Hyderabad ITAT: ₹12.92 Lakh Unexplained Cash Credits Sustained Under Section 68, Enhanced 60% Rate Under Section 115BBE Held Inapplicable for AY 2017-18

Case Overview

Case Name: Alikhan Mohammad Adilabad Vs. ITO (ITAT Hyderabad)
Assessment Year: 2017-18
Forum: Income Tax Appellate Tribunal, Hyderabad

The Hyderabad Bench of the Income Tax Appellate Tribunal delivered a split verdict in the appeal filed by the assessee, partly ruling in favour of the Revenue by sustaining an addition of Rs. 12,92,305/- under Section 68 of the Income-tax Act, 1961, while simultaneously granting meaningful relief on the tax rate question by holding that the enhanced 60% rate under Section 115BBE was not applicable to Assessment Year 2017-18.

Background and Factual Matrix

Return Filing and Scrutiny Assessment

The assessee, an individual, filed his return of income for AY 2017-18 on 25.09.2017, declaring a total income of Rs. 3,34,580/-. The case was picked up for complete scrutiny, and a notice under Section 143(2) of the Income-tax Act, 1961 was issued on 21.09.2018.

Upon completion of assessment proceedings under Section 143(3) of the Income-tax Act, 1961, the Assessing Officer passed an order dated 30.12.2019, making the following additions:

First Appellate Stage

The assessee appealed before the Addl/JCIT(A)-2, Ludhiana. By order dated 21.01.2026, the first appellate authority:

• Deleted the addition of Rs. 25,622/- on account of expenditure disallowance
• Confirmed the addition of Rs. 12,92,305/- under Section 68

Dissatisfied with the confirmation of the Section 68 addition and the application of the enhanced tax rate, the assessee preferred a further appeal before the Tribunal.

Grounds of Appeal Before the Tribunal

The assessee raised the following substantive grounds before the ITAT:

1. The order of the first appellate authority was erroneous both on facts and in law
2. The Addl/JCIT(A) wrongly confirmed the Assessing Officer's addition of Rs. 12,92,305/- as unexplained credits under Section 68 without properly appreciating the evidence submitted
3. The first appellate authority failed to seek a remand report on the additional evidence placed before it

Additional Ground on Section 115BBE

An additional ground was also raised before the Tribunal, contending that:

"On the facts and circumstances of the case, the A.O is not justified in levying tax at increased rate of 60% under section 115BBE of the Act in as much as the amendments made by the Taxation (Second Amendment) Act, 2016 to Finance Act, 2016 are made effective from the 1st day of April 2017 and are applicable for assessment year 2018-19 onwards. The authorities below ought not to have applied the same to the assessment year 2017-18."