TMI Blog2009 (1) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... . and M/s A.K.J. Fintech Ltd. Assessment for the block period 1st April, 1993 to 23rd June, 1999 of the assessee company was completed on 31st Aug., 2001 determining undisclosed income of the block period at Rs. 1,80,95,949 raising demand of Rs. 1,06,37,542 which inter alia included- Income-tax @ 60% of Rs. 1,80,95,949 Rs. 1,08,57,568 Surcharge @ 13% of Rs. 1,08,57,568 Rs. 14,11,484 The assessee filed settlement application under s. 245C(1) of IT Act, 1961 which was admitted vide order dt. 26th Nov., 2002 passed under s. 245D(1) of the Act; order under s. 245D(4) of the Act was passed by the Settlement Commission on 28th April, 2006 determining undisclosed income at Rs. 1,80,95,949. Order giving effect to this order of the Settlement Commission was passed on 31st May, 2006 and a net demand of Rs. 90,43,690 was raised after allowing credit for taxes paid by the assessee till the date of the order i.e. 31st May, 2006. The undisclosed income, tax and surcharge levied on undisclosed income remained unchanged. On 26th June, 2006 the assessee filed an application under s. 154 of the Act, requesting to delete the surcharge as the same was not leviable in search cases initiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which provides for levy of surcharge, was prospective, therefore, in respect of search conducted on 6th April, 2002, no surcharge was leviable. With regard to the scope of s. 154, the CIT(A) observed that AO was not justified in holding that surcharge cannot be deleted in the order under s. 154 as the Special Bench too had recorded its conclusion after long-drawn process of reasoning and observed on the point there were two equally plausible opinions. With regard to AO's objection on the limitation period for filing application under s. 154, which as per AO was barred by limitation, the CIT(A) held that order sought to be rectified was the order passed by AO giving effect to the order of Settlement Commission dt. 31st May, 2006, and not the order under s. 158BC dt. 31st March, 2002. Accordingly, he held that rectification application filed under s. 154 was well within time. 6. Aggrieved by the above decision of CIT(A), the Revenue is in further appeal before us and has raised the following grounds of appeal: "1. Learned CIT(A) has erred in law and in facts and circumstances of the case in deleting the surcharge of Rs. 14,11,484 levied while computing the liability of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 245D(iv) by Settlement Commission on 28th April, 2006, since levy of surcharge was neither subject-matter of settlement petition nor the Settlement Commission has recorded any finding in this regard. 8. On the other hand, learned Authorised Representative, Shri Satish Khosla referred to the decision of jurisdictional High Court in case of L.N. Gadodia Sons (P) Ltd. vs. Dy. CIT, order dt. 11th Oct., 2004, wherein it was held that where Settlement Commission made order under s. 245D(iv) and has drawn the computation in great detail, the AO while undertaking the recovery, has to strictly follow the order made by the Settlement Commission and it was not open for the AO to charge interest under s. 220(2) of the Act which is not indicated in the Settlement Commission order. Learned Authorised Representative also relied on the decision of Hon'ble High Court of Delhi in case of Capital Cables (India) (P) Ltd. vs. ITSC (2004) 189 CTR (Del) 103 : (2004) 267 ITR 528 (Del), wherein it was held that having passed an order under s. 254D(iv) involving interest under ss. 234A, 234B and 234C, Settlement Commission became functus officio and had no powers like IT authority, to charge interest u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed income, tax and surcharge levied on undisclosed income remained unchanged. Thereafter on 26th June, 2006, an application under s. 154 was filed by the assessee wherein surcharge was requested to be deleted on the plea that surcharge was not leviable in the search case initiated prior to 1st June, 2002, and thus was indicated as mistake apparent from the record. From the order of Settlement Commission, we found that levy of surcharge was neither subject-matter of settlement petition nor the Hon'ble Settlement Commission has recorded any finding in this regard. Vide order dt. 31st May, 2006 effect of the order of Settlement Commission was given and surcharge was levied as originally levied by the AO in his order dt. 31st Aug., 2001. Accordingly, the petition filed by the assessee under s. 154 on 26th June, 2006 was beyond the time-limit prescribed under s. 154(7) of the Act to be counted from the date of order of AO i.e. 31st Aug., 2001; accordingly, limitation for filing application has expired on 31st March, 2006. With regard to the levy of surcharge, the applicability of proviso to s. 113 in the case of block assessment, has been elaborately examined by the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first aggregation to be computed is the total income of the previous years falling within the block period including returned/assessed incomes as per regular returns and regular assessments. The second aggregate to be computed is the aggregate of the total incomes/losses of the previous years determined in terms of cls. (a) to (f) of s. 159BB(1). The difference between first aggregate and the second aggregate is the 'undisclosed income' to be taxed under the provisions of s. 113 of the 1961 Act at the special rates prescribed. Further, cl. (a) of Explanation to s. 158BB clarifies that the total income/loss of each previous years shall, for the purpose of aggregation, be taken as the total income or loss computed in accordance with the provisions of Chapter IV without giving effect to set off of brought forward losses under Chapter VI or unabsorbed depreciation under s. 32(2) of the 1961 Act. Hence, one has to read s. 158BB with s. 4 of the 1961 Act. There is no conflict between the computation machinery under Chapter XIV-B and normal computation machinery under Chapter IV. The Hon'ble Supreme Court in the above referred case also observed that there is a fallacy in the argument of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
