115BBE Amendment Not Retrospective – ITAT Chennai Restricts Tax to 30% for Pre-01.04.2017 Transactions

Periyasamy Arunachalam Vs ITO (ITAT Chennai)

U/s 115BBE Amendment Not Retrospective – ITAT Chennai Restricts Tax to 30% for Pre-01.04.2017 Transactions

In this case, the assessee faced additions under Section 68 for cash deposits during the demonetization period, and the Assessing Officer applied tax @ 60% under Section 115BBE. The CIT(A) upheld this higher rate.

However, before the ITAT Chennai, the assessee argued that the amended higher rate of 60% under Section 115BBE (introduced w.e.f. 15.12.2016) is applicable only from A.Y. 2018-19 onwards, and not for A.Y. 2017-18.

The Tribunal relied on the jurisdictional Madras High Court decision in SMILE Microfinance Ltd., which clearly held that the enhanced tax rate applies only to transactions after 01.04.2017. Since the impugned transactions pertained to an earlier period, the amendment could not be applied retrospectively.

Accordingly, the ITAT held that only the pre-amended rate of 30% under Section 115BBE is applicable, and directed the AO to recompute the tax. The appeal was thus partly allowed in favour of the assessee.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal by the assessee is arising out of the order dated 12.09.2025, passed by the Learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short “ld.CIT(A)”) for the assessment year (A.Y) 2017-18 against the order u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the AO, Ward 1, Pudukkottai dated 31.12.2019.