You surrendered income in a survey. Is it taxed at 60% under s.115BBE, or at your normal rate?
Where the source is your own business, at your normal rate. The deeming provisions only bite where the source is unexplained; unrecorded debtors from the business are explained, so s.115BBE was held not to apply.
Decided by the ITAT (ITAT Jaipur Bench — Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member)) on 2025-02-11, reported as ITA No. 1195/JP/2024. It bears on section 69, section 69A, section 115BBE of the Income Tax Act 1961, in Cash Credits & Unexplained Money matters.
The gap between the normal rate and 60% plus surcharge is the largest single swing in most survey cases. It turns entirely on how the surrender is characterised — which is decided by what you say in the survey statement, on the day.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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A survey was conducted at the hospital and real estate premises of the assessee. A diary found during the survey contained unrecorded sundry debtor entries totalling Rs 2.05 crore, which the assessee voluntarily surrendered as additional income and included in a return declaring total income of Rs 2.16 crore. The Assessing Officer treated the surrendered sum as unexplained investment under ss.69 and 69A and taxed it at 60% plus surcharge and cess under s.115BBE.
The appeal was allowed and the enhanced taxation deleted. The surrendered amount was income generated in the ordinary course of the assessee's business and was therefore assessable as business income rather than under ss.69 and 69A, so the higher rate under s.115BBE was not attracted.
The Bench reasoned that the deeming provisions in ss.68 to 69C operate only where the source of a receipt remains unexplained. Here the source of the surrendered income was clearly connected to the assessee's regular business operations — unrecorded sundry debtors arising from the hospital and real estate business — so the source stood explained. Once the receipt is identifiable as arising in the ordinary course of business, it cannot be recharacterised as unexplained investment or unexplained money, and consequently the special rate under s.115BBE, which attaches only to income referred to in those deeming provisions, cannot be applied.
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Handle my notice → Ask a CA on WhatsAppWhere the source is your own business, at your normal rate. The deeming provisions only bite where the source is unexplained; unrecorded debtors from the business are explained, so s.115BBE was held not to apply. This was decided by the ITAT (ITAT Jaipur Bench — Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member)) and bears on section 69, section 69A, section 115BBE of the Income Tax Act 1961. It is reported as ITA No. 1195/JP/2024. The gap between the normal rate and 60% plus surcharge is the largest single swing in most survey cases. It turns entirely on how the surrender is characterised — which is decided by what you say in the survey statement, on the day. If it applies to you, the first step is this: In any survey, describe the surrendered amount by its source — unrecorded sales, unrecorded debtors — never as 'unexplained'.
A survey was conducted at the hospital and real estate premises of the assessee. A diary found during the survey contained unrecorded sundry debtor entries totalling Rs 2.05 crore, which the assessee voluntarily surrendered as additional income and included in a return declaring total income of Rs 2.16 crore. The Assessing Officer treated the surrendered sum as unexplained investment under ss.69 and 69A and taxed it at 60% plus surcharge and cess under s.115BBE. The matter was decided on 2025-02-11 by the ITAT (ITAT Jaipur Bench — Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member)). On those facts the ITAT held as follows. The appeal was allowed and the enhanced taxation deleted. The surrendered amount was income generated in the ordinary course of the assessee's business and was therefore assessable as business income rather than under ss.69 and 69A, so the higher rate under s.115BBE was not attracted.
The Bench reasoned that the deeming provisions in ss.68 to 69C operate only where the source of a receipt remains unexplained. Here the source of the surrendered income was clearly connected to the assessee's regular business operations — unrecorded sundry debtors arising from the hospital and real estate business — so the source stood explained. Once the receipt is identifiable as arising in the ordinary course of business, it cannot be recharacterised as unexplained investment or unexplained money, and consequently the special rate under s.115BBE, which attaches only to income referred to in those deeming provisions, cannot be applied.
It was decided by the ITAT on 2025-02-11 and is reported as ITA No. 1195/JP/2024. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 69, section 69A, section 115BBE, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the enhanced taxation deleted. The surrendered amount was income generated in the ordinary course of the assessee's business and was therefore assessable as business income rather than under ss.69 and 69A, so the higher rate under s.115BBE was not attracted. It arises in Cash Credits & Unexplained Money matters, on section 69, section 69A, section 115BBE of the Income Tax Act 1961, and was decided by ITAT Jaipur Bench — Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Keep the diary, register or working from which the amount was computed; it is what links the income to the business. Check the assessment year against the date the amended s.115BBE rate took effect; retrospectivity is separately contested.
The judgment itself could not be reached, so no check was possible. No later decision applying, following or affirming this order was found, and the order itself could not be located in a subscription case-law database — searches on the party name, on an exact-phrase form of it and on the appeal number all came back without it. The decision it is reported as following, M/s Silver Wings Life Spaces v. DCIT, precedes it and is not later treatment. The underlying question remains genuinely divided at High Court level: the Rajasthan High Court in CIT v. Bajargan Traders supports treating a survey surrender connected to the business as business income, while the Punjab and Haryana High Court in Kim Pharma Pvt Ltd and the Madras High Court in SVS Oil Mills favour the deeming provisions, and there is no Supreme Court ruling on the point. On the rate, the position checked against the Acts module is this: section 115BBE of the Income-tax Act 1961 continues to read sixty per cent and that Act now stands repealed; its successor, section 195 of the Income-tax Act 2025, charges income referred to in sections 102 to 106 at thirty per cent, with no deduction for any expenditure, allowance or set-off of loss. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has now been read on the record and the particulars are settled from it: ITAT Jaipur, ITA No. 1195/JP/2024, assessment year 2017-18, heard 8 January 2025 and pronounced 11 February 2025, signed by Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member), the order being authored by the Accountant Member. The assessment year, which an earlier note recorded as inferred from the survey and filing dates, is printed on the order and is 2017-18. The figures are on the order too: the survey under section 133A on 4 July 2016, a diary recording unaccounted debtors of Rs 2,05,00,000, and a return filed on 6 November 2017 declaring total income of Rs 2,16,03,180. The Bench's own reasoning is that in the survey proceeding neither the source nor the details of the debtors were asked about, the assessee offered the income for the current year and that was accepted, and no question was raised about the year in which the income was earned. No law report citation was found, so no citator check is possible. One retrieval caveat is recorded rather than smoothed over: the body of this order does not render in full through the plain document view or the print view, both of which truncate part-way through the assessee's written submissions, so the concluding paragraphs could not be transcribed and no paragraph numbers were established for them. This entry quotes nothing, so nothing on it depends on that; but anyone adding a quotation must work from the fragment view and check whose voice the sentence is in, because the order reproduces long extracts from Sh. Baljinder Kumar v. DCIT and from Silver Wings Life Spaces. A Tribunal decision, and there is a substantial contrary line treating survey surrenders as deemed income. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the enhanced taxation deleted. The surrendered amount was income generated in the ordinary course of the assessee's business and was therefore assessable as business income rather than under ss.69 and 69A, so the higher rate under s.115BBE was not attracted.
TaxSphere, “Jagdish Kumar Arora v DCIT”, https://taxnotice.vittsphere.com/caselaw/case/jagdish-kumar-arora-v-dcit/ (validity last checked 2026-08-19)
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