. Further the plea of the petitioner it is applied retrospectively is incorrect, since the amendment was with effect from 01.04.2017 and hence the same is applicable for the previous year 2016-2017 and the assessment year 2017-2018. The amendment to section 115BBE is directly related to demonetization which would be evident from objects and reasons for such amendment. Interest u/S.234B and 234C were charged as per law. The contention of the petitioner that the amendment made in Section 115BBE cannot be applied retrospectively prior to 15.12.2016 is incorrect and the respondent submitted that the amendment to the Section 115BBE came into effect from the AY 2017-18 relevant to the previous year 2016-17 transactions and it is directly related to demonetization. Therefore, the respondent prayed to dismiss the writ petition. 13. The primary contention of the petitioner is that there is violation of principles of natural justice and submitted that the respondent issued notice u/s 133(6) to some borrowers and also to the banks. The information collected from the banks were never put to the petitioner but the impugned assessment order had relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal hearing but passed the assessment order. Hence there is violation of principles of natural justice. However, the contention of the respondent is that personal hearing was granted for the proceedings u/s143(2) on 19.8.2019 and 28.8.2019. Further all filing is through e-filing and no personal appearance was required. Further notice u/s 142(1) were issued on 19.08.2019 and 09.09.2019 requesting to furnish details through online. It is pertinent to mention that the Assessing Officer has not made any inquiry under Section 142(2) of the IT Act 1961. Hence, the petitioner's statement that there is violation of Section 142(3) is totally incorrect. After hearing the rival submissions this Court is of the considered opinion that the respondent is incorrect in stating there is no violation of Natural Justice. For the assessment proceedings u/s143(2) the respondent had granted personal hearing on 19.08.2019 and 28.09.2019, then again on 12.10.2019. Thereafter the petitioner was directed to file various details and the petitioner had filed through e-portal from 31.10.2019 to 13.12.2019. After filing the same the respondent ought to have granted personal hearing, but the respondent f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (the Act) can possibly be used for concealing black money. The Taxation Laws (Second Amendment) Bill, 2016 ('the Bill') has been introduced in the Parliament to amend the provisions of the Act to ensure that defaulting assessees are subjected to tax at a higher rate and stringent penalty provision. Further, in the wake of declaring specified bank notes "as not legal tender", there have been suggestions from experts that instead of allowing people to find illegal ways of converting their black money into black again, the Government should give them an opportunity to pay taxes with heavy penalty and allow them to come clean so that not only the Government gets additional revenue for undertaking activities for the welfare of the poor but also the remaining part of the declared income legitimately comes into the formal economy. In this backdrop, an alternative Scheme namely, 'Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016' (PMGKY) has been proposed in the Bill. The declarant under this regime shall be required to pay tax @ 30% of the undisclosed income, and penalty @10% of the undisclosed income. Further, a surcharge to be called 'Pradhan Mantri Garib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t only states that step had been taken to curb black money by withdrawing Specified Bank Notes of denomination of Rs. 500 and Rs. 1000. And also states the people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object "that instead of allowing people to find illegal ways of converting their black money into black again", it is evident that the government is intended to impose the same for future transactions. Especially the use of word "again" in the object would clearly indicate it is for future transactions i.e. from 01.04.2017. Therefore this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. And for prior transaction the revenue is empowered to impose only 30% rate of tax. 18. The next contention of the petitioner is that had deposited the cash available with it and the cash collected for the repayment of loan, wherein the said depositors had deposited the Specified Bank Notes. If the statement of accounts for the previous year is comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 69A of the Income Tax Act, 1961. Therefore, the impugned order making the petitioner liable to tax at the maximum marginal rate of tax by invoking Section 115BBE of the Income Tax Act, 1961 placing reliance on the decision of the Honourable Supreme Court in Smt. Shrilekha Banerjee Vs. CIT, 1964 AIR SC 697 appears to be misplaced. 17. Since the assessment proceedings no longer involve human interaction and is based on records alone, the assessment proceeding should have commenced much earlier so that before passing assessment order, the respondent assessing officer could have come to a definite conclusion on facts after fully understanding the nature of business of the petitioner. It appears that the return of income was filed by the petitioner on 02.11.2017. However, the assessment proceeding commenced much later towards the end of the period prescribed under section 153 of the Income Tax Act, 1961. In my view, assessment proceeding under the changed scenario would require proper determination of facts by proper exchange and flow of correspondence between the petitioner and the respondent Assessing Officer. 18. Under these circumstances, the impugned order is set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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