Court allows Revenue's appeal, sets aside Tribunal's order, directs Assessing Officer to await SC decision on surcharge. Ruling favors Revenue.

The court allowed the appeal filed by the Revenue, setting aside the Tribunal's order and restoring the orders of the Assessing Authority and the Appellate Commissioner. The court directed the Assessing Officer to await the decision of the larger Bench of the Supreme Court regarding the levy of surcharge before taking further action. The court ruled in favor of the Revenue, emphasizing that the proviso to Section 113 of the Income Tax Act, 1961, does not have retrospective application and should be strictly interpreted.

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Issues:
Challenge to order setting aside levy of surcharge for block assessment period.

Analysis:
The appeal was filed by the Revenue under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal setting aside the levy of surcharge for the block assessment period. The substantial question of law raised was whether the Tribunal was correct in setting aside the order of the Appellate Commissioner regarding the levy of surcharge despite the assessee admitting liability for the assessment year 2000-2001. The judgment referred to a previous case where the Apex Court clarified that the proviso to Section 113, inserted by the Finance Act, 2002, does not have retrospective application. The court emphasized that the proviso is clarificatory in nature and should be read strictly without retrospective effect. The court held that the order of the Tribunal was contrary to the Assessing Officer's order and set it aside.

In another case, the larger Bench of the Apex Court directed a reconsideration of the earlier judgment, indicating that the issue required further examination. The court acknowledged that the law at present mandates the payment of surcharge by the assessee. However, it also noted that if the larger Bench of the Supreme Court reverses the previous judgment and rules that surcharge is not leviable, the assessee would be relieved of the liability. Consequently, the court decided to set aside the Tribunal's order and remit the matter to the Assessing Authority, instructing them to await the decision of the larger Bench of the Supreme Court and act accordingly. The appeal was allowed, the Tribunal's order was set aside, and the orders of the Assessing Authority and the Appellate Commissioner were restored, subject to the decision of the larger Bench of the Supreme Court.

In conclusion, the court answered the substantial question of law in favor of the Revenue and against the assessee, while also directing the Assessing Officer to await the decision of the larger bench of the Supreme Court before taking further action based on the outcome of the Supreme Court's decision. The appeal was disposed of with these observations.

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