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TMI Blog2025 (4) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to serve the notice of hearing on the assessee. Vide letter dated 09/04/2024, filed through the office of the learned Departmental Representative ("learned DR"), the AO submitted that when attempts were made to serve the notice at the given address of the assessee, it was found that the assessee company is no longer present at the said address. Accordingly, notice was sent through post at the address mentioned by the assessee in its latest Income Tax Return for the assessment year 2024- 25. Additionally, notice was also sent to the email address of the assessee in ITBA system. Despite the aforesaid steps having been taken, there is no representation on behalf of the assessee. Accordingly, we proceed to decide the present appeal on the basis of the material available on record and after consideration of the submissions of the learned DR. 4. In this appeal, the Revenue has raised the following grounds: - "1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to re-compute the tax as per applicable provisions of law, whereas the AO has correctly computed the tax @ 60% as per Section 115BBE of the Income Tax Act?" 2. "On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n banks. Thus, the assessee submitted that the cash sales and collection from customers in cash is an established practice over the years and it is not an unusual event or transaction of the current year. 6. The Assessing Officer ("AO"), vide order dated 26/12/2019 passed under section 143(3) of the Act, notice that the total cash sales during the demonetization period, i.e. 08/11/2016 to 30/12/2016, was Rs. 4,72,26,475, which is substantially high as compared to the cash deposits for the financial year 2015-16 was Rs. 6,22,28,913. Thus, the AO noted that the substantial increase in cash deposits during the demonetization period is 64.27%, i.e. Rs. 4,00,00,949 when compared with the previous period. Accordingly, the AO held that during the demonetization period, the assessee had made huge cash deposits which are not made in the earlier years. Further, the AO noted that the assessee, despite sufficient opportunity, failed to file month-wise details of deposits made during the demonetization period. Accordingly, the AO treated the abnormal rise in cash deposits of Rs. 4,00,00,949 as unaccounted cash of Specified Bank Notes and added the same under section 68 of the Act. Further, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re reproduced as follows: - "8. Per contra, ld. DR submitted that the issue is covered in favour of the Revenue by the decision of Hon'ble Kerala and Karnataka High Courts and also by the decision of Indore Bench of ITAT in the case of Chandan Garments Private Limited v. Pr. CIT [IT Appeal No. 125 (Ind.) of 2022, dated 2-12-2022] wherein identical issue was examined. The Tribunals / High Court after examining the issue, has come to a conclusion that higher rate of tax is required to be applied for A.Y. 2017-18 (Previous year 201617). It was further submitted that Section 115BBE is not a charging provision but merely provides the rate of tax at which the income earned by the assessee during the year 2016-17 is required to be taxed. The relevant portion of the order of ITAT, Indore in the case of Chandan 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 v. 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 erroneou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore the higher rate of tax is not applicable to it, the tax-rate of 30%+3% Cess as existing in section 115BBE as on 01.04.2016 shall apply. To resolve this controversy, a lengthy discussion on the scheme of Income-tax Act, 1961; particularly the framework of previous year, assessment year, the parliamentary system of prescribing tax-rates, etc. is required; but we have the benefit of a direct decision rendered by Hon'ble Kerala High Court in WA No. 984 of 2019 - Maruthi Babu Rao Jadav v. The Assistant Commissioner of Income-tax, Central, Circle, Kozhikode, dated 23.09.2020 in which the Hon'ble High Court has already analysed such framework at length and was pleased to decide that the higher rate of tax would apply to whole Previous-Year 2016- 17 related to Assessment-Year 2017- 18. The relevant paragraphs 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 cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Year 2017-18 Page 12 of 16 also placed on the Full Bench decision of the Patna High Court in Loknath Goenka v. C.I.T [2019 417 ITR 521 (Patna)]. 11. Before we look at the amendments carried out, on facts, there were two seizures of cash made on 02.08.2016 and 03.11.2016 respectively of Rs. 1,05,03,500/- and Rs. 1,24,68,750/- both in the F.Y 2016-2017. The persons from whom the cash was seized as also the appellant herein admitted that it belonged to the appellant who carries on trading in gold bullion. The appellant not having produced any books of accounts or cash flow statements failed to establish the source of the money seized; which was included in the total income under Section 69A of the IT Act. The writ petition or the appeal does not challenge such inclusion. On the said amounts tax was imposed @60% under Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Finance Act, 2016 stood amended by which 115BBE was omitted from the 3rd proviso. After the 6th proviso yet another proviso was inserted which provided for the 'advance tax' computed under the first proviso, in respect of any income chargeable to tax under Section 115BBE(1)(i), to be increased by a surcharge for the purposes of the Union, calculated @25%. Hence there is no new liability of surcharge created and it is a mere enhancement of the rate of surcharge. 15. In the financial year 2016-17 itself the tax as provided under section 115BBE and the surcharge on advance tax was available as discernible from the IT Act and Finance Act, 2016 as it stood on 1.4.2016 itself. A major misdemeanor leading to assessment of income as accrued under Section 69A invites the consequences of Section 115BBE and surcharge provided under 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any time increase any of the duties or taxes referred to in those Articles by a surcharge for the purpose of the Union and the whole proceeds of any such surcharge shall form part of the consolidated Fund of India. Article 270 provides for taxes levied and collected by the Union and distributed between the union and these states. Caluse (1) says that tax on income other than agricultural income shall be levied and collected by the Government of India and distributed between the Union and the states in the manner provided in clause (2). Article 269 deals with taxes levied and collected by the Union but assigned to the States. The provisions of Articles 268 which is the First one under the heading distribution of revenue between the union and the states relate to duties levied by the Union but collected and appropriated by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and undoubtedly, the present year under consideration falls within A.Y. 2017-18. The provisions of the Act are required to be read in light of various decisions considered by the co-ordinate Bench of the Tribunal, and it will be repetitive, if we reproduce the same. However, for the purpose of completeness, it is essential to mention here the definition of "rate or rates in force" in relation to F.Y. has been defined under Section 2(37A) of the Act, which provides as under : Section 2(37A) in The Income Tax Act, 1961 (37A) "rate or rates in force" or "rates in force", in relation to an assessment year or financial year, means- (i) for the purposes of calculating income-tax under the first proviso to subsection (5) of section 132, or computing the income-tax chargeable under sub-section (4) of section 172 or sub-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y provision and it does not lay down any new law. The liability, if any, has been examined by the Assessing Officer / LD.CIT(A) by a reference to the bunch of sections 68, 69, 69A, 69B, 69C and 69D and Section 4 of the Income Tax Act and whereas Section 115BBE is merely a computation and machinery provision providing the rate of taxes to be applied on the income / deemed income declared by the assessee or assessed by the Assessing Officer. It is also settled proposition that the charging provision cannot be applied retrospectively, whereas the 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. In view of the above and respectfully, following the decision of ITAT, Indore Bench in the case of Chandan Garments Private Limited (supra), we do not find any 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. Accordingly, the appeal of the assessee is dismissed. 12. In the result, the appeal of the assessee is dismissed." 10. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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