Opinion Of Eminent Legal Luminaries On Controversial Issues

Tax on income referred in section 68, or section 69 or section 69B or section 69C or section 69D-Applicability of Section 115BBE

QUERY: Whether Section 115BBE would come into operation when the assessee has himself declared in his original Return of Income (or voluntarily through revised return) any income which could have been brought to tax by the Assessing Officer u/s. 68, 69, 69A and 69B etc? In other words, if the assessee himself declares any income in the Return without specifying the source thereof as other income he should be liable to pay tax at the normal applicable rate and not necessarily at 30% specified u/s. 115BBE.
ANSWER: This section is on statute since assessment year 2013-14. The object for introducing this section has been explained in Memorandum explaining the provisions of the Finance Bill, 2012, as under:
"Under the existing provisions of the Income-tax Act, certain unexplained amounts are deemed as income under section 68, section 69, section 69A, section 69B, section 69C and section 69D of the Act and are subject to tax as per the tax rate applicable to the assessee. In case of individuals, HUF etc.; no tax was levied up to the basic exemption limit. Therefore, in these cases, no tax could be levied on these deemed income, if the amount of such deemed income was less than the amount of basic exemption limit and even if it was higher, it is levied at lower slab rate.
In order to curb the practice of laundering of unaccounted money by taking advantage of basic exemption limit, it is proposed to tax unexplained credits, money, investment, expenditure etc., which has been deemed as income under section 68, section 69, section 69A, section 69B, section 69C or section 69D at the rate of 30% (plus surcharge and cess as applicable). It is also proposed to provide that no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of the Act in computing deemed income under the said sections."
Thereafter, the Finance Act, 2016 w.e.f. April 1, 2017 i.e., from assessment year 2017-18 amended the said section to provide that even set-off any loss shall also be not allowed against the income under the aforesaid sections.
Thus, even though the assessee declares voluntarily income under sections 68, 69, 69A and section 69B etc., shall be liable to pay tax @ 30% plus surcharge and cess as may be applicable, under section 115BBE.

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