ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM vs. M/S SHRI KUMARAN SILKS, SALEM

PDF · subscribers
ITA 2697/CHNY/2025Status: DisposedITAT Chennai29 June 2026AY 2017-185 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal agreed that Section 115BBE at 60% was erroneously applied as the transactions predated its applicability. The calculated tax effect was below the threshold specified in the CBDT circular.

What were the facts?

The Revenue appealed an order of the CIT(A) for AY 2017-18. The assessee argued the appeal was hit by a CBDT circular due to low tax effect, as the addition under Section 69B was wrongly taxed at 60% under Section 115BBE instead of 30%.

What were the issues?

Whether the Revenue's appeal is maintainable due to low tax effect as per CBDT circular, and the correct tax rate applicable to unexplained investment under Section 69B for the given assessment year.

Which sections of the Income-tax Act were involved?

Section 69B,Section 115BBE

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: 11.05.2026Pronounced: 29.06.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the Revenue and Cross-objection (CO) against the order of the Learned Commissioner of Income Tax (Appeals), (hereinafter referred to as ‘Ld.CIT(A)’), Chennai-20, dated

ITA Nos.2697/Chny/2025 & CO.01/Chny/2026 (AY.2017-18) M/s Shri Kumaran Silks :: 2 :: 24.07.2025 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.69B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) as unexplained investment and applied tax as per Section 115BBE of the Act @60%, which is erroneous, and the rate of tax ought to be only 30% instead of 60% and for such a proposition relied on the decision of the Hon’ble jurisdictional High Court in the case of M/s 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 was erroneously computed @60% instead of 30%; and in such an event, the tax effect of the Revenue Appeal would be less than Rs sixty lakhs and not maintainable. He placed before us the working/rate of tax as per the normal provisions, which is seen to be less than Rs.60 lakhs, which is reproduced as under : -

ITA Nos.2697/Chny/2025 & CO.01/Chny/2026 (AY.2017-18) M/s Shri Kumaran Silks :: 3 :: Particulars Amount in Rs. Tax @ 30% on Rs. 1,08,53,885/- 32,56,166/- Surcharge @ 25% on Rs.32,56,166/- 8,14,042/- Education Cess @ 2% on Rs.40,70,208/- 81,404/- Secondary and Higher Education Cess @ 1% 40,702/- on Rs.40,70,208/- Total tax effect 41,92,314/-

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 AO has made addition u/s.69B of the Act to the tune of Rs.1,08,53,885/- as unexplained investment and applied tax as per Section 115BBE of the Act @60%, which is per-se erroneous, and the rate of tax ought to be only 30% instead of 60%. For such a proposition, we rely on the decision of the Hon’ble jurisdictional High Court in the case of M/s Smile Microfinance Ltd. v. ACIT supra. Hence, considering the fact that AO has made addition

ITA Nos.2697/Chny/2025 & CO.01/Chny/2026 (AY.2017-18) M/s Shri Kumaran Silks :: 4 :: made u/s.69B of the Act is to the tune of Rs.1,08,53,885/- and in this relevant year Sec.115BBE of the Act won’t apply, as per the calculation of tax given (supra), the tax effect arising from it would be less than Rs.60 lakhs, Hence, we find merit in the contention of the Ld.Counsel for the assessee that since tax rate @60% as per Sec.115BBE of the Act applies on transactions on or after 01.04.2017, 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, on this score the instant appeal filed by the Revenue stands dismissed. The CO of the assessee is noted to be in support of the favorable decision of Ld CIT(A) and hence in the light of our action supra, the CO is disposed of being infractous.

4.

In the result, appeal filed by the Revenue & Cross-objection filed by the assessee are dismissed.

Order pronounced on the 29th day of June, 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: 29th June, 2026. YS

YASHVIR Digitally signed by YASHVIR SINGH SINGH Date: 2026.07.07 13:21:31 +05'30'

ITA Nos.2697/Chny/2025 & CO.01/Chny/2026 (AY.2017-18) M/s Shri Kumaran Silks :: 5 :: 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

More judgments on Section 69B

All 1,579 judgments and leading authorities on Section 69B →

Recent GST High Court judgments

Search GST case law →