Vijay Kumar Bansal Vs Deputy Commissioner (ITAT Delhi)
Summary: ITAT Delhi partly allowed the appeal of Vijay Kumar Bansal concerning taxation of ₹51 lakh surrendered during a survey conducted on 16 September 2016. The survey at the assessee’s business premises detected excess stock of ₹41,29,350 and excess cash of ₹9,69,210, against which the assessee surrendered ₹41.30 lakh and ₹9.70 lakh respectively. Although the returned income was accepted, the Assessing Officer treated the surrendered income as deemed income and subjected it to tax under section 115BBE at 60%. The Tribunal rejected the assessee’s jurisdictional objections concerning the section 143(2) notice issued by ITO, Ward-1, Jind and assessment completed by DCIT, Bhiwani. It held that the assessee had participated in the assessment without raising a timely jurisdictional objection and was therefore precluded by section 124(3)(a) from subsequently questioning jurisdiction. It further held that no section 127(2) order was required since ITO, Jind and DCIT, Bhiwani were under the same administrative control of PCIT, Rohtak. The objection regarding the format of the section 143(2) notice was also rejected. However, following the Madras High Court ruling in S.M.I.L.E. Microfinance Ltd. v. ACIT, the Tribunal noted that the assessee’s transactions pertained to the period prior to 16 September 2016 and directed the Assessing Officer to tax the additional income under the normal provisions without recourse to section 115BBE. Accordingly, grounds relating to the higher section 115BBE taxation were allowed and the appeal was partly allowed.
Cases Discussed
- Deputy Commissioner of Income-tax (Exemption) v. Kalinga Institute of Industrial Technology [2023] 454 ITR 582 (SC), dated 01.05.2023 — relied upon by the Revenue and applied by the Tribunal while holding that section 124(3)(a) precluded the assessee from questioning the Assessing Officer’s jurisdiction after participating in the proceedings without raising the objection within the prescribed period.
- Bharat Bansal v. National Faceless Assessment Centre, W.P.(C) 2238/2026, dated 09.04.2026 (Delhi High Court) — followed by the Tribunal in rejecting the objection regarding the format of the notice under section 143(2); the High Court had ruled that such notice need not strictly follow the specific format prescribed under CBDT Instruction F. No. 225/157/2017/ITA.II.
- S.M.I.L.E. Microfinance Ltd. v. ACIT, W.P.(MD) Nos. 2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras High Court) — followed on the section 115BBE issue; the Tribunal relied upon the ruling that the impugned statutory provision would operate for transactions on or after 01.04.2017 and consequently directed normal taxation of the assessee’s earlier transactions.
- Shilpi Sardana v. DCIT, ITA No. 1425/Del/2024 (ITAT Delhi) — cited by the assessee in support of the objection that the section 143(2) notice was not issued in the prescribed format.
- S.K. Industries v. ACIT, W.P. 4014/2016, dated 31.05.2017 (Delhi High Court) — cited by the assessee in support of the contention that the case had been transferred from ITO, Jind to DCIT, Bhiwani without an order under section 127.
- ACIT v. Hotel Blue Moon, 321 ITR 362 (SC) — relied upon by the assessee while contending that the DCIT, Bhiwani had completed the assessment under section 143(3) without himself issuing a notice under section 143(2), rendering assumption of jurisdiction invalid.
FULL TEXT OF THE ORDER OF ITAT DELHI
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeal)-3, Gurgaon [‘CIT(A)’ in short] dated 23.12.2025 arising from the assessment order passed under section 143(3) of the Income Tax Act by Deputy Commissioner of Income Tax, Circle, Bhiwani dated 30.12.2019 for A.Y. 2017-18.
2. The grounds raised by the assessee are as under:
1. “The Id. 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 security contrary to the instructions/guidelines issued by the Board.
3. The ld. Assessing Officer 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 Id. Assessing Officer 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 had a provision of tax@ 30% u/s 115BBE 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.”
3. Brief facts of the case are that the assessee, Vijay Kumar Bansal is the proprietor of Vishnu Laxmi Marbles, Gandhi Nagar, Jind and is regular income tax payer. A survey u/s 133A of the Act was conducted on the business premises of the assessee on 16.09.2016. During the survey, stock of Rs.41,29,350/- and cash of Rs.9,69,210/- was found in excess of the amounts as per books of accounts, against which the assessee surrendered an income of Rs.41,30,000/- in stock valuation and Rs.9,70,000/- in cash, subject to no penal action. Accordingly, the assessee filed his return of income for the Assessment year 2017-18 on 24-10-2017 at a total income of Rs.54,19,850/- after claiming a deduction under chapter VI-A for an amount of Rs. 1,24,000/- comprised of normal business income of Rs.4,43,853/- and surrendered income of Rs. 51,00,000/-. The ld AO framed the assessment u/s 143(3) of the Act vide order dated 30.12.2019 assessing the income at returned income but charging tax on surrendered income as deemed cash credit u/s 68 of the Income Tax Act liable to be taxed u/s 115BBE of the Act @ 60%. Aggrieved, assessee was in appeal before the CIT(A) who dismissed the appeal of the assessee.
4. Aggrieved, assessee is now in appeal before us. At the outset, learned Counsel of the assessee stated that Income Tax Officer, Ward- 1, Jind issued a notice u/s 143(2) dated 27.09.2018 of the Income Tax Act, which was not in the format as prescribed by the Board and relied on Shilpi Sardana V DCIT ITA 1425/Del/2024. Delhi ITAT. The ld AR further stated that ITO, Jind had no jurisdiction over the assessee as per CBDT Instruction no 1/2011 dated 31.01.2011 read with Instruction no 6/2011 dated 08.04.2011, as returned income declared was in excess of Rs 20,00,00/-. Further, the ITO Jind transferred the case to Deputy Commissioner of Income Tax, Bhiwani without having any order u/s 127 of the Act and relied on the hon’ble Delhi Court in S.K.Industries V ACIT W.P.4014/2016 dated 31.05.2017. The ld AR further argued that the assessment was framed u/s 143(3) of the Act by the Id. DCIT, Bhiwani Circle, Bhiwani without issuing any notice u/s 143(2) by himself and relied on the hon’ble Supreme Court in Hotel Blue Moon 321 ITR 362(SC). It is the say of the ld AR that since the DCIT, Bhiwani Circle, Bhiwani passed the assessment order without assuming valid jurisdiction, the assessment order passed is bad in law.
5. The ld AR further argued that the learned AO has erred in law and on facts while charging the tax @60% under section 115BBE of the Act on an income already settled and agreed upon between the parties i.e. assessee and revenue at the time of survey when the statute had a provision of tax @30% under section 115BBE of the Act and relied on the hon’ble Madras High Court decision in S.M.I.L.E. Microfinance Ltd. Vs. ACIT.
6. Per contra, learned DR stated that the assessee had filed return for AY 2016-17 with his jurisdictional AO i.e., ITO Jind. For AY 2017—18 also the assessee marked the ITO Ward -1, Jind as his jurisdictional officer. The notice u/s 143(2) for selection of the case for scrutiny was therefore issued by the ITO, Jind. The assessment u/s 143(3) however, was passed by the correct jurisdictional officer i.e., DCIT, Bhiwani as the income declared in the return was above Rs 20 lakh. The ld DR further stated that there is no requirement for passing order u/s 127(2) for transferring the case from ITO Jind to DCIT, Bhiwani as they both fall under the administrative control of same PCIT Rohtak charge. The ld DR further stated that the assessee never raised any objection with regard to the jurisdiction of the AO, either ITO, Jind or DCIT, Bhiwani and relied on the decision of the hon’ble Supreme Court in the case of Deputy Commissioner of Income-tax (Exemption) vs. Kalinga Institute of Industrial Technology [2023] 454 ITR 582 (SC) dated 01- 05-2023.
7. We have heard the rival submissions and perused the material available on record. In the instant case, we find that the assessee has filed his return of income for the Assessment year 2017-18 on 24-10- 2017 at a total income of Rs 3,19,850/- plus the surrendered income of Rs 51,00,000/- taking the total income at Rs.54,19,850/- with ITO Jind where he was regularly filing the return. The ITO Jind accordingly issued notice u/s 143(2) within the prescribed time. We further find that the assessee never raised any objection to the issuance of notice u/s 143(2) by the ITO Jind or the notices u/s 142(1) by the DCIT Bhiwani and hence the decision of Kalinga Institute of Industrial Technology (supra) squarely applies wherein the hon’ble Court held that:
1. The impugned order set asides the assessment for A.Y. 2014-2015 on the ground that the jurisdictional officer had not adjudicated upon the returns. The jurisdiction had been changed after the returns were filed. However, the records also reveals that the assessee had participated pursuant to the notice issued under section 142 (1) and had not questioned the jurisdiction of the assessing officer. Section 124(3)(a) of the Income-tax Act precludes the assessee from questioning the jurisdiction of the assessing officer, if he does not do so within 30 days of receipt of notice under section 142 (1)
8. We also find that the ITO, Jind and DCIT Bhiwani fall under the same administrative control of PCIT, Rohtak charge, hence there was no requirement of any order u/s 127(2) and the case of the assessee was automatically assigned to the DCIT, Bhiwani in terms of Instruction no 1/2011 and 6/2011. We are of the considered view therefore having participated in the assessment proceedings and not raising any objections to the issuance of notice u/s 143(2) or 142(1) of the Act, the jurisdictional objection of the assessee has no force as the provisions of section 124(3)(a) comes into play which precludes the assessee from questioning the jurisdiction of the assessing officer. The ground 1 and 2 are accordingly dismissed.
9. The assessee objection with regard to notice u/s 143(2) dated 27.09.2018 of the Income Tax Act, not being in the format as prescribed by the Board, is also no longer res-integra as the hon’ble Delhi High Court in the case of Bharat Bansal vs. National Faceless Assessment Centre (2026), in W.P.(C) 2238/2026 dated 09.04.2026 ruled that a Section 143(2) notice need not strictly follow the specific format prescribed under CBDT Instruction F. No. 225/157/2017/ITA. II. Ground 1 and 2 are dismissed.
10. Ground 3 with regard to addition u/s 68, is considered as mere invocation of wrong section as the facts in the case shows that the AO had show-caused the assessee on addition of the said amount under section 69 to 69D only. The ground 3 is accordingly dismissed.
11. In so far as assessee’s levy of tax at a higher rate under section 115BBE of the Act is concerned, we find that the Madras High Court in the Writ petition in the case of S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 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 transactions of the assessee pertain to period prior 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 and 5 raised by the assessee are allowed.
12. In the result, appeal filed by the assessee in ITA No. 1317/DEL/2026 is partly allowed.
Order pronounced in the open court on 15.06.2026
