TMI Blog2023 (5) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... E was inserted by Finance Act 2012, w.e.f. 01.04.2014 - HELD THAT:- We direct the assessing officer to tax the addition at the normal rate of tax applicable prior to Second Amendment Act 2016. In the result, ground No.2 of the appeal is allowed. - ITA No.293/SRT/2022 - - - Dated:- 22-5-2023 - Shri Pawan Singh, Judicial Member For the Assessee : Shri Mehul Shah, C.A For the Revenue : Shri Vinod Kumar, Sr-DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [for short to as NFAC/Ld. CIT(A) ] dated 23.09.2022 for assessment year 2017-18, which in turn arises out assessment order passed by Income Tax Officer, Ward-3(2)(8), / Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 05.12.2019. The assessee has raised the following grounds of appeal:- 1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in sustaining the addition of Rs.5,00,000/- out of Rs.16,60,000/- made by Assessing Officer u/s 69A of the Act. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tailed written submission. The submission of assessee is recorded in para-4 of the order of NFAC/Ld. CIT(A). In the submission, the assessee stated that he is a farmer and also a retired employee of GSRTC and having pension income. The Assessing Officer made addition by taking view that assessee has made cash deposits of Rs.16.60 lakh in his various bank accounts of Bank of Baroda. The assessee submitted that he has made deposit of Rs. 2.50 lakh in his bank account No.246020030343, out of past savings and cash withdrawal of Rs. 80,000/- on 07.11.2015 and Rs. 50,000/- on 04.05.2016 from his bank account No.2810100015213 respectively. For deposits in bank account in 2460600001999, the assessee stated that he has obtained a loan of Rs.10.00 lakh, which was credited/ disbursed in account No. 2460100020583 on 25.05.2015. The assessee withdrawn the cash of Rs.10.00 lakh in cash on 29.05.2015 and deposited in 2460600001999 on 03.12.2016, as it was compulsory as per guidelines of Reserve Bank of India. The assessee furnished account statement of loan account. On the basis of such explanation, assessee submitted that he is explained entire cash deposits. The assessee also relied on certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that Second Amendment Act 2016 was brought on statue only after the announcing the demonetisation made on 08th November 2016. Before that, the rate of taxation under section 115BBE was 35.54% including surcharge and cess by way of this amendment, the rate was increased to 77.25% retrospectively for AY 2017-18. The amendment is in contradiction with the law and policy of taxation. The assessee cannot be asked to pay at tax at the increased rate by way of retrospective amendment. To support his submissions, the ld AR for the assessee relied on the following decisions; Karimtharuvi Tea Estate Ltd Vs State of Kerala (1966 ITR 262-SC), CIT Vs S A Wahab (1990) 48 Taxman 362 (Kerala), Avani Export Vs CIT (2012) 23 taxmann.com 62-Gujarat, PCIT Vs Aacharan Enterprises (P) Ltd (2020) 117 taxmann.com 745 (Rajasthan). 10. On the other hand, Ld. Sr-DR for the Revenue supported the order of ld CIT(A) and would submit that the assessee has already allowed substantial relief to the assessee. It was submitted that CBDT Circular was issued for guidance of Officer of Department about the issue of cash deposits, which was not examined uniformly. So far as taxing of additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act is the subject matter before us. The assessee has challenged the chargeability of tax @ 77.25% by invoking the amended provision of Section 115BBE of the Act on account of additional income declared at the time of search, survey and also the addition made by the assessing officer. 12. The case of the assessee is this that the amendment in Section 115BBE came into force only on 15.12.2016 whereas the search was conducted on 21.09.2016 and the assessee has paid tax @ 30%. The provision of Section 115BBE of the Act tax prior to the amendment reads as follows: 115BBE. (1) Where the total income of an respondent assessee includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, the income-tax payable shall be the aggregate of (a) the amount of income-tax calculated on income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D , at the rate of thirty per cent; and (b) the amount of income-tax with which the respondent assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (a). 13. The second amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, Jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the respondent assessee for any source of income, and the respondent assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the respondent assessee for such financial year. 2.3] That provision of section 69B of the Act though invoked in the case of the above respondent assessee. However, the excess Jewellery as found was part of stock in trade of the respondent assessee company and not found as Investment as envisage in the provision of section 69B of the Income Tax Act. That provision of section 68 to 69D are residuary sections and the same is applied only where the amount was not taxed under any specific chapter. In the present case in hand, the respondent assessee company is engaged in the business of Jewellery. The difference in the quantity of stock was during the normal business activities of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also a fact that the Ld. assessing officer has not brought on record any evidence or material to establish that the assessee was involved in any other activities or having any other source of income. While deleting the addition made by the Ld. assessing officer the Ld. CIT(A) observed as follows: First of all let me discuss whether the provisions of section 115BBE are applicable to this case or not. The provision of disallowance of any loss with the income as computed under clause (a) of sub section (1) of section 115BBE came into force w.e.f 01.04.2017. Hon'ble Supreme court in the case of CIT vs Vatika Township Pvt Ltd (2014) 24 ITJ 532 (SC); (2014) 271 CTR 1: (2014) 227 Taxmann 121 has held that An amendment made to the taxing statute can be said to be intended to remove 'hardships' only of the assessee, not of the department-on the contrary, imposing a retrospective levy on the assessee would have caused undue hardship. Hon'ble ITAT Indore in the case of Priyadharshani Construction vs ITO (2012) 19 ITJ 276 (Trib-Indore) has held that Substantive law shall be understood to be applicable prospectively unless made specifically retrospective. Thus, it is se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the assessing officer, was not justified in stating that provisions u/s 115BBE were invoked by the assessee which in fact was applicable from 01.04.2017 and not from 28.09.2016 (date of search). Thus, the assessing officer is hereby directed to calculate tax as per normal rate applicable in the case of the assessee Therefore, appeal on this ground is Allowed. Since the search in the case of the assessee was carried out before the amendment the addition ought to have been made in terms of the prevailing provision and therefore, the addition made by the assessing officer invoking Section 115BBE provision of which came into force only on 01.04.2017 is not sustainable. Therefore, the order passed by the Ld. CIT(A) deleting the addition made on that premise is according to us just and proper so as to warrant interference. Hence, the appeal preferred by the Revenue found to be devoid of any merit and is dismissed. 15. In the result, the appeal filed by the Revenue is dismissed. 13. Thus, by following the ratio of decision of coordinate bench, in the above case, I direct the assessing officer to tax the addition at the normal rate of tax applicable prior to Seco ..... 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