P Veeraswamy, Hyderabad V. ACIT, Hyderabad

ITSSA 6/HYD/2006

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9133 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 5 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-06-2010
• Assessment Year: misc
• Appeal Filed On: 17-01-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: MOHAMMED KHURSHEED ALI
• Keywords: Block assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI AKBER BASHA, ACCOUNTANT MEMEBR IT(SS)A NO. 6/HYD/2006 BLOCK PERIOD 1990-91 TO 2000-2001 MR. P. VEERA SWAMY H.NO. 1-8-430/20/A, CHIKKADAPALLY, HYDERABAD PAN:AHDPP3788N VS. ASST. CIT, CENTRAL CIRCLE-V, SHAKAR BHAWAN, BASHEERBAGH HYDERABAD APPELLANT BY: MR. MOHAMMED KHURSHEED ALI RESPONDENT BY: K.V.N. CHARYA O R D E R PER N.R.S. GANESAN, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-I, HYDERABAD DATED 19.12.2005 AND PERTAI NS TO BLOCK PERIOD 1991-92 TO 2001-02. 2. THE FIRST ISSUE ARISING FOR CONSIDERATION IS LEVY O F SURCHARGE FOR THE BLOCK PERIOD. MR. MOHAMMED KHURS HEED ALI, THE LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED THA T SECTION 113 OF THE INCOME-TAX ACT, 1961 WAS AMENDED WITH EFFECT FROM 1.6.2002. THEREFORE, BEFORE 1.6.2002, THE REVENUE CANNOT LEVY SURCHARGE ON THE TAX COMPUTED FOR THE BLOCK PERIOD. REFERRING TO THE JUDGEMENT OF THE APEX COURT IN CIT VS. RAJIV BHATARA (2009) 310 ITR 105 THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT PRIOR TO 1.6.2002 EVEN THE DEPARTMEN T WAS NOT CLEAR AS TO WHETHER SURCHARGE WAS LEVIABLE WITH REG ARD TO RATES PROVIDED IN THE FINANCE ACT FOR THE YEAR IN WHICH T HE SEARCH WAS INITIATED. REFERRING TO THE OPERATIVE PORTION OF T HE JUDGEMENT OF THE APEX COURT, THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE SUPREME COURT HAS NO POWER TO LEGISLATE AN Y LAW. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE O NLY THE IT(SS)A NO. 6/HYD/2006 SRI P. VEERA SWAMY ============= 2 PARLIAMENT CAN ENACT LAW AND NOT THE SUPREME COURT. THEREFORE, THIS JUDGEMENT OF THE SUPREME COURT IN T HE CASE OF RAJIV BHATARA ((SUPRA)) CANNOT BE APPLIED FOR LEVY OF SURCHARGE FOR THE BLOCK PERIOD. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE SPECIAL BENCH OF THIS TR IBUNAL CONSIDERED THIS ISSUE ELABORATELY AND FOUND THAT TH E SURCHARGE CANNOT BE LEVIED FOR THE BLOCK PERIOD BEFORE 1.6.20 02. 3. ON THE CONTRARY, SHRI K.V.N. CHARYA, THE LEARNED DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT PROVISO TO SECTION 113 WAS HELD TO BE CLARIFICATORY IN NATURE. THEREF ORE, IT IS APPLICABLE RETROSPECTIVELY. ACCORDING TO THE LEARN ED DEPARTMENTAL REPRESENTATIVE FINANCE ACT ENACTED BY PARLIAMENT FOR THE RELEVANT FINANCIAL YEAR WOULD BE RELEVANT F OR THE PURPOSE OF LEVYING SURCHARGE FOR THE BLOCK PERIOD. THE LEA RNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT HE IS PLACING RELIANCE ON THE JUDGEMENT OF THE APEX COURT IN THE CASE OF SURESH N. GUPTA (2008) 4 SCC 362. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGEMENT OF THE APEX CO URT IN THE CASE OF RAJIV BHATARA (SUPRA) AND IN THE CASE OF SU RESH N. GUPTA (SUPRA). THE SUPREME COURT AFTER CONSIDERING THE RELEVANT FINANCE ACT AND AMENDMENT MADE TO SECTION 113 OF INCOME-TAX ACT BY FINANCE ACT, 2002 HAS OBSERVED AS UNDER: 'ACCORDING TO THE APPELLANT, PRIOR TO JUNE 1, 2002, THE POSITION WAS AMBIGUOUS AS IT WAS NOT CLEAR EVEN TO THE DEPARTMENT AS TO WHETHER SURCHARGE WAS LEVIABLE WITH REFERENCE TO THE RATES PROVIDED FOR I N THE FINANCE ACT OF THE YEAR IN WHICH THE SEARCH WAS INITIATED OR THE YEAR IN WHICH THE SEARCH WAS CONCLUDED OR THE YEAR IN WHICH THE BLOCK ASSESSMENT PROCEEDINGS UNDER SECTION 158BC WERE INITIATED OR THE YEAR IN WHICH BLOCK ASSESSMENT ORDER WAS PASSED. TO CLEAR THAT DOUBT PRECISELY, THE PROVISO IT(SS)A NO. 6/HYD/2006 SRI P. VEERA SWAMY ============= 3 HAS BEEN INSERTED IN SECTION 113 BY WHICH IT IS INDICATED THAT THE FINANCE ACT OF THE YEAR IN WHICH THE SEARCH WAS INITIATED WOULD APPLY. THEREFORE, I T HAS TO BE HELD THAT THE PROVISO TO SECTION 113 WAS CLARIFICATORY IN NATURE. IT ONLY CLARIFIES THAT OU T OF THE FOUR DATES, PARLIAMENT HAS OPTED FOR THE DATE, NAMELY, THE YEAR IN WHICH THE SEARCH WAS INITIATED, WHICH DATE WOULD BE RELEVANT FOR APPLICABILITY OF A PARTICULAR FINANCE ACT. THEREFORE, THE PROVISO HAS TO BE READ AS IT STANDS.' 5. IN VIEW OF THE ABOVE JUDGEMENT OF THE APEX COURT IN THE CASE OF RAJIV BHATARA (SUPRA) AND SURESH N. GUPTA ( SUPRA), IN OUR OPINION, SURCHARGE IS LEVIABLE FOR THE BLOCK PE RIOD EVEN BEFORE 1.6.2002. 6. COMING TO THE ARGUMENT OF THE LEARNED COUNSEL FOR T HE ASSESSEE THAT THE SUPREME COURT HAS NO LEGISLATIVE POWER, IN OUR OPINION, THE ARGUMENT OF THE LEARNED COUNSEL FO R THE ASSESSEE HAS NO SUBSTANCE. UNDER THE INDIAN CONSTI TUTION, THE POWERS OF THE EXECUTIVE, JUDICIARY AND LEGISLATURE HAVE BEEN CLEARLY DEMARCATED. THE PRIMARY FUNCTION OF THE LE GISLATURE IS TO ENACT LAW. THE FUNCTION OF THE JUDICIARY INCLUD ING THAT OF THE SUPREME COURT IS TO INTERPRET THE LAW ENACTED BY TH E LEGISLATURE. HOWEVER, WHEREVER THERE IS A LACUNAE THE SUPREME COURT BEING THE APEX JUDICIAL BODY IS EMPOWERED BY NECESSARY IMPLICATION TO SET GUIDELINES TILL SUCH TIME THE PA RLIAMENT MAKE LAW IN THE VERY SAME SUBJECT. IN OTHER WORDS, THE JUDGE MADE LAW IS ONE OF THE RECOGNIZED FORM OF LAW IN THE IND IAN LEGAL JURISPRUDENCE. THEREFORE, WE ARE UNABLE TO UPHOLD THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE. 7. IN THE CASE BEFORE US, THE SUPREME COURT HAS NOT EN ACTED ANY LAW. IN FACT, THE SUPREME COURT INTERPRETED TH E PROVISO TO SECTION 113 AND THE CONSTITUTION, IT WAS HELD THAT WHEN THE CONSTITUTION EMPOWERS THE PARLIAMENT TO ENACT A LAW FOR LEVY OF SURCHARGE, SUCH A LEVY CAN BE MADE BY ENACTING FINA NCE ACT FOR IT(SS)A NO. 6/HYD/2006 SRI P. VEERA SWAMY ============= 4 THE RESPECTIVE ASSESSMENT YEARS. THEREFORE, THE SU PREME COURT HELD THAT AMENDMENT TO SECTION 113 BY INTRODUCING A PROVISO BY FINANCE ACT, 2002 IS ONLY CLARIFICATORY IN NATURE. ACCORDINGLY, IT IS APPLICABLE RETROSPECTIVELY. THIS JUDGEMENT OF T HE APEX COURT DOES NOT MAKE/ENACT ANY LAW, IN FACT, IT INTERPRETS THE LAW ENACTED BY THE PARLIAMENT. THEREFORE, THE ASSESSEE CANNOT HAVE ANY GRIEVANCE THAT THE APEX COURT ENACTED THE PRESE NT PROVISO. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 8. NO DOUBT THE SPECIAL BENCH OF THIS TRIBUNAL CONSIDE RED THIS ISSUE ELABORATELY AND FOUND THAT PROVISO TO SE CTION 113 INTRODUCED BY THE PARLIAMENT BY FINANCE ACT, 2002 W AS PROSPECTIVE IN OPERATION. THE DECISION OF THE SPEC IAL BENCH WAS RENDERED BEFORE THE JUDGEMENT OF THE APEX COURT IN SURESH N. GUPTA (SUPRA). THEREFORE, THE DECISION OF THE SPEC IAL BENCH OF THIS TRIBUNAL IS NO LONGER GOOD LAW. INCOME TAX APP ELLATE TRIBUNAL IS A CREATURE OF STATUTE VIZ., THE INCOME-TAX ACT, 1961. INCOME TAX APPELLATE TRIBUNAL IS UNDER SUPERVISORY CONTROL OF HIGH COURT UNDER ARTICLE 227 OF CONSTITUTION OF IND IA. MOREOVER, THE LAW INTERPRETED BY THE APEX COURT IS BINDING ON ALL AUTHORITIES INCLUDING THIS TRIBUNAL UNDER ARTIC LE 141 OF THE CONSTITUTION OF INDIA. WHEN THE APEX COURT INTERPR ETS THE PROVISO TO SECTION 113 AND HELD THAT IT WAS ONLY A CLARIFICATORY IN NATURE AND, THEREFORE, APPLICABLE RETROSPECTIVELY, IN OUR OPINION, THIS JUDGEMENT OF THE APEX COURT IS BINDING ON THIS TRIBUNAL. THEREFORE, THE ASSESSEE CANNOT PLACE ANY RELIANCE O N THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL ESPE CIALLY WHEN THERE IS A LATEST JUDGEMENT OF THE APEX COURT WHICH HOLDS THE FIELD. IT(SS)A NO. 6/HYD/2006 SRI P. VEERA SWAMY ============= 5 9. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACC ORDINGLY THE SAME IS CONFIRMED. 10. THE ASSESSEE HAS TAKEN ONE MORE GROUND WITH REGARD TO LEVY OF INTEREST U/S. 158BFA OF THE ACT. DURING TH E COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE VERY FAIRLY SUBMITTED THAT HE IS NOT PRESSING THIS GROUND OF AP PEAL. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTIO N FOR DISMISSING THIS GROUND AS NOT PRESSED. IN VIEW OF THE ABOVE, THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO LE VY OF INTEREST U/S. 158BFA OF THE ACT IS DISMISSED AS NOT PRESSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH JUNE, 2010. SD/- (AKBER BASHA) ACCOUNTANT MEMBER SD/- (N.R.S. GANESAN) JUDICIAL MEMBER TPRAO HYDERABAD, DATED 18TH JUNE, 2010 COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-I, HYDERABAD 4 THE CIT (CENTRAL), HYDERABAD 5. THE DR A BENCH, HYDERABAD