ITAT Chandigarh Treats Survey Surrender as Business Income, Rejects 60% Section 115BBE Rate

Ajay Kumar Vs ITO (ITAT Chandigarh)

Summary: Survey surrender relating to excess cash and stock found at the business premises, having been disclosed as business income, is taxable as business income where no independent undisclosed asset or source is established. Further, the enhanced rate of 60% under section 115BBE, effective from 01.04.2017, cannot be applied to FY 2016-17; in the absence of a jurisdictional High Court decision, the interpretation favourable to the assessee is to be adopted.

Core Citation. Ajay Kumar v. ITO, Ward Rajpura, Patiala, Punjab, ITA No. 354/CHANDI/2024, AY 2017-18, ITAT Chandigarh, order dated 10.09.2026, Hon’ble Shri Manoj Kumar Aggarwal, Accountant Member and Shri Rajesh Damodarlal Sharma, Judicial Member.

Facts. The assessee’s business premises were subjected to survey under section 133A on 21.09.2016. During the survey, discrepancies relating to cash, stock, investment, advances etc. were found and the assessee surrendered Rs. 75 lakh in his recorded statement. The assessee disclosed the surrendered amount in the return of income by crediting it to the Profit & Loss Account as business income and paid tax at the normal rate of 30%.

AO / CIT(A) Finding. The Assessing Officer took the view that the surrendered income was liable to tax under section 115BBE and consequently applied the enhanced rate of 60%, resulting in additional tax liability. The CIT(A) confirmed the action of the AO. The assessee challenged the application of the higher rate before the Tribunal.