TMI Blog2008 (7) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... assed. Consequently, the only conclusion that can be arrived at is that the initiation of proceedings under section 263 were without jurisdiction – order u/s 263 is not maintainable. - 68 of 2008 - - - Dated:- 24-7-2008 - BADAR DURREZ AHMED and RAJIV SHAKDHER JJ. R. D. Jolly for the appellant. Satyen Sethi with Johnson Bara for the respondent. JUDGMENT The judgment of the court was delivered by BADAR DURREZ AHMED J. - Admit. 2. The following substantial questions of law arise for our consideration: "(1) Whether the Income-tax Appellate Tribunal had not erred in holding that no surcharge could be levied with reference to the search conducted before June 1, 2002, the effective date of insertion of the proviso in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated June 30, 2003, whereby the Assessing Officer levied surcharge on the undisclosed income. The assessee took the matter in appeal before the Commissioner Income-tax (Appeals) The said appeal was disposed of by an order dated December 11, 2003, on the ground that levy of surcharge was a contentious and debatable issue which could not be rectified under section 154 of the said Act. 6. It is at this stage that the Commissioner of Income-tax issued a notice under section 263, on March 1, 2004. The contents of the said notice clearly indicate that the Commissioner of Income-tax was aware of the fact that the section 154 order of the Assessing Officer had been set aside by the Commissioner income-tax (Appeals) by his order dated December ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso to section 113 in cases of search conducted prior to June 1, 2002, from which date the said proviso was effective, is a debatable issue." On the basis of this finding, the Tribunal concluded that the "omission to levy surcharge in the assessment cannot be said to be an apparent mistake which can be rectified under section 154". Consequently, the Tribunal dismissed the Revenue's appeal. The matter did not rest here. 9. The Revenue filed an appeal before this court against the Tribunal's order dated June 23, 2006. That appeal (I. T. A. No. 270 of 2007) was dismissed by this court following its decision in the case of CIT v. Devi Dass Malhan, I. T. A. No. 155/2007 (decided on February 23, 2007); [2009] 315 ITR 231 (Delhi) (Appen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n framed. 11. In so far as question No. 1 is concerned we find that the same is entirely covered by the decision of the Supreme Court in the case of CIT v. Suresh N. Gupta [2008] 297 ITR 322, inasmuch as the Supreme Court has taken the view that the proviso to section 113 is clarificatory in nature and, therefore, surcharge on undisclosed income would be leviable. In Suresh N. Gupta [2008] 297 ITR 322, the Supreme Court held (page 340): "25. We find no merit in the above arguments. Both, the Finance Acts of 2000 and 2001, indicated that a substantive charge was created in respect of the income-tax to be levied. Both these Acts prescribed the rates of surcharge. The said surcharge did not depend for its leviability on the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereunder, the question of surcharge being levied on undisclosed income was a debatable one and two views were possible. That being the position, the provisions of section 263 of the said Act could not be invoked. The learned counsel for the respondent placed reliance on the judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282. In the said decision, the Supreme Court held that for the purposes of examining as to whether an action under section 263 is valid or not the position of law as it stood on the date when the Commissioner exercised such jurisdiction and passed the order would be relevant and not what it was declared subsequently. 14. Considering the facts of the case in this light, we find when the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in view of Explanation (c) to section 263(1), it was not open to the Commissioner to have a relook into the matter under section 263 of the said Act. He submitted that because the issue of levy of surcharge had already been considered by the Commissioner Income-tax (Appeals) in his order dated December 11, 2003, it was not open to the Commissioner to exercise his jurisdiction with regard to such issue under section 263 in view of the said Explanation. In response, Mr. Jolly who appeared on behalf of the Revenue stated that Explanation (c) does not come into play at all. He submitted that the Commissioner sought to revise the order dated March 28, 2003, and not the order dated June 30, 2003, which was passed by the Assessing Officer invoki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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