S.M.I.L.E Microfinance Limited Vs ACIT (Madras High Court)
Madras High Court held that increase in rate under section 115BBE of the Income Tax Act from 30% to 60% is effect only from 01.04.2017. Accordingly, for period prior to 01.04.2017, applicable rate will be 30%.
Facts- The writ petitioner company is non-deposit taking Non-Banking Financial Company (NBFC) having license from the Reserve Bank of India (RBI) for functioning as a Micro Finance Institution (MFI) registered with RBI.
During the demonetization period the petitioner deposited the cash available with it and the cash collections of repayment from borrowers in the bank accounts of the petitioner company during the window made available for cash deposits in the bank account. On 28.03.2017 the petitioner filed an online response in the “Cash Transaction-2016” module in the filing portal of the Income Tax Department stating that “the cash deposited out of cash balance available as per cash book and loan amount repayment received from borrowers in cash”.
In the assessment order dated 31.12.2019, the respondent noted that the petitioner deposited specified bank notes to the tune of Rs.1,18,57,000/- in various bank accounts belongs to petitioner and had granted allowance for Rs. 19,06,251/- as cash balance as per petitioner’s cash book as on 08.11.2016 but had treated the balance of Rs.99,50,749/- as unexplained cash credit u/s.65 of the Act. Thereby the respondent charged a rate of 60% as per Section 115BBE of the Act on the addition of Rs.99,50,749/- and raised a demand of Rs. 1,30,50,323/-including interest u/s 2348 and 234C of the Income Tax Act, 1961.
