2013 (4) TMI 371 - HC - Income Tax

Levy of surcharge on Income Tax calculated U/s 113 - Addition on account of undisclosed income - Section 158BB(1)(ca) - Section 268-A - Regarding levy of Surcharge - Held that - It was already covered by a judgment of Hon ble the Apex Court reported in Commissioner of Income Tax vs. Suresh N. Gupta (2008 (1) TMI 396 - SUPREME Court )- The ratio of the said judgment appears to be that in case of block assessment, even prior to amendment made in Section 113 of the Act w.e.f. 01.06.2002, surcharge was leviable - Further it has been held that the amendment made w.e.f. 01.06.2002 was only clarificatory in nature. - Decided in favor of revenue.

Summary

Issues:
1. Levy of surcharge under Section 113 of the Income Tax Act.
2. Addition of undisclosed income for Assessment Years 1995-96 and 1996-97.
3. Burden of proof regarding undisclosed income disclosure.

Analysis:
1. The first issue raised in the appeal questions the justification of the Income Tax Appellate Tribunal in setting aside the levy of surcharge to the Assessing Officer without considering the clarificatory nature of the proviso to Section 113 inserted by the Finance Act, 2002. The Tribunal's decision was challenged based on the argument that the Finance Act of the relevant year clearly provided for the levy of surcharge on Income Tax as per Section 113. The High Court, referring to a judgment of the Apex Court, concluded that even before the amendment in Section 113, surcharge was leviable during block assessments. The Tribunal's decision was set aside, and the Assessing Officer's order regarding surcharge was restored in favor of the revenue.

2. The second issue pertains to the deletion of an addition of Rs.1,06,460 made on account of undisclosed income for Assessment Years 1995-96 and 1996-97. The challenge was based on the failure of the respondent to furnish returns before the due dates, invoking Section 158BB(1)(ca) which specifies that income is considered Nil if no return is filed after the due date. The High Court, however, upheld the order of the CIT(A) which deleted the addition. The Court found that the respondent failed to discharge the burden of proving that any undisclosed income had been disclosed in a return before the search commenced. Therefore, the Tribunal's decision to delete the addition was upheld.

3. The third issue, supplementary to the second, also deals with the deletion of the addition of undisclosed income for the same assessment years. The High Court reiterated the importance of the respondent proving the disclosure of any undisclosed income before the search began. The burden of proof was on the respondent to satisfy the assessing officer that the undisclosed income had been previously disclosed. The Court's decision aligned with the principles of burden of proof in tax matters.

In conclusion, the High Court partially allowed the appeal filed by the revenue, upholding the levy of surcharge under Section 113 and the deletion of the addition of undisclosed income for the specified assessment years. The judgment provided clarity on the interpretation of relevant provisions and emphasized the importance of meeting legal requirements in tax assessments.