Krishna Priya Parvathaneni Vs ITO (ITAT Visakhapatnam)
Summary: The assessee filed her return for AY 2017-18 declaring income of ₹7.71 lakh, while the assessment under Section 143(3) determined total income at ₹23.90 lakh after additions towards unexplained money under Section 69A and long-term capital gains. Although the assessee had challenged the additions before the lower authorities, before the Tribunal she confined her arguments to the application of the enhanced 60% tax rate under Section 115BBE to the unexplained-money addition. Relying on the decision of the Rajasthan High Court in Deepak Maratha v. Pr. CIT-II, Jodhpur, Civil Writ Petition No. 3625/2020 dated 27.05.2026, the Visakhapatnam ITAT noted that the amendment to Section 115BBE enhancing the rate of tax came into force from 01.04.2017, i.e. from FY 2017-18, and therefore the rate of 60% could apply only from AY 2018-19 onwards. Since the assessment year involved was AY 2017-18, the Tribunal held that the applicable rate under Section 115BBE was 30% and directed the Assessing Officer to compute tax at 30% on the addition made towards unexplained money under Section 69A. The appeal was accordingly partly allowed.
Enhanced 60% Tax Rate Under Section 115BBE Inapplicable to AY 2017-18; Visakhapatnam ITAT Directs Taxation at 30%
The assessee filed her return for AY 2017-18 declaring income of ₹7.71 lakh. The AO completed the assessment under Section 143(3) at ₹23.90 lakh after adding ₹14.09 lakh as unexplained money under Section 69A and ₹2.10 lakh as long-term capital gains. The CIT(A) upheld both additions.
Before the Tribunal, the assessee did not press her challenge to the additions and confined her arguments to the application of the enhanced 60% tax rate under Section 115BBE to the unexplained-money addition.
The Visakhapatnam ITAT, following the Rajasthan High Court ruling in Deepak Maratha v. Pr. CIT, held that the Finance Act, 2016 amendment enhancing the Section 115BBE rate from 30% to 60% came into force on 1 April 2017. Therefore, the enhanced rate applied only from FY 2017-18, corresponding to AY 2018-19, and could not be applied retrospectively to FY 2016-17 relevant to AY 2017-18.
Accordingly, the Tribunal directed the AO to levy tax at 30%, instead of 60%, on the addition made under Section 69A. The appeal was partly allowed.
List of Cases Discussed / Relied Upon
- Deepak Maratha v. Pr. CIT- II, Jodhpur,Civil Writ Petition No. 3625/2020, dated 27.05.2026 — relied upon for the proposition that the amendment to Section 115BBE enhancing the tax rate to 60% came into force from 01.04.2017 and therefore did not apply to FY 2016-17 relevant to AY 2017-18.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal is filed by the Assessee against the order Learned Commissioner of Income Tax (Appeals)/ Ld.ADDL/JCIT(A)-2, Lucknow [hereinafter in short “Ld. CIT(A)”] vide DIN: ITBA/APL/S/250/2025 -26/1086964867(1) dated 06-Mar-2026 for the Assessment Year 2017-18.
2. The Assessee has raised the following grounds of appeal:
“1. That under the facts and circumstances of the case, the order passed u/s 143(3) IT Act dt: 06.12.2019, which was upheld by the Ld. CIT(A), NFAC vide order passed u/s 250 of the IT. Act dt: 06.03.2026 is not in accordance with the facts of the case and the provisions of law.
2. That the Ld. CIT(A) has erred in upholding the assessment order without properly considering the factual matrix, documentary evidence, and submissions of the appellant.
3. The Ld. CIT(A) is not correct in upholding the action of the AO bringing to tax the cash deposits made in the bank account Rs.14,09,000/- , as unexplained cash deposits invoking provisions of sec 69A of the IT Act.
4. The Ld. CIT (A) ought to have appreciated the fact that when assesse e has explained the sources before the AO for the deposits made in bank account, with cogent reasons, the Ld. CIT (A) should have deleted the addition made under section 69A of the IT Act of Rs. 14,09,000/-
5. The Ld. CIT(A)erred in upholding the action o f the AO in bringing to tax long-term capital gains of Rs.2,10,405/- in the hands of the assessee, despite the fact that the property in question does not belong to the assessee. The explanation furnished before the lower authorities in this regard was not properly considered and was summarily disregarded. Therefore, the addition made on this account is unjustified and liable to be deleted.
6. For these and other reasons that have to be urged at the time of hearing of the case the assessee prays that the addition made by the assessing officer and sustained by Ld. CIT(A) are to be deleted in the interest of Justice.”
3. The brief facts of the case are that, the assessee is an individual filed her return of income for the A.Y.2017-18 on 06.03.2018 admitting total income of Rs.7,71,030/-. The case was selected for scrutiny and assessment has been completed under section 143(3) of Income Tax Act, 1961 [hereinafter in short “the Act”] on 06.12.2019 and determined total income at Rs.23,90,440/- by making additions towards Income from Other Sources for Rs.14,09,900/- and long-term capital gains derived from transfer of property for Rs.2,10,405/-.
4. Aggrieved by the Assessment Order, the assessee preferred an appeal before the Ld. CIT(A) and challenged the additions made by the Ld.AO towards Income from Other Sources and argued that the source of cash deposited into bank account is out of her known source of income from fishing farming. The assessee had also challenged additions made by the Ld.AO towards computation of long- term capital gains. Ld.CIT(A), after considering the submissions of the assessee and after taking note of relevant facts sustained the additions made by the Ld.AO, by holding that, the claim of savings from past declared income is unsubstantiated and further the appellant was failed to produce conclusive evidence to establish that she had no interest whatsoever in the property sold, and, therefore, the Ld.AO was rightly computed her share of capital gains.
5. Being aggrieved by the Ld. CIT(A) order, the assessee is now in appeal before the Tribunal.
6. Learned Counsel for the assessee, Shri C. Subrahmanyam, CA, referring to various grounds of appeal filed by the assessee, including additional grounds submitted that, the assessee has raised additional ground on the issue of validity of assessment passed by the Assessing Officer in light of notice issued by the Jurisdictional Assessing Officer (in short “JAO”) and argued that since the issue is sub-judice before the various Hon’ble High Courts on t retrospective amendment by insertion of section 292BC of the Act, the ground on JAO/FAO may be kept open to decide at appropriate stage.
7. Learned Counsel for the assessee, further submitted that, the assessee has also filed addition al ground challenging levy of higher rate of interest at 60% tax on income computed under the head “Income from Other Sources” towards unexplained money under section 69 of the Act, in light of the decision of the Hon’ble Rajasthan High Court in the case of Deepak Maratha v. Pr. CIT- II, Jodhpur in Civil writ Petition No. 3625/2020 dated 27.05.2026 and argued that since the amendment to section 115BBE came into effect from 01.04.2017 which is applicable for the A.Y.2018-19, the additional rate of tax cannot be applied for the assessment year under consideration. In other words, the assessee has not challenged the additions made by the Ld.AO towards unexplained money under section 69A of the Act and long- term capital gains but only argued the higher rate of tax computed by the Ld.AO in terms of section 115BBE of the Act.
8. Learned Senior AR for the Revenue, Shri A.P.Babu, Sr.AR, relied upon the order of the Ld.CIT(A) and argued that the amendment to provisions of section 115BBE of the Act came into effect from 0 1.04.2017 and is applicable for the A.Y. 2017- 18 and therefore the Ld.AO has rightly computed tax @60% on income assessed under the head “Income from other sources”. Therefore, he submitted that the order of the Ld. CIT(A) should be sustained.
9. We have heard both the sides, perused the material available on record and had gone through the orders of the authorities below. The assessee although had taken various grounds challenging the additions made by the Ld.AO towards unexplained cash deposits under section 69A of the Act, but restricted his arguments to the computation of tax in terms of section 115BBE of the Act @60% on the total income assessed under the head “Income from other sources” and claimed that this issue is covered in favour of the assessee, b y the decision of the Hon’ble Rajasthan High Court in the case of Deepak Maratha v. Pr. CIT- II, Jodhpur in Civil writ Petition No. 3625/2020 dated 27.05.2026. We find that the Hon’ble Rajasthan High Court had considered the similar issue in the case of Deepak Maratha v. Pr. CIT- II, Jodhpur in Civil writ Petition No. 3625/2020 dated 27.05.2026, where the Hon’ble High Court, after considering the relevant provisions of section 115BBE of the Act and amendment by the Finance Act, 2016 which is applicable from 01.04.2017 held that the amendment to section 115BBE came into force on 01.04.2017 i.e., first day of F.Y.2017- 18 and therefore, for F.Y. 2016- 17, the law in force on 01.04.2016 prescribed a rate of 30% must govern. The enhanced rate of tax @60% came int o force on 01.04.2017 and can apply only from the date i.e., for F.Y. 2017- 18 onwards. In other words, the Hon’ble High Court held that higher rate of interest as per section 115BBE of the Act @60 can be charged only from A.Y.2018- 19 but not prior assessment years. In the present case, the assessment year involved is A.Y.2017-18 and as per the provisions of section 115BBE of the Act, the rate of tax applicable upon impugned assessment year is @30%, and, therefore, we direct the Ld.AO to compute the tax @30% on the additions made towards unexplained money under section 69A of the Act under section 115BBE of the Act.
10. In the result, appeal filed by the assessee by the assessee is partly allowed.
Order pronounced in the open court on 21th August, 2026.
