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Issues:
1. Whether surcharge is leviable in a case where search was initiated before June 1, 2002. 2. Recomputation of interest under section 158BFA(1) after reducing cash seized from tax. Issue 1: The Revenue appealed against the decision of the Commissioner of Income-tax (Appeals) regarding the levy of surcharge. The Tribunal referred to various cases and held that surcharge is not leviable if the search was initiated before June 1, 2002, as per the proviso to section 113. The Tribunal cited cases like Merit Enterprises, CIT v. Roshan Singh Makker, and CIT v. Neotech Co. to support this position. Therefore, it was concluded that the Commissioner was justified in holding that surcharge is not applicable in this case, as the search was initiated on March 21, 2002, before the specified date. Issue 2: The second grievance of the Revenue was related to the direction given by the Commissioner of Income-tax (Appeals) to recompute interest under section 158BFA(1) after deducting cash seized from tax. The Tribunal analyzed the legislative intent behind section 158BFA(1) and referred to the case of Imperial Chit Funds to emphasize the importance of considering the purpose of introducing a section. It was noted that interest under section 158BFA should be calculated on the remaining tax amount after reducing the cash seized. The Tribunal also considered the provisions of sections 234A, 234B, and 234C in this context. The authorized representative argued that interest should not be levied if the entire tax has been paid in advance, citing relevant case laws and principles. On the other hand, the Departmental representative contended that interest is payable on the undisclosed income determined, regardless of the tax payment status by the assessee. The Tribunal examined the relevant sections including 158BFA(1), 158BC(c), 156, and Form No. 7 to interpret the calculation of interest. It was observed that the tax payable should be determined after adjusting prepaid taxes, and in this specific case, the tax deposited exceeded the tax determined in the block assessment. Therefore, the Tribunal concluded that interest under section 158BFA(1) was not applicable in this scenario and allowed the appeal. *Separate Judgement: No*
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