IT dept gets HC notice on post-DeMon amendment to Income-Tax Act

The Rajasthan High Court has issued a notice to the Income-Tax department on a petition challenging amendment to the IT Act provisions post-demonetisation.

A division bench comprising Chief Justice Indrajit Mahanty and Justice P S Bhati also barred the department from taking any coercive action against the petitioner until next order.

The petitioner, Deepak Maratha, had challenged the amendment to the section 115 BBE IT Act 1961, introduced post-demonetisation, which levied the penalty on undisclosed income from previous 30 per cent to 60 per cent.

Maratha, in his petition, said the IT department had levied penalties on him for the assessment year prior to the amendment.

Maratha's counsel Mayank Taparia argued in the court that the petitioner had filed his IT return for the financial year 2016-17 making further additions on account of the cash deposit, accrued through cash sales.

"Such cash deposits were treated as unexplained money by the IT department and applying the amendment in section 115 BBE retrospectively on his assessment for the financial year prior to the amendment, a penalty of 60% was levied on this money," said Taparia.

The petitioner's counsels had in the court termed the amendment and penalty levied on account of the amendment as irrational, arbitrary, unconstitutional and in violation of the Article 14.

Another counsel representing the petitioner, Sandeep Bhandawat said the amendment had been introduced on December 15, 2016 after introduction of the demonetization and the penalty was levied on the petitioner for the assessment year 2016-17.

Admitting the petition, the division bench issued notice to the IT department seeking reply by April 15 barring the respondent from taking any coercive step against the petitioner.

He claimed that the IT department has racked up millions by way of the amendment and a number of organisations, opposing the amendment, have requested the government to provide relief.