ITO WARD 2(1), ERODE V. KANDASAMY KUPPUSAMY, ERODE

MA 100/CHNY/2025

AI Insights

The case involves the Income Tax Officer, Ward-2(1), Erode as the appellant and Kandasamy Kuppusamy as the respondent. The dispute centered on the addition of Rs.20 lakhs as unexplained cash deposits during the demonetization period, which was later reduced to Rs.15 lakhs by the Tribunal. The Revenue filed an MA challenging the applicability of section 115BBE, which was contested based on a precedent set by the Madras High Court. The Tribunal, after considering the submissions and the precedent, modified its earlier order to apply section 115BBE but adjusted the tax rate to 30%.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780177 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-10-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Appeal Filed On: 19-06-2025
• Other Referred Cases: S.M.I.L.E Micro Finance Limited
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GOWTHAMI MANIVASAGAM
• Assessee Lawyers: S. SRIDHAR; ERODE VIRTUAL
• Keywords: Set aside

Judgement Text

"आयकर अपीलीय अधिकरण, ’ ए’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI माननीय श्री मनु क ुमार धिरर ,न्याधयक सदस्य एवं माननीय श्री अमिताभ शुक्ला, लेखा सदस्य क े सिक्ष BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND HON’BLE SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./MA No.100/Chny/2025 (In ITA No.2874/Chny/2024) Assessment Years: 2017-18 Income Tax Officer, Ward-2(1) Erode Kandasamy Kuppusamy, No.11/193, Porayankadu, Chennimalai, Tamil Nadu-638 051. [PAN: AGGPK3046E] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr.S.Sridhar, Erode Advocate (Virtual) प्रत्यर्थी की ओर से /Revenue by : Ms.Gowthami Manivasagam, JCIT सुनवाई की तारीख/Date of Hearing : 22.08.2025 घोषणा की तारीख /Date of Pronouncement : 06.10.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This MA has been filed by the Revenue requesting for recalling of the order in ITA no. 2874/Chny/2024 for AY-2017-18 dated 30.04.2025. In the aforesaid order the appeal of the assessee was partly allowed. As per the facts existing therein the Ld.AO had made an addition of Rs.20 lakhs pertaining to cash deposits made by the assessee during the demonetization period as unexplained cash deposits. While doing so, the Ld.AO had invoked provisions of section 115BBE of the Act. The Ld.CIT(A) had confirmed the findings of the Ld.AO. Vide order in ITA no. 2874/Chny/2024 supra, the assessee was Printed from counselvise.com MA No.100/Chny/2024 Page - 2 - of 3 given another relief of Rs.5 lakhs and the addition was restricted to Rs.15 lakhs. It was also held that invocation of section 115BBE in this case was unwarranted in the light of decision of Hon’ble Madras High Court in the case of S.M.I.L.E Micro Finance Limited. In para 7.1 of the impugned order dated 30.04.2025 it was observed “….Thus, Hon’ble High Court has held that section 115BBE would be applicable for transactions undertaken w.e.f. 01.04.2017 and not of earlier period….The order of lower authorities on this issue is therefore set aside and the Ld AO is directed to recompute the income without applying provisions of section 115BBE….”. 2.0 Through the present MA, the appellant Revenue has argued that section 115BBE has been in existence since long and that the moot question is regarding the applicability or otherwise of 60% tax rate for AY-2017-18 in the light of decision of Hon’ble Madras High Court in the case of S.M.I.L.E Micro Finance Limited supra. It was urged that provisions of section 115BBE would still be applicable on the impugned disallowance qua unexplained cash deposits. 3.0 The Ld.Counsel for the assessee relied upon the order of this order of this tribunal in ITA No.2874/Chny/2024. 4.0 We have heard rival submissions in the light of material available on records. We have noted that provisions of section 115BBE have been in existence since long. There was therefore no intention to give an impression qua non-existence of said provisions in earlier years. We have also noted that the moot controversy is regarding the applicability or otherwise of 60% tax rate Printed from counselvise.com MA No.100/Chny/2024 Page - 3 - of 3 for AY-2017-18 in the light of decision of Hon’ble Madras High Court in the case of S.M.I.L.E Micro Finance Limited supra. To set the matter right, the contents of para 7.1 of the order dated 30.04.2025 are modified and it is held that provisions of section 115BBE would be applicable in the present case for AY-2017-18 qua unexplained cash deposits. The Ld.AO is however directed to, in the light of decision of Hon’ble Madras High Court in the case of S.M.I.L.E Micro Finance Limited supra, to recompute the tax rate at 30% only on the final addition of Rs.15 lakhs. Accordingly, the MA preferred by the Revenue is allowed for statistical purposes. 5.0 In the result, the MA of the Revenue is allowed for statistical purposes. Order pronounced on 6th , October-2025 at Chennai. Sd/- (मनु क ुमार धिरर) (MANU KUMAR GIRI) न्याधयक सदस्य / Judicial Member Sd/- (अधमताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, धदनांक/Dated: 6th , October-2025. KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai/Coimbatore/Madurai/Salem. 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF Printed from counselvise.com "