SURESH KUMAR,JIND vs. DEPUTY COMMISSIONER, BHIWANI

ITA 1070/DEL/2026Status: DisposedITAT Delhi28 September 2026AY 2017-185 pages
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What were the facts?

The assessee, Suresh Kumar, proprietor of M/s Shiv Shakti Trading Co., engaged in trading edible oils, sugar, and rice, is in appeal against the order of the CIT(A)-3, Gurgaon, dated 23-12-2025, which upheld the assessment order dated 30-12-2019 passed under Section 143(3) of the Income Tax Act, 1961 (the Act) for Assessment Year 2017-18. A survey under Section 133A was conducted on 11-08-2016, during which the assessee surrendered an additional income of Rs. 50,20,000/-. The assessee filed an income tax return on 27-10-2017 declaring an income of Rs. 55,84,170/-. The case was selected for manual scrutiny as a survey case. The Assessing Officer (AO) completed the assessment, charging tax at 60% under Section 115BBE of the Act on the surrendered income, finding that mere declaration did not preclude further investigation into the nature and source of income.

What did the Tribunal hold?

The Tribunal held that grounds 1 to 3 were not pressed by the assessee's counsel and were therefore decided against the assessee. Regarding grounds 4 and 5, the Tribunal noted that the assessee's surrendered income pertained to a period before 11-08-2016. Following the decisions of the Madras High Court in S.M.I.L.E. Microfinance Ltd. v. ACIT and the co-ordinate bench in Vijay Kumar Bansal v. Deputy Commissioner, the Tribunal held that the amended provisions of Section 115BBE, prescribing a 60% tax rate, would only come into effect for transactions on or after 01-04-2017. Since the assessee's transactions were prior to this date, the Tribunal directed the Assessing Officer to tax the additional income under the normal provisions of tax, without recourse to Section 115BBE. Consequently, grounds 4 and 5 were allowed. The appeal was partly allowed.

What were the issues?

1. Whether the assessment order passed under Section 143(3) is valid, considering alleged jurisdictional grounds, including the absence of a valid notice under Section 143(2) and a transfer of case without an order under Section 127 of the Act. 2. Whether the notice under Section 143(2) was validly issued, given it was issued by a non-jurisdictional officer, was not in the prescribed format, and the case was selected for manual scrutiny contrary to Board instructions. 3. Whether the AO erred in passing the assessment order without application of mind and by invoking Section 68 of the Act. 4. Whether the AO erred in charging tax at 60% under Section 115BBE on income agreed upon during a survey, when the statute provided for a 30% tax rate under Section 115BE. 5. Whether the AO erred in imposing a penalty-like charge by applying the retrospective effect of amendments to Section 115BBE on an agreed surrender, which was subject to no penalty. Assessee's Contentions: The assessee argued that Section 115BBE was amended with effect from 01-04-2017, increasing the tax rate to 60%. The survey was conducted on 16-09-2016, when the maximum tax rate under Section 115BBE was 30%. Reliance was placed on the Madras High Court decision in S.M.I.L.E. Microfinance Ltd. v. ACIT and a co-ordinate bench decision in Vijay Kumar Bansal v. Deputy Commissioner. The assessee contended that the higher tax rate under Section 115BBE should not apply to transactions prior to the amendment. The assessee also raised grounds regarding the validity of the assessment proceedings, including notice under Section 143(2) and transfer of case. Revenue's Contentions: The Revenue relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 127,Section 143(2),Section 142(1),Section 68,Section 115BBE,Section 115BE,Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “F”, DELHI

Before: SH. SUDHIR KUMAR & SH. MANISH AGARWAL

For Appellant: CA (VC)
For Respondent: Ms. Harpreet Kaur Hansra, Sr. DR
Hearing: 24/08/2026Pronounced: 28/09/2026

PER SUDHIR KUMAR, JUDICIAL MEMBER:

This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-3 Gurgaon [hereinafter referred to as (“Ld.CIT(A)”] vide order dated 23-12-2025 arising out the assessment order dated 30-12-2019 u/s 143(3) of the Income Tax Act 1961 (in short “the Act” pertaining to A.Y. 2017-18. 2. The assessee has raised the following grounds in appeal:

1.

The ld. Assessing Officer i.e DCIT, Bhiwani has erred in law and on facts by passing the order u/s 143(3) of the Income Tax on following juri ictional grounds:- a. Without issuing any valid notice u/s 143

The order continues below.

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