Deepak Maratha S/o Ramchandra Maratha Vs Union of India (Rajasthan High Court)
Rajasthan HC Rules 60% Tax Under Section 115BBE Cannot Apply Retrospectively Because Amendment Was Effective Only From 01.04.2017; Demonetization-Era Cash Deposits Not Liable to 60% Tax Because Section 115BBE Amendment Was Prospective; Consequential Penalty Under Section 271AAC Cannot Apply Retrospectively Because It Depends on Section 115BBE
The Rajasthan High Court examined whether the enhanced tax rate introduced by the Taxation Laws (Second Amendment) Act, 2016 under Section 115BBE of the Income Tax Act could be applied to income relating to Financial Year 2016-17. The petitioner, a jewellery and bullion trader, had deposited ₹66.17 lakh during the demonetization period, which was later treated by the Assessing Officer as unexplained income under Section 68 and taxed at the amended rate of 60%, along with surcharge and consequential penalty under Section 271AAC. The Court analyzed the legislative history, statutory provisions, Finance Acts, and judicial precedents, including Karimtharuvi Tea Estate, Govinddas, and Vatika Township. It held that although the amending Act came into force on 15.12.2016, the amendment to Section 115BBE was expressly made effective from 01.04.2017 and could not be retrospectively applied to transactions or income of FY 2016-17. The Court concluded that the enhanced tax and penalty provisions operate prospectively and not retrospectively.
