Section 195 (Act of 2025)

Section 195 (Act of 2025) — the law in short

What the courts have decided on section 195 (Act of 2025), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Deepak Maratha v Union of India High CourtHelps taxpayerHigh Courts differ
  My demonetisation cash deposit was added for the year ended 31 March 2017 and taxed at 60% under section 115BBE. Can that rate reach income of that year?
  The Rajasthan High Court held that it cannot. The rate in section 115BBE was raised from 30% to 60% by the Taxation Laws (Second Amendment) Act, 2016, which received assent on 15 December 2016 and came into force at once - but the amendment to section 115BBE(1) was separately expressed to take effect from 1 April 2017. The law applicable to an assessment year is the law in force on the first day of that year, and a change made after a financial year has begun cannot govern the tax liability for that year unless it is expressly made retrospective. Nothing in the 2016 Act says section 115BBE is retrospective. Doubling a rate alters existing rights and is not a procedural or clarificatory change. So for the financial year 2016-17 the law in force on 1 April 2016 governs, at 30%, and the 60% rate applies from the financial year 2017-18 onwards; section 271AAC, which depends on section 115BBE, is prospective in the same way.
• ACIT v Hirapanna Jewellers ITATHelps taxpayer
  My cash sales are already in my books and already in my turnover. The officer has added the same money again under section 68 and taxed it at 60%. Can he?
  Not on these facts. The Tribunal upheld the deletion of an addition of Rs 4,71,31,500 made under section 68 read with section 115BBE on a jeweller's cash sales of 8 November 2016. The Assessing Officer had accepted the sales and the stock, had not disturbed the closing stock, and had found no defect in the stock register on either of two surveys; purchases, sales and stock are interlinked and inseparable, every purchase increases the stock and every sale reduces it, and where the movement matches the sales there is no basis to disbelieve them. Because the receipts had already been admitted as revenue receipts and offered as turnover, the Tribunal held there was no case for adding them under section 68 or taxing them again under section 115BBE. Suspicion, however strong, cannot decide the matter against the assessee without tangible evidence disproving the sales.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.