sekarreporter1: https://twitter.com/sekarreporter1/status/1654296823685865473?t=gDZz1-HHr0lJ9gvsE3ieYw&s=08 [5/5, 06:58] sekarreporter1: *GLIMPSE OF A LATEST VERDICT* Case Name: K.L. Swamy vs Commissioner of Income Tax & Anr. Case No.: CA No. 3704 of 2012 etc. (Batch) *Hon’ble Justices Mr. M.R. Shah and C.T. Ravikumar* of the Hon’ble Supreme Court has allowed appeals of K.L. Swamy and others in part and held that the respective

[5/5, 06:58] sekarreporter1: https://twitter.com/sekarreporter1/status/1654296823685865473?t=gDZz1-HHr0lJ9gvsE3ieYw&s=08
[5/5, 06:58] sekarreporter1: *GLIMPSE OF A LATEST VERDICT*
Case Name: K.L. Swamy vs Commissioner of Income Tax & Anr.
Case No.: CA No. 3704 of 2012 etc. (Batch)

*Hon’ble Justices Mr. M.R. Shah and C.T. Ravikumar* of the Hon’ble Supreme Court has allowed appeals of K.L. Swamy and others in part and held that the respective assessees are not liable to pay the surcharge under the proviso to Section 113 of the Income Tax Act, 1961 and the assessee persons other than searched persons shall be liable to pay the interest under Section 158BFA of the Income Tax Act, for late filing of the return under Section 158BC of the Income Tax Act and even for the period prior to 01.06.1999.

*Facts of the Case:*
A search under Section 132 of the Act, 1961 was conducted in the residential premises of the assessee. The assessee was served with the notice under Section 158BD to file the return of income for the block period in 01.04.1986 to 13.02.1997. The assessee filed the return for the block period in response to the notice. The assessing officer levied interest under Section 158BFA(1) for the period from 18.1.1998 to 19.01.1999 and levied interest of Rs. 7,12,296 on the amount of Rs. 27,49,600. The appeal filed by the assessee before the C.I.T.(A) was dismissed by the C.I.T.(A). The appeal filed by the assessee was allowed by the I.T.A.T., Bangalore. Against the same, the Revenue filed I.T.A. before the High Court, Karnataka and the same was allowed. Against the same, the present appeal was filed by the assessee before the Supreme Court.

*Contention of the Parties:*
Section 158BFA applies only when a return “as required by notice under Clause (a) of Section 158BC” has not been furnished within time and in the absence of notice under clause (a) of Section 158BC, the fundamental prerequisite of the section is not fulfilled. If on its plain words, a section does not apply, the liability under that section cannot be imposed. So far as the levy of surcharge under proviso to Section 113 of the Income Tax Act is concerned, it is submitted that as such, the said question is now covered in favour of the Assessee by the Constitution Bench decision of this Court in Vatika Township _[CIT vs. Vatika Township (P) Ltd – (2015) 1 SCC 1]._

*Fine Reasoning:*
1) Since the Constitution Bench in the case of Vatika Township has held that the proviso to Section 113 of the Act, 1961 is only prospective in nature, it is held that in the present case, the assessee is not liable to pay the surcharge under the proviso to Section 113 of the Income Tax Act, 1961. (Parliament specifically chose to make the proviso effective from 01.06.2002).

2) Prior to amendment in Section 158BD, vide the Finance Act, 2002 and even thereafter, the provisions of Section 158BC would be applicable in case of “searched persons”. Section 158BD would be applicable in case of persons “other than searched persons”. Therefore, in case of persons “other than searched person”, no notice under Section 158BC which is required to be issued in case of “searched persons”, was required to be issued. For a person “other than searched person”, notice under Section 158BD is sufficient.