2007 (2) TMI 184

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..... , 1999, and an order was passed for the said block period on June 19, 2001, levying a surcharge at 17% on the tax payable on the block assessment. Aggrieved by the said order of block assessment, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), who upheld the order of the Assessing Officer levying surcharge by order dated February 26, 2002. The Tribunal, on further appeal by the assessee, held that prior to introduction of the proviso to section 113 with effect from June 1, 2002, whereby it was clarified that surcharge as applicable would be leviable in cases of block assessments, the levy would fail, since the search in the present case was prior to June 1, 2002, and hence, surcharge is not imposable. Aggrieved .....

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..... attracted. The relevant portion of the said judgment of the Punjab and Haryana High Court in the case cited supra reads as follows: "We have perused the order passed by the Tribunal and section 113 of the Act in which new proviso was inserted with effect from June 1, 2002, by the Finance Act, 2002. The provisions of section 113 of the Act are as under: '113. Tax in the case of block assessment of search cases.- The total undisclosed income of the block period, determined under section 158BC, shall be chargeable to tax at the rate of sixty per cent.: Provided that the tax chargeable under this section shall be increased by a surcharge, if any, levied by any Central Act and applicable in the assessment year relevant to the previous year .....

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..... cited supra, a Division Bench of this court, in which one of us was a party (P. D. Dinakaran J.), in T. C. (A) No. 46 of 2007 between CIT v. Neotech Co. (Firm) [2007] 291 ITR 27 (Mad), by order dated February 7, 2007, held that surcharge is not applicable to block assessments in respect of the search conducted prior to the introduction of the proviso to section 113. Admittedly, in the instant case also, the search was conducted on July 15, 1999, which is prior to the introduction of the proviso to section 113, i.e., June 1, 2002. Hence, following the abovesaid decisions, the issues raised in the first and second questions are decided in the affirmative, against the Revenue and in favour of the assessee. In that view of the matter, the iss .....

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