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

ITA 604/CHNY/2025

AI Insights

The case involves an appeal by the Income Tax Department against the order of the Learned Commissioner of Income Tax (Appeals), Delhi, concerning the Assessment Year 2017-18. The appeal was based on an addition made under Section 68 of the Income Tax Act, 1961, which was treated as unexplained income and taxed at 60% under Section 115BBE. However, the assessee contested this, citing a CBDT Circular and a High Court decision that the higher tax rate applied only to transactions post-01.04.2017. The tribunal found merit in the assessee's arguments, leading to the dismissal of the Revenue's appeal and the assessee's Cross-Objection.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780208 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 27-02-2025
• Other Referred Cases: Smile Microfinance Ltd. v. ACIT in WP (MD) No.2078 of 2020 & 1742
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R.KAVITHA
• Assessee Lawyers: N.V. LAKSHMI
• Keywords: Tax effect

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ 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 आयकर अपील सं./ITA No.604/Chny/2025 िनधा\u000eरण वष\u000e/Assessment Year: 2017-18 & Cross-Objection No.67/Chny/2025 िनधा\u000eरण वष\u000e/Assessment Year: 2017-18 The ITO, Ward-2, Cuddalore. v. Shanmuga Devar – Muralidaran, 189, Priya Belt Traders, Cuddalore Main Road, Neyveli-607 802. [PAN: AKZPM 7254 R] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent/Cross- Objector) Department by : Ms.R. Kavitha, Addl.CIT Assessee by : Ms.N.V. Lakshmi, Adv. सुनवाईक तारीख/Date of Hearing : 08.09.2025 घोषणाक तारीख /Date of Pronouncement : 07.10.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: ITA No.604/Chny/2025 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 17.12.2024 for the Assessment Year (hereinafter referred to as ‘AY‘) Printed from counselvise.com ITA No.604/Chny/2025 & CO No.67/Chny/2025 (AY 2017-18) Shanmuga Devar Muralidaran :: 2 :: 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: Printed from counselvise.com ITA No.604/Chny/2025 & CO No.67/Chny/2025 (AY 2017-18) Shanmuga Devar Muralidaran :: 3 :: 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), Printed from counselvise.com ITA No.604/Chny/2025 & CO No.67/Chny/2025 (AY 2017-18) Shanmuga Devar Muralidaran :: 4 :: 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. Sd/- (एस. आर. रघुनाथा) (S.R.RAGHUNATHA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 07th October, 2025. TLN Printed from counselvise.com ITA No.604/Chny/2025 & CO No.67/Chny/2025 (AY 2017-18) Shanmuga Devar Muralidaran :: 5 :: 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 "