ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, MADURAI vs. 5 NO. BEEDI FACTORY, TIRUNELVELI

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ITA 4115/CHNY/2025Status: DisposedITAT Chennai09 July 2026AY 2017-185 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the tax effect was below the prescribed threshold limit. Therefore, the Revenue's appeal was not maintainable and was dismissed.

What were the facts?

The Revenue filed an appeal against the CIT(A)'s order. The assessee raised a preliminary objection that the appeal was not maintainable due to low tax effect, citing CBDT circulars and a High Court decision.

What were the issues?

Whether the Revenue's appeal is maintainable when the tax effect is below the prescribed monetary limit as per CBDT circulars.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI S.R. RAGHUNATHA

Hearing: 12.06.2026Pronounced: 09.07.2026

Heard together (2 matters)

ITA No. 4115/Chny/2025
CO No. 32/Chny/2026

Read from the judgment's own cause title. This page is filed under one of them.

आदेश / O R D E R PER ABY T. VARKEY, JM: ITA 4115/Chny/2025 and CO No. 32/Chny/2026 are appeal filed by the Revenue and CO preferred by the assessee respectively against the order of the Learned Commissioner of Income Tax (hereinafter referred to as ‘Ld.CIT(A)’) “Chennai-19” dated 24.10.2025 for AY 2017-18.

ITA No.4115/Chny/2025 & CO No.32/Chny/2026 (AY 2017-18) 5 No. Beedi Factory :: 2 :: 2. At the outset, the Ld.AR of the assessee has raised a preliminary objection against maintainability of Revenue Appeal being hit by Tax- effect, citing the decision of the Hon’ble Madras High Court in M/s SMILE Microfinance Limited Vs. ACIT in WP No.2078 of 2020 dated 19.11.2024, and submits that the tax computation for the relevant assessment year (AY 2017-18) after giving effect to the impugned order of the Ld.CIT(A) will fall below the threshold monitoring limit of Rs.60 lakhs as fixed by the CBDT Circular No.09/2024 dated 15.03.2024 and Circular No.09/2024 dated 17.09.2024. Hence, according to him, Revenue is precluded from filing of appeal before this Tribunal and therefore, the instant appeal preferred by the Revenue is hit by the CBDT Circular supra on the ground of low tax effect and submitted the following computation of tax which shows that the total tax effect in this case after giving effect to the impugned Ld.CIT(A) order would be as follows:- MEMO FILED BY THE Assessee 1. For this Assessment Year, the AO vide order u/s 143(3) of the Act dated 25.12.2019 made the following additions; Disallowance of expenditure Rs.7,43,844/- Unexplained cash credits u/s 68 of the Act Rs. 1,43,85,042/- Total addition Rs. 1,51,28,886/- 2. The CIT(A) vide order dated 24.10.2025 partly allowed the appeal filed by the Assessee. Aggrieved by the same, the department filed the present appeal and a cross-objection was filed by the Assessee. 3. Tax effect on the additions made is as follows:

ITA No.4115/Chny/2025 & CO No.32/Chny/2026 (AY 2017-18) 5 No. Beedi Factory :: 3 :: Particulars Amount in Rs. Tax @ 30% on Rs. 1,51,28,886/- 45,38,666/- Surcharge @ 12% on 5,44,640/- Rs.45,38,666/- Cess @ 3% on Rs.50,83,306/- 1,52,499/- Total tax effect 52,35,805/- 4. Thus, the tax effect on the appeal is Rs. 52,35,805/-, which is less than the limit prescribed Rs.60,00,000/- as per Circular No.05/2024 dated 15.03.2024 and Circular No 09/2024 dated 17.09.2024. It is, hence, prayed that the appeal filed by the Department be dismissed as not maintainable, in limine. And in the above scenario, he prayed that the instant appeal filed by the Revenue needs to be dismissed and pointed out that the CO of assessee is only supporting the order of the Ld.CIT(A), hence if Revenue appeal is not maintainable, then CO would be infructuous.

3.

The Ld.DR of the department could not controvert the aforesaid contention of the Ld counsel for the assessee, but he submitted that the Revenue has preferred an appeal challenging the order of the Hon’ble Single Bench of the Madras High Court against the decision as in the case of M/s SMILE Microfinance Ltd. (supra), wherein it was held that Section 115BBE of the Act applies on transaction on or after 01.04.2017 and therefore rate of tax of 60% would be applicable only on or after 01.04.2017 and not in AY 2017-18. Hence, he pleaded that the issue relating to rate of tax at 30% as decided by the Hon’ble Single Bench has not attained finality and therefore, till the decision is made by the Hon’ble Division Bench, the assessee cannot take the plea that tax effect would

ITA No.4115/Chny/2025 & CO No.32/Chny/2026 (AY 2017-18) 5 No. Beedi Factory :: 4 :: fall below Rs.60 lakhs and hence, he wants us to dismiss the plea of tax effect as per the CBDT Circular (supra).

4.

Heard both the parties. We note that the Hon’ble Jurisdictional High Court in the case of M/s. SMILE Microfinance Limited (supra) held that Section 115BBE of the Act applies on transactions on or after 01.04.2017 and since, the transaction in question were on or before 31.03.2017, rate of tax at the rate of 60% does not arise, instead applicable rate of tax would be 30% only and in this regard placed before us the working/rate of tax as per the normal provisions in this case, which is seen to be less than Rs.60 lakhs. The Ld DR’s only plea is that the Revenue has challenged the order of the Hon’ble Single Bench before the Division Bench. In this regard, the Ld.AR brought to our notice that till date he has no information about filing of such an appeal or in any case, writ appeal against decision in M/s. SMILE Microfinance Limited (supra) has not been numbered as on date. Be that as it may, as on date we are bound by the decision of the Hon’ble High Court, since there is no stay against implementation of Hon’ble Single bench order and hence when we find that the tax effect after giving effect to the Ld.CIT(A)’s order is falling less than the threshold monitoring limit of Rs.60 lakhs which fact is discernible from the tax computation given (supra). We find force in the contention of the Ld.AR of the assessee that the instant appeal of the Revenue is not

ITA No.4115/Chny/2025 & CO No.32/Chny/2026 (AY 2017-18) 5 No. Beedi Factory :: 5 :: maintainable being hit by low tax effect as per the CBDT Circular supra; and hence, the instant appeal filed by the Revenue stands dismissed and CO in support of the impugned order also stands dismissed as infructuous.

5.

In the result, appeal filed by the Revenue and CO filed by the assessee stand dismissed.

Order pronounced on the 09th day of July 2026, in Chennai. Sd/- Sd/- (एस. आर. रघुनाथा) (एबी टी. वक�) (S.R.RAGHUNATHA) (ABY T. VARKEY) लेखा सद�/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 09th 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 Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.07.20 12:20:10 +05'30'

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