SUMITRA DEVI JHURIA,GUWAHATI vs. ITO-2(1) GUWAHATI, GUWAHATI

, written submissions and rectification order are considered carefully. It is seen that the contentions made by the appellant in the instant case are against the additions made in the impugned order u/s 147 rws 144B of the act dated 25.03.2022. However, the additions made by the Assessing Officer in the Order u/s 147 rws 144B of the Act had been confirmed by the CIT(A), NFAC vide Order u/s 250 of the Act dated 13.06.2024 in DIN & Order No. ITBA/NFAC/S/250/2024-25/1065637553(1). Therefore, the contentions made by the appellant with regard to re-opening of assessment u/s 147/148 of the Act and making additions made u/s 68 and 69C of the Act are redundant and infructuous. 4.2.1 Further, the provisions of the section 115BBE of the Act were introduced with effect from AY 2013-14 onwards. Section 115BBE of the Act specifically levies tax on such unexplained items deemed as income at the flat rate of 30 per cent (plus surcharge and cess, as applicable), irrespective of the slab of income. Moreover, no deduction is available for any expenditure or allowance while computing such deemed income. Further, the section was amended with effect from A.Y.2017-18 wherein if income is added under section 68, 69, 69A to 69D by the AO, the tax is Sumitra Devi Jhuria levied at a flat rate of 60% plus surcharge @ 25% on such tax and cess, as applicable. The burden of proof is on the appellant to prove the source of the unexplained money/investment, expenditure etc. Therefore, the AO was correct in taxing the income at special rate u/s 115BBE of the Act.”

2. Further aggrieved with this action of Ld. CIT(A), the assessee has filed the present appeal with the following grounds:

1) For that the impugned order is bad in law as well as on facts and as such is liable to be quashed in its entirety. 2) For that the learned CIT(A) was wrong and unjustified in confirming the impugned order u/s.154 of the Act and levy of penal tax u/s.115BBE of the Act at penal rate which should not be applied in the instant case. 3) For that, in the facts and circumstances of the case, entire matter regarding levy of penal tax u/s.115BBE is on an amount of Rs.1,48,78,730/-assessed u/s.68 of the I.T. Act, 1961 and consequent levy of tax thereon u/s 115BBE of the Act which is arguable/debatable and as such rectification made by the impugned order is wrong and unjustified and therefore is liable to be quashed in its entirety. 4) For that, in the facts and circumstances of the case, entire matter regarding levy of penal tax u/s.115BBE on an amount of Rs.2,97,575/-assessed u/s.68 of the I.T. Act, 1961and consequent levy of penal tax thereon u/s 115BBE of the Act which is arguable/debatable and as such rectification made by the impugned order is wrong and unjustified and therefore is liable to be quashed in its entirety. 5) For that, without prejudice to the above, in any case, the learned CIT(A) erred in not taking into account the important aspect regarding the dateline and implementation of the provisions u/s.15BBE of the Act as in any case the penal tax should have been levied at the rates prescribed u/s.115BBE of the Act as it stood prior to its amendment made by Taxation Laws (Second Amendment) Act, 2016, w.e.f. 01.04.2017. 6) For that the Appellant craves for your honour's permission to adduce other and/or further grounds of appeal at the time of hearing of the appeal.

2.1 On the last date of hearing, it was informed by the ITAT Bench Clerk that the assessee had filed written submissions with the request to consider the same before disposing of this matter. For the sake of record, some relevant portions from the written submissions are extracted as under:

Sumitra Devi Jhuria “2) That the appellant begs to submit that the additional tax at special rates u/s.115BBE is in the nature of penal levy and as such the matter is arguable and debatable. In the present case, the learned AO has levied the tax at special rates simply on mathematical calculations without independent enquiry and without applying his mind to the facts and circumstances of the case. 3) The whole matter being in the nature of a penal levy, it is submitted that the law and judicial pronouncements in respect of levy of penalty in this respect is applicable in toto in such matters. There are plethora of judicial pronouncements against levy of penalty in income tax law which are totally applicable to the facts and circumstances of this case also. 4) The Appellant begs to submit that the provisions of section 115BBE by which the charge of tax at special rates and surcharge thereon is made applicable itself came into effect from 01.04.2017 i.e. A/Y. 2017-18 vide Taxation Laws (Second Amendment) Act, 2016 w.e.f. 01.01.2017. This important aspect regarding the dateline and implementation of the provisions has been not taken into consideration by both the AO and the learned CIT(A)NFAC while passing the impugned order. It is submitted that the impugned levy is illegal and is without justification. As such it is submitted that the impugned order of the learned CIT(A)NFAC was not justified in confirming levy of tax and surcharge and as such the impugned order is vitiated by law and is as such is liable to be and should be cancelled/annulled in its entirety. 3) NO SUFFICIENT OPPORTUNITY :- (a) Impugned order is passed without affording sufficient and reasonable opportunity to the Appellant in haste and also without affording opportunity to the appellant to explain the nature of addition made on which the applicability of section 115BBE depends. 4) IMPUGNED ORDER IS BEREFT OF ENQUIRY : (a) The impugned order has been passed by the learned AO without applying his own specific enquiry and satisfaction about the nature of the addition made and consequent applicability of section 115BBE of the Act in the facts and circumstances of the case. Thus, the impugned order is bereft of any enquiry. Had proper and independent enquiry been made no such imposition of special tax would and/or could have been made. 5) BORROWED SATISFACTION:- The whole order is not based on the satisfaction of the learned AO himself as will be found from the impugned order of assessment. The, order is based on "borrowed satisfaction" in the assessment order. It is submitted that any order which is based on satisfaction of any other authority in any other context is bad on law and Sumitra Devi Jhuria consequently the impugned proceedings u/s154 of the Act is bad in law and facts of the case and therefore is liable to be quashed in its entirety.” 2.2 We have gone through the contents of the written submissions and also the orders of authorities below. We have also taken the help of Ld. DR in understanding the facts of this case. As has been mentioned in the extracts (supra), the assessee’s contentions are that any action under Section 115BBE of the Act is penal in nature, hence, the same is debatable. It has been thereafter, averred that such action would not fall within the purview of section 154 of the Act. It is also mentioned in the written submissions that sufficient opportunity was not provided before enhancement of the tax liability. Lastly, the assessee has assailed the additions on merit.

2.3 Per contra, the Ld. DR relied on the orders of authorities below and stated that the Ld. AO had no option but to pass the rectification order and determine the assessee’s correct tax liability u/s 115BBE of the Act.

3.1 Before parting with this issue, it needs to be mentioned that the claim of the assessee about denial of opportunity of being heard before the said enhancement, does not merit any consideration since admittedly there was a reply dated 07.02.2023 filed before the Ld. AO and the same Sumitra Devi Jhuria was considered. Furthermore, the averments of the assessee that the quantum additions were devoid of merit cannot help her at this stage since, such additions are not subject matter of the present appeal.