LexCOMMNR. OF INCOME TAX, JALANDHAR-1 versus SHRI RAJIV BHATARA
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[2009] 2 S.C.R. 873 -"' 1 COMMNR. OF INCOME TAX, JALANDHAR-1 A v SHRI RAJIV BHATARA Civil Appeal No. 1121 of 2009 FEBRUARY 19, 2009 B [DR. ARIJIT PASAYAT AND DR. MUKUNDAKAM SHARMA, JJ.] y Income Tax Act, 1961 : s.113, proviso, s.158BA rlw s.4 and s.158BC - Block c assessment - Search conducted on 6-4-2000 - Levy of surcharge on assessed tax- Insertion of proviso to s.113 vide Finance Act, 2002 w. e. f 1-6-2002 - Effect of, on cases booked before 1-6-2002 - Held: In the various Finance Acts, the Parliament sought to levy surcharge on tax in case of block D assessment - Even without the proviso to s. 113, the Finance Act, 2001 was applicable to block assessment under Chapter XIV-B in relation to search initiated on 6-4-2000 and accordingly surcharge was leviable on the tax. The present appeal filed by the Department concerns E levy of surcharge on assessed tax in cases of block assessment and the effect of insertion of proviso to s.113 vide Finance Act, 2002 w.e.f 1-6-2002 on cases booked before 1-6-2002. Allowing the appeal, the Court F HELD:1. As a general concept, income tax includes surcharge. Reading Section 2(1) of the Finance Act, 2001, it is clear that the term 'income tax' as used in Section 2(1) and proviso to Section 2(3) of the said Act did not include G the amount of surcharge. Surcharge was a separate item of taxation, different from income tax. [Para 10] [878-G] 2. Section 158-BA(2) read with Section 4 of the Act 873 H ''\ . ,_ ...... ~ 874 · SUPREME COURT REPORTS [200912-·s.c.R. A looks~t Section 113 for the imposition rate at which tax has to be imposed in the case of block assessment. That r )I>,- rate is 60%. That rate is fixed by the Act itself. That rate has been stipulated by Parliament not with a view to oust the levy of surcharge but to make the levy cost effective B and easy. Therefore, a flat rate is pre$cribed. The difficulty in block assessment is that one has to -correlate· the undisclosed income to different years in which income is earned, hence, Parliament has fixed a flat rate of tax in -Section 113. [~ara 11][879-8] "'( _-c 3. Though Parliament was aware of rate of tax !;._ prescribed by Section 113 and yet- in. the various Finance Acts, Parliament has soughtto levy surcharge on the tax "'1 in the case of block assessment. In the present case, the r assessing officer has applied the rate of surcharge at 17% D which, rate finds place in Para A"of Part I of Schedule I to -l the said Finance Act of 2001., therefore, surcharge leviable under Einance Act was a distinct charge,. nol dependent for its leviability on the assessee's liability to pay income tax but on assessed tax. [Para-12] [879-D] E 4. Even without the proviso to Section 113 (inserted vide Finance Act, 2002 w.e.f. 1.6.2002), Finance Act, 2001 was applicable to block assessment under Chapter XIV- 8 in relation to the search initiated ori 6.4.2000 and 'accordingly surcharge was leviable on the tax. [Para 13] -1 F [879-E-F] 5. -According to the assessee,, prior to 1.6.2002, the _ position ~as ambiguous as it was not clear even to the Department as to whether surcharge was leviabfe with reference to .the rates provided for in Finance Act of the G year in which the search was initiated or the year in which· the search was conclude.d or the year·in which the block .\ assessment proceedings -under Section 158 BC were ·initiated or the year in which block assessment order was passed. To ~lear that doubt precisely, the _provis~ has H been inserted in. Section 113 by which it is indicated that COMMNR. OF INCOME TAX, JALANDHAR-1 V. 875 SHRI RAJIV BHATARA -..._ 1 Finance Act of the year in which the search was initiated A would apply. Therefore, it has to be held that the proviso to Section 113 was clar;lficatory in nature. It only clarifies that out of the four dates, Parliament was opted for the date, namely the year in which the search was initiated, . which date ·would be relevant for applicability of a s particular Finance Act. Therefore, the proviso has to be read as it stands. [Para 14] [879-G; 880-A] Y CIT v. Ram Lal Bahu Lal 148 CTR 643; CIT v. Roshan Singh Makkar (2006) 287 !TR 160; CIT v. Neotech·Company [(2007) 291 /TR 27] and CIT v. S. Palanivel [(2,007) 291 /TR C 33; Commissioner of Income Tax, Central II v. Suresh N. Gupta [2008(4) sec 362 - referred to. Case Law Reference 148 CTR 643 referred to Para 3 D (2006) 2
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