2020 (11) TMI 419 - HC - Income Tax

Block assessment - surcharge at 10% with interest thereon could not have been levied for the tax payable by the Petitioner for that period in view of the relevant statutory provisions, as it then stood - whether surcharge cannot be levied by the Assessing Officer for the block assessment pertaining to the period prior to 01.06.2002? - HELD THAT - The impugned order insofar as it levies surcharge with consequential interest thereon, cannot be sustained and that portion of the assessment shall stand deleted. The assessment of the Petitioner in the impugned order in other respects is confirmed. The Petitioner is entitled to work out his remedies in that regard before the proper forum in the manner recognized by law. Writ Petition is ordered on the aforesaid terms.

Summary

Issues:
Challenge to order assessing income tax liability for block period under Income Tax Act, 1961 with regard to surcharge and interest levied.

Analysis:

1. Assessment of Income Tax Liability:
The Writ Petition challenged the order assessing the liability of the Petitioner for income tax for the block period under Section 143(3) read with Section 158BC of the Income Tax Act, 1961. The Petitioner contended that the surcharge at 10% with interest could not have been levied for the tax payable for that period based on the legal position established by the Hon'ble Supreme Court in a specific case. The Court acknowledged this argument and held that the surcharge with consequential interest levied in the impugned order could not be sustained. However, the assessment of the Petitioner in all other respects was confirmed.

2. Legal Position on Surcharge:
The Court referred to the dictum laid down by the Constitutional Bench of the Hon'ble Supreme Court of India in a specific case, stating that surcharge cannot be levied by the Assessing Officer for the block assessment pertaining to the period prior to a certain date. In line with this legal position, the Court ruled that the portion of the assessment imposing surcharge with interest would be deleted. This decision was based on the statutory provisions as they stood at the relevant time.

3. Remedies Available to Petitioner:
The Court concluded by stating that the Petitioner was entitled to work out their remedies in connection with the assessment before the proper forum as recognized by law. This indicates that while the surcharge portion of the assessment was set aside, the Petitioner had the option to pursue further legal avenues to address any remaining issues related to the assessment.

4. Final Order:
In conclusion, the Writ Petition was allowed on the terms mentioned, with the portion of the assessment related to surcharge and interest being deleted. The Petitioner was granted the opportunity to seek further remedies within the legal framework. The connected Miscellaneous Petition was closed without any costs being imposed on either party.