ASSISTANT COMMISSIONER OF INCOME TAX, MADURAI vs. SETHURAMAN GURUSHANKAR, MADURAI

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ITA 818/CHNY/2026Status: DisposedITAT Chennai22 July 2026AY 2017-183 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal agreed that the appeal was hit by the CBDT circular on account of low tax effect. The tax rate under Section 115BBE was applicable only for transactions on or after April 1, 2017, as per the Madras High Court ruling.

What were the facts?

The Revenue appealed an order concerning AY 2017-18. The assessee argued the appeal was hit by a CBDT circular due to low tax effect, as the AO's addition under Section 68 was incorrectly taxed at 60% under Section 115BBE.

What were the issues?

Whether the appeal by the Revenue is maintainable due to low tax effect as per CBDT circular, and the applicability of Section 115BBE at 60% tax rate for the assessment year.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘a’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI INTURI RAMA RAO

Hearing: 17.07.2026Pronounced: 22.07.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeal)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 21.11.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2017-18.

2.

At the outset, the Ld.AR of the assessee submitted that the instant appeal preferred by the Revenue is hit by the CBDT Circular No.09/2024 on 17.09.2024 on account of low tax effect as per the normal provisions. According to him, the AO has computed the addition u/s.68 of the Income

ITA No.818/Chny/2026 (AY 2017-18) Sethuraman Gurushankar :: 2 :: Tax Act, 1961 (hereinafter referred to as ‘the Act’) as unexplained income and applied tax as per Section 115BBE of the Act @60%, which is incorrect, in light of the binding decision of the Hon’ble jurisdictional High Court in the case of Smile Microfinance Ltd. v. ACIT in WP (MD) No.2078 of 2020 & 1742 dated 19.11.2024 (Madras-HC), wherein, it was held that Sec.115BBE of the Act applies on transactions on or after 01.04.2017 and since, the transactions in question were on or before 31.03.2017, rate of tax @60% doesn’t arise instead applicable rate of tax would be 30% only; and placed before us the working/rate of tax as per the normal provisions, which is seen to be less than ₹60 lakhs [Total addition is of ₹12,03,315/- disallowance on account of agricultural income and ₹76,62,355/- u/s 68]. Hence, he prayed that the instant appeal filed by the Revenue needs to be dismissed

3.

The Ld. DR for the department couldn’t controvert the aforesaid contentions of the Ld. Counsel for the assessee. Hence, we find force in the submissions of the Ld.AR of the assessee that the Revenue’s appeal is hit by the CBDT Circular No.09/2024 on 17.09.2024 on account of low tax effect as per the normal provisions. In this regard, we note that the additions made by the AO as unexplained is to the tune of ₹76,62,355/- and as is evident from the calculation of tax placed before us, which shows the tax effect would be less than ₹60 lakhs. Hence, we find merit in the contention of the Ld.AR for the assessee that since tax rate @60%

ITA No.818/Chny/2026 (AY 2017-18) Sethuraman Gurushankar :: 3 :: as per Sec.115BBE of the Act applies on transactions on or after 01.04.2017 only as held by the decision of the Hon’ble Madras High Court in the case of Smile Microfinance Ltd. (supra), in this year under Sec.115BBE of the Act won’t apply. Hence, we find that the instant appeal of the Revenue is hit by the CBDT Circular on account of low tax effect as per the normal provisions and hence, the instant appeal filed by the Revenue stands dismissed. Grounds/Additional Grounds of Appeal raised by Revenue, is left open in light of our action (supra).

4.

In the result, appeal filed by the Revenue is dismissed.

Order pronounced on the 22nd day of July, 2026, in Chennai. Sd/- Sd/- (इंटूरी रामा राव) (एबी टी. वक�) (Inturi Rama Rao) (ABY T. VARKEY) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�/ACCOUNTANT MEMBER

चे�नई/Chennai, �दनांक/Dated: 22nd July, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF YASHVIR Digitally signed by YASHVIR SINGH SINGH Date: 2026.08.12 17:08:00 +05'30'

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