COMMISSIONER OF INCOME TAX Vs. ROSHAN SINGH MAKKER

JUDGEMENT

(1.) THIS appeal, filed under Section 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 Section 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. v. Asstt. CIT in ITA No. 5/Asr/1996, dt. 25th Oct., 2002 and V.S. Fabrics and Investment Co. (P) Ltd. v. Asstt. CIT in ITA No. 1218/Chd/1996, dt. 22nd Nov., 2002 holding that since the proviso to Section 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.) WE have perused the order passed by the Tribunal and Section 113 of the Act in which new proviso was inserted w.e.f. 1st June, 2002, by 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 under Section 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 Section 132 or the requisition is made under Section 132A. Relevant Notes on Clause is extracted below : Clause 41 seeks to amend Section 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 Section 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 Section 132 or requisition was made under Section 132A. This amendment will take effect from 1st June, 2002. (emphasis, italicised in print, supplied)