Pre-01.04.2017 Survey Surrender: Additional Income Taxable at Normal Slab Rates – Analysis of Suresh Kumar Vs DCIT (ITAT Delhi)

1. Background and Context

The Delhi Bench of the Income Tax Appellate Tribunal in Suresh Kumar Vs DCIT (ITAT Delhi) has clarified the tax treatment of income surrendered during a survey conducted before 01.04.2017. The central dispute was whether such surrendered income, pertaining to a transaction of August 2016, should be taxed at the special rate under Section 115BBE or under the ordinary computation provisions of the Income Tax Act 1961.

The Tribunal ultimately directed that the additional income connected with the survey be assessed at normal rates, without applying Section 115BBE, following binding and coordinate precedents.

This order is particularly relevant for assessments involving:

  • Surveys conducted before 01.04.2017, and
  • Surrendered income linked to transactions that occurred prior to 01.04.2017,
  • Where the Revenue has sought to apply the enhanced 60% rate introduced later in Section 115BBE.

2. Facts of the Case

2.1 Business Profile and Survey

The assessee, Suresh Kumar, was the proprietor of Shiv Shakti Trading Co., a proprietorship concern engaged in trading edible oils, sugar, rice and related commodities.

A survey operation under Section 133A was carried out at his business premises on 11.08.2016. During the course of this survey:

  • The assessee agreed to surrender additional income of ₹50,20,000.

For Assessment Year 2017-18, the assessee filed his return of income on 27.10.2017 declaring a total income of ₹55,84,170. This total included the amount surrendered during the survey.

2.2 Selection for Scrutiny and Assessment Proceedings

  • The case was selected for compulsory manual scrutiny on the basis that it was a survey case.
  • A notice under Section 143(2) was initially issued by ITO, Ward-1, Jind.
  • Subsequently, the jurisdiction was transferred to the then DCIT, Bhiwani, who proceeded with the assessment.
  • A notice under Section 142(1) along with an annexure was issued on 20.09.2019, to which the assessee furnished replies.

In the assessment order dated 30.12.2019 passed under Section 143(3), the Assessing Officer (AO):

  • Examined the surrendered income,
  • Took the view that the mere disclosure of ₹50,02,000 (amount noted in the assessment discussion) in the return did not prevent further enquiry into the nature and source of such income, and
  • Held that, in the absence of an acceptable explanation about its nature and source, the amount was liable to tax at 60% under Section 115BBE.

Accordingly, the AO levied tax at the enhanced rate of 60% on this surrendered income.

2.3 First Appeal before CIT(A)

The assessee challenged the assessment before the Commissioner of Income Tax (Appeals)-3, Gurgaon [CIT(A)], primarily contesting:

  • The validity of the Section 143(2) notice and jurisdictional aspects, and
  • The application of the 60% rate under Section 115BBE on survey surrender relating to a pre-01.04.2017 transaction.

The CIT(A), vide order dated 23.12.2025, confirmed the action of the AO and dismissed the appeal.

The assessee then carried the matter to the Delhi ITAT.

3. Grounds Raised before ITAT and Their Fate

The assessee’s appeal before the Tribunal contained multiple grounds, which broadly fell into two categories:

3.1 Jurisdictional and Procedural Grounds (Grounds 1 to 3)

These grounds challenged, inter alia:

  • The alleged absence of a valid Section 143(2) notice by the jurisdictional AO,
  • The transfer of the case without a proper Section 127 order,
  • The fact that the Section 143(2) notice was issued by ITO, Ward-1, Jind (claimed to be a non-jurisdictional officer),
  • The form and manner of selection for manual scrutiny, and
  • The invocation of Section 68 without proper application of mind.

However, at the time of hearing before the Tribunal, the assessee’s Authorised Representative expressly did not press Grounds 1 to 3.

As a result, the Tribunal dismissed these grounds without examining their merits, and decided them against the assessee solely on the basis that they were not pressed.

This implies that the order cannot be cited as an authority on: