TaxTMI 
TaxTMI 
2026 (3) TMI 1569
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....aken the following grounds of appeal: "1. Whether the Ld.CIT(A) has erred in law and on facts in quashing order u/s 154 dated 21.10.2024 wherein the tax was re-computed on addition u/s 69A of the Act @ 60% instead of 30%, applying the amended provisions of Sec. 115BBWE of the I.T. Act, 1961 for A.Y. 2017-18 in the case of the assessee? 2. Whether the ld.CIT(A) has erred in quashing rectification order u/s 154 for computing tax incorrectly when the quantum addition u/s 69A on which tax is recomputed is under test of appeal? 3. Whether the Ld.CIT(A) has erred inholding that the issue relating to the applicable tax rate u/s 115BBE is debatable, despite the statutory amendment brought by the Taxation Laws (Amendment) ....
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....fore falls outside the scope of section 154 of the Act. It was further submitted that the amendment enhancing the rate from 30% to 60% was prospective in nature and could not be applied to transactions undertaken prior to 15.12.2016. In support of this contention, reliance was placed on the decision of the Hon'ble Madras High Court in the case of S.M.I.L.E. Microfinance Ltd., wherein it was held that the enhanced rate of tax is applicable only from 01.04.2017 onwards and not to prior transactions. 5. The assessee also raised a specific ground regarding violation of principles of natural justice by contending that no show cause notice under section 154 was served and the rectification order was passed without affording any opportunity of ....
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....in revising the tax rate from 30% to 60% was beyond the scope of section 154. The Ld. CIT(A) also took note of the submissions regarding non-service of notice and violation of principles of natural justice. In view of these findings, the Ld. CIT(A) quashed the rectification order passed under section 154 and allowed the appeal of the assessee. 8. The Department is in appeal before us against the order passed by CIT(Appeals) allowing the appeal of the assessee. 9. We have heard the rival contentions and perused the material available on record. 10. At the outset, we note that the issue relating to applicability of the amended provisions of section 115BBE has been subject matter of judicial consideration. The Hon'ble Madras High Cour....
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....e revenue is empowered to impose only 30% rate of tax..." 13. Further, in the case of Jagathesh vs. ACIT [2026] 182 taxmann.com 28 (Chennai - Trib.)[30-12-2025], the ITAT held that where addition under section 69A related to transactions prior to 1-4-2017, enhanced rate of 60 per cent under section 115BBE was inapplicable, such rate being operative only from assessment year 2018-19 and not for assessment year 2017-18. 14. In the case of In Reva Enterprises v. ITO [2025] 180 taxmann.com 767 (Surat - Trib.) (AY 2017-18), the Tribunal held that where the assessee failed to file return and did not explain the source of cash deposits, addition under section 69A of the Act was rightly sustained; however, on the issue of taxability, it was c....
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.... Enterprises v. ITO [2025] 180 taxmann.com 767 has reiterated that the amended provisions of section 115BBE are prospective and do not apply to Assessment Year 2017-18, and accordingly directed taxation at normal rates. The Ahmedabad Bench of the Tribunal in ITA No.272/Ahd/2024 has also taken a consistent view that the enhanced rate is applicable only from 01.04.2017 onwards and not prior thereto. 17. Thus, a consistent judicial view has emerged that the amended provisions of section 115BBE enhancing the rate of tax to 60% are prospective and do not apply to Assessment Year 2017-18. Once this position is accepted, the very foundation of the rectification order passed under section 154 collapses. 18. Even otherwise, the existence of di....