RAJES KUMAR,J. - (1.) THIS is an appeal under Section 260A of the IT Act, 1958 (hereinafter referred to as 'the Act') against the order of the Tribunal dt. 21st April, 2006 arising from the appeal No. 699/Luck/2002.
(2.) THE opposite party assessee (hereinafter referred to as 'the assessee') was a partner in a firm M/s Sasta Vastra Bhandar. A search and seizure was conducted by the IT officials on 9th Feb., 2000 at the residential premises of the assessee as a result of which the proceeding under Section 158BC was initiated asking the assessee to file the return of the undisclosed income for the period of the asst. yrs. 1990 -91, 1991. -92, 1994 -95, 1995 -96 and 1996 -97. The claim of the assessee was that the total income for the aforesaid period was Rs. 2,22,365 comprising of income of Rs. 30,770 for the asst. yr. 1990 -91, Rs. 47,640 for the asst. yr. 1991 -92, Rs. 47,410 for the asst. yr. 1994 -95, Rs. 52,725 for the asst. yr. 1995 -96 and Rs. 43,820 for the asst. yr. 1996 -97. The assessee could not file the return as the income in each year was below the taxable limit and as such there was no obligation under Section 139(1) to file the return. It was also submitted that M/s Sasta Vastra Bhandar was the IT assessee and assessed to tax for the aforesaid years and in the balance sheet and the capital accounts of the partners, the income from the share income and interest income was disclosed and in this view of the matter there was no undisclosed income. The assessee had made investment in Kisan Vikas Patra in his own name and in the name of family members. The assessee admitted the investments made in Kisan Vikas Patra in his own name and in the name of wife and other family members as undisclosed income and accordingly filed the block return of the undisclosed income for Rs. 5,10,400. The assessing authority has passed the block assessment order on 28th Feb., 2002 under Section 158BC of the Act. The assessing authority has not accepted the plea of the assessee in respect of the amount of Rs. 2,22,365 which was the share and interest income frdm M/s Sasta Vastra Bhandar and assessed to tax under Section 158BC treating it as undisclosed income for the asst. yrs. 1990 -91, 1991 -92, 1994 -95, 1995 -96 and 1996 -97. Apart from the tax levied @ 60 per cent of income assessed surcharge @ 10 per cent has also been levied. Aggrieved by the assessment order, assessee preferred an appeal before the CIT(A) -III, Lucknow. The CIT(A) vide order dt. 14th May, 2002 allowed the appeal in part. The CFT(A) held that M/s Sasta Vastra Bhandar was a partnership firm in which the assessee was one of the partners and was regularly assessed to tax and the share and interest income from the said firm were disclosed in the return of the firm and deleted the addition relying upon the decision of Bombay High Court in the case of CIT v. Shamlal Balram Gurbani : [2001]249ITR501(Bom) . The surcharge @ 10 per cent has been deleted on the ground that the proviso to Section 113 under which the surcharge was chargeable, was inserted by Finance Act, 2002 w.e.f. 1st June, 2002, therefore, the surcharge was not leviable for the block period 1st April, 1989 to 9th Feb., 2000. Aggrieved by the order of CIT(A) III, Lucknow, the Asstt. CIT filed appeal No. 699/Luck/2002 before the Tribunal. The Tribunal by the impugned order remanded back the matter, so far as the levy of surcharge is concerned, on the ground that the dispute has been referred to the Special Bench of Tribunal for adjudication in the case of Merit Enterprises v. Dy. CIT (2006) 102 TTJ (Hyd) 748 : (2006) 101 ITD 1 (Hyd)(SB). So far as the addition of Rs. 2,22,365 is concerned the Tribunal upheld the order of CIT(A). Being aggrieved by the order of Tribunal present appeal has been filed. Appeal has been admitted on following questions: 1. Whether on the fact and circumstances of the case, the Hon'ble Tribunal was justified in law in setting aside the issue regarding the levy of surcharge to the file of the AO, without appreciating that the proviso to Section 113 inserted by the Finance Act, 2002 is only clarificatory in nature and the Finance Act of the relevant year clearly provided for levy of surcharge on income -tax calculated as per the provisions of Section 113 of the Act? 2. Whether on the fact and in the circumstances of the case, the Hon'ble Tribunal was justified in upholding the order of the CIT(A), who deleted the addition of Rs. 2,22,365 made on account of undisclosed income in respect of the asst. yrs. 1990 -91, 1991 -92, 1994 -95, 1995 -96 and 1996 -97 as the respondent had failed to furnish the returns before the expiry of due dates, without appreciating the provisions of Section 158BB(1)(ca) according to which the income is to be taken as Nil for any previous year falling in the block period, where the due date for filing of return of income has expired and no return of income has been filed? 3. Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was justified in upholding the order of the CIT(A), who deleted the addition of Rs. 2,22,365 made on account of undisclosed income in respect of asst. yrs. 1990 -91, 1991 -92, 1994 -95, 1995 -96 and 1996 -97, as the respondent had failed to furnish the returns before the expiry of the due dates, without appreciating that the respondent had failed to discharge the burden of proving to the satisfaction of the AO that any undisclosed income has already been disclosed in any return of income filed by the respondent before the commencement of search?
(3.) HEARD Sri D.D. Chopra, learned senior standing Counsel of the Revenue and Sri Ratnesh Chandra appearing on behalf of assessee.;