P.D. Dinakaran, J.@mdashThe above tax case appeal is directed against the order of the Income Tax Appellate Tribunal in IT(SS) A. No. 7/Mds./2004 dated 27-10-2006.
2. The facts leading to the filing of the above appeal are as follows:
A search was conducted by the revenue officials u/s 132 of the Income Tax Act, 1961 in the premises of the assessee on 7-6-2000 and a block assessment was framed for the block period 1 -4-1990 to 7-6-2000. An order was passed for the said block period on 4-4-2002 levying a surcharge at 17 per cent on the tax payable on the block assessment. Aggrieved by the said order of block assessment:, the assessee filed an appeal before the Commissioner (Appeals), who by order dated 12-12-2003, upheld that order of the assessing officer levying surcharge. The Tribunal, on appeal by the assessee, held that prior to introduction of proviso to Section 113 with effect from 1-6-2002, whereby it was clarified that surcharge are applicable would be leviable in cases of block assessments, the levy would fail, and since the search in the present case was prior to 1-6-2002, surcharge is not imposable. Aggrieved by the said order of the Tribunal, the revenue has preferred the above appeal raising the following substantial questions of law:
1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that surcharge is not applicable to block assessments if the search took place prior to introduction of the proviso to Section 113 with effect from 1-6-2002 ?
2. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the levy of surcharge prior to introduction of the proviso is riddled with complexity and as such the levy fails ?
3. Mr. J. Narayanasamy, learned standing counsel appearing for the revenue, fairly submits that the issues raised in the above appeals are covered by the decisions of this Court in
4. In
5. We have perused the order passed by the Tribunal and Section 113 ofthe Act in which new proviso was inserted with effect from 1-6-2002, by the Finance Act, 2002. The provisions of Section 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 u/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 u/s 132 or the requisition is made u/s 132 A.
The relevant clause of the Notes on clauses is extracted below (see
Clause 41 seeks to amend Section 113 of the Income Tax 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 u/s 15BBC, 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 u/s 132 or requisition was made u/s 132A.
This amendment will take effect from 1-6-2002.'' (Emphasis supplied)
6. We have perused Section 113 of the Act, especially the proviso added on June 1,2002, which provides for levy of surcharge. Counsel could not dispute that the same has not been given retrospective effect on the language of Clause 41 of the Notes on Clauses is in clear terms.
7. Since the search in the present case was conducted on June 1,2000, i.e., before the insertion of the proviso in Section 113 of the Act, with effect from June 1,2002. The levy of surcharge envisaged under this proviso will not be attracted in the present case.... (p. 375 of Taxman)
5. This Court, in Neotech Co. s case (supra), after referring to the decision of the Punjab & Haryana High Court in Roshan Singh Makker''s case(supra), held that the search was conducted on 9-7-1998 which was obviously prior to the introduction of proviso to Section 113 levying surcharge on the tax payable and, accordingly, the Tribunal was right in holding that surcharge was not applicable to block assessments in respect of the search conducted prior to the introduction of proviso to Section 113.
6. The view taken Neotech Co. s case (supra), was reiterated by this Court in S. Palanivel''s case (supra).
7. Admittedly, in the instant case, the search was conducted on 7-6-2000,which is prior to the introduction of the proviso to Section 113, i.e., 1 -6-2002and applying the decisions cited supra, the question of levy of surcharge does not arise. Accordingly, the appeal stands dismissed.
