TMI Blog2022 (11) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... on the clear language of the Amending Act, as well as the principle that a substantive amendment is to be generally prospective. We draw support from the decision in Vatika Township Pvt. Ltd. [ 2014 (9) TMI 576 - SUPREME COURT] reiterating the settled law of the rule against retrospectivity. The tax rate applicable to the impugned income would, therefore, be at 30%, i.e., the rate specified in sec. 115BBE as on 30/11/2016, the date of the surrender of income per statement u/s133A (PB-1, pgs.35-44). This, it may be noted, is also consistent with our view that the income is liable to be assessed u/s. 69B. Addition u/s. 68 - The assessee has deliberately kept the two transactions apart, and the same stand divulged only now. Rather than providing credence, the same debilitates the assessee s case, clearly suggesting of there being something more to the transaction than meets the eye. Could the same be under circumstance regarded as proved or as satisfactorily explained ? To our mind, surely not; the genuineness of the transaction, even the purpose of which stands not explained at any stage, being highly suspect. The excess stock found at survey seemingly suggest of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subsequently honoured. The surrendered amount was duly returned for the relevant year, though as business income. The Assessing Officer (AO), however, brought the same to tax u/s. 69B, applying a tax rate of 60% u/s. 115BBE. This defines the first controversy attending this case. The ld. CIT(A) has allowed relief on the basis that the relevant amendment to s.115BBE, increasing the tax rate thereunder from 30% to 60%, was w.e.f. 01/04/2017 and, accordingly, would not apply for the current previous year, being f.y. 2016-17 (para 4.2 of his order). 2.2 The second issue is qua a sum of Rs. 24 lacs, outstanding in the name of one, Shri Manish Jain, assessed u/s. 68. The same was added as the assessee admittedly did not furnish any documents in relation thereto during the assessment proceedings. The assessee filing the same before the ld. CIT(A), explaining the hardship that prevented him from furnishing the same during the assessment proceedings, he admitted the same, and called for a remand report. The creditor s bank account statement was, however, not filed, a fact emphasized upon by the Assessing Officer (AO) in the remand report, wherein the admission of additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017. The assessee s case, accordingly, before us, was two-fold, as under: i) The two businesses afore-mentioned (para 2.1) are the only source of income of the assessee (in this regard it was confirmed by Sh. Bardia, the ld. counsel for the assessee, during hearing, that the mention of the assessee s (only) business as of hardware by the ld. CIT(A) in his order is incorrect). The facts stand confirmed on the basis of the documents found and impounded during survey. The excess stock, thus, only represents the undisclosed income of the assessee s real estate and, in any case, dal mill/grain trading business. This finding is supported by various decisions by the Tribunal. ii) The Taxation Laws (Second Amendment) Act, 2016, received the assent of the President of India on 15/12/2016 (PB-2, pgs.46-51). The same is a substantive amendment. Though qua a tax rate, which is normally per the Finance Act, for one year at a time (s. 4(1)), the flat rate prescribed is per a provision of the Act, i.e., s.115BBE, falling under Chapter-XII of the Act, titled Determination of tax in certain special cases . Inasmuch as the tax rate seriously prejudices the assessee, it is a substantive amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit and loss account for the year. Why, but for s. 69B, deeming it as the income for the relevant year, it could not be said to be income for the relevant year. It was open for the assessee to contend, and which may well be the case, that the difference in stock is a carry-over from the past; that no discrepancy in his accounts for the current year had been found/ detected. Why, it could equally be contended of arising on account of an undisclosed infusion of capital, either in the past or in the current year, and, being not attributable to the business, for which the books are maintained, remained to be entered therein. True, the asset found is in the form of a trading asset of the business. The same, however, by itself represents neither accrual nor receipt of income, the two incidents that attract charge of tax under the Act, and which it must to be attributable to a defined source of income, but is only an application of that income, which though is deemed as income and, further, for the year in which it is so found. That is, but for ss. 68, 69 thro 69D, the amount under reference may not stand to be assessed as income and, in any case, as the income of the relevant year. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jection of it s books of account as unreliable. The Revenue also bringing to tax unexplained credit/s therein, challenged by the assessee on that basis, the Apex Court explained that there is nothing in law that prevents the assessing authority to tax both, the cash credit, the source of which is not satisfactorily explained, and the business income estimated by rejecting the accounts as unreliable. It clarified that it was for the assessee to prove that the cash credit represents income from a source that has already been taxed, and that no further burden lies on the Revenue, upon deeming a cash credit as the assesee s income, to show that it is from a particular source. In the facts of the instant case even the books of account have not been rejected . Coming to the decisions by the Tribunal, claimed to be covering the matter, none were referred to during hearing, even as Sh. Bardia contended of the same being based on credence being allowed to circumstantial evidence/s. The question in these cases thus admittedly turned on the facts of the case. Questions of, and decisions based on findings of, fact, do not yield any statement of law, which alone is binding or has preced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndments, as in the instant case, represents the first day of the assessment year, i.e., AY 2017-18, which explains the assessee s grievance of it being thus effective for fy 2016-17 or, w.e.f. 01/4/2016. Enacting it mid-year and, further, making it applicable at once , becomes meaningless if the same is to take effect retrospectively, or is made effective from a later date (01/4/2017), which could in that case be by Finance Act, 2017. True, the amendment, where so read, does gives rise to a peculiar situation inasmuch as two tax rates would obtain for the current year, i.e., one from 01/04/2016 to 14/12/2016, and another from 15/12/2016 to 31/03/2017, but, then, that is no reason to read retrospectivity where the applicable date is clear and, further, there is nothing to suggest retrospectivity. Further, extraordinary and supervening circumstance of the Demonetization Scheme, 2016, brought out by the Government of India in November, 2016, explains the urgency in bringing an amendment mid-year. Further, the tax rate being in respect of incomes which are imputed with reference to a transaction/s, it is possible to administer the same, another aspect of the matter that stands conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him. The said finding/s having not been withdrawn/corrected, stand to date. Besides being wholly inappropriate on the part of the ld. CIT(A) to have decided in the manner he does, this is all the more unfortunate in view of the AO s remand report dated 22/07/2020 (PB-1, pgs.32-34), whereby he underscores the non-filing of the creditor s bank statement as well as objects to the admission of additional evidence; the assessee not justifying his case for the said admission under rule 46A ((a) to (d)), to which there is no reference in the impugned order, in any manner. The ld. CIT(A), however, proceeds regardless and, as per the assessee s version, admits the said bank statement, date of furnishing which is not clarified, even as the same stands furnished per the assessee s rejoinder to the remand report (PB-1, pgs.28-31), after obtaining the same from the bank on 21/08/2020. No explanation stands furnished while submitting the same, for having not furnished it earlier, i.e., along with the other documents furnished in respect of this credit, before the ld. CIT(A). Inasmuch as the bank statement of the creditor, MJ, was admittedly not furnished before the AO, and neither did it form p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being mandatory. Why, even the fact of MJ being the assessee s relative, stated before us without any material, or even specifying the evidence, stands not revealed prior to the stage of the Tribunal. Merits apart, why, where relevant, the documents not furnished earlier. To contend that these documents formed part of the documents impounded during survey, as Shri Bardia would submit, is, besides being a bald claim, without substance. We have already noted that the creditor s bank statement was procured from his bank only on 21/8/2020, so that it was inferably not available earlier. How could it then be a part of the documents impounded during survey, which were in respect of excess inventory of stock-in-trade, which concluded in a disclosure, duly honoured, in its respect. What, one may ask, is the relevancy of the said documents, i.e., qua the impugned addition, which is admittedly not a part of the disclosure? Further, if so, which is understandably the purport of the submissions before us, why were the same not furnished earlier and being only now, and in a piecemeal manner. As explained in CIT v. Text Hundred India Pvt. Ltd. [2013] 351 ITR 57 (Del) with reference to judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. This becomes all the more intriguing considering that the funds have been arranged by the creditor (MJ) through bank borrowing. There is, under the circumstances, no question of the creditor (MJ), claimed to be without any material in support, a relative, enabling the assessee by providing him funds for his business, when the creditor himself owed money to the assessee toward purchase of flat from him, i.e., under an oral or formal agreement. The assessee has deliberately kept the two transactions apart, and the same stand divulged only now. Rather than providing credence, the same debilitates the assessee s case, clearly suggesting of there being something more to the transaction than meets the eye. Could the same be under circumstance regarded as proved or as satisfactorily explained ? To our mind, surely not; the genuineness of the transaction, even the purpose of which stands not explained at any stage, being highly suspect. The excess stock found at survey seemingly suggest of the assessee s accounts as not reflecting the true state of affairs. It could be a case under-invoicing, as the ld. CIT(A) says, albeit without any material to exhibit the same, which fact was c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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