ADARSH SOOD,KHANNA vs. ITO WARD 1, KHANNA, PUNJAB

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ITA 38/CHANDI/2026Status: DisposedITAT Chandigarh15 July 2026AY 2019-205 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the amendment to Section 115BBE, enhancing the tax rate, is prospective and applicable from April 1, 2017. Since the assessment year in question is 2019-20, the amended provisions were already in force.

What were the facts?

During a survey, the assessee surrendered Rs. 30,00,000/- on account of excess cash and stock. The Assessing Officer initially accepted the return at normal tax rates but later rectified the assessment under Section 154 to apply the higher tax rate under Section 115BBE.

What were the issues?

Whether the higher tax rate under Section 115BBE applies to income surrendered during a survey for AY 2019-20, and if the rectification under Section 154 was valid.

Which sections of the Income-tax Act were involved?

Section 115BBE,Section 154,Section 133A

AI-generated summary — verify with the full judgment below

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH HEARING THROUGH: HYBRID MODE BEFORE: SHRI. LALIET KUMAR, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 38 /Chd/2026 िनधा�रण वष� / Assessment Year : 2019-20 Adarsh Sood बनाम The ITO Samrala Road, Khanaa, Ludhiana, Ward-1, Khanna Punjab, Khanna-141401 �ायी लेखा सं./PAN NO: ARPPS2328P अपीलाथ�/Appellant ��थ�/Respondent िनधा�रती की ओर से/Assessee by : Shri Parikshit Aggarwal, C.A (Virtual) राज� की ओर से/ Revenue by : Shri Prabodh Sharma, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 25/06/2026 उदघोषणा की तारीख/Date of Pronouncement : 15/07/2026 आदेश/Order PER LALIET KUMAR, J.M: The present appeal has been preferred by the assessee against the order dated 10.10.2025 passed by the Ld. Commissioner of Income Tax (Appeals), whereby the action of the Assessing Officer in passing the rectification order under section 154 of the Income Tax Act, 1961 and levying tax on the surrendered income by applying the provisions of section 115BBE of the Act has been upheld. The solitary grievance raised by the assessee before us is against the applicability of the higher rate of tax under section 115BBE to the surrendered income of Rs.30,00,000/-.

2.

At the outset, the Registry pointed out that there is a delay of 8 days in filing the present appeal. The Ld. AR prayed for condonation of delay. 3. The Ld. DR opposed the application for condonation of delay.

4.

I have heard both the parties and request for seeking condonation of delay . Upon consideration of the facts and circumstances of the case, and the reasons explained therein, I am satisfied that the assessee was prevented by sufficient and reasonable cause from filing the appeal within the

2 prescribed period of limitation. Accordingly, the delay of 8 days in filing the appeal is condoned, and the appeal is admitted for adjudication.

5.

The brief facts of the case are that the assessee is engaged in the business of trading of sanitary goods. A survey under section 133A of the Act was conducted at the business premises of the assessee on 13.09.2018. During the course of survey proceedings, excess cash amounting to Rs.2,00,000/- and excess stock valued at Rs.28,00,000/- were found. The assessee surrendered an aggregate sum of Rs.30,00,000/- comprising Rs.28,00,000/- on account of excess stock and Rs.2,00,000/- on account of excess cash and offered the same as additional income for the assessment year under consideration.

5.1 The return of income declaring total income of Rs.34,19,540/- was accepted under section 143(3) read with section 144B of the Act vide order dated 09.09.2021, wherein tax on the surrendered income was computed at the normal rate. Subsequently, the Assessing Officer noticed that while framing the assessment, tax on the surrendered income had inadvertently been charged at the normal rate instead of the rate prescribed under section 115BBE. Treating the same as a mistake apparent from the record, proceedings under section 154 were initiated and vide order dated 18.04.2024, the Assessing Officer rectified the assessment by applying the provisions of section 115BBE, thereby recomputing the tax liability.

6.

Aggrieved, the assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A), after considering the submissions of the assessee, held that charging tax at the normal rate instead of the rate prescribed under section 115BBE constituted a mistake apparent from the record and, therefore, the Assessing Officer had rightly exercised jurisdiction under section 154. Accordingly, the appeal of the assessee was dismissed.

7.

Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal.

3 8. During the course of hearing, the Ld. AR submitted that the solitary controversy involved in the present appeal is whether the surrendered income is liable to be taxed at the enhanced rate of 60% under section 115BBE or at the normal rate of 30%.

8.1 It was contended that the amendment brought in by the Taxation Laws (Second Amendment) Act, 2016 enhancing the rate of tax under section 115BBE is prospective in nature and cannot be applied retrospectively. In support of the aforesaid contention, reliance was placed upon the recent judgment of the Hon'ble Rajasthan High Court in Deepak Maratha vs. Union of India, D.B. Civil Writ Petition No. 3625/2020, reported as 2026:RJ-JD:26319-DB, wherein it has been held that the amendment enhancing the rate of tax under section 115BBE is prospective and would apply only with effect from 01.04.2017. It was, therefore, prayed that the assessee be granted appropriate relief.

9.

Per contra, the Ld. Departmental Representative strongly relied upon the orders of the Assessing Officer and the Ld. CIT(A). It was submitted that the Assessing Officer has rightly invoked the provisions of section 154 for rectifying the apparent mistake in computation of tax and that the provisions of section 115BBE were correctly applied. It was further submitted that the judgment relied upon by the Ld. AR does not advance the case of the assessee since the assessment year involved in the present appeal is Assessment Year 2019-20, by which time the amended provisions had already come into force. Accordingly, the order of the Ld. CIT(A) deserves to be upheld.

10.

I have heard the rival submissions and perused the material available on record. The sole issue arising for our consideration is whether the surrendered income of the assessee is liable to be taxed at the enhanced rate prescribed under section 115BBE of the Act.

10.1 The Ld. AR has placed reliance upon the recent judgment of the Hon'ble Rajasthan High Court in Deepak Maratha vs. Union of India, D.B. Civil

4 Writ Petition No. 3625/2020, reported as 2026:RJ-JD:26319-DB, wherein the Hon'ble High Court examined the scope and applicability of the amendment made to section 115BBE by the Taxation Laws (Second Amendment) Act, 2016.

10.2 The Hon'ble High Court, after considering the legal position relating to retrospectivity of fiscal statutes, summarized the legal principles in paragraph 17 of the judgment as under:

"(i) The law applicable to an assessment year is the law in force on the first day of that year, i.e., 01st April. A provision coming into force after that date, without express retrospective language, cannot be applied to assessments for that year. (ii) Changes in law occurring after the commencement of a financial year cannot govern the tax liability for that year unless the amendment is expressly made retrospective. (iii) The amendment to Section 115BBE came into force on 01.04.2017. For FY 2016-17, the law in force on 01.04.2016 prescribing a rate of 30% must govern. The enhanced rate of tax @60% came into force on 01.04.2017 and can apply only from that date, i.e., for financial year 2017-18 onwards. (iv) The Taxation Laws (Second Amendment) Act, 2016 contains no express language for its retrospective effect of Section 115BBE." Thereafter, while answering the issue, the Hon'ble High Court held in paragraph 18 as under: "We thus hold that the Taxation Laws (Second Amendment) Act, 2016 is prospective in effect as specified therein (from 15.12.2016 except the amendment of Section 115BBE, which is effective from 01.04.2017)."

Respectfully following the aforesaid judgment, it is evident that the enhanced rate of tax under section 115BBE is prospective in operation and is applicable from 01.04.2017 onwards.

10.3 In the present case, admittedly, the assessment year involved is Assessment Year 2019-20. Therefore, the amended provisions of section 115BBE were already in force and applicable to the assessment year under consideration. Consequently, the reliance placed by the Ld. AR on the aforesaid judgment is misplaced, as the ratio laid down therein rather fortifies the stand of the Revenue that the enhanced rate is applicable only prospectively, which includes the assessment year involved before us.

10.4 I, therefore, find no infirmity in the action of the Assessing Officer in rectifying the computation of tax under section 154 by applying the provisions of section 115BBE, as affirmed by the Ld. CIT(A). Accordingly, the solitary ground raised by the assessee is devoid of merit and is dismissed.

11.

In the result, the appeal of the assessee is dismissed.

Order pronounced on 15/07/2026

Sd/- ( LALIET KUMAR) JUDICIAL MEMBER AG आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकर आयु�/ CIT 3. आयकर आयु� (अपील)/ The CIT(A) 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�ीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File 6.

BY ORDER, ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KENDRIYA SADAN, SECTOR-9A CHANDIGARH

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