TaxTMI 
TaxTMI 
2014 (5) TMI 224
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.... have heard the counsel for the parties. 3. In the present appeals revenue has formulated the following three substantial questions of law in the memorandum of appeal: 1. Whether the Appellate Authorities were correct in setting aside the disallowance of sundry debtors claim by the assessee when the same had not been disclosed in the course of search and the same was not supported by bills and the alleged debtors had only dealt with the assessee which evidence was not taken into consideration and accounts/books had not been maintained u/s.36(1(vii) of the Act? 2. Whether the Appellate Authorities were correct in deleting the levy of surcharge by the Assessing Officer on the date of search based on the Finance Act, when the same can be levied only after the introduction of proviso to Section 113 of the Act? 3. Whether Appellate Authorities were correct in condoning 3 months delay in charging interest u/s.158BFA(1) of the Act, when the same was leviable and the assessing Officer had no jurisdiction to condone the same? 4. Learned counsel appearing for ....
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....nder: "37. According to the assessee, prior to 1st June, 2002, the position was ambiguous as it was not clear even to the Department as to which year's FA would be applicable. To clear this doubt precisely, the proviso has been inserted in section 113 by which it is indicated that FA of the year in which the search was initiated would apply. Therefore, in our view, the said proviso was clarificatory in nature. In taxation, the legislation of the type indicated by the proviso has to be read strictly. There is no question of retrospective effect. The proviso only clarifies that out of the four dates, Parliament, has opted for the date, namely, the year in which the search is initiated, which date would be relevant for applicability of a particular FA. Therefore, we have to read the proviso as it stands. 38. There is one more reason for rejecting the above submission. Prior to 1st June, 2002, in several cases, tax was prescribed sometimes in the 1961 Act and sometimes in FA and often in both. This made liability uncertain. In the present case, however, the rate of tax in case ....
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....on of the larger Bench of the Supreme Court and may proceed subject to outcome of the decision that will be rendered by the Supreme Court. 8. It is not in dispute that the 3rd question is also covered by the judgment of this Court in CIT v. K.L. Srihari [2011] 335 ITR 215. In this case, the Division Bench considered the question whether the assessee is liable to pay interest under Section 158 BFA(1) of the Income Tax Act in view of the mandatory provision for belatedly filing the return of income for the block period? It would be relevant to reproduce paragraphs 35 and 48 thereof which is the clear answer to this question. Paragraphs 35 and 48 reads thus: "Insofar as the question of levy of interest under section 158BC [sic-158BFA(1)] of the Act is concerned, we have to indicate that the scheme of block assessment under Chapter XIV-B of the Act is virtually a self-contained code, providing for a variation of the manner in which the liability for payment of tax is determined and covering a situation where an undisclosed income relatable to the block period had not suffered tax only due to the non-disclosure a....
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....er. In the case of companies, the provision is deducted from sundry debtors. As stated above, the Assessing Officer has not examined whether in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the Assessing Officer. Hence, the matter is remitted to the Assessing Officer for de novo consideration of the above mentioned aspect only and that too only to the extent of the write-off." 11. To appreciate and to understand the contentions urged by Mr. Aravind, learned counsel for the revenue, it would be relevant to reproduce paragraph 8 from the order of the Appellate Authority which reads thus: "8. Sundry Debtors: The AO has computed the figure of amount receivable arising out of unaccounted sales as evidence by a long back seized. During the courses of appellate proceedings the AR has pointed out that in respect of the pages 8,20 and 30 of the long book dated : 11-05-1999, 27-10-1999 and 19-01-2000 pertaining to debtors, Sri Thimmappanna, Shariff and Shashi, the AO has actually made double additions. The total of which works out to around ....