Babu Ram Aggarwal Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi, in the case of Babu Ram Aggarwal vs. ITO for Assessment Year 2012-13, has ruled that the higher tax rate prescribed under Section 115BBE of the Income Tax Act, 1961, cannot be applied to transactions undertaken before April 1, 2017. This decision aligns with a recent judgment from the Madras High Court.
The central issue in the appeal was the invocation of Section 115BBE by the Assessing Officer (AO) concerning an addition of Rs. 3,61,000/- made under Section 69C of the Act, which pertains to unexplained expenditure.
The ITAT, after hearing the Departmental Representative (DR) and reviewing the available records, concluded that the provisions of Section 115BBE were not applicable in this specific case. The Tribunal drew support for its conclusion from the Madras High Court’s judgment dated November 19, 2024, in the case of S.M.I.L.E Microfinance Ltd. (W.P. (MD) NO. 2078 Of 2020 & W.M.P (MD) NO. 1742 Of 2020).
In the S.M.I.L.E Microfinance Ltd. case, the Madras High Court addressed the applicability of Section 115BBE’s increased tax rate, from 30% to 60%, introduced through an amendment. The High Court analyzed the effective date of this amendment, which was April 1, 2017. The revenue in that case argued that the amendment, being effective from April 1, 2017, applied to the financial year 2016-17 and Assessment Year 2017-18, and was related to demonetization.
