Maruthi Babu Rao Jadav Vs ACIT (Kerala High Court)
The writ petition challenged amendments made by the Taxation Laws (Second Amendment) Act, 2016 to Section 115BBE of the Income Tax Act, 1961, which enhanced the tax rate on specified unexplained incomes to 60%, along with a 25% surcharge under the Finance Act, 2016 for income covered by Section 69A. The amendment to Section 115BBE was made effective from 01.04.2017. The petitioner sought a declaration that the amendments were prospective and consequential relief against the assessment order imposing 60% tax and 25% surcharge on income arising from cash seizures.
The learned Single Judge had rejected the writ petition by relying on Commissioner of Income Tax v. S.A. Wahab. The petitioner challenged that decision before the High Court.
Two cash seizures of Rs.1,05,03,500/- and Rs.1,24,68,750/- were made on 02.08.2016 and 03.11.2016 respectively, both during Financial Year 2016-17. The persons from whom the cash was seized and the appellant admitted that the amounts belonged to the appellant, who was engaged in trading in gold bullion. As the source of the seized money was not established, the amounts were included in total income under Section 69A of the Income Tax Act.
The assessment imposed tax at 60% under Section 115BBE and surcharge at 25%. The petitioner contended that the seizures and admissions preceded the amendment dated 15.12.2016 and therefore the enhanced rates should not apply.
