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Judgment
ORDER
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals), addl/JCIT(A)-3, Ahmedabad [‘CIT(A)’ in short] dated 24.12.2025 arising from the rectification order dated 23.01.2021 passed by the Dy. Commissioner of Income Tax – Circle – 16(1), Delhi under Section 154 read with section 143(3) of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2017-18.
The grounds raised by the assessee are as under :
1.“That under the facts and circumstances Ld. A.O erred in law as well as on merits in applying Sec.115BBE on addition of Rs.1,69,00,000/-made u/s 68 by re-coursing to provisions of sec. 154, which issue cannot be covered within the scope of Sec.154 hence, impugned order is illegal, without jurisdiction and unsustainable in law.
1.1That as per already settled law as on date, amended Sec.115BBE is not applicable w.e.f A.Y. 2017-18 but only from A.Y. 2018-19, hence, for this reason also, the impugned rectification is unwarranted u/s 154.
2.That even on merits, amended Sec.115BBE is not applicable w.e.f A.Y. 2017-18 hence, the calculations of tax and surcharge as per amended Sec.115BBE is unsustainable in law.”
Brief facts of the case are that assessee is a limited company. Assessment order u/s 143(3) was passed on 27.12.2019 and made an addition of Rs.1,69,00,000/- u/s 68 of the Act on returned income of Rs. 83,51,250/- and therefore, income was assessed at Rs.2,52,51,250/-. Thereafter, a rectification order dated 23.01.2021 passed u/s 154 of the Act for A.Y. 2017-18 by the AO wherein the AO invoked the provisions of section 115BBE.
Assessee has challenged the application of Section 115BBE of the Act on addition of Rs.1,69,00,000/- made u/s 68 of the Act under the provision of Section 154 of the Act.
At the outset, the learned Counsel of the assessee stated that the same is not covered under the scope of section 154, hence, the order u/s 154 is invalid. It was further, pointed out by the learned AR that section 115BBE of the act is applicable from A.Y. 2018-19 only.
Per contra, learned DR relied on the order of Assessing Officer.
We have heard the rival submissions and perused the material available on record. We find that the Madras High Court in the Writ petition in the case of S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) has held that the impugned statutory provision would come into effect on the transaction done on or after 01.04.2017 only. Accordingly, we direct the AO to tax the addition under normal provisions of tax and not under the provisions of 115BBE of the Act.
In the result, appeal of the assessee in ITA No. 212/DEL/2026 is allowed.