RAJ KUMAR RAJ,ABU ROAD vs. DCIT, CIRCLE-2, JODHPUR

The relevant facts, in brief, are that a survey action under section 133A was carried out in the case of the assessee on 23.09.2016, during the course of which excess cash of ₹2,83,266/- and certain investment in gold amounting to ₹9,79,432/- were found. The assessee, in his statement recorded during the survey, surrendered the aforesaid amounts as undisclosed income. In the assessment proceedings, the Ld. AO treated the said amounts as unexplained income, inter alia, under section 69A and subjected the same to tax at the enhanced rate of 60% by applying the amended provisions of section 115BBE. The said action has been sustained by the Ld. CIT(A).

Before us, the learned counsel submitted that, irrespective of the characterization of the surrendered amount under section 69A, the enhanced rate of tax of 60% introduced in section 115BBE by the Taxation Laws (Second Amendment) Act, 2016 could not have been applied to income pertaining to Financial Year 2016-17 relevant to Assessment Year 2017-18. In support, strong reliance has been placed upon the recent judgment of the Hon’ble jurisdictional

We have considered the submissions and perused the material placed before us. The issue regarding applicability of the enhanced rate under section 115BBE for Financial Year 2016-17 now stands directly answered by the Hon’ble jurisdictional High Court in Deepak Maratha (supra). The Hon’ble High Court, after examining the Taxation Laws (Second Amendment) Act, 2016 and the settled principles governing temporal operation of fiscal legislation, has categorically held that the amendment to section 115BBE enhancing the rate of tax from 30% to 60% is prospective and effective from 01.04.2017. It has further been held that, for Financial Year 2016-17, the law as it stood on 01.04.2016, prescribing the rate of 30%, would govern and that the enhanced rate of 60% could apply only from Financial Year 2017-18 onwards. The Hon’ble High Court has also specifically noticed that the Taxation Laws (Second Amendment) Act, 2016 contains no express language giving retrospective operation to the amended section 115BBE.

The Hon’ble High Court has reached the aforesaid conclusion following, inter alia, the principle enunciated by the Hon’ble Supreme Court in Karimtharuvi Tea Estate Ltd. v. State of Kerala (1966) 60 ITR 262 (SC) that, ordinarily, the law

Thus, the issue before us is no longer res integra. Admittedly, the survey in the present case was conducted on 23.09.2016 and the excess cash of ₹2,83,266/- and investment in gold of ₹9,79,432/- were found and surrendered during Financial Year 2016-17 itself. Consequently, even if the said surrendered income has been brought within the ambit of section 69A, the enhanced rate of 60% under the amended section 115BBE could not have been applied for the year under consideration. Respectfully following the binding judgment of the Hon’ble jurisdictional Rajasthan High Court in Deepak Maratha (supra), we direct the Ld. AO to compute the tax on the income falling within the ambit of section 115BBE at the rate applicable prior to its amendment by the Taxation Laws (Second Amendment) Act, 2016, i.e. at 30%, subject to applicable surcharge and cess as

The next issue relates to the addition of ₹2,00,000/- on account of cash deposited in the assessee’s bank account on 28.11.2016. The learned counsel submitted that the assessee had already surrendered cash of ₹2,83,266/- found during the course of survey and there was further cash balance of ₹44,734/- available with him. Therefore, the subsequent cash deposit of ₹2,00,000/- ought not to have been treated as an independent unexplained amount without allowing the benefit of the cash already surrendered/available with the assessee. The limited prayer before us is, therefore, for grant of telescoping/set-off against the surrendered cash.

Considering the aforesaid facts, we find that the plea of telescoping requires examination with reference to the availability and utilization of the surrendered cash and whether there was any intervening application or depletion thereof before the deposit of ₹2,00,000/- on 28.11.2016. Accordingly, we direct the Ld. AO to verify the availability of the surrendered cash/cash balance as on the date of deposit and, to the extent such cash is found to be available and not otherwise utilised, allow appropriate telescoping/set-off against the deposit of

Insofar as the addition of ₹50,043/- is concerned, the learned counsel has stated at the time of hearing that the said ground is not pressed. Accordingly, the same is dismissed as not pressed.

In the result, the appeal of the assessee is partly allowed in the terms indicated above.