C I T JAIPUR vs. M/S AKLANK KR BAGDA

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. JUDGMENT DB INCOME TAX APPEAL NO.102/2004. Commissioner of Income Tax (Central), New Central Revenue Building, Statue Circle, Jaipur (Raj.) Versus Sh. Aklank Kumar Bagda, 27, Income Tax Officers Colony, Suraj Nagar West, Jaipur. DATE OF ORDER ::: 05.10.2016. HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE BANWARI LAL SHARMA Mr. Anuroop Singhi for the appellant. 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has confirmed the order in favour of the assessee while allowing the appeal of the assessee. 2. This Court has framed the following issues for consideration: “1. Whether on the facts and in the circumstances of the case and in law the I.T.A.T. was right and justified in holding that surcharge on tax on undisclosed income cannot be levied prior to 1st June, 2002? 2. Whether on the facts and in the circumstances of the case and in law the ITAT was right and justified in deleting the addition of Rs.40,000/-, which was confirmed by the CIT (A), and consequently providing double benefit to the assessee? 3. Whether the finding of the Tribunal is perverse in respect of the issues involved in the aforesaid questions?”

2 3. The issue no.1 is squarely covered by the decision of the Supreme Court in the case of Commissioner of Income Tax (Central)-I, New Delhi Vs. Vatika Township Private Limited- (2015)1 SCC 1 wherein it has been held as under: “Furthermore, considering the deliberations on this issue at the Conference of Chief Commissioners on the rate of surcharge applicable, it becomes clear that as per the provisions then enforced (i.e. prior to the insertion of the proviso concerned w.e.f. 1-6- 2002), levy of surcharge in the block assessment on the undisclosed income was a difficult proposition. It is for this reason retrospective amendment to Section 113 was suggested. Notwithstanding the same, the legislature chose not to do so. Thus, it was a conscious decision of the legislature, even when the legislature knew the implication thereof; and took note of the reasons which led to the insertion of the proviso, that the amendment is to operate prospectively. Contrary to the language used in the Finance Act, 2002 in respect of the other amendments, insofar as amendment to section 113 is concerned, there is no language used which makes it clarificatory/retrospective. Rather, a specific stipulation is added making the provision effective f rom 1-6-2002. Further, the understanding of CBDT itself regarding this provision makes the position clear. It is contained in CBDT Circular No.8 of 2002 dated 27-8-2002, which the subject “Finance Act, 2002- Explanatory Notes on Provision relating to Direct Taxes”. This circular has been issued after the passing of the Finance Act, 2002, by which amendment to Section 113 was made. In this circular, various amendments to the Income Tax Act are discussed amply demonstrating as

which

amendments

are clarificatory/retrospective in operation and which amendments are prospective. When it comes to amendment to Section 113 of the Act, this very circular provides that the said amendment along with amendments in

3 Section 158-BE, would be prospective i.e. it will take effect from 1-6-2002. The Finance Act, 2003, against makes the position clear that surcharge in respect of block assessment of undisclosed income was made prospective. Such a stipulation is contained in the second proviso to sub- section (3) of Section 2 of the Finance Act,2003. Addition of this proviso in the Finance Act,2003 further makes it clear that such a provision was necessary to provide for surcharge in the cases of block assessment and thereby making it prospective in nature. The charge in respect of the surcharge, having been created fro the first time by the insertion of the proviso to Section 113, is clearly a substantive provision and hence is to be construed prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove “hardships” only of the assessee, not of the Department. On the contrary, imposing a retrospective levy on the assessee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1-6-2002.” 4. In that view of the matter, we answer the question no.1 in favour of the assessee and against the department. The question no.2 will not survive in view of the issue decided in favour of the assessee. 5. The appeal stands disposed of accordingly. (BANWARI LAL SHARMA), J. (K.S. JHAVERI), J. bblm