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TMI Blog2023 (7) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... s no error or prejudice much less both, to warrant the innovation of the powers conferred u/s 263. 3. That on the facts and circumstances of the case and in law, and in any view of the matter, the ld. Pr. CIT, Indore-1 erred in holding that the impugned assessment order dated 29.12.2019 passed u/s 143(3) of the Income Tax Act 1961 to be erroneous and prejudicial to the interest of Revenue for complete lack of enquiry on the part of the Ld. Assessing officer on all the stated issues. 4. That on the facts and circumstances of the case and in law, the Ld. Pr. CIT, Indore-1 erred in initiating proceeding u/s 263 without appreciating the fact that the assessment order is passed by the Ld. AO after detailed scrutiny and raising specific queries and after satisfying with the reply and evidence filed by the assessee and so also case law relied by the assessee on the reasons for which proceeding u/s 263 is initiated. 5. That on the facts and in the circumstances of the case and in law the Ld. pr. CIT erred in holding that the Excess stock of Rs. 1,68,030/- and Excess cash Rs. 9,21,460/- is to be assessed u/s 69 and 69A respectively without appreciating the fact that all the above in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. 4. In response to the notice, the assessee made a reply which is reproduced by Ld. PCIT in his order. Ld. PCIT considered the same but being unsatisfied, he passed revision-order setting aside the assessment-order and directing the Ld. AO to frame a de novo assessment. 5. Being aggrieved by revision-order, the assessee has now come in appeal before us. 6. Although the assessee has raised as many as seven grounds as cited earlier, the crux of the grounds can be fit in a narrow compass i.e. whether income relatable to the excess-stock of Rs. 1,68,030/- and excess-cash of Rs. 9,21,460/- attracted section 115BBE or not; and consequently whether the revision-order passed by Ld. PCIT is valid or not? 7. Thus, the fundamental controversy between the parties is with regard to the application or non-application of section 115BBE and this controversy arises for the rival reasoning of both sides i.e. while the assessee claims the impugned excess-stock and excess-cash as part of business-income thereby not attracting section 69 /69A read with section 115BBE of the act; the Ld. PCIT claims the same to have been earned from undisclosed sources thereby attracting section 69A / 69 read wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewelry or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewelry or other valuable article may be deemed to be the income of the assessee for such financial year." Thus, section 69 / 69A is applicable if three conditions are satisfied, viz. (i) the assessee has made investment / is found to be owner of any money; (ii) such investment / money is not recorded in the books of account maintained for any source of income; and (iii) the assessee offers no explanation about the nature and source of investment / money. Reverting back to the Statement of assessee, we observe that all three conditions are clearly satisfied, viz. (i) the assessee was found to have investment in excess stock of Rs. 1,68,030/- and owner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment-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 of Rs. 1,68,030/- has been incorporated as taxable income by the assessee in the ITR filed besides its regular income for the year under consideration." We are in agreement with Ld. DR that the Ld. AO has simply stated that the assessee has incorporated the excess-cash and excess-stock in the ITR. Needless to mention that the function of assessing authority is not only of adjudicator but also of investigator. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 contend that even going by the decision in Karimtharuvi Tea Estate ltd. v. State of Kerala (AIR (1966) SC 1385) an amendment made on the 1st day of April of any financial year would apply to the assessments of that year. That is, if an amendment is brought into force on 01.04.2017, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties. 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 and to ensure that defaulting assessees are subjected to higher tax and stringent penalty provision. Both the measures spoken of herein were to further the said objects and there cannot be any nexus assumed nor is it discernible. 13. Section 115BBE was inserted by Finance Act 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 liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 are not relevant to the issue raised here and we need only look at the declaration as to the nature of a surcharge imposed in the Finance Act. The legislative history with respect to the concept of surcharge was traced by the Court, which, for the first time was found to have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses 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 e4ffect 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 reasoning herein above and the writ appeal would stand dismissed without any order as to costs." 14. We are consciously aware of the judicial hierarchy and discipline according to which the Hon'ble High Court of Kerala, though non- jurisdictional, is higher than ITAT. Hence, respectfully 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 discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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