Nachimuthu Sivashanmugam Vs ITO (ITAT Chennai)
The assessee, an individual engaged in the business of running goods carriages, had not filed his return for AY 2017-18. The AO initiated reassessment proceedings and initially made an addition of ₹4.10 crore u/s 68. Subsequently, in revision proceedings u/s 264, the PCIT set aside the assessment and directed the AO to pass a fresh order. In the fresh assessment, the AO treated cash deposits of ₹61.31 lakh as unexplained money u/s 69A.
On appeal, the CIT(A) partly allowed the assessee’s claim and reduced the addition to ₹30.43 lakh, but applied the higher tax rate of 60% under Section 115BBE.
Before the ITAT, the assessee argued that the enhanced tax rate of 60% introduced in Section 115BBE after demonetisation applies only from 01-04-2017 onwards, relying on the Madras High Court judgment in SMILE Microfinance Ltd..
The Tribunal accepted the contention and observed that amendments to the Income-tax Act apply from the first day of the relevant financial year. Since the higher rate under Section 115BBE was intended for future transactions and applicable from 01-04-2017, it cannot be applied to earlier transactions relating to the year under consideration.
Accordingly, the ITAT directed the AO to tax the sustained addition of ₹30.43 lakh at 30% instead of 60%.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
