Case Of Block Assessment, In View Of The Judgment Of The Hon'blesupreme Court In The Case Of Cit v. Suresh N.gupta (297 Itr 32

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.01.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARIANDTHE HON'BLE MR.JUSTICE R.SURESH KUMAR V.Sekaran... Appellant The Income Tax Officer,Ward I (2),Namakkal. ...Respondent Appeal filed under Section 260A of the Income Tax Act, 1961against the order of the Income Tax Appellate Tribunal 'D'Bench, Chennai dated 10.12.2009 in M.P.No.224/Mds/2008 in I.T.(SS)A. Nos.85 & 77/Mds/2003 for Block Assessment Period01.04.1990 to 21.09.2000, against the order of the Commissioner of Income Tax(Appeals)-II, Coimbatore dated 17.02.2003 in Appeal No.ITA.302-C/02-03 for the Assessment Block Year 1990-91 to 2001-02 (upto21/09/2000) and against the Assessment order of the Deputy Commissioner ofIncome Tax, Central Circle, Salem dated 31/10/2002 and made inPAN/GIR No.CCPS-016 for the Assessment Year Block Assessment forBlock period 01/04/1990 to 21/09/2000. (Judgment of the Court was delivered by DR.VINEET KOTHARI,J.) The Assessee V.Sekaran has filed the present appeal againstthe order dated 10.12.2009 passed by the learned Income TaxAppellate Tribunal whereby the Tribunal decided the questionagainst the Assessee on the issue of levy of surcharge in the https://hcservices.ecourts.gov.in/hcservices/ case of block assessment, in view of the judgment of the Hon'bleSupreme Court in the case of CIT Vs. Suresh N.Gupta (297 ITR 32). 2.The said judgment of Suresh N.Gupta came to be reversedlater on by the Hon'ble Supreme Court on 29th October, 2014 inthe case of Commissioner of Income Tax, Bangalore Vs. K.RahejaHotels & Estate (P.) Ltd., [(2015) 228 Taxman 5 (SC)]. Therelevant portions of the judgment of the Hon'ble Supreme Courtin the case of K.Raheja Hotels & Estate (P.) Ltd., are quotedbelow for ready reference: "Thus, it was a conscious decision of the legislature,even when the legislature knew the implication thereofand took note of the reasons which led to the insertionof the proviso, that the amendment is to operateprospectively. Learned counsel appearing for theassessees sagaciously contrasted the aforesaidstipulation while effecting amendment in Section 113 ofthe Act, with various other provisions not only in thesame Finance Act but Finance Acts pertaining to otheryears where the legislature specifically provided suchamendment to be either retrospective or clarificatory.In so far as amendment to Section 113 is concerned,there is no such language used and on the contrary,specific stipulation is added making the provisioneffective from 1st June, 2002. (e) There is yet another very interesting piece ofevidence that clarifies the provision beyond any paleof doubt, viz. understanding of CBDT itself regardingthis provision. It is contained in CBDT circular No.8of 2002 dated 27th August, 2002, with the subject"Finance Act, 2002 - Explanatory Notes on provisionrelating to Direct Taxes". This circular has beenissued after the passing of the Finance Act, 2002, bywhich amendment to Section 113 was made. In thiscircular, various amendments to the Income Tax Act arediscussed amply demonstrating as to which amendmentsare clarificatory/retrospective in operation and whichamendments are prospective. For example, explanation toSection 158BB is stated to be clarificatory in nature.Likewise, it is mentioned that amendments in Section145 whereby provisions of that section are madeapplicable to block assessments is made clarificatoryand would take effect retrospectively from 1st day ofJuly, 1995. When it comes to amendment to Section 113of the Act, this very circular provides that the saidamendment along with amendments in Section 158BE, wouldbe prospective i.e. it will take effect from 1st June,2002.(f) Finance Act, 2003, again makes the position clearthat surcharge in respect of block assessment of undisclosed income was made prospective. Such astipulation is contained in second proviso to sub-section (3) of Section 2 of Finance Act, 2003. Thispriviso reads as under: "Provided further that the amount of income-taxcomputed in accordance with the provisions of section113 shall be increased by a surcharge for purposes ofthe Union as provided in Paragraph A, B, C, D or E, asthe case may be, of Part III of the First Schedule ofthe Finance Act of the year in which the search isinitiated under Section 132 or requisition is madeunder section 132A of the income-tax Act." Addition of this proviso in the Finance Act, 2003further makes it clear that such a provision wasnecessary to provide for surcharge in the cases ofblock assessments and thereby making it prospective innature. The charge in respect of the surcharge, havingbeen created for the first time by the insertion of theproviso to Section 113, is clearly a substantiveprovision and hence is to be construed prospective inoperation. The amendment neither purports to be merelyclarificatory nor is there any material to suggest thatit was intended by Parliament. Furthermore, anamendment made to a taxing statute can be said to beintended to remove 'hardships' only of the assessee,not of the Department. On the contrary, imposing aretrospective levy on the assessee would have causedundue hardship and for that reason Parliamentspecifically chose to make the proviso effective from1.6.2002. 40.The aforesaid discursive of ours also makes itobvious that the conclusion of the Division Bench inSuresh N. Gupta treating the proviso as clarificatoryand giving it retrospective effect is not a correctconclusion. Said judgment is accordingly overruled. 41.As a result of the aforesaid discussion, the appealsfiled by the Income Tax Department are herebydismissed. Appeals of the assessees are alloweddeleting the surcharge levied by the assessing officerfor this block assessment pertaining to the periodprior to 1st June, 2002." 3.In view of this, the matter deserves to be sent back tothe learned Tribunal for deciding the appeal again, in the lightof the latest decision of the Hon'ble Supreme Court in the caseof Commissioner of Income Tax, Bangalore Vs. K.Raheja Hotels &Estate (P.) Ltd. 4.Accordingly, we dispose of the present Appeal and settingaside the order of the learned Income Tax Appellate Tribunaldated 31.12.2007 and the order dated 10.12.2009 passed inM.P.No.224/Mds/2008 in I.T.(SS).A.Nos.85 & 77/Mds/2003. On thisaspect of the matter, we remand the case back to the learnedTribunal for deciding afresh in accordance with law. No costs. Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant Registrar To1.The Income Tax Appellate Tribunal, 'D' Bench, Chennai. 2.The Income Tax Appellate Tribunal, Chennai. Chennai. 3.The Commissioner of Income Tax (Appeals)-II, Coimbatore. Coimbatore. 4.The Deputy Commissioner of Income Tax, Central Circle, Salem. Central Circle, Salem. 5.The Income Tax Officer, Ward I(2), Namakkal. +1cc to Mr.M.Swaminathan, Advocate Sr.6512 pa[co]srg 04/03/2020 T.C.A.No.1159 of 2010