High Court Of Punjab & Haryana
CIT vs. Roshan Singh Makker
Section 113, proviso
Block period 1st April, 1990 to 6th April, 2000
Adarsh Kumar Goel & Rajesh Bindal, JJ.
IT Appeal No. 29 of 2006
16th May, 2006
Counsel Appeared
S.K. Garg Narwana, for the Appellant
JUDGMENT
By the court :
This appeal, filed under s. 260A of the IT Act, 1961 (for short ‘the Act’), against the order dt. 22nd Aug., 2005 passed by the Tribunal, Amritsar Bench, Amritsar in MA No. 65/Asr/2005 arising out of IT(SS)A No. 30/Asr/2003 for block period 1st April, 1990 to 6th April, 2000 raises the following substantial question of law: “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the CIT(A)’s order directing not to levy surcharge on the tax worked out on the undisclosed income, as the case pertains to search conducted prior to 1st June, 2002.”
2. Briefly the facts of the case are that search and seizure operations were conducted at the business as well as residential premises of Sh. Roshan Singh Makkar (deceased) on 6th April, 2000. As a result thereof notice under s. 158BC of the IT Act, 1961 (for short ‘the Act’) was issued on 29th Dec., 2000. In response to the notice, the assessee filed his return for the block period ended 6th April, 2000 declaring an undisclosed income of Rs. 21 lakhs. In assessment, the AO determined the tax liability at Rs. 16,81,015 and surcharge thereon at Rs. 2,85,772. In appeal against the order, the CIT(A) deleted the addition on merits and as far as surcharge was concerned, addition was deleted relying upon earlier orders passed by the Tribunal in the case of Hemco Inds. vs. Asstt. CIT in ITA No. 5/Asr/1996, dt. 25th Oct., 2002 and V.S. Fabrics & Investment Co. (P) Ltd. vs. Asstt. CIT in ITA No. 1218/Chd/1996, dt. 22nd Nov., 2002 holding that since the proviso to s. 113 of the Act providing for levy of surcharge was added in the statute book w.e.f. 1st June, 2002, hence was not applicable in respect to search conducted before 1st June, 2002.
3. Still aggrieved, the Revenue went in appeal before the Tribunal. The Tribunal also vide order dt. 30th Dec., 2004 [reported as Dy. CIT vs. Roshan Singh (2005) 95 TTJ (Asr) 485—Ed..], dismissed the appeal filed by the Revenue. However, the Revenue filed a Miscellaneous Application No. 65/Asr/2005, inter alia, on the ground that the issue relating to levy of surcharge had not been dealt with in the order. While accepting the plea of the Revenue about the maintainability of the application for rectification under s. 254(2) of the Act, on the issue of levy of surcharge, the same was considered on merits and rejected. While doing so, the Tribunal relied upon a number of earlier orders of the Tribunal on the same issue. The findings to that effect have been recorded in para 9 of the Tribunal’s order, which is extracted below : “9. We have heard both the parties and considered the rival contentions. The learned CIT(A) has decided the matter by relying on the decisions of various Benches mentioned in para 7 of this order. In addition to the same, we find this issue is also squarely covered in favour of assessee and against the Revenue by Tribunal, Amritsar Bench’s recent decision dt. 14th June, 2005 in the case of Dy. CIT vs. Shri Charanjit Lal Chauhan, Prop. Chauhan Zewrat House, Kapurthala (supra) where by relying on its earlier decision in the case of Dy. CIT vs. R.K. Jewellers in IT(SS)A No. 10/Asr/2004 it was held that surcharge on tax on undisclosed income in respect of cases where searches were carried out before 1st June, 2002 was not leviable.
The relevant findings recorded by Tribunal in para 8.2 are as under : ‘We have heard both the parties and considered the rival contentions. We find that the same issue came up before us in the case of Dy. CIT vs. R.K. Jewellers in IT(SS)A No. 10/Asr/2004 where on identical facts, the order of the CIT(A) was upheld by recording following finding in para 6 of the order : ‘6. We have heard both the parties and considered the rival submissions with reference to facts and material on record. From the facts discussed above, it is obvious that search and seizure action in the present case was carried out by the IT authorities on 1st March, 2001. Chapter XIV-B of the IT Act has been specifically inserted in the IT Act, w.e.f. 1st July, 1995 and the same prescribes special procedure for completion of block assessments. The purpose of inserting such chapter was to make expeditious assessment in respect of cases where searches had taken place and to compute the undisclosed income of the block period. This was in addition to the regular assessment provided under normal provisions of the Act. The rate of tax to be levied on the undisclosed income was different from the rate of tax on normal income disclosed in the regular returns. As per provisions of s. 113, as these stood in the statute prior to 1st June, 2002, it was not provided that in addition to tax on undisclosed income, surcharge should also be levied. However, the proviso to s. 113 was inserted by the Finance Act, 2002 w.e.f. 1st June, 2002 as per which levy of surcharge on the undisclosed income was specifically provided w.e.f. 1st June, 2002. However, such proviso has not been given retrospective effect and is applicable only to cases where searches had been carried out after 1st June, 2002. In the present case, the search had been carried out prior to 1st June, 2002 and, therefore, no surcharge on tax on undisclosed income was leviable. This view also finds support from the decision of the Tribunal Chandigarh Bench in the case of V.S. Fabrics & Investment Co. (P) Ltd. vs. Asstt. CIT (supra) and decision of Tribunal, Bombay Bench in the case of D.G.P. Windsor (India) Ltd. vs. Dy. CIT (supra) and also the decision of Tribunal, Amritsar Bench in the case of Hemco Indus. vs. Asstt. CIT in ITA No. 5/Asr/1996, dt. 25th Oct., 2002. Having regard to these facts and the legal position we are of the opinion that the order of the CIT(A) does not merit any interference. The same is upheld and this ground of appeal is dismissed.’
In the present case also search took place prior to 1st June, 2002, i.e., before proviso to s. 113 was inserted. Therefore, the ratio of the aforesaid decision is directly applicable to the facts of the present case. Respectfully following the same, we confirm the order of the CIT(A) and reject the ground of appeal of the Revenue.’
In the present case also search and seizure action was carried out on 6th April, 2000, i.e., prior to 1st June, 2002. Therefore, the above decision is squarely applicable to the present case. Respectfully following the same we do not find any justification to interfere with the order of CIT (A). The same is upheld and this ground of appeal is dismissed. In the result, appeal of the Revenue is dismissed.”
4. We have perused the order passed by the Tribunal and s. 113 of the Act in which new proviso was inserted w.e.f. 1st June, 2002, by Finance Act, 2002. The provisions of s. 113 of the Act are as under : “113. Tax in the case of block assessment of search cases.—The total undisclosed income of the block period, determined under s. 158BC, shall be chargeable to tax at the rate of sixty per cent : Provided that the tax chargeable under this section shall be increased by a surcharge, if any, levied by any Central Act and applicable in the assessment year relevant to the previous year in which the search is initiated under s. 132 or the requisition is made under s. 132A.” Relevant Notes on Clause is extracted below : “Clause 41 seeks to amend s. 113 of the IT Act relating to tax in the case of block assessment of search cases. Under the existing provision of the said section, the total undisclosed income of the block period, determined under s. 158BC, shall be chargeable to tax at the rate of sixty per cent.
It is proposed to insert a proviso in the said section to provide that the tax chargeable under that section shall be increased by a surcharge, if any, levied by any Central Act and applicable in the assessment year relevant to the previous year in which the search was initiated under s. 132 or requisition was made under s. 132A. This amendment will take effect from 1st June, 2002.” (emphasis, italicised in print, supplied)
We have perused s. 113 of the Act, especially the proviso added on 1st June, 2002, which provides for levy of surcharge. The counsel could not dispute that the same has not been given retrospective effect on the language of cl. (1) of Notes on Clauses which is in clear terms.
Since the search in the present case was conducted on 6th April, 2000, i.e., before the insertion of the proviso in s. 113 of the Act, w.e.f. 1st June, 2002, the levy of surcharge envisaged under this proviso will not be attracted in the present case. While holding this in favour of the assessee, the Tribunal has relied upon a series of judgments on the issue taking a view in favour of the assessee as referred to in para 9 of the Tribunal’s order, as extracted above. The Revenue has not been able to point out as to what is the distinction between the present case and the cases which have been relied upon by the Tribunal while deciding the issue in favour of the assessee and if facts were same, as to why those decisions were not challenged further.
In view of our above discussion, we do not find that any substantial question of law arises for consideration in the present case. Hence, the appeal is dismissed.
[Citation : 287 ITR 160]
