The Deputy Commissioner Of Income Tax, Central Circle v. Pyarali Sadruddin Noorani....opponent(S

O/TAXAP/1476/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1476 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1....Appellant(s) Versus PYARALI SADRUDDIN NOORANI....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1RULE SERVED for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIand HONOURABLE MR.JUSTICE K.J.THAKER Date : 12/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of this appeal, the appellant-revenue has challenged the order dated 02.12.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad [for short “the Tribunal”], in ITA No.335/Ahd/2003, whereby the appeal preferred by the respondent-assessee was allowed by the Tribunal. 2.The facts, in brief, are that the respondent-assessee is engaged in the business of trading ceramics and sanity items under the name and style of M/S.P.S. Traders. On 17.08.2000 a search was carried out in the premise of the respondent-assessee. During the said search, number of papers and documents were found which were seized. A notice came to be issued to the assessee under Section 158BC of the Act. Thereafter, the assessee filed the return for the block year. The said return was processed and the Assessing Officer vide order dated 30.08.2002 passed the assessment order and determined total income of the assessee at Rs.10,03,000/-. Thereafter, the assessee filed an application under Section 154 of the Act, drawing attention of the Assessing Officer that the surcharge has wrongly been levied while passing the assessment order. However, the Assessing Officer rejected the said application. 2.1.Against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)-II, Ahemdabad. The CIT(A) vide order dated 10.07.2003 dismissed the appeal of the assessee. Being aggrieved and dissatisfied with the order of the CIT(A), the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 02.12.2005 allowed the appeal of the assessee and deleted the surcharge levied by the Assessing Officer. Hence, this appeal is filed at the instance of the revenue. following substantial question of law:- “Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal is right in deleting the surcharge levied by the Assessing Officer under the provisions of the Finance Act, 2000 ?” 4.Learned advocate for the appellant-revenue has contended that question of law involved in this appeal is already concluded by the Apex Court in favour of the respondent-assessee in the case of Commissioner of Income Tax v. Vatika Township P. Ltd., reported in [2014] 367 ITR 466. following substantial question of law:- “Whether, on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal is right in deleting the surcharge levied by the Assessing Officer under the provisions of the Finance Act, 2000 ?” 4.Learned advocate for the appellant-revenue has contended that question of law involved in this appeal is already concluded by the Apex Court in favour of the respondent-assessee in the case of Commissioner of Income Tax v. Vatika Township P. Ltd., reported in [2014] 367 ITR 466. 5.We have heard learned advocate for the appellant-revenue and perused the material on record. We have also perused the decision relied upon by the learned advocate for the appellant-revenue and find that the question of law involved in this appeal is already concluded by the Apex Court in favour of the assessee and against the revenue. Paragraph No.14, 39.F and 40 of the aforesaid decision read as under:- “14. The surcharge on the income tax was introduced for the first time by the Finance Act, 1995, in Section 2(3) thereof. However,initially,this surcharge was levied only on the income of companies i.e. corporate entities incorporated under the Indian Companies Act by specified surcharge at the rate of 15% in the Finance Act, 1996, which was reduced to 7.50% in the Finance Act, 1997. In the next two Finance Acts i.e. 1998 and 1999, there was no surcharge levied even in the cases of companies. However, by Finance Act, 2000, surcharge at a flat rate of 10% came to be levied in respect of individuals, HUF, BOI,AOP as well as co-operative societies, partnership firms, local authorities and also the companies. In subsequent years, the rates at which the surcharge is levied on the aforesaid entities are of varying nature. A O/TAXAP/1476/2007 JUDGMENT tabulated form showing surcharge in respect of different category of assessees in different assessment years, levied under each Finance Act, shall be reproduced at the relevant stage. 39.(f) Finance Act, 2003, again makes the position clear that surcharge in respect of block assessment of undisclosed income was made prospective. Such a stipulation is contained in second proviso to sub-section (3) of Section 2 of Finance Act, 2003. This proviso reads as under: “Provided further that the amount of income-tax computed in accordance with the provisions of section 113 shall be increased by a surcharge for purposes of the Union as provided in Paragraph A, B, C, D or E, as the case may be, of Part III of the First Schedule of the Finance Act of the year in which the search is initiated under section 132 or requisition is made under section 132A of the income-tax Act.” Addition of this proviso in the Finance Act, 2003 further makes it clear that such a provision was necessary to provide for surcharge in the cases of block assessments and thereby making it prospective in nature. The charge in respect of the surcharge, having been created for the first time by the insertion of the proviso to Section 113, is clearly a substantive provision and hence is to be construed prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove 'hardships' only of the assessee, not of the Department. On the contrary, imposing a retrospective levy on the assessee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. levy on the assessee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. 40. The aforesaid discussion of ours also makes it obvious that the conclusion of the Division Bench in Suresh N.Gupta treating the proviso as clarificatory and giving it retrospective effect is not a correct conclusion. Said judgment is accordingly overruled.” 6.In view of the above, the present appeal deserves to be dismissed. Since the issue is already concluded by the Apex Court, no elaborate reasons are required to be assigned for disposing this appeal. The question of law raised in this appeal is answered in affirmative i.e. in favour of the assessee and against the revenue. The Tribunal was right in deleting the surcharge levied by the Assessing Officer under the provisions of the Finance Act, 2000. The present appeal is dismissed. The order of the Tribunal is hereby confirmed. (K.S.JHAVERI, J.) (K.J.THAKER, J)