Commissioner Of Income Tax (Central)Ludhiana v. M/S. Bansal Sweet House, Amritsar

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 126 of 2004Date of decision: 22.2.2011 Commissioner of Income Tax (Central)Ludhiana --- Appellant Versus M/s. Bansal Sweet House, Amritsar --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. Denesh Goyal, Standing Counselfor the appellant-Revenue. Mr. Rajiv Sharma, Advocatefor the respondent-assessee. --- AJAY KUMAR MITTAL, J. 1.This appeal under Section 260A of the Income-Tax Act, 1961(for short “the Act”) has been filed by the Revenue against the orderdated 28.11.2003, passed by the Income Tax Appellate Tribunal AmritsarBench, Amritsar (in short “the Tribunal”) in IT(SS) A No. 24(ASR)/2002and 27(ASR)/2002, for the block period from 1.4.1989 to 4.2.2000. The Revenue has claimed the following substantial question of law for determination by this Court: “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in directing not to levy surchargeon the tax worked out on undisclosed income as incomepertains to search prior to 1.6.2002.” 3.The facts, in brief, necessary for adjudication as narrated inthe appeal, are that search under Section 132 of the Act was conductedat the premises of the assessee on 4.2.2000. The respondent-assesseefiled return on 7.3.2001 declaring undisclosed income of Rs. 30,00,000/-for the block period from 1.4.1989 to 4.2.2000. However, during thecourse of assessment proceedings, the assessing officer by order dated28.2.2002 made certain additions and ultimately, the block assessmentunder Section 158BC of the Act was completed on 28.2.2002 at the totalundisclosed income of Rs. 38,77,900/- and surcharge of Rs. 2,32,674/-was levied on the tax worked on that undisclosed income. The appealcarried by the assessee met with partial success before theCommissioner of Income-tax (Appeals) {in short “the CIT(A)”}, inasmuchas the surcharge was deleted by the CIT(A), vide order dated 18.7.2002. 4. Feeling not satisfied with the order dated 18.7.2002 passed bythe CIT(A), the Revenue preferred appeal before the Tribunal. The orderdated 18.7.2002 was, however later on rectified by the CIT(A) vide orderdated 27.9.2002 and surcharge at the rate of 10% was held leviable forAssessment year 2000-2001. The assessee raised a grievance againstthe same by filing appeal to the Tribunal. The Tribunal allowed the appealof the assessee and dismissed that of the Revenue vide order dated28.11.2003 giving rise to the instant appeal. 5.We have heard learned counsel for the parties and have perused the record. 6. The point for consideration in this appeal is, whether thesurcharge on income tax in terms of Section 113 of the Act would beleviable where search and seizure had taken place prior to 1.6.2002. 7.Learned counsel for the Revenue relied upon a decision of theapex Court in Commissioner of Income Tax vs. Suresh N. Gupta,(2009) 297 ITR 322 and submitted that proviso to Section 113 which wasinserted by Finance Act 2002 whereby surcharge was made leviable incases of search, was clarificatory in nature and the present case shall begoverned by the said provision. 8. The matter is no longer res integra. The similar issue cameup for consideration before the Hon’ble Supreme Court of India in SureshN. Gupta’s case (supra), wherein it was held that the proviso to Section113 which was inserted by Finance Act, 2002 was curative in nature. Therelevant observations of the Apex Court in the context are as under: 7.Learned counsel for the Revenue relied upon a decision of theapex Court in Commissioner of Income Tax vs. Suresh N. Gupta,(2009) 297 ITR 322 and submitted that proviso to Section 113 which wasinserted by Finance Act 2002 whereby surcharge was made leviable incases of search, was clarificatory in nature and the present case shall begoverned by the said provision. 8. The matter is no longer res integra. The similar issue cameup for consideration before the Hon’ble Supreme Court of India in SureshN. Gupta’s case (supra), wherein it was held that the proviso to Section113 which was inserted by Finance Act, 2002 was curative in nature. Therelevant observations of the Apex Court in the context are as under: “There is one more reason for rejecting the above submission.Prior to June 1,2002, in several cases, tax was prescribedsometimes in the 1961 Act and sometimes in the Finance Actand after in both. This made liability uncertain. In the presentcase, however, the rate of tax in case of block assessment at60 per cent was prescribed by section 113 but the year of theFinance Act imposing surcharge was not stipulated. Thisresulted in the above four ambiguities. Therefore, clarificationwas needed. The proviso was curative in nature. Hence, theproviso inserted in section 113 merely clarifies that out of theabove four dates, the relevant date for applicability of the Income Tax Appeal No. 126 of 2004 4 Finance Act would be the year in which the search stoodinitiated under section 158BC.” 9. Accordingly, the issue stands concluded by the aforesaiddecision of the Supreme Court wherein it has been laid down that theproviso to Section 113, inserted vide Finance Act, 2002, with effect fromJune 1, 2002, was applicable to block assessments under Chapter XIV-Bof the Act and surcharge on income tax would be imposable even in thosecases where search had taken place prior to 1.6.2002 according to theFinance Act of the particular year in which search had taken place. It hasfurther been held that the proviso was only clarificatory and, therefore,question of its retrospective effect did not arise.10.In view of the above, the appeal is allowed and the substantialquestion of law is answered in favour of the Revenue. (AJAY KUMAR MITTAL) JUDGE February 22, 2011*rkmalik* (ADARSH KUMAR GOEL) JUDGE