COMMISSIONER OF INCOME TAX vs. RAJIV BHATARA

PDF · subscribers
ITA/587/2006HC Punjab & HaryanaPHHC01075325200606 August 2007Bench: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE M.M. KUMAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the question of law was no longer res-integra. It referred to a Division Bench judgment of the same Court in CIT v. Roshan Singh Makkar (2006) 287 ITR 160, which held that the proviso added to Section 113 of the Income Tax Act, 1961, by the Finance Act 2002, could not be considered retrospective in its effect. Consequently, it would not be applicable to searches conducted before its effective date. The Court noted that the search in the present case took place on 6.4.2000, which was prior to the amendment. The Revenue's counsel could not successfully dispute that the instant appeal was covered by the Roshan Singh Makkar judgment. The High Court also noted that this judgment had been followed by the Madras High Court in CIT v. Neotech Company and CIT v. S. Palanivel. Therefore, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax, Jalandhar, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 11.7.2006 passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The ITAT had upheld the order of the Commissioner of Income Tax (Appeals) [CIT(A)] which directed that no surcharge be levied on the undisclosed income of the assessee, Rajiv Bhatara, for the block period 1.4.1990 to 3.7.2000. A search was conducted on the assessee on 6.4.2000. The Assessing Officer had initially imposed a surcharge, which was rectified by the assessee. The CIT(A) reversed the Assessing Officer's order, holding that surcharge was not leviable for searches conducted prior to 1.6.2002, relying on a High Court judgment. The ITAT confirmed this view.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in confirming the CIT(A)'s order directing not to levy surcharge on the tax worked out on the undisclosed income as the case pertains to a search conducted prior to 1.6.2002? Assessee's Contentions: The judgment does not record specific contentions made by the assessee before the High Court. However, the reasoning of the CIT(A) and ITAT, which was upheld, indicates the assessee argued that the amendment to Section 113 of the Act, which introduced the levy of surcharge on undisclosed income, was not retrospective and therefore not applicable to searches conducted before its effective date of 1.6.2002. Revenue's Contentions: The Revenue argued that the ITAT was wrong in confirming the CIT(A)'s order and that surcharge should have been levied. The Revenue's counsel could not dispute that the appeal was covered by a previous Division Bench judgment of the High Court.

Which sections of the Income-tax Act were involved?

Section 260A,Section 113,Section 154

AI-generated summary — verify with the full judgment below

ITA 587 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No. 587 of 2006 Date of decision 6 . 8 .2007 The Commissioner of Income Tax, Jalandhar 1 .. Appellant Versus Rajiv Bhatara

.. Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE AJAY KUMAR MITTAL PRESENT: Mr.Sanjiv Bansal, Advocate for the Revenue Mr. Ravish Sood, Advocate for the assessee M.M.Kumar, J. The Revenue has filed the instant appeal under Section 260A of the Income Tax Act,1961 (for brevity 'the Act') challenging order dated 11.7.2006 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity 'the Tribunal') in IT(SS) No.22(ASR)/2005 for block period 1.4.1990 to 3.7.2000. It has been claimed that the following substantive question of law would emerge from the order of the Tribunal: “ Whether, on the facts and in the circumstances of the case, the ITAT was right in law in confirming the CIT(A)'s order directing not to levy surcharge on the tax worked out on the undisclosed income as the case pertains to a search conducted prior to 1.6.2002.?”. It is undisputed that search in this case took place on 6.4.2000 and the provision with regard to surcharge was added by way of amendment in Section 113 of the Act on 1.6.2002. The Assessing Officer, however, in his order dated 22.5.2002 imposed surcharge and an application under Section 154 of the Act filed by the assessee for rectification was dismissed vide order dated 17.9.2003 ( Annexure A.2) with the observation that the

ITA 587 of 2006 2 surcharge was levied as per the provisions of Part I of the Ist Schedule appended to Finance Act 2000. On the ground that there was no mistake apparent on the record, the application under Section 154 of the Act was rejected. However, the Commissioner of Income Tax ( Appeals), Ludhiana (for brevity 'the CIT(A)') reversed the order passed by the Assessing Officer and took the view that surcharge was not leviable in cases where the search has taken place prior to 1.6.2002. In that regard, reliance was placed on a Division Bench judgement of this Court in the case of CIT v. Ram Lal Bahu Lal 148 CTR 643. On further appeal by the Revenue, the Tribunal upheld the order dated 12.9.2005 passed by the CIT(A) holding that the search in the present case took place on 6.4.2000 which was much prior to the date of amendment made in Section 113 of the Act. The amendment was incorporated on 1.6.2002 by inserting proviso to Section 113 by Finance Act 2002. It was by the amendment that levy of surcharge on the disclosed income was specifically provided w.e.f. 1.6.2002. The provision has not been given retrospective effect and, therefore, the Tribunal held that it applied only to cases where searches were carried out after 1.6.2002. After hearing learned counsel for the parties, we find that the question is no longer res-integra as a Division Bench of this Court in the case of CIT v. Roshan Singh Makkar (2006) 287 ITR 160 has taken the view that the proviso added to Section 113 by Finance Act 2002 cannot be considered as retrospective in its effect and therefore would not be applicable to the search conducted on 6.4.2000. Learned counsel for the Revenue could not successfully dispute that the instant appeal is covered by the Division Bench judgement of this Court in the case of Roshan Singh

ITA 587 of 2006 3 Makkar (supra). It is also appropriate to mention that the Division Bench of this Court has been followed by the Madras High Court in the cases of CIT v. Neotech Company (2007) 291 ITR 27 and CIT v. S. Palanivel (2007) 291 ITR 33. In view of the above, the instant appeal fails and the same is dismissed. (M.M.Kumar) Judge (Ajay Kumar Mittal) 6.8.2007 Judge okg

More judgments on Section 113

All 50 judgments and leading authorities on Section 113 →

Recent GST High Court judgments

Search GST case law →