INCOME TAX ACT, 1961

Section 154

Rectification - Under section 154 - Validity - Surrendered income taxed apparent for record

AO invoked jurisdiction under section 154 on the reasoning that on the undisclosed income surrendered during search tax rate should have been charged @ 60%. As per amended provisions of section 115BBE as applicable, whereas during assessment proceedings, tax on surrendered income under section 115BBE has been charged @ 30%. Held: Both pre-amended and post-amended provisions of section 115BBE talks about income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D. The change which has been brought about in the provisions relates to income so referred to in aforesaid provisions so defined, which is either reflected in the return of income or determined by the AO and in both cases, it would be covered by the provisions of section 115BBE and rate of taxation has been increased from 30% to 60% on such specified income. Accordingly, there is nothing stated in either pre-amended or post-amended provisions of section 115BBE that where assessee surrenders undisclosed income during search action for the relevant year, the tax rate was to be charged as per provision of section 115BBE. Therefore, without dwelling further on applicability of amended provisions of section 115BBE for the concerned assessment year, reasoning so adopted by AO in terms of applicability of section 115BBE by default in search cases could not be accepted and in any case, same was clearly not a mistake which was apparent from the plain reading of provisions of section 115BBE. Thus, invocation of jurisdiction under section 154 was not legally tenable.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2017-18

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