When income determined is below exemption limit, section 115BBE not applicable

When the income determined as taxable is below exemption limit, provisions of section 115BBE can not be invoked.

In a recent case, ITAT Lucknow deleted the addition made by the Assessing Officer (AO) by invoking provisions of section 115BBE of the Income Tax Act, 1961 (the Act) merely because assessee had not filed return of income as his income was below the taxable limit.

ABCAUS Case Law Citation:
4827 (2025) (11) abcaus.in ITAT

This is an example how power to assess can be abused to harass an assessee and how appellate departmental machinery functions in a mechanical manner favouring revenue.

In the instant case, the assessment order was passed u/s 147 read with section 144/144B of the Act whereby the assessee’s total income was determined at an amount which was less than 2,50,000/- which was below the basic exemption limit for the relevant Assessment Year. However, the AO while framing the reassessment made an addition under section 69A of the Act on account of cash deposited by the assessee in bank and invoked the higher rate of taxation u/s 115BBE of the Act.

Against the assessment order, the assessee’s appeal was dismissed by the CIT(A). 

The Tribunal observed that both the Assessing Officer as well as CIT(A) were in agreement that assessee’s total income was below the taxable limit for the relevant assessment year.

The Tribunal further noted that both the lower authorities had taken an adverse view of the fact that the assessee did not file return of income and therefore invoked the provisions of section 115BBE of the Act to bring the exempt income of the assessee to tax.

The Tribunal opined that when the assessee’s total income is below the taxable limit, there is no requirement on the part of the assessee, under law, to file return of income.  When there is no requirement under law to file return of income, no adverse view can be taken against the assessee for not filing return of income.  Therefore, the action of the Assessing Officer in invoking the provisions of section 115BBE of the Act, which was confirmed by the CIT(A) in the impugned appellate order, was unsustainable. 

Therefore, the Tribunal quashed the assessment order and the impugned appellate order was set aside.

Download Full Judgment Click Here >>

• Non issue of notice u/s 143(2) for even belated ITR filed u/s 148 makes assessment void ab initio
• Calculation of functional disability depends on victim’s earning capacity in open market – SC
• Appeal against ITAT shall lie only before High Court within whose jurisdiction AO is situated
• SC recommends action against Customs Officer who relied upon AI generated fake case laws
• Non- payment of cost imposed can’t trigger automatic confirmation of an invalid exparte assessment.