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

ITA 175/GTY/2024

AI Insights

The case involves Sumitra Devi Jhuria, who appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, which confirmed the rectification order issued by the AO. The rectification pertained to the application of special tax rates on additions made to the assessee's income under Sections 68 and 69C of the Income Tax Act, 1961, for the Assessment Year 2014-15. The primary contention of the assessee was that the application of Section 115BBE was debatable and that the rectification under Section 154 was not justified. The Tribunal dismissed the appeal, agreeing with the lower authorities that the special tax rates were correctly applied and that the assessee had been given adequate opportunity to respond.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31754 (ITAT-GUWAHATI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Onus to prove; Reopening of assessment; Rectification of order; Deemed to accrue or arise in india; Borrowed satisfaction
• Section: 147; 250; 154; 68; 69C; 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI (VIRTUAL HEARING AT KOLKATA) SHRI MANOMOHAN DAS, JUDICIAL MEMBER SHRI SANJAY AWASTHI, ACCOUNTANT MEMBER I.T.A. No. 175/GTY/2024 Assessment Year: 2014-15 Sumitra Devi Jhuria, Jhuria Readymade Centre, S.S. Road, Fancy Bazar, Assam - 781001 [PAN: ABQPJ0837K] .....................…...……………....Appellant vs. ITO 2(1), Guwahati, Aayakar Bhawan, G.S. Road, Assam- 781006 ...............…..….................... Respondent Appearances by: Assessee represented by : Written submission dt.17.02.2025 Department represented by : Kaushik Ray, JCIT Date of concluding the hearing : 17.02.2025 Date of pronouncing the order : 19.02.2025 ORDER PER SANJAY AWASTHI, ACCOUNTANT MEMBER: 1. The present appeal arises from the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 20.06.2024, passed under Section 250 of the Income Tax Act, 1961 (hereafter ‘the Act’). 2.1 In this case, the assessment for A.Y. 2014-15 was completed under Section 147 read with section 144B of the Act. The Ld. AO made an addition of Rs. 1,48,78,730/- under Section 68 of the Act and another sum of Rs. 2,97,575/- has been added under Section 69C of the Act. Subsequently, the AO noticed that on the additions made under sections I.T.A. No. 175/GTY/2024 Sumitra Devi Jhuria 2 68 and 69C of the Act, special tax rates as per section 115BBE of the Act were applicable and the same had not been give effect to in the assessment order. Thereafter, the Ld. AO issued notice under Section 154, dated 02.02.2023 proposing to rectify the error in computation of tax liability. In response to this notice, the assessee filed his reply dated 07.02.2023, which was apparently considered before levying the special tax rates as prescribed under section 115BBE of the Act. 1.2 Aggrieved with this action of Ld. AO, the assessee approached the CIT(A), who is seen to have given a detailed finding on the issue as under: “4.1 The appellant has contended 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. The appellant has contended that initiation of proceedings u/s 154 of the Act is invalid, illegal and without jurisdiction. Further, the appellant has contended that section 68 of the Act is not applicable in this case. Also, the appellant has contended that impugned order was passed without affording sufficient opportunity to the appellant to explain the addition made on which the applicability of section 115BBE depends. The appellant has contended that the impugned order is bereft of any enquiry. Further, the appellant has contended that the whole order was based on borrowed satisfaction in the assessment order. Also, the appellant contended that there was no basis for making addition u/s 69C of the Act. Therefore, in view of the facts and circumstances of the case, the appellant has requested to allow the present appeal in full by quashing the impugned order u/s 154 of the Act. 4.2 The grounds of appeal, 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 I.T.A. No. 175/GTY/2024 Sumitra Devi Jhuria 3 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: I.T.A. No. 175/GTY/2024 Sumitra Devi Jhuria 4 “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 I.T.A. No. 175/GTY/2024 Sumitra Devi Jhuria 5 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. We have carefully considered the submissions of the assessee, gone through the documents before us and also heard the Ld. DR. A perusal of section 115BBE of the Act reveals that it gets triggered the moment any additions are made under Sections 68, 69, 69A, 69B, 69C or section 69D of the Act. It is evident that computation of tax under this section is mandatory and not discretionary, whenever any of the sections mentioned in the text of section 115BBE of the Act are applied in assessing the income of any assessee. Thus, it is clear that the Ld. AO had no option but to compute the tax liability under the said section. To this extent, the action of Ld. AO is worthy of being upheld. 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 I.T.A. No. 175/GTY/2024 Sumitra Devi Jhuria 6 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. 4. In the result, the appeal of the assessee is hereby dismissed. Order pronounced in the court on 19.02.2025 Sd/- Sd/- [Manomohan Das] [Sanjay Awasthi] Judicial Member Accountant Member Dated: 19.02.2025 AK, PS Copy of the order forwarded to: 1. Sumitra Devi Jhuria 2. ITO 2(1), Guwahati 3. CIT(A)- 4. CIT- 5. CIT(DR) //True copy// By order Assistant Registrar, Kolkata Benches "