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Judgment
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.
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 jurisdictional grounds:-
a. Without issuing any valid notice u/s 143(2) by the AO
b. On transfer of case without having any order passed u/s 127 of the Act.
2.The ld. AO has erred in law and on facts while passing an order u/s 143(3) of the Act based on a notice u/s 143(2) which was
a. issued by ITO, ward -1 Jind (a non-jurisdictional assessing officer)
b, Issued in a format other than the one prescribed by the board.
c. Selected for manual scrutiny contrary to the instructions/guidelines issued by the Board.
3.The ld. AO has erred in law and on facts while passing the order without application of mind and further by invoking the provisions of section 68 of the Act in the given facts and circumstances of the case.
4.The ld. AO has erred in law and on facts while charging the tax@60% u/s 115BBE of the income tax on an income already settled and agreed upon between the parties i.e. assessee and revenue at the time of survey when the statute has a provision of tax@ 30% u/s 115BE of the Income Tax Act.
5.The ld. AO has erred in law and on facts while imposing a sort of penalty on agreed surrender subject to no penalty by applying the retrospective effect of the amendment in provisions of section 115BBE of the Income Tax Act.
6.The Assessee hereby requests to be allowed to make any addition alteration amendment or deletion to any ground or grounds of appeal at any time before or during the course of hearing of the appeal.
The brief facts of the case are that the assessee is a proprietorship firm carrying a business of trading in edible oils, sugar rice etc. with the name of M/s Shiv Shakti Trading Co. Janta Bazar Jind. A survey operation dated 11-08-2016 under section 133A of the Act was conducted at the business premises of assessee. During the course of survey, the assessee surrendered additional income of Rs.50,20,000/-. The assessee filed his income tax of return on 27-10-2017 declaring an income of Rs.55,84,170/-. The case of the assessee was selected for compulsory manual scrutiny as being a survey case by the then Assessing Officer and notice under section 143(2) of the Act issued to the assessee. Later, on the case was transferred from ITO Ward-1 Jind to the present jurisdictional Assessing Officer. Notice under section 142(1) along with annexture was issued to the assessee on 20-09-2019. In the compliance of the notice the assessee furnished the reply. The Assessing Officer completed the assessment and charged the tax @ 60% under the section 115BBE of the Act. The Assessing Officer found that mere incorporating the amount of Rs.50,02,000/- in the income Tax Return by the assessee could not disentitle the revenue to further investigate the income nature and its source. According to Assessing Officer if the assessee failed to explain the nature and source then the receipt should be charged at the rate of 60% under section 115BBE of the Act.
Aggrieved by the order of the Assessing Officer, the assessee preferred the appeal before Ld. CIT(A), who vide order dated 23-12-2025 dismissed the appeal. Being aggrieved the order of the Ld. CIT(A) the assessee is in appeal before the tribunal on the various grounds.
We have heard both the parties and perused the material available on record.
Ground No. 1to 3
These grounds not pressed by the Ld. AR of the assessee, hence decided against the assessee.
Ground No.4 &5;
The Ld. AR of the assessee submitted that the survey was conducted on 16-09-2016 and on that date maximum tax rate was 30% and same was special rate of tax prescribed under section 115BBE of the Act. The section 115BBE of the Act was amended by the government with effect from 01-04-2017 and prescribed the 60% tax rate in this section. In the case of S.M.I.L.E. Microfinance Ltd. V. ACIT W.P.(MD) No. 2078 of 2020 dated 19-11-2024 (Madras) the Hon’ble Madras High Court held that the impugned statutory provision would come into effect on the transaction done on or after 01-04-2017 only. Reliance also placed the decision of Vijay Kumar Bansal V. Deputy Commissioner ITA No. 1317/Del/2026 AY 2017-8. 8. The Ld. DR relied upon the orders of the lower authorities.
The Ld. AR stated that the tax was charged at a higher rate under section 115BEE of the Act. In the case of Vijay Kumar Bansal V. Deputy Commissioner ITA No. 1317/Del/2026 AY 2017-8 the co-ordinate bench held as under:
11.In so far as assessee’s levy of tax at a higher rate under section 115BEE of the Act is concerned, we find that the Madras High Court in the Writ petition in the case of of S.M.I.L.E.Microfinance Ltd. V. ACIT W.P.(MD) No. 2078 of 2020 dated 19-11-2024 (Madras) has held that the impugned statutory provision would come into effect on the transaction done on or after 01-04-2017 only. We find the transaction of the Assessee pertain to period to 16-09-2016. Accordingly, we direct the AO to tax the additional income under normal provisions of tax without any recourse to the provisions of section 115BBE. The ground 4& 5 raised by the assessee are allowed.
We find that in this case the transactions of the assessee pertain to period to 11-08-2016. Respectfully, following the above cited decisions, we direct the Assessing Officer to tax the additional income under normal provisions of tax without any recourse to the provisions of section 115BBE of the Act. The ground no. 4&5 raised by the assessee are allowed.
In the result, the appeal of the assessee is partly allowed.