TMI Blog2007 (6) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... date from which the proviso to section 113 is applicable. (1) Merit Enterprises v. Deputy CIT [2007] 288 ITR (AT) 226 (Hyd.) [SB] ; [2006] 101 ITD 1 (Hyd) ; (2) CIT v. Roshan Singh Makker [2006] 287 ITR 160 (P H) ; (3) CIT v. Neotech Co. (Firm) [2007] 291 ITR 27 (Mad). Respectfully, following the above decisions, it is held that the learned Commissioner of Income-tax (Appeals) was justified in holding that surcharge is not leviable in this case, as search in this case was initiated on March 21, 2002, i.e., before June 1, 2002. *See in this connection CIT v. Suresh N. Gupta [2008] 297 ITR 322 (SC).-Ed. The next grievance of the Revenue is that the learned Commissioner of Income-tax (Appeals) has erred in directing the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re than the amount of self-assessment tax payable and hence the provisions of section 249(4) stand complied with. During the course of proceedings before us, the learned authorised representative has filed written submissions. The written submissions are reproduced for ready reference : Section 2(43) defines tax as income-tax chargeable under the provisions of this Act. Section 4 is the charging section as per which tax can be charged as per the provisions of the Act. In terms of section 132 if any income is undisclosed and is found in the form of cash at the time of search, it can be seized. In this case, the seizure of Rs. 16,50,000 was on March 21, 2002. It was in the custody of the Department. A sum of Rs. 20,00,000 was paid on Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest can be charged. The march of law is such that if cash is kept in preventive custody and not adjusted at all, the assessee is entitled to interest and interest on interest to the refund made ultimately. Vide Bhagwan Prasad Agarwal [2006] 282 ITR 189 (All). The view of the apex court expressed in Sandvik Asia reported in [2006] 280 ITR 643, that even if there is no provision to compensate an assessee it has to be read into the Act is apposite in this context. It is therefore respectfully submitted that when no tax was payable at all there can be no levy of interest because the term interest itself prohibits such levy it being compensatory in nature. As there is no loss caused to the State, the question of compensation by way of inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then it is not open to the judiciary to interpret the law keeping equity in mind. We have heard both the parties. Before dealing with the issue, we would like to reproduce the relevant sections. Section 158BFA(1) : Where the return of total income including undisclosed income for the block period, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997, as required by a notice under clause (a) of section 158BC, is furnished after the expiry of the period specified in such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent. of the tax on undisclosed income, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the period aforesaid in accordance with section 220(2). As per section 158BFA(1), interest is to be determined on the tax of undisclosed income determined under clause (c) of section 158BC. Section 158BC(c) requires the Assessing Officer to determine the tax payable on the basis of block assessment. It does not indicate that tax on undisclosed income is to be determined. It only says that tax payable is to be determined by the Assessing Officer at the time of completion of block assessment. When any tax is payable, notice of demand is to be issued under section 156 of the Income-tax Act. Such notice of demand is to be issued in the prescribed Form No. 7. As per clause 3 of Form No. 7, simple interest is leviable on the amount, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust the refund to our regular assessment. Kindly adjust the balance demand amount out of tax paid and adjusted to P.D. A/c by your good-self. As much more amount has been got paid from us, kindly refund the amount with interest at your earliest and oblige. From the above letter, it appears that the assessee is claiming credit of Rs. 20 lakhs paid on April 22, 2002 against tax for the assessment year 2002-03. In the paper book, the assessee has attached copy of pay order of Rs. 20 lakhs. The pay order is in the name of Commissioner of Income-tax, Central Circle, Bangalore. Such pay order has been handed over to the Deputy Director of Income-tax. Such pay order does not indicate that amount has been paid towards tax dues for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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