DCIT, Circle 16(1) vs Meenakshi Creations Pvt. Ltd.

PER S. RIFAUR RAHMAN, AM:

The Revenue has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 13.10.2025 for the Assessment Year 2017-18. The assessee has also filed cross objections in support of the impugned order dated 13.10.2025.

At the time of hearing, Ld. Counsel for the assessee has submitted that the tax effect in the appeal filed by the Revenue is below Rs.60 lakhs. The CBDT in its Circular No.09/2024 dated 17.09.2024 has recently revised the monetary limit for filing of the departmental appeal to the ITAT at Rs.60 lakhs. Ld. AR submitted that the Assessing Officer has erred in law in subjecting the impugned addition to tax u/s 115BBE of the Income-tax Act, 1961 (for short ‘the Act’) at the rate of 60% plus surcharge instead of normal rates. He submitted that section 115BBE applies only where the total income of the assessee includes income referred to in sections 68 to 69D. He submitted that in the instant case, the impugned amount represents recorded business receipts from cash sales, duly entered in the books of account, supported by sales invoices, stock records and VAT/GST returns and already offered to tax as business income. He submitted that once the assessee has satisfactorily explained the nature and source of the cash deposits, the provisions of section 68 are not attracted and consequently, section 115BE has no application. He further submitted that even otherwise, the enhanced rate of tax u/s 115BBE as amended by the Taxation Laws (Second Amendment) Act, 2016 though made application from 01.04.2017 was not intended to operate retrospectively so as to cover transactions which had already taken place prior to the enactment and notification of the Amendment Act on 15.12.2016, particularly in cases where the income itself does not fall within the mischief of section 68 to 69D. He furthers submitted that this issue is fully covered by the judgment of Hon’ble Madras High Court in the case of S.M.I.L.E Microfinance Ltd. vs. ACIT order dated November 19, 2024 wherein the court held that this court is of the considered opinion that “revenue is empower to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. And for prior transaction the Revenue is empower to impose only 30% rate of tax.” Accordingly, ld. AR submitted a chart showing the tax effect calculation which is reproduced below :-

In view of the above, he submitted that the tax effect is below the permissible limit of Rs.60 lakhs and therefore, requested that the Revenue’s appeal may be dismissed accordingly.

However, Ld. Sr. DR did not oppose the aforesaid proposition.

Considered the rival submissions and material available on record. We have gone through the aforesaid decision of Hon’ble Madras High Court in the case of S.M.I.L.E Microfinance Ltd. (supra) and are of the opinion that the tax is to be charged at the normal rates i.e. 30%. We observed that the chart given by the ld. AR as reproduced above clearly shows that the tax effect is below Rs.60 lakhs. In view of the above position, we noticed that the tax effect in appeal preferred by the Revenue is below Rs.60 lakhs, we deem it proper to dismiss the appeal of the Revenue in the light of the latest Circular No.09/2024 of the CBDT dated 17.09.2024, as not maintainable.

In the result, the appeal of the Revenue is dismissed.

As we have dismissed the appeal of the Revenue, the cross objections filed by the assessee has become infructuous, hence the same is dismissed as infructuous.

To sum up : the appeal filed by the Revenue and the cross objections filed by the assessee are dismissed.