CHIDAMBARAM CHETTIAR KRISHNAN,RANIPET V. ACIT, CIRCLE-1, VELLORE

ITA 2202/CHNY/2025

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The case involves an appeal by Shri Chidambaram Chettiar Krishnan against the order of the Learned Commissioner of Income Tax (Appeals), which taxed Rs.20,59,556/- at a higher rate under section 68 r.w.s. 115BBE of the Income Tax Act for the Assessment Year 2017-18. The primary contention was whether the amount, which was declared as income from miscellaneous and consultancy services, should be taxed at a higher rate despite being included in the total income for AY 2017-18. The Tribunal found that the transaction date was prior to the cut-off date of 01.04.2017, and thus, following the High Court's decision, only a 30% tax rate should apply.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 783990 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 07-08-2025
• Other Referred Cases: SMILE Microfinance Ltd. Vs ACIT [WP(MD) No.2078 of 2020 & WMP(MD) No.1742 of 2020 dated 19.11.2024]
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRYATI SHARMA
• Assessee Lawyers: N. ARJUN RAJ
• Section: 68

Judgement Text

"आयकर अपीलȣय अͬधकरण,‘ए’ Ûयायपीठ,चेÛनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI Įी मनु क ुमार ͬगǐर,ÛयाǓयक सदèय एवं Įी जगदȣश, लेखा सदèय क े सम¢ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2202/Chny/2025 िनधाᭅरण वषᭅ /Assessment Year: 2017-18 Shri Chidambaram Chettiar Krishnan, 151, SIDCO Industrial Estate, Ranipet – 632 403 v. The Assistant Commissioner of Income Tax, Circle 1, Vellore [PAN: AFNPK 2149E] (अपीलाथȸ/Appellant) (Ĥ×यथȸ/Respondent) अपीलाथȸ कȧ ओर से/ Appellant by : Shri N. Arjun Raj, Advocate Ĥ×यथȸ कȧ ओर से /Respondent by : Ms.Pryati Sharma, JCIT सुनवाई कȧ तारȣख/Date of Hearing : 30.10.2025 घोषणा कȧ तारȣख /Date of Pronouncement : 10.11.2025 आदेश / O R D E R PER MANU KUMAR GIRI, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), (in short ‘the CIT(A), NFAC / Delhi dated 18.07.2025 for the Assessment Year (in short ‘AY’) 2017-18. 2. The short grievance of the assessee is that whether the ld.CIT(A) is justified taxing Rs.20,59,556/- at a higher rate in terms of section 68 r.w.s. of the Act for AY 2017-18 ? 3. The ld.CIT(A) at para 5.2.1 held as under: Printed from counselvise.com - 2 - ITA No.2202/CHNY/2025 “ 5.2.1. I have considered the submissions made by the Appellant; I have also perused the assessment order. I find that the AO has made the impugned addition since the Appellant failed to satisfactorily explain the source of cash deposits. In this regard, I find that the Appellant had filed return of income for AY 2016-17 wherein, an income of Rs.21,79,944/- has been declared under the head 'Income from Other Sources'. As per the Appellant, cash in hand as on 31/03/2016 is Rs. 25,15,500/-. This amount already offered to tax in AY 2016- 17, cannot be taxed again in AY 2017-18. As regards, the remaining cash deposits of Rs.20,59,556/-,I find that the Appellant has not explained the sources of the same. The Appellant has simply stated that it is on account of miscellaneous income and consultancy income. The Appellant has not submitted any details like bills/vouchers, confirmations etc., explaining the source of such cash deposits. Though, this amount has been included in the total income in the return filed for AY 2017-18, however, its source remains unexplained. In view of the same, I concur with the findings of the AO that such amounts are to be taxed u/s 68 r.w.s. 115BBE of the Act. However, since the amount of Rs.20,59,556/-, has already been offered to tax in the return filed for AY 2017-18, no separate addition can be made. This would amount to double taxation. However, the said amount of Rs. Rs.20,59,556/-, is to be taxed at a higher rate in terms of section 68 r.w.s. 115BBE of the Act. Grounds are, thus, partly allowed.” 4. The ld. counsel for the assessee referred judgment of the Hon’ble jurisdictional High Court in the case of SMILE Microfinance Ltd. Vs ACIT [WP(MD) No.2078 of 2020 & WMP(MD) No.1742 of 2020 dated 19.11.2024] (Mad.) wherein the Hon’ble High Court at para 17 held as under: “17. In the aforesaid objects and reasons nowhere it is stated that due to “demonetization” the unaccounted money ought to be charged 60% rate of tax. It only states that step had been taken to curb black money by withdrawing Specified Bank Notes of denomination of Rs.500 and Rs.1000. And also states the people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object “that instead of allowing people to find illegal ways of converting their black money into black again”, it is evident that the government is intended to impose the same for future transactions. Especially the use of word “again” in the object would clearly indicate it is for future transactions i.e. from 01.04.2017. Therefore this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. Printed from counselvise.com - 3 - ITA No.2202/CHNY/2025 And for prior transaction the revenue is empowered to impose only 30% rate of tax.” 5. Per contra, the ld.DR could not dispute para 17 of the judgment of the Hon’ble jurisdictional High Court. Although she vehemently relied upon the impugned order of the ld.CIT(A). 6. We have heard the rival submissions and perused the record and judgment of the Hon’ble jurisdictional High Court and find that the issue in question i.e; assessee’s assessment u/s 115BE is concerned, is squarely covered by the judgment of the Hon’ble High Court in the case of SMILE Microfinance Ltd. Vs ACIT [WP(MD) No.2078 of 2020 & WMP(MD) No.1742 of 2020 dated 19.11.2024] (Mad.). Hence, respectfully, following the judgment of the Hon’ble jurisdictional High Court, we direct the AO to recompute the income and impose only 30% rate of tax on the amount of Rs.20,59,556/- as the transaction is prior to 01.04.2017. 7. In the result, the appeal of the assessee is allowed in terms above. Order pronounced in open Court on the 10th day of November 2025, in Chennai. Sd/- (जगदीश) (JAGADISH) लेखा सदèय/ACCOUNTANT MEMBER Sd/- (मनु क ुमार िगįर) (MANU KUMAR GIRI) ÛयाǓयक सदèय/JUDICIAL MEMBER चेÛनई/Chennai, Ǒदनांक/Dated:10th November, 2025. RSR,Sr.PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकर आयुƅ/CIT, Chennai /Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF Printed from counselvise.com "