Clarificatory proviso on block assessments confirmed surcharge levy for searches conducted before its insertion.

The proviso to section 113 of the Income-tax Act was treated as clarificatory and curative, so surcharge remained leviable on block assessments even where the search occurred before 1 June 2002. The court read the block assessment computation scheme with the general charging and computation provisions, and held that the relevant Finance Act applied through that linkage. The later proviso was viewed as resolving the uncertainty over surcharge for the search year rather than creating a new retrospective liability, with the issue decided against the assessee and in favour of the Revenue.

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Issues: Whether surcharge was leviable on block assessments where the search was conducted before insertion of the proviso to section 113 of the Income-tax Act, 1961 with effect from 1 June 2002.

Analysis: The proviso to section 113 was held to be clarificatory and curative in nature. The computation scheme for undisclosed income in block assessments was read with the general charging and computation provisions, and the relevant Finance Act was held to apply through that linkage. The later proviso was not treated as creating a new liability retrospectively, but as resolving the uncertainty regarding the applicable surcharge for the search year.

Conclusion: Surcharge was leviable even for searches conducted before 1 June 2002, and the issue was answered against the assessee and in favour of the Revenue.

Final Conclusion: The appeals succeeded on the surcharge question, and the block assessment tax was held exigible to surcharge under the applicable legal position.

Ratio Decidendi: A proviso inserted to clarify the applicability of surcharge in block assessments is curative in character and applies to unresolved assessments by indicating the relevant Finance Act for the search year.

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