ACIT Vs Sethuraman Gurushankar (ITAT Chennai)
Summary: The Income Tax Appellate Tribunal (ITAT), Chennai Bench, dismissed the Revenue’s appeal for Assessment Year 2017-18 against the order of the CIT(A)/NFAC dated 21 November 2025 in the case of ACIT v. Sethuraman Gurushankar. The assessee objected that the appeal was barred by the ₹60 lakh monetary limit prescribed under CBDT Circular No. 09/2024 dated 17 September 2024. The Assessing Officer had made an addition of ₹76,62,355 under Section 68 as unexplained income and a disallowance of ₹12,03,315 relating to agricultural income. The assessee submitted that the tax effect had incorrectly been calculated using the enhanced 60% rate under Section 115BBE.
The assessee relied on the jurisdictional Madras High Court decision in SMILE Microfinance Ltd. v. ACIT, W.P.(MD) No. 2078 of 2020, dated 19 November 2024, for the proposition that the enhanced 60% rate under Section 115BBE applied to transactions on or after 1 April 2017 and not to the transactions in question, which occurred on or before 31 March 2017. On the assessee’s calculation, applying the 30% rate resulted in a tax effect below ₹60 lakh. The Departmental Representative did not controvert the submissions. Accepting the low-tax-effect objection, the Tribunal dismissed the Revenue’s appeal under the CBDT circular without adjudicating its substantive grounds or additional grounds, which were expressly left open.
Cases Discussed
- SMILE Microfinance Ltd. v. ACIT — Madras High Court; W.P.(MD) No. 2078 of 2020 and W.M.P. No. 1742 of 2020; 19/11/2024. Relied upon for the proposition that the enhanced 60% tax rate under Section 115BBE did not apply to the pre-1 April 2017 transactions in issue. Related TaxGuru discussion.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
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 21.11.2025 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 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 ₹12,03,315/- disallowance on account of agricultural income and ₹76,62,355/- 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 ₹76,62,355/- 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 01.04.2017 only as held by the decision of the Hon’ble Madras High Court in the case of Smile Microfinance Ltd. v. ACIT (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 22nd day of July, 2026, in Chennai.
