TMI Blog2022 (3) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, was introduced only with effect from 1st June 2002, as held by the Apex Court in Vatika Township (P.) Ltd.[ 2014 (9) TMI 576 - SUPREME COURT] the levy of surcharge cannot be made applicable retrospectively to search conducted in petitioner s case. Respondent no.3 is directed to issue a fresh assessment order recalculating the tax and interest payable, within four weeks from the date of this order being uploaded/a copy of the order is submitted by petitioner, by not including surcharge at 15% and limiting the interest payable from 5th January 1997, which is the 36th day after the impugned assessment order dated 27th November 1996 was passed, upto 9th April 1997 when petitioner s application came to be accepted under Section 245D(1) of the Act. Petitioner shall pay the amount, if any, payable within seven days of receiving a copy of the fresh demand. - WRIT PETITION NO.2121 OF 2010 - - - Dated:- 25-2-2022 - K.R. SHRIRAM N.J. JAMADAR, JJ. Mr. Dharan V. Gandhi for petitioner. Mr. Suresh Kumar for respondents. ORAL JUDGMENT : (PER K.R. SHRIRAM, J.) 1. Petitioner is challenging the legality and validity of the impugned orders dated 31st December 2007 pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 245D(4) of the Act and levied surcharge under Section 113 of the Act at the rate of 15%. 5. This was followed by petitioner filing a rectification application under Section 154 of the Act to respondent no.2 requesting respondent no.2 to delete the levy of interest under Section 220(2) of the Act from the date of admission of the application under Section 245D(1) of the Act, i.e., 9th April 1997, to the date of final disposal order dated 31st December 2007 passed under Section 245D(4) of the Act and the levy of surcharge under Section 113 of the Act. This application of petitioner was rejected by respondent no.2. 6. Petitioner preferred an appeal against the order of respondent no.3 under Section 246A of the Act before Commissioner of Income Tax (Appeals) in which petitioner challenged the levy of interest under Section 220(2) of the Act, which appeal, even today, is pending adjudication. Mr. Gandhi states that if the Court accepts the petition, then that appeal will be rendered infructuous and within such time, as directed by the Court, petitioner will withdraw that appeal. 7. Thereafter, petitioner once again preferred an application for rectification on 2nd April 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition under Section 245C. A new Chapter XIX-A was introduced by the Taxation Laws (amendment) Act, 1975 (in short the 'Amendment Act') w.e.f. 1.4.1976. The Commission is constituted by the Central Government for the settlement of cases under Chapter XIX-A. The expression case as appearing in Section 245A(b) refers to any proceeding under the Act for the assessment or re-assessment of income of any person in respect of any year or years or by way of appeal or revision in connection with such assessment or re- assessment which may be pending before any income-tax authority on the date on which an the application under sub-section (1) of Section 245C is made. It further provides that where any appeal or application for revision has been preferred after the expiry of the specified period and which has not been admitted then the same shall not be deemed to be a proceeding pending within the meaning of clause (b) of Section 245A. Scheme of Chapter XIX- A shows that the filing of application by the assessee is a unilateral act, and the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is rupees two lakhs and the undisclosed income is five lakhs, the rate of tax levied on rupees two lakhs may be one but may be different for an income of rupees seven lakhs. For the purpose of computation of taxes, there is a requirement to club both the disclosed and undisclosed income. But that does not empower the Commission to deal with the disclosed income before deciding to proceed with the petition. xxxxxxxxxxxxx 11. To put it differently, the interests charged in terms of Sections 234A, B and C become payable on the income already disclosed in the returns filed, together with the income disclosed before the Commission. The concerned interest as aforesaid shall be on the consolidated amount of income, i.e. both disclosed and undisclosed. As indicated above, such interests shall be charged till the Commission acts in terms of Section 245D. Thereafter, the prescription relating to charging of interests etc. becomes operative, after the Commission allows the application for settlement to be proceeded with. In such event, there is no further charge of interest in terms of Sections 234A, B and C. The interest charged in terms of Section 245D is a separate levy and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge at 15% under Section 113 of the Act was payable, in the facts and circumstances of the case, Mr. Gandhi, relying upon a judgment of the Apex Court in Commissioner of Income Tax (Central)-I, New Delhi V/s. Vatika Township (P.) Ltd. (2014) 49 taxmann.com 249 (SC) submitted that it was not payable. 12. We have considered Vatika Township (Supra). The Apex Court has held that Chapter XIVB is a complete code in itself providing for self contained machinery for assessment of undisclosed income for the block period of 10 years or 6 years, as the case may be. In case of regular assessments, for which returns are filed on yearly basis, Section 4 of the Act is the charging Section. At what rate the income is to be taxed is specified every year by the Parliament in the Finance Act but when it comes to payment of tax on the undisclosed income relating to the block period, rate is specified in Section 113 of the Act. The Court held that Chapter XIVB comprehensively takes care of all the aspects relating to the block assessment relating to undisclosed income, which includes Section 156BA(2) as the charging Section and even the rate at which such income is to be taxed is mentioned in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis, Section 4 of the Act is the charging section. However, at what rate the income is to be taxed is specified every year by the Parliament in the Finance Act. In contradistinction, when it comes to payment of tax on the undisclosed income relating to the block period, rate is specified in Section 113 of the Act. It remains static at 60% of the undisclosed income which is the categorical stipulation in the Section 113 of the Act. Section 158BA(2) of the Act clearly states that the total undisclosed income relating to the block period shall be charged to tax at the rates specified under Section 113 as income of the block period irrespective of previous year or years. Under Section 113 of the Act, the undisclosed income is chargeable to tax at the rate of 60%. 28. From the above, it becomes manifest that Chapter XIVB comprehensively takes care of all the aspects relating to the block assessment relating to undisclosed income, which includes Section 156BA(2) as the charging section and even the rate at which such income is to be taxed is mentioned in Section 113 of the Act. No doubt, Section 4 of the Act is also a charging section which is made applicable on 'total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to observe that when a separate charging section is introduced specifically, to assess the undisclosed income, notwithstanding a provision in the nature of Section 4 already on the statute book, this move of the legislature has to be assigned some reason, otherwise, there was no necessity to make a provision in the form of Section 158BA(2). It could only be that for assessing undisclosed income, charging provision is Section 158BA(2) alone. 29. Notwithstanding the aforesaid position clarified with us, we are of the opinion that dehors this discussion, in any case on the application of general principles concerning retrospectivity, the proviso to Section 113 of the Act cannot be treated as clarificatory in nature, thereby having retrospective effect. To make it clear, we need to understand the general principles concerning retrospectivity. xxxxxxxxxxxxxxx 34. In such cases, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee. On the contrary, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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