INCOME TAX OFFICER, WANAPARTHY BLOCK AYAKAR BHAWAN V. VEERASAMY MANI, CHENNAI

ITA 1971/CHNY/2025

AI Insights

The case involves an appeal by the Income Tax Officer (ITO), Non-Corporate Ward-9(1), Chennai against the order of the Learned Commissioner of Income Tax (Appeal)/NFAC, Delhi, concerning the Assessment Year 2017-18. The primary contention was regarding the application of tax rates under Section 115BBE of the Income Tax Act, 1961, specifically whether the 60% tax rate applied to unexplained income should be considered for transactions before April 1, 2017. The assessee, Shri Veerasamy Mani, argued that the correct tax rate was 30%, based on a binding decision from the Madras High Court. The tribunal agreed with the assessee's position, leading to the dismissal of the Revenue's appeal due to the low tax effect.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847416 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Chennai
• Assessment Year: 2017-2018
• Appeal Filed On: 11-07-2025
• Other Referred Cases: Smile Microfinance Ltd. v. ACIT in WP (MD) No.2078 of 2020 & 1742 dated 19.11.2024 (Madras-HC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: G. BASKAR
• Keywords: Tax effect
• Section: 40(a)(ia)

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी एस. आर. रघुनाथा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER ITA No.1971/Chny/2025 िनधा\u000eरणवष\u000e/Assessment Year: 2017-18 The ITO, Non-Corporate Ward-9(1), Chennai. v. Shri Veerasamy Mani, 15 NA, Dr. Natesan Road, ICE House, Chennai-600 005. [PAN: AMZPM 0668 F] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) Department by : Ms.R. Anita, Addl.CIT Assessee by : Mr.G. Baskar, Advocate सुनवाईक तारीख/Date of Hearing : 24.02.2026 घोषणाक तारीख /Date of Pronouncement : 25.03.2026 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 02.04.2025 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 Tax Act, 1961 (hereinafter referred to as ‘the Act’) as unexplained income Printed from counselvise.com ITA No.1971/Chny/2025 (AY 2017-18) Veerasamy Mani :: 2 :: 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 ₹10,58,299/-u/s 40(a)(ia) and ₹1,13,56,000/-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 ₹1,13,56,000/- 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% as per Sec.115BBE of the Act applies on transactions on or after Printed from counselvise.com ITA No.1971/Chny/2025 (AY 2017-18) Veerasamy Mani :: 3 :: 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 25th day of March, 2026, in Chennai. Sd/- (एस. आर. रघुनाथा) (S.R.RAGHUNATHA) लेखा सद /ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0001याियक सद\bय/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 25th March, 2026. TLN आदेश क \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF Printed from counselvise.com TUMMALACHARLA LAKSHMI NARAYANA Digitally signed by TUMMALACHARLA LAKSHMI NARAYANA Date: 2026.03.25 15:07:40 +05'30' "