Bonthula Hari Venkata Krishna Vs ACIT (ITAT Visakhapatnam)
Recharacterisation Yes, Double Addition No: ITAT Deletes Duplication in Sec 68 Case; Sec 68 Addition to Be Netted Off from Business Income; Tax @ 30%, Not 60%
The Visakhapatnam Bench of the ITAT, in Bonthula Hari Venkata Krishna vs ACIT (ITA No. 581/Viz/2025, AY 2017-18), granted substantial relief to the Assessee by holding that re-characterisation of commission income as unexplained cash credit u/s 68 cannot result in double addition, and further directed that such addition be taxed @ 30% and not 60%.
The Assessee had credited commission income of ₹82.02 lakh in the Profit & Loss account, out of which ₹60.52 lakh was re-characterised by the AO as unexplained cash credit—₹20.52 lakh for want of explanation and ₹40 lakh as unsubstantiated receipts. However, while making the addition u/s 68, the AO failed to reduce the same amount from the business income already offered, thereby taxing the same sum twice. The Tribunal held that once the receipts are treated as unexplained u/s 68, they must be excluded from the business income, and directed recomputation accordingly.
On the rate of tax, the ITAT held that the enhanced rate under the post-amended section 115BBE (60%) is applicable only to transactions from 01.04.2017 onwards, and not to earlier transactions. Relying on the Madras High Court ruling in S.M.I.L.E Microfinance Ltd. and following the principle that where conflicting non-jurisdictional High Court views exist, the view favourable to the Assessee should prevail, the Tribunal directed the AO to tax the addition u/s 68 @ 30%. The appeal was thus allowed.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 22/07/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under Section 143(3) of the Income-tax Act, 1961 (for short, “Act”), dated 21/12/2019, for the Assessment Year 2017-18.
