Appellant v. Shri.p.n.mallikarjuna Rao

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 21.04.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN and THE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal) Nos.1506 and 1507 of 2007 Commissioner of Income Tax,Central III, Madras Appellant v. Shri.P.N.Mallikarjuna RaoNo.3, Lodikhan Street,T.Nagar, Chennai 17 Respondent Tax Case Appeals filed under section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate Tribunal,Madras 'B' Bench, Chennai, dated 02.03.2007 passed in IT(SS)ANo.125/209/(Mds)/2003 and IT(SS)A.No.209 MDS/2003 Dt.02.03.2007against ITA 297-C/02/03 Dt.1.5.2003 on the file of the Commissionerof Income Tax, Coimbatore against No.GI/PA/No.AF VPM 4989/M on thefile of the Central Circle, Chennai. For appellant : Mrs.Pushya SitaramanFor respondent : Mr.N.Devanathan JUDGMENT (Judgment of the Court was delivered byK.RAVIRAJA PANDIAN, J.) These are the appeals at the instance of the revenue filedagainst the order of the Tribunal, wherein the Tribunal has heldthat in respect of the block assessment years, the levy ofsurcharge is impermissible in law. Hence, the revenue carried thematter by way of appeals before this Court by framing the followingquestion of law:- " Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in law in deletingthe surcharge levied under Section 113 of theIncome Tax Act is valid in law". https://hcservices.ecourts.gov.in/hcservices/ 2. The issue involved is whether the revenue can levysurcharge under the block assessment prior to 01.06.2002. Thisissue has been considered and decided in favour of the revenue bythe Division Bench of this Court in the case of Commissioner ofIncome Tax vs A.Chandran reported in 306 ITR 274, wherein thisCourt has held as follows:- "This issue is now settled by the Supreme Court inthe case of Commissioner of Income Tax vs. SureshN.Gupta reported in (2008) 297 ITR 322 (SC) and theSupreme Court has categorically observed as follows:-"Section 158BA relates to assessment of"undisclosed income" discovered as a result of asearch, and section 158BB deals with thecomputation thereof. Parliament has taken theblock period to mean the period comprisingprevious years relevant to 10 or 6 assessmentyears preceding the previous year in which thesearch is conducted. The unit of time remainsconstant. Block assessment computation in section158BB does not exclude either the concept of"previous year" or the concept of "total income":they are retained. Section 158BB(1) incorporatesthe principle of aggregation of total income ofprevious years falling within the block periodcomputed in accordance with the provisions ofChapter IV, which deals with "computation of totalincome". Even computation of "undisclosed income"under section 158BB has to be done in the mannerprovided under Chapter IV dealing with"computation of total income". In view of the nonobstante clause in section 158BA and the retentionof the concepts of "previous year" and "totalincome", one has to read section 158BB withsection 4. There is no conflict between thecomputation machinery under Chapter XIV-B and thenormal computation machinery under Chapter IV.Section 158BH inter alia states that if there isno conflict between the provisions of Chapter XIV-B and any other provision of the Act then thelatter will operate.Once section 158BB is to be read with section4 then the relevant Finance Act of the concernedyear would automatically stand attracted to thecomputation under Chapter XIV-B. Section 158BBlooks to section 113. The proviso was inserted in section 113 toindicate that the Finance Act of the year in whichthe search was initiated would apply. Thatproviso was only clarificatory in nature. Thereis no question of retrospective effect. Theproviso has to be read as it stands. Prior toJune 1, 2002, in several cases, tax was prescribedsometimes in the Income Tax Act and sometimes inthe Finance Act and sometimes in both. This made https://hcservices.ecourts.gov.in/hcservices/ liability uncertain. Therefore, clarification wasneeded. The proviso is curative in nature. Theproviso only clarifies that out of the four dates,Parliament has opted the date, namely, the year inwhich the search under Section 158BBC isinitiated, which date would be relevant forapplicability of a particular Finance Act". 3. Following the Division Bench Judgment in the case ofCommissioner of Income Tax vs A.Chandran reported in 306 ITR 274which was held against the assessee as the issue is covered by thedecision of the Supreme Court referred to above, both the appealsare allowed by answering the question in affirmative in favour ofthe revenue. Sd/Asst.Registrar/true copy/Sub Asst.Registrarrg To1. The Assistant Registrar Income Tax Appellate Tribunal, Chennai 'b' Bench, Chennai.2. The Commissioner of Income Tax, Central III, Chennai3. The Deputy Commissioner of Income Tax, Central Circle, ChennaiT.C.A.Nos.1506 and 1507 of 2007 MBS(CO)SRA(5/5/2009)