2009 (2) TMI 12

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....ritsar Bench, Amritsar (in short the 'Tribunal'). The dispute related to the block period 1.4.1990 to 3.7.2000. The question which arose for consideration is as follows:"Whether, on the facts and in the circumstances of the case, the ITAT was right in law in confirming the CIT (A)'s order directing not to levy surcharge on the tax worked out on the undisclosed income as the case pertains to a search conducted prior to 1.6.2002?". 3. Factual position in a nutshell reads as follows: Search was conducted on 6.4.2000. The Assessing Officer in his order dated 22.5.2002 imposed surcharge and an application under Section 154 of the Act filed by the assessee for rectification was dismissed vide order dated 17.9.2003 with the observation that ....

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.... 291 ITR 33]. 4. Learned counsel for the appellant submitted that the case at hand is squarely covered by a decision of this court in Commissioner of Income Tax, Central II v. Suresh N. Gupta [2008(4) SCC 362]. 5. The power to levy a surcharge on income tax is traceable to Article 271 read with Entry 82 of List I of Schedule VII to the Constitution of India, 1950 (in short the 'Constitution'). That power is not traceable to Section 4 of the Act. Every year the Finance Act is enacted by Parliament to give effect to the financial proposals of the Central Government. The rate at which a charge on the total income of the previous year is imposed under Section 4(1) of the Act is not laid down in the Income Tax Act and, therefore, the said ....

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....sclosed income", detected as a result of search and this separate assessment has to be in addition to the normal assessment covering the same period.  Therefore, a separate return covering the years of the block period is a prerequisite for making block assessment. Under the said procedure, Explanation is inserted in Section 158-BB, which is computation Section, explaining the method of computation of "undisclosed income" of the block period. 8. If the "block period", as defined in Section 158-B(a), comprises previous years relevant to 10/6 assessment years is treated by Parliament as one unit of time for assessment purposes, one has to correlate "undisclosed income" to each of the years in which income was earned by the assessee. ....

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....nt has sought to levy surcharge on the tax in the case of block assessment. In the present case, the assessing officer has applied the rate of surcharge at 17% which rate finds place in Para A of Part I of Schedule I to the said Finance Act of 2001, therefore, surcharge leviable under Finance Act was a distinct charge, not dependent for its leviability on the assessee's liability to pay income tax but on assessed tax. 13. Therefore, even without the proviso to Section 113 (inserted vide Finance Act, 2002 w.e.f. 1.6.2002), Finance Act, 2001 was applicable to block assessment under Chapter XIV-B in relation to the search initiated on 6.4.2000 and accordingly surcharge was leviable on the tax. 14. According to the assessee, prior to 1.6.....