Law:

Section:

Section 113 of the Income-tax Act, 1961 - Block assessment in search cases - Tax in case of - Whether proviso to section 113 is clarificatory in nature and, therefore, surcharge on undisclosed income would be leviable even where search was conducted before insertion of said proviso - Held, yes Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - As in block assessment order passed in case of assessee, no surcharge was levied on undisclosed income, Assessing Officer passed an order under section 154 to levy surcharge - On appeal, Commissioner (Appeals) set aside said order on ground that levy of surcharge was a contentious and debatable issue which could not be rectified under section 154 - Thereafter, Commissioner passed an order under section 263 holding that block assessment order was erroneous and prejudicial to interest of revenue since surcharge, which was leviable, had not been charged - Whether when at time when Commissioner issued notice, contemporaneous understanding was that question of surcharge on undisclosed income was debatable one, provisions of section 263 could be invoked - Held, no FACTS The block assessment in the assessee's case was completed by the Assessing Officer under section 158BC on 28-2-2002 at certain undisclosed income. The Commissioner (Appeals) allowed the assessee's appeal partly and thereafter, by an order dated 28-3-2003, the Assessing Officer revised the undisclosed income, giving effect to the order passed by the Commissioner (Appeals). As in the block assessment order as well as in the order dated 28-3-2003, no surcharge was levied on the undisclosed income, the Assessing Officer passed an order under section 154 on 30-6-2003 levying surcharge on undisclosed income. On appeal, the Commissioner (Appeals), by an order dated 11-12-2003, set aside the rectification order on the ground that levy of surcharge was a contentious and debatable issue which could not be rectified under section 154. Despite that fact, the Commissioner issued notice under section 263 taking the view that the block assessment order dated 28-3-2003 giving effect to the order of the Commissioner (Appeals) was…

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