INCOME TAX OFFICER, WARD 2, CUDDALORE vs. SHANMUGA DEVAR MURALIDARAN, NEYVELI

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ITA 604/CHNY/2025Status: DisposedITAT Chennai07 October 2025AY 2017-18Bench: SHRI ABY T. VARKEY (Judicial Member), SHRI S.R.RAGHUNATHA (Accountant Member)1 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 Section 115BBE applies to transactions on or after April 1, 2017. Since the transactions in question were on or before March 31, 2017, the 60% tax rate was not applicable. The Revenue's appeal was found to be hit by CBDT Circular No. 09/2024 due to low tax effect.

What were the facts?

The Revenue filed an appeal against the order of the CIT(A) for Assessment Year 2017-18. The assessee filed a Cross-Objection. The primary issue was the applicability of Section 115BBE of the Income Tax Act, 1961, which imposes a 60% tax rate.

What were the issues?

Whether Section 115BBE of the Income Tax Act, 1961 is applicable to transactions prior to April 1, 2017, and if the Revenue's appeal is maintainable under the CBDT Circular on low tax effect.

Which sections of the Income-tax Act were involved?

Section 68,Section 115BBE,Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

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

Hearing: 08.09.2025Pronounced: 07.10.2025

against the order of the Learned Commissioner of Income Tax (Appeal)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 17.12.2024 for the Assessment Year (hereinafter referred to as ‘AY‘)

2017-18 and CO No.67/Chny/2025 is a Cross-Objection filed by the assessee for 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 Tax Act, 1961 (hereinafter referred to as ‘the Act‘) as unexplained income and applied tax as per Section 115BBE of the Act @60%. Drawing our attention to the 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; and placed before us the working/rate of tax as per the normal provisions, which is seen to be less than ₹60 lakhs [as per the first limb, it would be ₹57,23,182/- or as per the second limb, it would be ₹56,38,362/-]. Hence, he prayed that the instant appeal filed by the Revenue needs to be dismissed. The working regarding calculation of tax effect in the case of assessee is noted as under:

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 u/s.68 of the Act is to the tune of ₹1,45,97,700/- and as evident from the calculation of tax given (supra), the tax effect would be less than ₹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 only as held by the decision of the Hon’ble Madras High Court in the case of Smile Microfinance Ltd. (supra), in this year i 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.

4.

As we have dismissed the appeal filed by the Revenue, Cross- Objection filed by the assessee also stands dismissed as infructuous.

5.

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

Order pronounced on the 07th day of October, 2025, in Chennai.

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