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Tuesday, September 30, 2014

Alibi - Medical evidence - Non examination of senior counsel to prove alibi instead of office colleague is not a ground for discard the evidence - trial court discarded it where as High court accepted the same and acquitted the accused - when the alleged blunt object said to be used by Accused 4,8 high court acquitted as the Doctor deposed that death was caused due to sharp weapon not by blunt objects said to be used by A 4,8 - Apex court held that nothing is there to interfere - regarding conviction and confirmation of sentences of other accused the Apex court held that the trial court and the High Court recorded concurrent findings holding that the appellants accused Dilawar Singh (A-1), Yash Pal (A-3) and Shamsher Singh (A-7) have committed the offences punishable under Section 302 IPC read with Section 149 IPC and under Section 148 IPC. It has been repeatedly held by this Court that even though powers of this Court under Article 136 of the Constitution are very wide, in criminal appeals this Court does not interfere with the concurrent findings of fact, save in exceptional circumstances.= CRIMINAL APPEAL NO. 1362 OF 2010 DILAWAR SINGH & ORS. …Appellants Versus STATE OF HARYANA ...Respondent = 2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41916

 Alibi - Medical evidence - Non examination of senior counsel to prove alibi instead of office colleague is not a ground for discard the evidence - trial court discarded it where as High court accepted the same and acquitted the accused - when the alleged blunt object said to be used by Accused 4,8 high court acquitted as the Doctor deposed that death was caused due to sharp weapon not by blunt objects said to be used by A 4,8 - Apex court held that nothing is there to interfere - regarding conviction and confirmation of sentences of other accused the Apex court held that the trial court and the High Court recorded concurrent  findings holding that the appellants accused Dilawar Singh (A-1), Yash Pal (A-3)  and Shamsher Singh (A-7) have committed the offences  punishable  under  Section 302 IPC read with Section 149 IPC and under Section 148 IPC. It  has  been repeatedly held  by this Court  that  even  though   powers  of  this  Court under Article 136 of the Constitution  are  very wide, in  criminal  appeals this Court does not interfere with the concurrent  findings of   fact,  save in exceptional circumstances.=

Appellants Dilawar Singh (A-1),  Yash  Pal  (A-3)  and  Shamsher
Singh (A-7) in Criminal Appeal No.1362/2010 challenge the legality of  their
conviction for the offence  punishable  under  Section  302  IPC  read  with
Section 149 IPC and the sentence of  life  imprisonment  and  imposition  of
fine of  Rs.5,000/- each  and  also  challenge  their  conviction   for  the
offence punishable under Section 148 IPC and sentence  of  imprisonment  for
two years.
Being aggrieved by the acquittal of Balkar Singh  (A-4),  Ranbir
Singh (A-6) and Charan       Singh (A-8), State of Haryana and Chanda  Singh
– father of the deceased Narinder Singh have preferred Criminal Appeal  Nos.
826/2010 and 830/2010.

Accused Ranbir Singh took a plea of alibi by stating that he  is  practising
as an advocate at Kurukshetra  and was not present    at  the  spot  on  the
date of occurrence.  Gurdev Singh (A-2) also took  the  plea  of  alibi  and
stated that he was posted as a Naib Tehsildar and  in  connection  with  his
official work had gone to village Sardhaheri  on  the  date  of  occurrence.
 The
trial court 
acquitted Gurdev Singh  (A-2),  Ashok  Kumar  (A-5)  and  Dalbir
Singh(A-9).

Apex court held that
Regarding convictions

The trial court and the High Court recorded concurrent  findings
holding that the appellants accused Dilawar Singh (A-1), Yash Pal (A-3)  and
Shamsher Singh (A-7) have committed the offences  punishable  under  Section
302 IPC read with Section 149 IPC and under Section 148 IPC.
 It  has  been
repeatedly held  by this Court  that  even  though   powers  of  this  Court
under Article 136 of the Constitution  are  very wide, in  criminal  appeals
this Court does not interfere with the concurrent  findings of   fact,  save
in exceptional circumstances.

Regarding acquittals of High court

A-6, Ranbir Singh  has put forth defence  plea  of  alibi.  A-6,
Ranbir Singh was a practising lawyer at Kurukshetra and he was working as  a
junior advocate in the office of  Senior  Advocate,  Mr.  S.C.  Sharma.  Mr.
Yudhvir Singh, advocate was examined as DW-6, who was also  practising  with
Mr. S.C.Sharma.
 He stated that on the date  of  occurrence     A-6,  Ranbir
Singh was in the  office  of  Senior  Advocate  and  not  at  the  place  of
occurrence.
Trial Court has not accepted the plea of alibi  raised  by  him
only on the ground that the Senior Advocate with whom A-6, Ranbir Singh  was
practising was not examined.
The High Court  held  that  evidence  of  DW-6
cannot be doubted as there was no reason  to  disbelieve  him  and  plea  of
alibi taken by A-6, Ranbir Singh cannot be rejected on the ground  that  his
Senior Advocate Mr. S.C. Sharma was not examined and on  those  findings  as
recorded, High Court acquitted Ranbir Singh, the 6th  accused.
We  do  not
see any perversity in the appreciation of evidence  by  High  Court  and  we
find no substantial ground to interfere with  the  acquittal of A-6.
34.          Insofar  as  A-4,  Balkar  Singh  and  A-8,  Charan  Singh  are
concerned, the case of the prosecution is that
 A-4   gave  gandasi  blow  to
Narinder Singh on his left arm and A-8,
Charan Singh gave a  blow  with  his
sword on the right leg of Narinder Singh.
PW-10, Dr. Surinder Singh  stated
that death of the deceased was caused by sharp edged weapon  and  could  not
have been caused by any blunt weapon.
The High Court was of  the  view  that
the overt act of A-4, Balkar Singh  and  A-8,  Charan  Singh,  do  not  find
corroboration with medical evidence and on those  findings  the  High  Court
set aside the conviction of A-4, Balkar Singh  and  A-8,  Charan  Singh  and
acquitted them.
We, therefore, do not find any merit in the appeal preferred  by
accused (A-1, Dilawar Singh), (A3, Yash Pal),  and  (A-7,  Shamsher  Singh).
The appeal fails and the same is dismissed.  The appeals  against  acquittal
preferred by the State and by Chanda Singh also are dismissed.

   2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41916 

                                                             REPORTABLE

                        IN THE SUPREME COURT OF INDIA
                       CRIMINAL APPELLATE JURISDICTION

                      CRIMINAL APPEAL NO. 1362 OF 2010

DILAWAR SINGH & ORS.                        …Appellants

                                   Versus

STATE OF HARYANA                                 ...Respondent
                                    WITH

                       CRIMINAL APPEAL NO. 826 OF 2010

STATE OF HARYANA                                 .. Appellant

                                   Versus

BALKAR SINGH & ORS.                               ..Respondents
                                     AND

                       CRIMINAL APPEAL NO. 830 OF 2010

CHANDA SINGH                                          .. Appellant

                                   Versus

RANBIR SINGH & ORS.                               ..Respondents

                               J U D G M E N T


R. BANUMATHI, J.

            Appellants Dilawar Singh (A-1),  Yash  Pal  (A-3)  and  Shamsher
Singh (A-7) in Criminal Appeal No.1362/2010 challenge the legality of  their
conviction for the offence  punishable  under  Section  302  IPC  read  with
Section 149 IPC and the sentence of  life  imprisonment  and  imposition  of
fine of  Rs.5,000/- each  and  also  challenge  their  conviction   for  the
offence punishable under Section 148 IPC and sentence  of  imprisonment  for
two years.  Being aggrieved by the acquittal of Balkar Singh  (A-4),  Ranbir
Singh (A-6) and Charan       Singh (A-8), State of Haryana and Chanda  Singh
– father of the deceased Narinder Singh have preferred Criminal Appeal  Nos.
826/2010 and 830/2010.
2.          Briefly stated  case  of  the  prosecution  is  that    deceased
Narinder Singh was running a shop for the sale of fertilizers at  the  Ladwa
Town and he was residing near Veterinary Hospital.  On  22.8.1998  at  about
8.45 p.m. Narinder Singh  was driving his motor cycle  and  when  he  turned
towards  Babain Road, in Ladwa  little ahead  of  the  veterinary  hospital,
Dilawar Singh (A-1), Gurdev  Singh  (A-2)  and  Yash  Pal  (A-3)  and  other
accused persons  namely Balkar Singh (A-4), Ashok Kumar (A-5)  Ranbir  Singh
(A-6), Shamsher Singh  (A-7),  Charan  Singh  (A-8)  and  Dalbir  Singh(A-9)
intercepted him.  Dilawar Singh (A-1), Yash Pal (A-3) and Shamsher Singh (A-
7) gave blow on the head of deceased Narinder Singh  with  their  respective
cutter and Narinder Singh fell down along with his motor cycle  and  shouted
Bachao Bachao. At that time Chanda Singh-father of the deceased  along  with
his brother Hakam Singh came nearby in  their  car   and   saw  the  accused
being attacked.  Chanda Singh and Hakam Singh cried  for  help  and  shouted
‘NA MARO NA MARO’.  Gurdev Singh (A-2) and Charan Singh (A-8)  caused  sword
blows on the  left leg and right leg of Narinder Singh.  Ranbir Singh  (A-6)
gave gandasi blow on the right hand of Narinder Singh whereas  Balkar  Singh
(A-4) gave gandasi blow to Narinder  Singh  on  his  left  arm.   Two  other
assailants  namely  Ashok  Kumar  (A-5)  and  Dalbir  Singh  (A-9)  attacked
Narinder Singh with hockey sticks and caused  injuries  to  Narinder  Singh.
In the meanwhile, Sham Singh (PW-7) also reached there and  he  too  shouted
at the accused not to kill Narinder Singh.  All the accused  fled away  from
the spot with their respective  weapons  in  their   motor  cycles.   Chanda
Singh (PW-6), Hakam Singh and Sham Singh (PW-7)  chased  the  assailants  in
their respective vehicles but they could not catch hold of  them.
3.          Further case of prosecution is that on 22.8.1998 at  about  9.00
p.m. ASI Charan Dass (PW-11) who was on  patrolling  duty  received  message
about an injured person lying near Veterinary Hospital, Ladwa and PW-11  and
police party went to the scene of occurrence and  shifted  injured  Narinder
Singh to Community Health Centre, Ladwa  where  Dr.  Ashwini  Kumar  (DW-1),
Medical Officer  of the Health Centre examined him and found him not fit  to
make  statement. In the meanwhile, Chanda Singh and Hakam Singh reached  the
spot and found that injured Narinder Singh had already been shifted  to  the
hospital by the police.   Chanda Singh (PW-6) went  to  the  Ladwa  Hospital
and Hakam Singh went to the   village  to  inform  the  family  members   of
Narinder Singh  about the incident.  When  Chanda  Singh  reached  Community
Health Centre at Ladwa, injured Narinder Singh was, in the process of  being
referred  to  the  Lok  Nayak  Jai  Prakash  Hospital,  Kurukshetra  as  his
condition  was  very   serious.   In  the  hospital  at   Kurukshetra,   Dr.
S.C.Grover (PW-1)  examined  the  injured–Narinder  Singh  and  opined  that
Narinder Singh was unfit to make any  statement.   Since  the  condition  of
Narinder Singh was serious, he was immediately referred  to  PGI  Chandigarh
and Chanda Singh shifted injured Narinder  Singh  to  PGI  Chandigarh.   Dr.
Munish Kumar (PW-9)  of  PGI  Chandigarh  admitted  Narinder  Singh  in  the
hospital on 23.8.1998 at about 2.30 a.m. and  intimation  was sent   to  the
police post located near the hospital. On receipt of  information  from  the
hospital,  ASI  Karam  Chand  (PW-4)  went  to  the  hospital  and  on   his
application  Dr. Kanya Rejangam (PW-8) opined that injured  Narinder   Singh
was unfit  to make statement.  Injured Narinder Singh succumbed to  injuries
at about  5.30 a.m. on 23.8.1998  and death intimation  was  sent   to   the
Police Post, PGI Chandigarh.  On the same day Chanda  Singh  came  back   to
Ladwa and went to the police station and lodged the complaint on  the  basis
of which FIR was registered at  Ladwa  Police Station, ASI Charan Dass  (PW-
11) went to PGI Chandigarh and conducted  the inquest  on the dead  body  of
deceased  Narinder  Singh.  In  PGI,  Dr.  Surinder           Singh  (PW-10)
conducted autopsy on the body of  Narinder  Singh   and   noted  18  incised
injuries and other injuries all over the body of  the  deceased  and  issued
the Post Mortem Certificate.  Dr. Surinder Singh  (PW-10)  opined  that  the
deceased died of cut injuries on the  head  and  due  to  haemorrhage   from
multiple  incised wounds.  The  accused  surrendered  before  the  court  on
various dates and on information of their surrender, Inspector  Jagdish  Ram
(PW-12) took the accused to police custody and  based  on  their  confession
the  weapons  and  motor  cycles  were   seized.     After   completion   of
investigation, the accused were charge sheeted under Section  302  IPC  read
with Section 149 IPC.
4.          To  bring  home  the  guilt  of  the  accused,  prosecution  has
examined PWs 1 to 16 and placed reliance on documents and material  objects.
The  accused  were  questioned  under  Section   313   Cr.P.C.   about   the
incriminating evidence and  circumstances  and  they  denied  all  of  them.
Accused Ranbir Singh took a plea of alibi by stating that he  is  practising
as an advocate at Kurukshetra  and was not present    at  the  spot  on  the
date of occurrence.  Gurdev Singh (A-2) also took  the  plea  of  alibi  and
stated that he was posted as a Naib Tehsildar and  in  connection  with  his
official work had gone to village Sardhaheri  on  the  date  of  occurrence.
The accused examined DWs 1to 6 as witness on their side.
5.           Upon   consideration  of  the  evidence,   the    trial   court
convicted and sentenced Dilawar Singh (A-1), Yash Pal  (A-3),  Balkar  Singh
(A-4), Ranbir Singh (A-6), Shamsher  Singh  (A-7)  and  Charan  Singh  (A-8)
under Section 302  IPC read with Section  149  IPC  and  sentenced  them  to
undergo life imprisonment and to pay a fine of Rs.5,000/- each with  default
clause and also convicted them for the  offence   punishable  under  Section
148 IPC and sentenced to undergo rigorous imprisonment for  two  years.  The
trial court acquitted Gurdev Singh  (A-2),  Ashok  Kumar  (A-5)  and  Dalbir
Singh(A-9).
6.           Being aggrieved  by  the  conviction  and  sentence,  convicted
accused 1,3,4 and 6 to 8 preferred appeal before the High Court.   The  High
Court confirmed  the conviction of  Dilawar Singh (A-1), Yash Pal (A-3)  and
Shamsher Singh (A-7)  and acquitted   Balkar Singh (A-4), Ranbir  Singh  (A-
6) and  Charan Singh (A-8).  Being  aggrieved  by  the  conviction,  Dilawar
Singh (A-1), Yash Pal (A-3) and Shamsher Singh  (A-7)  have  filed  Criminal
Appeal No. 1362/2010.  Being aggrieved by the acquittal of Balkar Singh  (A-
4), Ranbir Singh (A-6) and Charan Singh (A-8), State has preferred  Criminal
Appeal                  No.826/2010 and Chanda Singh  (PW-6)–father  of  the
deceased Narinder Singh has filed  Criminal Appeal No. 830/2010.
7.          Mr. Giri, learned Senior Counsel  appearing  for  the  convicted
accused Dilawar Singh  (A-1),  Yash  Pal  (A-3)  and  Shamsher  Singh  (A-7)
submitted that serious doubts arise as to the presence of Chanda Singh  (PW-
6) in the scene of occurrence  and trial court as well as High Court   ought
not to have based the conviction on the evidence of PW-6 and  conviction  of
the aforesaid  accused is not sustainable.
8.          Mr. Rao Ranjit, learned counsel, appearing  for  the  State  has
taken us through the evidence of Chanda Singh (PW-6) and Sham  Singh  (PW-7)
and other evidence and submitted that evidence of  PW-6 is corroborated   by
evidence of PW-7, recovery of weapons and  Serology Report and  courts  have
recorded concurrent findings of fact that PW-6 is  a  reliable  witness  and
the  same  does not  warrant interference.   The  learned  counsel   further
submitted that when the   learned courts have  believed the evidence of  PWs
6 and 7  qua  Dilawar Singh(A-1), Yash Pal(A-3)   and  Shamsher  Singh(A-7),
the courts ought not to have disbelieved the case of prosecution qua  Balkar
Singh (A-4),  Ranbir Singh (A-6) and  Charan Singh (A-8)  for  reversal   of
acquittal.
9.          We have heard the learned counsel appearing for the  accused  4,
6 and 8 who were acquitted and also            Mr. Shishpal  Laler,  learned
counsel appearing for the appellant- Chanda Singh.
10.         The prosecution case  revolves  around  the  ocular  version  of
Chanda Singh (PW-6) father of deceased  Narinder  Singh  who  witnessed  the
occurrence along with his brother Hakam Singh and Sham Singh (PW-7).  PWs  6
and 7 have spoken about the attack on the deceased and overt act of  accused
Dilawar Singh (A-1), Yash Pal (A-3) and Shamsher  Singh  (A-7)  and  others.
Hakam Singh was not examined.  Evidence of Sham  Singh  (PW-7)  corroborates
the version of Chanda Singh (PW-6). Learned courts below found the  evidence
of PW-6 trustworthy and recorded respective findings for convicting  Dilawar
Singh (A-1), Yash Pal (A-3) and Shamsher Singh (A-7)  and  acquitting  other
accused.
11.         Contending that Chanda  Singh (PW-6) could  not  have  witnessed
the occurrence  and the learned  courts erred  in  placing   reliance   upon
version of PW-6,  evidence  of  PW-6  is   interalia   assailed  on  various
grounds :- (i)  PW-6 had no reason  to  be   present  in  Babain  Road  near
Veterinary Hospital, Ladwa; (ii) Conduct of PW-6 is  not  natural   that  on
witnessing  the attack on  his  son,  he  had  not  naturally   reacted   in
trying to save his son but he is alleged to have chased the  accused;  (iii)
PW-6 had he been the witness, he would  have given  statement to the  police
immediately after  the  occurrence   and  there  would  not  have  been   an
inordinate delay in registration of FIR i.e. on 23.8.1998 at 11.00  A.M  and
the delay in registration of  FIR falsifies his evidence.
12.         Insofar as the contention of the appellants  that  Chanda  Singh
(PW-6) had no reason to be present in  the  place  of  occurrence,  deceased
Narinder Singh was dealing in fertilizers at Ladwa and  was  residing  in  a
house near the veterinary hospital of the town.  PW-6 has stated that  their
home  place Mehra is at a distance of 5 kms from Ladwa and is  connected  by
a pakka  road which leads  towards  Babain  from  Ladwa.  Village  Mehra  is
connected with this            Ladwa - Babain   road  by  a  link  road  and
when this link road is  connecting  PW-6’s  home  village  Mehra,  there  is
nothing  unusual about Chanda Singh  going  through   Babain  Road  and  his
presence in the  place of occurrence.  It is unreasonable to  contend   that
Chanda Singh (PW-6) had  no compelling reason  to be present  in  the  place
of occurrence.
13.         Learned counsel for the appellant contended that the conduct  of
 Chanda Singh (PW-6)  is unnatural and  being  father of  the  deceased  and
on seeing his son belaboured,    PW-6 had not swiftly   acted  to  save  his
son  and neither PW-6 nor Hakam Singh  or   Sham  Singh  (  PW-7)  took  the
deceased to the hospital and Chanda Singh and other  witnesses  are  alleged
to have left the injured at the place of incident and   proceeded  to  chase
the assailants and such unnatural  conduct of PW-6 only shows  that  he  was
not present at the place of occurrence.
14.         We find no merit in the submission that Chanda Singh  (PW-6)  is
to be disbelieved on the ground that  he  has  not  acted  in  a  particular
manner to save his son.  Every person who witnesses a murder reacts  in  his
own  way.  On seeing Narinder Singh being attacked,  PW-6  and  Hakam  Singh
might have been shocked and stunned.  Being two  together,  PW-6  and  Hakam
Singh might have perhaps thought of catching the assailants  and  appear  to
have chased them by following them in the car.
15.         In Rana Partap and Ors. vs. State of Haryana (1983) 3  SCC  327,
while dealing with the behaviour of the witnesses, this Court opined thus:
“6….Every person  who witnesses a murder reacts in his own  way.   Some  are
stunned, become speechless and stand  rooted   to  the  spot.   Some  become
hysteric and start wailing.  Some start shouting for help.  Others run  away
to keep themselves  as far removed from the spot  as possible.   Yet  others
rush to the rescue of the victim, even going  to  the   extent  of  counter-
attacking the assailants.  Every one reacts in his own special  way.   There
is no set rule of natural reaction.  To discard the evidence  of  a  witness
on the ground that  he  did  not  react  in  any  particular  manner  is  to
appreciate evidence in a wholly unrealistic and unimaginative way.”

   16.           In State of H.P. v. Mast Ram (2004) 8 SCC 660 it  has  been
stated that there is no set rule that  one must react  in a particular  way,
for the natural reaction of man is  unpredictable.  Everyone reacts in   his
own way and, hence, natural  human  behaviour  is  difficult   to  prove  by
credible  evidence.  It has to be appreciated in the context of given  facts
and circumstances of the case.  Similar view has  been  reiterated  in  Lahu
Kamlakar  Patil  and  Anr.  v.  State  of  Maharashtra  (2013)  6  SCC  417.

17.         Behaviour of the witnesses or their reactions would differ  from
situation  to  situation  and  individual  to  individual.  Expectation   of
uniformity in the reaction of witnesses would be  unrealistic  and  no  hard
and fast rule can  be   laid  down  as  to  the  uniformity  of   the  human
reaction.  The evidence of PW-6 is not to be disbelieved simply  because  he
did not react in a particular manner.  PW-6 explained how he happened to  be
there in  the  place  of  occurrence  and  had  cogently  spoken  about  the
occurrence and his  evidence  remained  unscathed  despite  searching  cross
examination.
18.         In his evidence  Chanda  Singh  (PW-6)  stated  that  they  have
chased the assailants for about 300 – 400  meters  and  then  abandoned  the
chase and returned to the place of occurrence after  fifteen   minutes.   In
the meanwhile, injured Narinder Singh  was  shifted   to   Community  Health
Centre, Ladwa by ASI Charan Dass (PW-11).  Sham  Singh  (PW-7)  stated  that
after  chasing the assailants they have returned to the place of  occurrence
within 5-7 minutes.  On behalf of the  appellants,  it  was  contended  that
chasing the accused to a distance of 200–300 meters would  have  taken  only
about 5-7 minutes  and the fact that  Narinder  Singh  was  shifted  to  the
hospital by the time PW-6 returned  to the place of occurrence   only  shows
that PW-6 was not present at the time of occurrence and  that  he  has  been
planted as an  eye-witness subsequently.  Version of  PW-6  that  they  have
chased the assailants and came back after  about  15-20  minutes,  does  not
affect  his credibility  nor the prosecution case. It is brought  on  record
that on the date of occurrence i.e. 22.8.1998 there was  solar  eclipse  and
Solar Eclipse Fair  was going  on   in  Kurukshetra   and  large  number  of
people congregated and the place  of  occurrence   and   nearby   place  was
crowded  with  temporary bazaars and exhibitions and therefore   PW-6  could
come back  to the place of occurrence  only after  15  minutes  and  in  the
meanwhile injured Narinder  Singh  was  shifted       to   Community  Health
Centre, Ladwa by ASI Charan         Dass (PW-11).  The  alleged  time  taken
in chasing the accused  and the fact that in the meanwhile   Narinder  Singh
was shifted  to  the Community Health Centre, Ladwa, in our view,  does  not
 militate  against the credibility  of PW-6.
19.         Learned counsel  for the appellants then contended  that  police
station in Ladwa is situated within a  short  distance  from  the  place  of
occurrence and yet no information was given to the  police  immediately.  It
was submitted that Chanda Singh (PW-6) had  not given statement   to  police
either at Ladwa or at Kurukshetra or atleast to PW-4, ASI   Karam  Chand  of
Police Post  at PGI Chandigarh  who came to  the  hospital   on  receipt  of
information  of admission  of  injured Narinder Singh in PGI Chandigarh  and
FIR was registered only on 23.8.1998  at  11.00  A.M.  and   the  inordinate
delay in giving information to the  police and registration  of  FIR  raises
serious  doubts  about   the   credibility    of    prosecution   case   and
trustworthiness of PW-6.
20.         We find no merit  in the submission that  delay in  registration
of   FIR  is  fatal  to the prosecution case  for the reason that  delay  is
satisfactorily explained by the prosecution.  Let  us  briefly  recapitulate
the sequence of events.  After chasing the assailants for few minutes,  PW-6
came to Community Health Centre, Ladwa  at 9.00  –  9.15  P.M.  Hakam  Singh
went to village Mehra to inform   the  family   members  and  for  arranging
money.  By the time  PW-6  arrived  in  the  Ladwa  Hospital,  the  hospital
authorities were making  arrangement to refer  the  injured  to  Kurukshetra
as his condition was  very  serious.    By  the  time  PW-6  went  to  Ladwa
Hospital, PW-11 left to village  Mehra  to  inform  the  family  members  of
injured Narinder Singh.  Evidently in Ladwa Hospital, PW-6  could  not  have
met ASI Charan Dass  (PW  11).  PW-6  shifted  the  injured  to  Kurukshetra
Hospital at        10.30-11.00 P.M. and then  shifted  Narinder  Singh  from
Kurukshetra Hospital to PGI Chandigarh. They left Kurukshetra between 11.30-
12.00  P.M.  for  PGI  and  reached  PGI   Chandigarh   at   2.30  A.M.   on
23.8.1998.  ASI Charan Dass (PW 11) reached Kurukshetra Hospital   at  about
11.30 P.M. and moved an application to the doctor regarding fitness  of  the
injured  to make  a statement.  Again in Kurukshetra there  was  hardly  any
time for PW-6 to meet  PW-11,  ASI  Charan   Dass.    There  is  nothing  on
record  showing that PW-6 met PW-11  either  at  Ladwa  or  at  Kurukshetra.
When PW-6 was busy in arranging  medical aid  to  save  his  son,  delay  in
lodging  the  FIR cannot be said to  be  fatal.   The   sequence  of  events
clearly show that PW-6 was taking all steps to save the  life  of   his  son
and making  arrangements for  money, ambulance etc.
21.         Whether the delay  is so long as to draw a cloud   of  suspicion
on the prosecution case will depend upon variety of factors which will  vary
from case to case.    As pointed out by the learned courts,  from  the  very
beginning the condition of  injured Narinder Singh  was   very  serious  and
he was struggling for existence  and his father PW-6 and uncle  Hakam  Singh
were concerned about the welfare  of the injured.  While so, they could  not
have thought of approaching  the  police first  and  informing   them  about
the incident and the assailants.   Where  delay  in  lodging  complaint  and
registration of FIR has been satisfactorily explained, the delay  by  itself
was no ground for disbelieving the prosecution  evidence  particularly  when
it had  been accepted both by the Sessions Court and the High Court.
22.         Coming to the  further  contention  of  the  appellants  raising
doubts about   the credibility of PW-6  in  not  making  any  statement   at
least to ASI  Karam Chand (PW-4) of Police Post PGI Chandigarh,  on  receipt
of  the information regarding  admission  of  injured  Narinder  Singh,  ASI
Karam Chand (PW-4)  went to the PGI Hospital  to record  the  statement   of
injured  Narinder Singh. At that time, Chanda  Singh  (PW-6)  was  attending
his son.  The contention of the appellants is that   PW-6 had  the  occasion
to  inform the police  about the incident   at least to ASI Karam Chand (PW-
4) but the same was not done which raise serious doubts about  the  presence
of Chanda Singh (PW-6) at  the  scene  of  occurrence.  By  perusal  of  the
evidence of PW-4, it is seen that on receipt  of  intimation  (rukka)   from
PGI Chandigarh, PW-4 rushed to the  hospital  for  recording  the  statement
of  injured Narinder Singh.  Since Chanda Singh (PW-6)  did  not  offer  any
statement  to ASI Karam Chand  (PW-4), since Narinder Singh was then  alive,
there was no occasion for recording  the statement  of Chanda Singh.  It  is
also brought in evidence that after the death of  Narinder Singh  ASI  Karam
Chand (PW-4) did not  go to  PGI for the second time.  In our  view,   there
is no merit in the submission  that PW-6 is to be disbelieved on the  ground
that he did not  choose to give  any statement at least to ASI  Karam  Chand
(PW-4).
23.         Narinder Singh died at 5.30 A.M.  on  23.8.1998  and  thereafter
Chanda Singh (PW-6) went to Ladwa Police Station on 23.8.1998 at 11.00  A.M.
and lodged the complaint and FIR was registered  as Ext PE No. 314/1998   at
Ladwa Police Station.  Sequence of  events  clearly  show   that  PW-6   was
attending  his son and was taking  steps to shift   injured  Narinder  Singh
from  Community Health Centre Ladwa  to  Lok  Nayak  Jai  Parkash  Hospital,
Kurukshetra and from Kurukshetra to PGI Chandigarh  and  PW-6  was  busy  in
arranging  for money, medical aid and ambulance etc.  The  delay  of   about
15 hours  and 15 minutes  in lodging  the FIR,   in  our  view,   cannot  be
said to be fatal.  Learned courts have  recorded   concurrent  finding  that
the  delay in registration  of FIR  has been  satisfactorily  explained  and
the delay is not fatal to the prosecution case.
24.         While appreciating the  evidence  of  a  witness,  the  approach
must be whether the evidence  of the witness  read as  a  whole  appears  to
have a ring  of truth. Once that impression is formed it  is  necessary  for
the court  to scrutinize  the evidence,  to find out whether it  is  against
the  general tenor of the prosecution  case.   Learned  courts  below  found
evidence of PW-6 reliable and accepted the same.  The power  of  this  Court
under Article 136 of the  Constitution  are  very  wide.   But  in  criminal
appeals this Court does not interfere with the concurrent findings  of  fact
save in exceptional circumstances. When the learned courts below  found  the
evidence of PW-6 reliable and acceptable, we do not find any  perversity  in
the approach of the  learned  courts  in  accepting  the  evidence  of  PW-6
warranting interference in exercise of  jurisdiction under  Article  136  of
the Constitution of India.
25.         Evidence of Chanda Singh (PW-6) is corroborated by the  evidence
of Sham Singh (PW-7).  Credibility of PW-7 is assailed on  the  ground  that
he was also challaned along with Narinder Singh in  criminal  case  in  1994
and that PW-7 has animosity against the accused  persons.   The  mere   fact
that PW-7 was also challaned along with  Narinder  Singh  and  that  he  was
inimical towards the accused would not result  in  mechanical  rejection  of
evidence of  such a witness; but would only make the  court  cautious  while
evaluating   the   testimony  of  the  witness  and  we  do  not  find   any
infirmity in the  appreciation of  evidence  of  PW-7   by  the  courts  and
relying  upon the same as corroborative evidence.
26.         PWs 6 and 7 have spoken in one voice against Dilawar  Singh  (A-
1), Yash Pal (A-3)  and  Shamsher  Singh  (A-7).   Their  evidence  is  also
corroborated by the medical evidence  of  Dr.  Surinder  Singh  (PW-10)  who
conducted the autopsy on the body of  Narinder Singh.   As  per  Post-Mortem
Certificate, 18 incised wounds were found on the body of the deceased  which
strengthen the prosecution case as to the overt act of the accused 1, 3  and
7.  Based on the confessional statement of the disclosure of  Dilawar  Singh
(A-1), Yash Pal (A-3) and Shamsher   Singh  (A-7)   cutters  were  recovered
and detection of human blood in those cutters also  lends  credence  to  the
prosecution case.
27.         Placing  reliance  on  the  evidence  of  DW-1,              Dr.
Ashwini Kumar feeble attempt was made to contend that serious  doubts  arise
about the prosecution case.  Of  course,  according  to  DW-1,  Dr.  Ashwini
Kumar who admitted injured Narinder  Singh   in  Ladwa  Hospital,  he  found
only five injuries on the person of  the injured and  he  opined  that   the
same had been caused by blunt weapon.  As per Post Mortem  Certificate    as
many as 18 incised wounds were found on the  body  of  Narinder  Singh.   As
held by the learned courts DW-1 did not examine the injuries on  the  person
of the injured in  right  perspective  and  did  not  correctly  record  the
injuries on the  person  of  Narinder  Singh.   Opinion  of  DW-1  that  the
injuries were the result of blunt weapon is false and  for  that  reason  he
has been rightly challaned by the police for the  offence  punishable  under
Section 218 IPC on the ground that he had  prepared  the  wound  certificate
falsely.  Reasonings contained in paragraphs 44 and 45 in  the  judgment  of
the Sessions Court sufficiently answer the arguments advanced on  behalf  of
the appellant and the evidence of DW-1 is of no assistance to  the  accused.

28.         The trial court and the High Court recorded concurrent  findings
holding that the appellants accused Dilawar Singh (A-1), Yash Pal (A-3)  and
Shamsher Singh (A-7) have committed the offences  punishable  under  Section
302 IPC read with Section 149 IPC and under Section 148 IPC.   It  has  been
repeatedly held  by this Court  that  even  though   powers  of  this  Court
under Article 136 of the Constitution  are  very wide, in  criminal  appeals
this Court does not interfere with the concurrent  findings of   fact,  save
in exceptional circumstances.
29.          Considering the scope of power of this Court under Article  136
of the Constitution in criminal appeals,  in the case
of Ganga Kumar Srivastava vs. State of  Bihar  (2005)  6  SCC  211,   it  is
observed:
“From the aforesaid series of decisions  of this Court on  the  exercise  of
power of the Supreme Court  under Article 136 of the Constitution  of  India
following principles emerge:-

      (i) The powers of this Court  under Article  136 of  the  Constitution
are very wide  but in criminal appeals  this  Court  does  not  interference
with the concurrent findings  of fact save  in exceptional  circumstances.
      (ii) It is open to this Court   to  interfere  with  the  findings  of
fact  given  by the High Court,  if the High  Court    has acted  perversely
 or otherwise  improperly.
      (iii) It is open to this  Court  to invoke  the  power  under  Article
136 only in very exceptional  circumstances as  and when  a question of  law
of general public importance  arises or a  decision  shocks  the  conscience
of the Court.
      (iv) When the evidence adduced by the prosecution  fell short  of  the
test  reliability and acceptability  and as  such it is  highly  unsafe   to
act upon it.
(v) Where  the appreciation of evidence  and  finding  is  vitiated  by  any
error of law or procedure  or found  contrary  to the principles of  natural
justice, errors of record  and misreading  of the evidence,  or  where   the
conclusions   of   the   High   Court    are   manifestly    perverse    and
unsupportable  from the evidence  on record.”


30.          In the case of Charanjit  & Ors. vs. State of Punjab  and  Anr.
(2013) 11 SCC 163, it was observed as under:-
“26. Thus, the trial court and the  High  Court   have  recorded  concurrent
findings  of facts holding  the appellants  guilty  of  the  offences  under
Sections 323/34, 504/34, 376(2) (a) and 376 (2) (g)  IPC and  the  appellant
Radha Krishan guilty  of the offence  under Section 342 IPC  also.   It  has
been repeatedly held by this Court  that even though  the  powers   of  this
Court  under Article 136 of the Constitution  are  very  wide,  in  criminal
appeals this Court does not interfere    with  the  concurrent  findings  of
facts, save in  exceptional  circumstances   where  there  has   been  grave
miscarriage    of justice {Sambhu Das v.  State  of  Assam   (2010)  10  SCC
374}.  As we have found that the concurrent findings of  facts  recorded  by
the trial court  and the High Court   in  this  case  are  based  on   legal
evidence and there is no miscarriage of justice as such by  the  two  courts
while arriving at the said findings, we are not   inclined  to  disturb  the
impugned  judgment  of the High Court  in exercise of our  discretion  under
Article 136 of the Constitution.”

31.          As we  have  found    that  the  concurrent  findings  of  fact
recorded by the trial court and the High  Court  qua  Dilawar  Singh  (A-1),
Yash Pal (A-3) and Shamsher Singh (A-7)    are based  on  evidence,  in  our
view, there is no miscarriage  of  justice   by  the  learned  courts  while
arriving at the said findings and  we are  not  inclined  to   disturb   the
impugned judgment  of the High Court in exercise of   our  discretion  under
Article 136 of the  Constitution.   The  appeal  preferred  by  the  Dilawar
Singh(A-1), Yash Pal (A-3) and Shamsher Singh (A-7)  fails   and  is  liable
to be dismissed.
32.         Appeals   against  Acquittal   qua  Balkar  Singh         (A-4),
Ranbir Singh (A-6)  and  Charan  Singh  (A-8):-   Being  aggrieved  by   the
acquittal of Balkar Singh (A-4), Ranbir Singh (A-6)  and Charan  Singh   (A-
8), State and Chanda Singh  have preferred Criminal Appeal No. 826/2010  and
Criminal Appeal No.  830/2010.
33.         A-6, Ranbir Singh  has put forth defence  plea  of  alibi.  A-6,
Ranbir Singh was a practising lawyer at Kurukshetra and he was working as  a
junior advocate in the office of  Senior  Advocate,  Mr.  S.C.  Sharma.  Mr.
Yudhvir Singh, advocate was examined as DW-6, who was also  practising  with
Mr. S.C.Sharma.  He stated that on the date  of  occurrence     A-6,  Ranbir
Singh was in the  office  of  Senior  Advocate  and  not  at  the  place  of
occurrence.  Trial Court has not accepted the plea of alibi  raised  by  him
only on the ground that the Senior Advocate with whom A-6, Ranbir Singh  was
practising was not examined.  The High Court  held  that  evidence  of  DW-6
cannot be doubted as there was no reason  to  disbelieve  him  and  plea  of
alibi taken by A-6, Ranbir Singh cannot be rejected on the ground  that  his
Senior Advocate Mr. S.C. Sharma was not examined and on  those  findings  as
recorded, High Court acquitted Ranbir Singh, the 6th  accused.   We  do  not
see any perversity in the appreciation of evidence  by  High  Court  and  we
find no substantial ground to interfere with  the  acquittal of A-6.
34.          Insofar  as  A-4,  Balkar  Singh  and  A-8,  Charan  Singh  are
concerned, the case of the prosecution is that A-4   gave  gandasi  blow  to
Narinder Singh on his left arm and A-8, Charan Singh gave a  blow  with  his
sword on the right leg of Narinder Singh.  PW-10, Dr. Surinder Singh  stated
that death of the deceased was caused by sharp edged weapon  and  could  not
have been caused by any blunt weapon. The High Court was of  the  view  that
the overt act of A-4, Balkar Singh  and  A-8,  Charan  Singh,  do  not  find
corroboration with medical evidence and on those  findings  the  High  Court
set aside the conviction of A-4, Balkar Singh  and  A-8,  Charan  Singh  and
acquitted them.
35.         The court of appeal would  not  ordinarily  interfere  with  the
order of acquittal unless the approach is vitiated by  manifest  illegality.
In an appeal against acquittal, this Court will not interfere with an  order
of acquittal merely because  on the evaluation of the evidence, a  different
plausible view may arise and   views  taken  by  the  courts  below  is  not
correct.  In other words, this  Court must come to the conclusion  that  the
views taken by the learned courts below, while  acquitting,  cannot  be  the
views of a reasonable person on the material on record.
36.         In Chandrappa and Ors. v. State of Karnataka (2007) 4  SCC  415,
the scope of power  of  appellate  court  dealing  with  an  appeal  against
acquittal has been considered and this Court held as under:
“42…..(4)   An appellate court, however, must bear in mind that in  case  of
acquittal, there is double presumption in favour of the  accused.   Firstly,
the presumption of innocence is  available  to  him  under  the  fundamental
principle of criminal jurisprudence that every person shall be  presumed  to
be innocent unless he  is  proved  guilty  by  a  competent  court  of  law.
Secondly, the accused having secured his acquittal, the presumption  of  his
innocence is further reinforced, reaffirmed and strengthened  by  the  trial
court.
(5)   If two reasonable  conclusions  are  possible  on  the  basis  of  the
evidence on record, the appellate court should not disturb  the  finding  of
acquittal recorded by the trial court.”


Unless there are substantial and compelling reasons, the order of  acquittal
is not required to be reversed in appeal.  It has been so  stated  in  State
of Rajasthan vs. Shera Ram (2012) 1 SCC 602.
37.         On evaluation of the evidence found  by  the  High  Court  while
recording an order of acquittal, in our  view,  does  not  suffer  from  any
infirmity or illegality or manifest error.  We see no  reason  to  interfere
with the order of acquittal of Accused 4, 6 and 8.
38.         We, therefore, do not find any merit in the appeal preferred  by
accused (A-1, Dilawar Singh), (A3, Yash Pal),  and  (A-7,  Shamsher  Singh).
The appeal fails and the same is dismissed.  The appeals  against  acquittal
preferred by the State and by Chanda Singh also are dismissed.

                                                              ………………………………J.
                                                               (T.S. Thakur)



                                                             ……………………………….J.
                                                              (R. Banumathi)

New Delhi;
September 16, 2014

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29


Proviso appended to sec.113 of Income Tax Act - prospective or clarificatory & curative in nature or retrospective - Apex court held that The charge in respect of the surcharge, having been created for the first time by the insertion of the proviso to Section 113, is clearly a substantive provision and hence is to be construed prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove 'hardships' only of the assessee, not of the Department. On the contrary, imposing a retrospective levy on the assessee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. The aforesaid discursive of ours also makes it obvious that the conclusion of the Division Bench in Suresh N. Gupta treating the proviso as clarificatory and giving it retrospective effect is not a correct conclusion. Said judgment is accordingly overruled. As a result of the aforesaid discussion, the appeals filed by the Income Tax Department are hereby dismissed. Appeals of the assessees are allowed deleting the surcharge levied by the assessing officer for this block assessment pertaining to the period prior to 1st June, 2002. = CIVIL APPEAL NO.8750 OF 2014 (arising out of SLP (C) No. 540 of 2009) |COMMISSIONER OF INCOME TAX | | |(CENTRAL)-I, NEW DELHI |…..APPELLANT(S) | | | | |VERSUS | | |VATIKA TOWNSHIP PRIVATE LIMITED |…..RESPONDENT(S) = 2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41914

   Proviso appended to sec.113 of Income Tax Act - prospective or clarificatory & curative in nature or retrospective - Apex court held that The charge in respect of the surcharge, having been created for the  first  time by the insertion of the proviso to Section 113,  is  clearly  a  substantive provision and hence is  to  be  construed  prospective  in  operation.   The amendment neither purports to be  merely  clarificatory  nor  is  there  any material to suggest that it was intended  by  Parliament.   Furthermore,  an amendment made to a taxing statute can be said  to  be  intended  to  remove 'hardships' only of the assessee, not of the Department.  On  the  contrary,
imposing a retrospective levy  on  the  assessee  would  have  caused  undue hardship and for that reason  Parliament  specifically  chose  to  make  the proviso effective from 1.6.2002. The aforesaid discursive of  ours  also  makes  it  obvious  that  the conclusion of the Division Bench in Suresh N. Gupta treating the proviso  as clarificatory  and  giving  it  retrospective  effect  is  not   a   correct conclusion.  Said judgment is accordingly overruled. As a result of the aforesaid discussion,  the  appeals  filed  by  the Income Tax Department are hereby dismissed.  Appeals of  the  assessees  are allowed deleting the surcharge levied by  the  assessing  officer  for  this
block assessment pertaining to the period prior to 1st June, 2002.  =


whether  the
proviso appended to Section 113 of the Income Tax Act (hereinafter  referred
to as 'the Act') which was inserted in that  Section  by  the  Finance  Act,
2002 is to operate prospectively or is clarificatory and curative in  nature
and, therefore, has retrospective operation. =
Apex court held that
  “Notes on Clauses” appended to  Finance  Bill,  2002  while  proposing
insertion of proviso categorically states that  “this  amendment  will  take
effect from 1st June, 2002”.
These become epigraphic words,  when  seen  in
contradistinction to other  amendments  specifically  stating  those  to  be
clarificatory  or  retrospectively  depicting   clear   intention   of   the
legislature.
It can be seen from the same notes that few  other  amendments
in the Income Tax Act were made by the same Finance Act specifically  making
those amendments retrospectively.
For example, 
clause  40  seeks  to  amend S.92F.  Clause iii (a) of S.92F is  amended  “so  as  to  clarify  that  the
activities mentioned in the said clause include  the  carrying  out  of  any
work  in  pursuance  of  a   contract.”    This   amendment   takes   effect
retrospectively from 01.04.2002.  Various other amendments also  take  place
retrospectively.  
The Notes on Clauses show that the  legislature  is  fully
aware of 3 concepts:
(i)   prospective amendment with effect from a fixed date;

(ii)  retrospective amendment with effect from a fixed anterior date; and

(iii) clarificatory amendments which are retrospective in nature.


      Thus, it was a conscious decision of the legislature,  even  when  the
legislature knew the implication thereof and took note of the reasons  which
led to the insertion of the  proviso,  that  the  amendment  is  to  operate
prospectively.
 Learned counsel  appearing  for  the  assessees  sagaciously
contrasted the aforesaid stipulation while effecting  amendment  in  Section
113 of the Act, with various other provisions not only in the  same  Finance
Act but Finance  Acts  pertaining  to  other  years  where  the  legislature
specifically  provided  such  amendment  to  be  either   retrospective   or
clarificatory.
 In so far as amendment to Section 113  is  concerned,  there
is no such language used and on the contrary, specific stipulation is  added
making the provision effective from 1st June, 2002.

(e)    There  is  yet  another  very  interesting  piece  of  evidence  that
clarifies the provision beyond any pale  of  doubt,  viz.  understanding  of
CBDT itself regarding this provision.
It  is  contained  in  CBDT  circular
No.8 of 2002 dated  27th August, 2002, with the subject “Finance  Act,  2002
– Explanatory Notes on provision relating to Direct Taxes”.
This  circular
has been issued after the  passing  of  the  Finance  Act,  2002,  by  which
amendment to Section 113 was made.
In this circular, various amendments  to
the Income Tax Act are discussed amply demonstrating as to which  amendments
are  clarificatory/retrospective  in  operation  and  which  amendments  are
prospective.
For example, explanation to Section  158BB  is  stated  to  be
clarificatory in nature.
Likewise,  it  is  mentioned  that  amendments  in
Section 145 whereby provisions of that section are made applicable to  block
assessments is made clarificatory  and  would  take  effect  retrospectively
from 1st day of July, 1995.
When it comes to amendment to  Section  113  of
the Act, this very circular provides that  the  said  amendment  along  with
amendments in Section 158BE, would be prospective i.e. it will  take  effect
from 1st June, 2002.
(f)   Finance Act, 2003, again makes the position clear  that  surcharge  in
respect of block assessment of  undisclosed  income  was  made  prospective.
Such a stipulation is contained in second  proviso  to  sub-section  (3)  of
Section 2 of Finance Act, 2003.
This proviso reads as under:

“Provided further that the amount of income-tax computed in accordance  with
the provisions of  section  113  shall  be  increased  by  a  surcharge  for
purposes of the Union as provided in Paragraph A, B, C, D or E, as the  case
may be, of Part III of the First Schedule of the Finance Act of the year  in
which the search is initiated under  section  132  or  requisition  is  made
under section 132A of the income-tax Act.”

Addition of this proviso in the Finance Act, 2003  further  makes  it  clear
that such a provision was necessary to provide for surcharge  in  the  cases
of block assessments and thereby  making  it  prospective  in  nature.
The
charge in respect of the surcharge, having been created for the  first  time
by the insertion of the proviso to Section 113,  is  clearly  a  substantive
provision and hence is  to  be  construed  prospective  in  operation.
The
amendment neither purports to be  merely  clarificatory  nor  is  there  any
material to suggest that it was intended  by  Parliament.   Furthermore,  an
amendment made to a taxing statute can be said  to  be  intended  to  remove
'hardships' only of the assessee, not of the Department.  On  the  contrary,
imposing a retrospective levy  on  the  assessee  would  have  caused  undue
hardship and for that reason  Parliament  specifically  chose  to  make  the
proviso effective from 1.6.2002.


40.   The aforesaid discursive of  ours  also  makes  it  obvious  that  the
conclusion of the Division Bench in Suresh N. Gupta treating the proviso  as
clarificatory  and  giving  it  retrospective  effect  is  not   a   correct
conclusion.  Said judgment is accordingly overruled.


41.   As a result of the aforesaid discussion,  the  appeals  filed  by  the
Income Tax Department are hereby dismissed.  Appeals of  the  assessees  are
allowed deleting the surcharge levied by  the  assessing  officer  for  this
block assessment pertaining to the period prior to 1st June, 2002.  
2014 - Sept. Month - http://judis.nic.in/supremecourt/filename=41914

                                                            REPORTABLE


                        IN THE SUPREME COURT OF INDIA


                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL NO.8750 OF 2014
                  (arising out of SLP (C) No. 540 of 2009)


|COMMISSIONER OF INCOME TAX                       |                      |
|(CENTRAL)-I, NEW DELHI                           |…..APPELLANT(S)       |
|                                                 |                      |
|VERSUS                                           |                      |
|VATIKA TOWNSHIP PRIVATE LIMITED                  |…..RESPONDENT(S)      |

                                   W I T H

                        CIVIL APPEAL NO.8764 OF 2014
                  (arising out of SLP (C) No. 1362 of 2009)

                        CIVIL APPEAL NO.8762 OF 2014
                  (arising out of SLP (C) No. 1339 of 2009)

                        CIVIL APPEAL NO.8773 OF 2014
                 (arising out of SLP (C) No. 19319 of 2008)

                        CIVIL APPEAL NO.8763 OF 2014
                  (arising out of SLP (C) No. 1342 of 2009)

                        CIVIL APPEAL NO.8755 OF 2014
                 (arising out of SLP (C) No. 31528 of 2008)

                        CIVIL APPEAL NO.8775 OF 2014
                 (arising out of SLP (C) No. 22444 of 2008)

                        CIVIL APPEAL NO.8779 OF 2014
                 (arising out of SLP (C) No. 27162 of 2008)

                        CIVIL APPEAL NO.8780 OF 2014
                 (arising out of SLP (C) No. 27413 of 2008)

                        CIVIL APPEAL NO.8774 OF 2014
                 (arising out of SLP (C) No. 20855 of 2008)

                        CIVIL APPEAL NO.8765 OF 2014
                  (arising out of SLP (C) No. 4769 of 2009)

                        CIVIL APPEAL NO.8760 OF 2014
                  (arising out of SLP (C) No. 1257 of 2009)

                        CIVIL APPEAL NO.8756 OF 2014
                 (arising out of SLP (C) No. 31537 of 2008)

                        CIVIL APPEAL NO.8759 OF 2014
                  (arising out of SLP (C) No. 767 of 2009)

                        CIVIL APPEAL NO.8772 OF 2014
                 (arising out of SLP (C) No. 14204 of 2008)

                        CIVIL APPEAL NO.8777 OF 2014
                 (arising out of SLP (C) No. 26473 of 2008)

                        CIVIL APPEAL NO.8770 OF 2014
                 (arising out of SLP (C) No. 13886 of 2008)

                     CIVIL APPEAL NOS.8752-8753 OF 2014
               (arising out of SLP (C) Nos. 4842-4843 of 2008)

                        CIVIL APPEAL NO.8754 OF 2014
                  (arising out of SLP (C) No. 5704 of 2008)

                        CIVIL APPEAL NO.8768 OF 2014
                  (arising out of SLP (C) No. 6897 of 2008)

                        CIVIL APPEAL NO.8758 OF 2014
                  (arising out of SLP (C) No. 745 of 2009)

                        CIVIL APPEAL NO.8776 OF 2014
                 (arising out of SLP (C) No. 24602 of 2008)

                        CIVIL APPEAL NO.8769 OF 2014
                  (arising out of SLP (C) No. 8901 of 2008)

                        CIVIL APPEAL NO. 1160 OF 2007

                 CIVIL APPEAL NOS.      8766-8767   OF 2014
               (arising out of SLP (C) Nos. 6767-6768 of 2014)




                               J U D G M E N T

A.K. SIKRI, J.

Delay condoned.

2.    Leave granted in all these matters.

3.    In these batch  of  appeals,  most  of  which  are  preferred  by  the
Commissioner(s)  of  Income   Tax   (hereinafter   referred   to   as   'the
Department'), with the exception of few appeals filed by the assessees,  the
question of law which has fallen for consideration  is  as  to  whether  the
proviso appended to Section 113 of the Income Tax Act (hereinafter  referred
to as 'the Act') which was inserted in that  Section  by  the  Finance  Act,
2002 is to operate prospectively or is clarificatory and curative in  nature
and, therefore, has retrospective operation.

      The Background Facts:

4.    This question has been referred  to  the  Constitution  Bench  in  the
Civil Appeal arising out of S.L.P.  No.540/2009  and,  therefore,  to  start
with, we would be justified in referring to facts of  that  case.   In  fact
the answer to the aforesaid question would lead to the sealing of  the  fate
of all these appeals one way or the other.  The facts in this appeal,  which
need recapitulation, are that there  was  a  search  and  seizure  operation
under Section 132 of the Act on the premises of the assessee on  10.02.2001.
 Notice under Section 158BC of  the  Act  was  issued  to  the  assessee  on
18.06.2001 requiring him to file his return of income for the  block  period
ending 10.02.2000.  In compliance, the assessee filed its return  of  income
for the block period from 01.04.1989 to 10.02.2000.   The  Block  Assessment
in this case was completed under Section 158BA  on  28.02.2002  at  a  total
undisclosed  income  of  Rs.85,18,819/-.   After  sometime,  the   Assessing
Officer, on verification of working of calculation  of  tax,  observed  that
surcharge had not been levied on the tax imposed upon  the  assessee.   This
was treated as a mistake apparent on record by  the  Assessing  Officer  and
accordingly a rectification order was passed under Section 154  of  the  Act
on 30.06.2003.  This order under Section 154 of the Act, by which  surcharge
was levied by the  Assessing  Officer,  was  challenged  in  appeal  by  the
assessee.  The said order was cancelled by the CIT  (Appeals)-I,  New  Delhi
vide order dated 10.12.2003 on the ground that the levy of  surcharge  is  a
debatable issue and therefore such an  order  could  not  be  passed  taking
umbrage under Section 154 of the Act.  The undisclosed  income  was  revised
under  Section  250BC/158BC  by  the  Assessing  Officer  vide  order  dated
09.09.2003 to Rs.10,90,000/- to give effect to the above order  of  the  CIT
(Appeals), and thereby removing the component of the surcharge.

5.    As the Department wanted the surcharge to be levied, the  Commissioner
of Income Tax (Central-I), New Delhi issued a notice under  Section  263  of
the Act to the assessee and sought to  revise  the  order  dated  09.09.2003
passed by the Assessing Officer by which he had given effect  to  the  order
of the CIT (Appeals) and in the process did not charge  any  surcharge.   In
the opinion of CIT, this  led  to  income  having  escaped  the  assessment.
According to the CIT, in view of the provisions of Section 113  of  the  Act
as inserted by the Finance Act, 1995 and clarified  by  the  Board  Circular
No.717 dated 14.08.1995, surcharge was  leviable  on  the  income  assessed.
According to the CIT the charging provision was Section 4 of the  Act  which
was to be read with Section 113 of the Act that prescribes the rate and  tax
for search and seizure cases and rate  of  surcharge  as  specified  in  the
Finance Act of the relevant year was to  be  applied.   In  this  particular
case the search and seizure operation took place on 14.07.1999 and  treating
this date as relevant, the Finance Act 1999 was to be applied.

6.    The  CIT,  accordingly,  cancelled  the  order  dated  09.09.2003  not
levying surcharge upon the assessee, as being erroneous and  prejudicial  to
the interests of the revenue.  The Assessing Officer  was  directed  by  the
CIT to levy surcharge @ 10% and the amount of income tax computed and  issue
revised notice of demand.  The order  covered  block  period  01.04.1989  to
10.02.2000.   This order of the CIT under Section 263 of the Act was  passed
on 23.03.2004.   The  assessee  filed  the  appeal  before  the  Income  Tax
Appellate Tribunal (hereinafter referred to as 'the Tribunal')  against  the
said order of the  CIT.   The  Tribunal  vide  its  order  dated  23.06.2006
allowed the appeal of the assessee.  The Tribunal held  that  the  insertion
of the proviso to Section 113 of the Income Tax Act cannot  be  held  to  be
declaratory  or  clarificatory  in  nature  and  was  prospective   in   its
operation.  Against the order of the Tribunal dated 23.06.2006  the  revenue
approached the High Court of Delhi by way of an appeal filed  under  Section
260 A of the Act for  the  block  period  01.04.1989  to  10.02.2000.   This
appeal has been dismissed vide order dated 17.04.2007  by  the  High  Court.
It is this order of the High Court  which  is  the  subject  matter  of  the
appeal in question.

7.    It is clear from the aforesaid  narration  that  the  High  Court  has
taken the view that proviso inserted in  Section  113  of  the  Act  by  the
Finance Act, 2002 was prospective in nature and the  surcharge  as  leviable
under the aforesaid proviso could  not  be  made  applicable  to  the  block
assessment in question of an earlier period i.e. the period from  01.04.1989
to 10.02.2000 in the instant case.

      The Reference Order


8.    It so happened that this very issue about the said proviso to  Section
113,  viz.,  whether  it  is  clarificatory  and  curative  in  nature  and,
therefore, can be applied retrospectively or it is to take effect  from  the
date i.e. 01.06.2002  when  it  was  inserted  by  the  Finance  Act,  2002,
attracted the attention of this Court and was  considered  by  the  Division
Bench in the case of Commissioner of Income Tax, Central  II  v.  Suresh  N.
Gupta[1].  The Division Bench held that the said  proviso  is  clarificatory
in nature.  When the instant appeal came up before  another  Division  Bench
on 06.01.2009 for hearing, the said  Division  Bench  expressed  its  doubts
about the correctness of the view taken in Suresh N. Gupta and directed  the
Registry to place the matter before Hon'ble the Chief Justice of  India  for
constitution of a larger Bench.  We reproduce order dated 06.01.2009 in  its
entirety as under:

      “Delay condoned.

      The question which fell for consideration before the  High  Court  was
as to whether the proviso appended to Section 113 of the Income Tax  Act  is
clarificatory and/or curative in nature.  The said provision had  come  into
force with effect from 01.06.2002.  It reads as under:

      “Provided  that  the  tax  chargeable  under  this  section  shall  be
increased by a surcharge, if any, levied by any Central Act  and  applicable
in the assessment year relevant to the previous year in which the search  is
initiated under Section 132 or the requisition is made under Section 132-A.

      In this case, the search and seizure took  place  on  06.10.2001.   An
order of block assessment in terms of Section 158BC was made in  respect  of
the assessment years 1984 to 2003.  The surcharge was levied on 30.06.2003.

      In support of its contention that the said proviso  was  retrospective
in nature, the learned Additional Solicitor General relies upon  a  Division
Bench decision of this Court in Commissioner of Income Tax,  Central  II  v.
Suresh N. Gupta, (2008) 4 SCC 362 wherein it has been held:

      “37.  According to the assessee, prior  to  01.06.2002,  the  position
was ambiguous as it was not clear even to the Department as to which  year's
FA would be applicable.  To clear this  doubt  precisely,  the  proviso  has
been inserted in Section 113 by which it is indicated that FA  of  the  year
in which the search was initiated would apply.  Therefore, in our view,  the
said proviso was clarificatory in nature.  In taxation, the  legislation  of
the type indicated by the proviso has to be  read  strictly.   There  is  no
question of retrospective effect.  The proviso only clarifies  that  out  of
the four dates, Parliament has opted for  the  date,  namely,  the  year  in
which  the  search  is  initiated,  which  date  would   be   relevant   for
applicability of a particular FA.  Therefore, we have to  read  the  proviso
as it stands.

38.   There is one more reason for rejecting the  above  submission.   Prior
to 01.06.2002, in the 1961 Act and sometimes in FA and often in both.   This
made liability uncertain.  In the present case, however, the rate of tax  in
case of block assessment at 60% was prescribed by Section 113 but  the  year
of FA imposing surcharge was not stipulated.  This  resulted  in  the  above
four ambiguities.  Therefore, clarification was  needed.   The  proviso  was
curative in nature.  Hence, the  proviso  inserted  in  Section  113  merely
clarifies  that  out  of  the  above  four  dates,  the  relevant  date  for
applicability of FA would be the year in which the  search  stood  initiated
under Section 158-BC.”

      As the said proviso was introduced with effect from  01.06.2002,  i.e.
with prospective effect and by reason thereof, tax chargeable under  Section
135 of the Income Tax Act is to  be  increased  by  surcharge  levied  by  a
Central Act, we are of the opinion that keeping in view  the  principles  of
law that the taxing statute should be  construed  strictly  and  a  statute,
ordinarily, should not be held to  have  any  retrospective  effect,  it  is
necessary that the matter be considered by a larger Bench.

      We, while issuing notice, direct the  Registry  to  place  the  matter
before Hon'ble the Chief Justice for constitution of a larger Bench.”


9.    A three Member Bench was constituted before which the matter  came  up
for hearing on  08.04.2010.   On  that  date,  the  said  Bench  passed  the
following order :

“Vide order dated 06.01.2009 the lead  matter  was  referred  to  be  listed
before a larger Bench and consequently  the  matter,  along  with  connected
matters, were listed before a three Judge Bench.

After having heard learned counsel on both sides at length, looking  to  the
important questions of law involved having wide ramifications  and  pendency
of several matters  on  the  same  issue  before  several  High  Courts  and
Tribunals, we deem it appropriate to refer  the  matters  for  being  placed
before Five Judges Bench.  Matter be placed accordingly.”


10.   This is precisely raison d'etre for hearing the matter by the  present
Constitution  Bench.   We  may  observe  here  that  after   the   aforesaid
reference, other connected appeals raising the  identical  issue  have  been
tagged with direction to be heard along with this appeal.

      The Statutory Provisions


11.   Before adverting to the submissions of the Department,  as  argued  by
Mr.  P.S.  Narsimha,  learned  Additional  Solicitor  General  and  rebuttal
thereto given by various counsel appearing for the  assessees,  we  deem  it
apposite to take note of the relevant statutory provisions,  having  bearing
over the matter, along with proviso to Section 113, which  is  the  bone  of
contention and subject mater of interpretation.  As is well  known,  Section
4 of the Act is the charging Section in the Act.  It reads as under:

“S.4(1) Where any Central Act enacts that income-tax shall  be  charged  for
any assessment year at any rate or rates, income-tax at that rate  or  those
rates shall be charged for that year in accordance with, and subject to  the
provisions (including provisions for the levy of additional income-tax)  of,
this Act in respect of the total  income  of  the  previous  year  of  every
person :

Provided that where by virtue of any provision of this Act income-tax is  to
be charged in respect of the income of a  period  other  than  the  previous
year, income-tax shall be charged accordingly.

(2) In respect of income chargeable under sub-section (1), income-tax  shall
be deducted at the source or paid in advance, where it is so  deductible  or
payable under any provision of this Act.”


12.   Though, Section 4 of the Act is  the  charging  Section,  it  is  well
known that rate or rates at which  the  income  tax  is  to  be  charged  is
specified each year by enacting a Finance Act at the  time  of  presentation
of the annual Budget.

13.   While Section 4 of the Act deals with the charge of  income  tax,  the
Parliament also has the power to levy surcharge on  income  tax.   Power  to
levy a surcharge is contained in Article 271 of the  Constitution  of  India
which read as under:

“271. Surcharge on certain duties  and  taxes  for  purposes  of  the  Union
Notwithstanding anything in Articles 269 and  270,  Parliament  may  at  any
time increase any of the duties or taxes referred in  those  articles  by  a
surcharge for purposes of the Union and  the  whole  proceeds  of  any  such
surcharge shall form part the Consolidated Fund of India.”


14.   The surcharge on the income tax was introduced for the first  time  by
the Finance Act, 1995, in Section 2 (3) thereof.  However,  initially,  this
surcharge was  levied  only  on  the  income  of  companies  i.e.  corporate
entities incorporated under the Indian Companies Act by specified  surcharge
at the rate of 15% in the Finance Act, 1996, which was reduced to  7.50%  in
the Finance Act, 1997.  In the next two Finance Acts  i.e.  1998  and  1999,
there was no surcharge levied even in the cases of companies.   However,  by
Finance Act, 2000, surcharge at a flat rate of 10%  came  to  be  levied  in
respect of individuals, HUF, BOI, AOP as  well  as  co-operative  societies,
partnership firms, local authorities and also the companies.  In  subsequent
years, the rates at which the surcharge is levied on the aforesaid  entities
are of varying nature.  A tabulated form showing  surcharge  in  respect  of
different category of assessees in different assessment years, levied  under
each Finance Act, shall be reproduced at the relevant stage.

15.   In the present case, since we are concerned with the surcharge on  the
block assessment, it also becomes imperative to take note  of  the  relevant
provisions pertaining  to  the  block  assessment.    These  provisions  are
contained in Chapter XIV-B.  The purpose of this Chapter is to  lay  down  a
special procedure for assessment of search cases with a view to  combat  tax
evasion and also to expedite and simplify assessments in search  cases.   We
reproduce hereinbelow the provisions of Section 158B,  158BA,  158BB,  158BC
and 158BH of that Chapter, which have bearing on the issue at hand:

“158B.  In this Chapter, unless the context otherwise requires,-

       (a)  'block  period'  means  the  period  comprising  previous  years
relevant to six assessment years preceding the previous year  in  which  the
search was conducted under Section 132 or any  requisition  was  made  under
Section  132A  and  also  includes  the  period  up  to  the  date  of   the
commencement of such search or date of  such  requisition  in  the  previous
year in which the said search was conducted or requisition was made.

Provided that where the search is  initiated  or  the  requisition  is  made
before the 1st day of June, 2001, the provisions of this clause  shall  have
effect as if for the words "six assessment years" the words "ten  assessment
years" had been substituted.

(b) "undisclosed income" includes any money,  bullion,  jewellery  or  other
valuable article or thing or any income based on any entry in the  books  of
account or other documents  or  transactions,  where  such  money,  bullion,
jewellery, valuable article, thing, entry in the books of account  or  other
document or transaction represents  wholly  or  partly  income  or  property
which has not been or would not have been  disclosed  for  the  purposes  of
this Act.

158BA. Assessment  of  undisclosed  income  as  a  result  of  search.-  (1)
Notwithstanding anything contained in  any  other  provisions  of  this  Act
where after the 30th day of June, 1995, a search is initiated under  Section
132 or books of account, other documents or  any  assets  are  requisitioned
under Section 132A in the case of any person, then,  the  Assessing  Officer
shall proceed to assess  the  undisclosed  income  in  accordance  with  the
provisions of this Chapter.

(2) The total undisclosed income relating  to  the  block  period  shall  be
charged to tax, at the rate specified in  Section  113,  as  income  of  the
block period irrespective of the  previous  year  or  years  to  which  such
income relates and irrespective of the fact whether regular  assessment  for
any one or more of the relevant assessment years is pending or not.

Explanation- For the removal of doubts, it is hereby declared that-

(a) the assessment made under this Chapter  shall  be  in  addition  to  the
regular assessment in respect of each previous year included  in  the  block
period;

(b) the total undisclosed income relating to  the  block  period  shall  not
include the income assessed in any regular  assessment  as  income  of  such
block period;

(c) the income assessed in  this  Chapter  shall  not  be  included  in  the
regular assessment of any previous year included in the block period.

(3) Where the assessee proves to the satisfaction of the  Assessing  Officer
that any part of income  referred  to  in  sub-section  (1)  relates  to  an
assessment year for which the previous year has not ended  or  the  date  of
filing the return of income under sub-section (1) of  section  139  for  any
previous year has not expired, and such income or the transactions  relating
to such income are  recorded  on  or  before  the  date  of  the  search  or
requisition in the books of account or other  documents  maintained  in  the
normal course relating to such previous years, the said income shall not  be
included in the block period.

158BB. Computation of undisclosed income  of  the  block  period.-  (1)  The
undisclosed income of the block period shall be the aggregate of  the  total
income of the previous years falling within the block  period  computed,  in
accordance with the provisions of Chapter  IV,  on  the  basis  of  evidence
found as a result of search or requisition of books of account or  documents
and such other materials or information as are available with the  Assessing
Officer, as reduced by the aggregate of the total income, or,  as  the  case
may be, as increased by the aggregate of the losses of such previous  years,
determined,-

(a) where assessments under section 143 or section 144 or section  147  have
been concluded, on the basis of such assessments;

(b) where returns of income Have been filed under  section  139  or  section
147 but  assessments  have  not  been  made  till  the  date  of  search  or
requisition, on the basis of the income disclosed in such returns;

(c) where the due date for filing a return of  income  has  expired  but  no
return of income has been filed, as nil;

(d) where the previous year has not ended or the date of filing  the  return
of income under Sub-section (1) of Section  139  has  not  expired,  on  the
basis of entries relating to such income or transactions as recorded in  the
books of account and other documents maintained in the normal course  on  or
before the date of the search  or  requisition  relating  to  such  previous
years;

(e) where any order of settlement has been made  under  sub-section  (4)  of
section 245D, on the basis of such order;

(f) where an assessment of undisclosed income had been  made  earlier  under
Clause (c) of section 158BC, on the basis of such assessment.

Explanation.- For the purposes of determination of undisclosed income,

(a) the total income or loss of each previous year shall,  for  the  purpose
of aggregation, be taken as the total income or loss computed in  accordance
with the provisions of Chapter IV  without  giving  effect  to  set  off  of
brought forward losses under Chapter VI  or  unabsorbed  depreciation  under
sub-section (2) of section 32;

(b) of a firm, returned income and total income assessed  for  each  of  the
previous  years  falling  within  the  block  period  shall  be  the  income
determined before allowing deduction of salary, interest, commission,  bonus
or remuneration by whatever name called to any partner not being  a  working
partner:

Provided that undisclosed income of the firm  so  determined  shall  not  be
chargeable to tax in the hands of the partners, whether on allocation or  on
account of enhancement;

(c) assessment under Section 143 includes determination of income under sub-
section (1) or sub-section (1B) of section 143.

(2) In computing the undisclosed income of the block period, the  provisions
of sections 68, 69, 69A, 69B and 69C shall, so far  as  may  be,  apply  and
references to financial  year  in  those  sections  shall  be  construed  as
references to the  relevant  previous  year  falling  in  the  block  period
including the previous year ending  with  the  date  of  search  or  of  the
requisition.

(3) The burden of proving to the satisfaction of the Assessing Officer  that
any undisclosed income had already been disclosed in any  return  of  income
filed  by  the  assessee  before  the  commencement  of  search  or  of  the
requisition, as the case may be, shall be on the assessee.

(4) For the  purpose  of  assessment  under  this  Chapter,  losses  brought
forward from the previous year under Chapter VI or  unabsorbed  depreciation
under sub-section (2) of section  32  shall  not  be  set  off  against  the
undisclosed income determined in the block assessment  under  this  Chapter,
but may be carried forward for being set off in the regular assessments.

158BC. Procedure for block assessment.- Where any search has been  conducted
under section 132 or  books  of  account,  other  documents  or  assets  are
requisitioned under section 132A, in the case of any person, then,-

(a) the Assessing Officer shall-

(i) in respect of search initiated or books of account  or  other  documents
or any assets requisitioned after the 30th day of  June,  1995,  but  before
the 1st day of January, 1997, serve a notice to such  person  requiring  him
to furnish within such time not being less than fifteen days;

(ii) in respect of search initiated or books of account or  other  documents
or any assets requisitioned on or after the 1st day of January, 1997,  serve
a notice to such person requiring him to furnish within such time not  being
less than fifteen days but not more than forty-five days,

as may be specified in the notice  a  return  in  the  prescribed  form  and
verified in the same manner as a return under clause (i) of sub-section  (1)
of section 142, setting forth his total  income  including  the  undisclosed
income for the block period:

Provided that no notice under Section 148 is required to be issued  for  the
purpose of proceeding under this Chapter:

Provided further that a person who has furnished a return under this  clause
shall not be entitled to file a revised return;

(b) the Assessing Officer shall proceed to determine the undisclosed  income
of the block period in the  manner  laid  down  in  section  158BB  and  the
provisions of section 142, sub-sections (2)  and  (3)  of  section  143  and
section 144 shall, so far as may be, apply;

(c) the Assessing Officer, on determination of  the  undisclosed  income  of
the block period in accordance with this Chapter, shall  pass  an  order  of
assessment and determine the tax  payable  by  him  on  the  basis  of  such
assessment;

(d) the assets seized under section 132 or requisitioned under section  132A
shall be retained to the extent necessary  and  the  provisions  of  section
132B shall apply subject to such modifications as may be necessary  and  the
references to 'regular assessment' or 'reassessment' in section  132B  shall
be construed as references to 'block assessment'.

158BH. Application of other provisions  of  this  Act.-  Save  as  otherwise
provided in this Chapter, all other provisions of this Act  shall  apply  to
assessment made under this Chapter.”


16.   It would be of some significance to point out at this  stage  that  in
so far as rates of tax chargeable in case of block assessment is  concerned,
that is not provided in the Finance  Act.   Pertinently,  the  provision  to
this effect has been made in the Income Tax Act itself and is  contained  in
Section 113 of the Act.  This Section, before insertion of proviso  thereto,
read as under:

“113.  Tax in the case of block assessment of  search  cases.  -  The  total
undisclosed income of the block  period,  determined  under  section  158BC,
shall be chargeable to tax at the rate of sixty per cent.”

17.   The proviso to Section 113 was inserted  by  Finance  Act,  2002  with
effect from June, 2002 and is to the following effect:

“Provided that the tax chargeable under this section shall be  increased  by
a surcharge, if any, levied  by  any  Central  Act  and  applicable  in  the
assessment year relevant to  the  previous  year  in  which  the  search  is
initiated under section 132 or the requisition is made under section 132A.”


18.   From the reading of the aforesaid statutory  provisions  in  abstract,
particularly relating to surcharge, it is clear that  though  provision  for
surcharge under the Finance Act has been in existence since 1995, in so  far
as levy of surcharge for block assessment is concerned, it is introduced  by
insertion of aforesaid proviso of Section 113.  It is  in  this  background,
the question has arisen as to whether this  surcharge  on  block  assessment
has been levied for the first time by  the  aforesaid  proviso  coming  into
effect from 01.06.2002 or it is only clarificatory in nature because of  the
reason that the provision for surcharge was made in the Finance Act  in  the
year 1995 and that covered surcharge on block assessment as well.

      Judgment in Suresh N. Gupta

19.   As already noticed above, this very proviso to Section 113 of the  Act
came up for interpretation in Suresh N. Gupta  and  the  Division  Bench  of
this Court took the view that this proviso is clarificatory in nature as  it
simply clarifies the date with reference to which the rate of  surcharge  is
payable, namely, the surcharge levied by the Central Act and  applicable  in
the assessment year relevant to the previous year in  which  the  search  is
initiated.  It would  be  advisable  to  take  note  of  the  reasons  which
prevailed with the Bench to come to the aforesaid  conclusion,  inasmuch  as
it is the ratio of this judgment which was doubted by the Bench  making  the
reference to the larger Bench.

20.   The Court in Suresh N. Gupta formulated two points for  consideration,
viz.;
“1.   Whether on the facts and circumstances of this case, the Finance  Act,
2001 was applicable to “block assessment” under Chapter XIVB in  respect  of
search carried out on January 17, 2001?

2.    Whether the proviso inserted in Section 113 by the Finance Act,  2002,
is clarificatory?”


Dealing with the first question, the  Court  noted  the  contention  of  the
assessee that Chapter XIVB, which was inserted  by  the  Finance  Act,  1995
with effect from July 1, 1995 was a self-contained chapter as it  lays  down
a special procedure  for  assessment  of  undisclosed  income  found  during
search for the “block period”.  It was argued  by  the  assessee  that  this
Chapter contains a charging section (158BA), a computation section  (158BB),
a procedural section for block assessment (158BC), limitation provision  for
completion of block assessment (158BE) and the provisions for imposition  of
interest and penalty (158BFA).  It  was  also  argued  that  the  scheme  of
assessment of “undisclosed income” under Chapter  XIV-B  is  different  from
the scheme of assessment of  “total  income”  of  any  person  in  terms  of
Section 4(1) of the Act.  In support of  this  argument,  it  was  submitted
that whereas Chapter XIV-B deals with assessment  of  “undisclosed  income”,
Section  4  of  the  Act  relates  to  the  assessment  of  “total  income”.
Moreover, “block period” mentioned in Chapter XIV-B was different  from  the
assessment of income of the “previous year” under Section 4(1) of  the  Act.
Even the rate of tax at  which  the  “undisclosed  income”  is  assessed  is
different inasmuch as it is 60% as specified in Section 158BA(2)  read  with
section 113 of the Act, in  contradistinction  to  the  taxation  of  normal
income which is at the rates specified in  the  relevant  Finance  Act.   In
nutshell, it was argued that block assessment falls  in  Chapter  XIV-B  for
which charging section  was  section  158BA  and  for  assessment  of  block
period, charging section was not section 4(1) of the Act.   On  that  basis,
the assessee wanted the Court to hold that it was not open to the  Assessing
Officer to levy surcharge prior to June 1, 2002, i.e. before  the  insertion
of proviso to Section 113 of the Act.

21.   This argument was rejected by the  Court.   The  Bench  took  note  of
Article 271 of the Constitution along  with  Entry  82  of  List  1  of  the
Seventh Schedule to the Constitution of India  and  Section  4  of  the  Act
which is the charging section.  It held that the power to levy surcharge  on
income tax is traceable to Article  271  read  with  Entry  82  and  not  to
Section 4 of the Act.  The rate at which the charge on total income  on  the
previous year is imposed is not laid down in the Income Tax Act but  in  the
Finance Act indicated every year by the Parliament to  give  effect  to  the
financial proposals of the Central Government.  It further held  that  since
Income Tax Act deals with tax on income and nothing else,  nor  with  charge
should be a legal charge under Section 4, it must be a tax on the income  of
the assessee.  Therefore, Section 4(1) of the Act was the  charging  section
and the rate of tax is prescribed under that very Act i.e. Section 113.   As
long as the charge is on the “total income” of  the  previous  year  and  so
long as the rate relates to the subject matter of the tax, there is  nothing
to prevent the Parliament from fixing the date.  What is to be seen is  that
the rate is applied to the “total income” and the  tax  which  the  assessee
has to pay must be at the rate  in  respect  of  the  total  income  of  the
previous year.

22.   The Bench was of the view that the concepts  of  “previous  years”  as
well as “total income” in Chapter XIV-B were  retained.   Therefore  Section
158BB was to be read with  Section  4  of  the  Act  implying  thereby  that
Section 4 remains the charging section.  The procedure contained in  Section
4 was not ruled out from block assessment procedure  even  in  the  case  of
assessment of block period.  It was,  nevertheless,  an  assessment  on  the
total  income  of  the  previous  years  falling  within  the  block  period
including returned/assessed incomes  as  per  regular  returns  and  regular
assessment.  As a fortiori, the provisions of the relevant Finance Act  have
got to be read into the block assessment scheme under  Chapter  XIV-B,  even
prior to June 1, 2002.   As  a  sequential,  even  without  the  proviso  to
section 113, which was inserted by the Finance Act, 2002  with  effect  from
June 1, 2002, the Finance Act  2001,  was  applicable  to  block  assessment
under Chapter XIV-B and accordingly surcharge was leviable.

23.   Adverting to the second question  formulated  by  the  Bench,  namely,
whether insertion of the proviso in section 113 by  the  Finance  Act,  2002
was applicable to search of the earlier period as well  i.e.  upto  May  31,
2002, the Court pointed out  that  in  view  of  its  answer  to  the  first
question, second  question  did  not  even  require  any  examination.   It,
however, proceeded to answer this question as  well  having  regard  to  the
submission  of  the  assessee  that  before  the  said  proviso,  there  was
inconsistency with  regard  to  levy  of  surcharge  and  the  position  was
ambiguous as it was not clear even to the  Department  as  to  which  year's
Finance Act would be applicable.  Brushing aside this  argument,  the  Court
held that to clear this very doubt precisely, the proviso had been  inserted
in section 113 and therefore it  was  only  clarificatory  in  nature.   The
Court specifically noted that before the proviso  was  inserted,  there  was
some doubts in the mind of the Department and the taxpayers about  the  date
with reference to which  the  rate  at  which  surcharge  is  payable.   The
confusion was as to whether surcharge was leviable  with  reference  to  the
rates provided for in 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 block assessment proceedings under Section  158BC  were  initiated  or
the year in which block assessment order was passed.  The Court opined  that
proviso only clarifies that out of the aforesaid  4  dates,  the  Parliament
has opted for the date  in which  the  search  is  initiated,  as  the  date
relevant for applicability of a particular Finance Act.

24.   Aforesaid were the reasons to arrive at a conclusion that the  proviso
was clarificatory and/or curative in nature.

25.   It would be our duty to point out at this stage that another  Division
Bench in the case of CIT v. Sanjiv Bhatara[2], has  followed  the  aforesaid
judgment by giving same reasons in support.

26.   It is not necessary to take note of  the  arguments  advanced  by  the
learned ASG for the Department and various  counsel  who  appeared  for  the
assessees in these appeals, in detail.  The reason for making these  remarks
by us is that Mr. Narasimha, learned ASG,  had  argued  on  the  same  lines
which formed the basis of rendering the decision of the  Division  Bench  in
Suresh N. Gupta that have already been summarised above. Of course,  it  was
his incessant effort with all  effervescence,  to  persuade  this  Court  to
accept the conclusion arrived at in the said judgment. Learned  counsel  for
the assessees also emphasised those very submissions advanced in  that  case
which did not find favour with  the  Division  Bench.   In  addition,  these
counsel articulated some more arguments with all  enthusiasm  and  temerity,
reference to which would be made while giving our analysis  to  the  various
provisions leading up to the answer to the issue involved.
Scheme of Chapter XIVB
27.   Before we proceed to answer the question, it  would  be  necessary  to
keep in mind the scheme of block assessment introduced in  Chapter  XIVB  to
Finance Act, 1995 w.e.f. 1st July, 1995.  As already mentioned in  brief  by
us, Chapter XIVB of the Act which deals with block assessment  lays  down  a
special procedure for search  cases.   The  main  reason  for  adding  these
provisions in the Act was to curb  tax  evasion  and  expedite  as  well  as
simplify the assessments in such search cases.  Undisclosed incomes have  to
be related in different  years  in  which  income  was  earned  under  block
assessment.  This is because in  such  cases,  the  “block  period”  is  for
previous years relevant to 10/6 assessment years and also the period of  the
current previous year up to the date of the  search,  i.e.,  form  April  1,
2000, to  January  17,  2001,  in  this  case.   The  essence  of  this  new
procedure, therefore, is a separate single assessment  of  the  “undisclosed
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
pre-requisite for making block assessment.  Under the  said  procedure,  the
Explanation is inserted in section 158BB, which is the computation  section,
explaining the method of computation of “undisclosed income”  of  the  block
period.  It is now well accepted that this Chapter is  a  complete  code  in
itself providing for self-contained machinery for assessment of  undisclosed
income for the block period of 10 years or 6 years, as the case may be.   In
case of regular assessments for which returns are  filed  on  yearly  basis,
Section 4 of the Act is the charging section.  However,  at  what  rate  the
income is to be taxed is specified every  year  by  the  Parliament  in  the
Finance Act.  In contradistinction, when it comes to payment of tax  on  the
undisclosed income relating to  the  block  period,  rate  is  specified  in
Section 113 of the Act.  It remains static at 60% of the undisclosed  income
which is the  categorical  stipulation  in  the  Section  113  of  the  Act.
Section 158BA(2) of the  Act  clearly  states  that  the  total  undisclosed
income relating to the block period “shall be charged to tax” at  the  rates
specified under Section 113 as income of the block  period  irrespective  of
previous year or years.  Under Section  113  of  the  Act,  the  undisclosed
income is chargeable to tax at the rate of 60%.

28.   From the above, it becomes manifest that Chapter XIVB  comprehensively
takes care of all the aspects relating to the block assessment  relating  to
undisclosed income, which includes Section 156BA(2) as the charging  section
and even the rate at which such income  is  to  be  taxed  is  mentioned  in
Section 113 of the Act.  No doubt, Section 4 of the Act is also  a  charging
section which is made applicable on 'total income  of  previous  year'.   As
per Section 2  (45),  'total  income'  means  the  total  amount  of  income
referred to in Section 5, computed in the  manner  laid  down  in  the  Act.
Section 5 of the Act enumerates the scope of total  income  and  prescribes,
inter alia, that it would include all income which is received or is  deemed
to receive in India in any previous year by or on behalf of a person who  is
a Resident.  No doubt, undisclosed income referred to  in  Chapter  XIVB  is
also an income which was received  but  not  disclosed,  therefore,  in  the
first blush, argument of the Department that undisclosed income referred  to
in Chapter XIVB is also a part of total income and  consequently  Section  4
becomes the charging section in respect thereof as well.  However, a  little
closer scrutiny leads us to conclude that that is not the  position  as  per
the scheme of Chapter XIVB.  In the  first  place,  income  referred  to  in
Section 5 talks of total income of any 'previous year'.  As  per  Section  2
(34) of the Act, 'previous year' means previous year as defined  in  Section
3.  Section 3 lays  down  that  previous  year  means  'the  financial  year
immediately preceding the assessment year'.  Undisclosed income referred  to
in Chapter XIVB is not relateable to the previous year.   On  the  contrary,
it is for the block period which may be 6 years or 10  years,  as  the  case
may be.  Consequently, as already mentioned, while analyzing the  scheme  of
Chapter XIVB, such Chapter is a complete code in respect of  assessments  of
'undisclosed income'.  Not only it defines what is  undisclosed  income,  it
also lays down the block period for which undisclosed income can  be  taxed.
Further, it also lays down the procedure for  taxing  that  income.   It  is
very pertinent to note  at  this  stage  that  for  this  purpose,  specific
provision in the form of Section 158BA(2) is inserted making it  a  charging
section.   Thus,  a  diagnostic  of  Chapter  XIVB  of  the  Act  leads   to
irresistible conclusion that it contains all the  provisions  starting  from
charging section till the completion of assessment, by  prescribing  special
procedure in  relation  thereto,  making  it  a  complete  Code  by  itself.
Looking it from  this  angle,  the  character  and  nature  of  'undisclosed
income' referred to in Chapter  XIVB  becomes  quite  distinct  from  'total
income' referred to in Section 5.  It is of  some  significance  to  observe
that when a separate charging section is introduced specifically, to  assess
the undisclosed  income,  notwithstanding  a  provision  in  the  nature  of
Section 4 already on the statute book, this move of the legislature  has  to
be assigned some reason,  otherwise,  there  was  no  necessity  to  make  a
provision in the form of Section  158BA(2).   It  could  only  be  that  for
assessing  undisclosed  income,  charging  provision  is   Section  158BA(2)
alone.

29.   Notwithstanding the aforesaid position clarified with us,  we  are  of
the opinion that dehors this discussion, in any case on the  application  of
general principles concerning retrospectivity, the proviso  to  Section  113
of the Act cannot be treated as  clarificatory  in  nature,  thereby  having
retrospective effect.  To make it clear, we need to understand  the  general
principles concerning retrospectivity.

General Principles concerning retrospectivity

30.   A legislation, be it  a  statutory  Act  or  a  statutory  Rule  or  a
statutory Notification, may physically consists of words printed on  papers.
 However, conceptually it is a great  deal  more  than  an  ordinary  prose.
There is a special peculiarity in the mode  of  verbal  communication  by  a
legislation.  A legislation is not just a series of statements, such as  one
finds in a work of fiction/non fiction or even in a judgment of a  court  of
law.  There is a technique required to draft a legislation  as  well  as  to
understand  a  legislation.   Former  technique  is  known  as   legislative
drafting and latter one  is  to  be  found  in  the  various  principles  of
‘Interpretation of  Statutes’.   Vis-à-vis  ordinary  prose,  a  legislation
differs in its provenance, lay-out and features as also in  the  implication
as to its meaning that arise by presumptions as to the intent of  the  maker
thereof.

31.   Of the various rules guiding how a legislation has to be  interpreted,
one established  rule  is  that  unless  a  contrary  intention  appears,  a
legislation  is  presumed  not  to  be  intended  to  have  a  retrospective
operation.  The idea behind the rule is that a  current  law  should  govern
current activities.  Law passed today cannot apply  to  the  events  of  the
past.  If we do something today, we do it keeping in view the law  of  today
and in force and not tomorrow’s backward adjustment of it.   Our  belief  in
the nature of the law is founded on the bed rock that every human  being  is
entitled to arrange his affairs by relying on the existing  law  and  should
not find that his plans have been retrospectively upset.  This principle  of
law is known  as  lex  prospicit  non  respicit  :  law  looks  forward  not
backward.   As  was  observed  in  Phillips  vs.  Eyre[3],  a  retrospective
legislation is contrary to the general principle that legislation  by  which
the conduct of mankind is to be regulated  when  introduced  for  the  first
time to deal with future acts ought not to  change  the  character  of  past
transactions carried on upon the faith of the then existing law.

32.   The obvious basis of the  principle  against  retrospectivity  is  the
principle of  'fairness’, which must be the basis of  every  legal  rule  as
was observed in the decision reported in L’Office Cherifien  des  Phosphates
v.  Yamashita-Shinnihon  Steamship  Co.Ltd[4].   Thus,  legislations   which
modified accrued rights or which impose obligations or impose new duties  or
attach a new disability  have  to  be  treated  as  prospective  unless  the
legislative intent is clearly to give the enactment a retrospective  effect;
unless the legislation is for purpose of supplying an obvious omission in  a
former legislation or to explain a former legislation.   We  need  not  note
the cornucopia of case law available on the subject because aforesaid  legal
position clearly emerges from the various decisions and this legal  position
was conceded by the counsel for the parties.  In any case,  we  shall  refer
to few judgments containing this dicta, a little later.

33.   We would also like to point out, for the sake  of  completeness,  that
where  a  benefit  is  conferred  by  a  legislation,  the  rule  against  a
retrospective  construction  is  different.   If  a  legislation  confers  a
benefit on some persons but without inflicting a corresponding detriment  on
some other person or on the public  generally,  and  where  to  confer  such
benefit appears to have been the legislators object,  then  the  presumption
would be that such a legislation, giving it a purposive construction,  would
warrant it to  be  given  a  retrospective  effect.   This  exactly  is  the
justification  to  treat  procedural  provisions   as   retrospective.    In
Government of India & Ors. v. Indian Tobacco  Association[5],  the  doctrine
of  fairness  was  held  to  be   relevant  factor  to  construe  a  statute
conferring a benefit, in the context of  it  to  be  given  a  retrospective
operation.  The same doctrine of  fairness,  to  hold  that  a  statute  was
retrospective in nature, was applied in the  case  of   Vijay  v.  State  of
Maharashtra & Ors.[6]  It was held that where  a  law  is  enacted  for  the
benefit of community as a whole, even in the  absence  of  a  provision  the
statute may be  held  to  be  retrospective  in  nature.   However,  we  are
confronted with any such situation here.

34.   In such cases, retrospectively is attached to benefit the  persons  in
contradistinction to the provision imposing some burden or  liability  where
the presumption attaches towards prospectivity.  In the  instant  case,  the
proviso added to Section 113 of the Act is not beneficial to  the  assessee.
On the contrary, it is  a  provision  which  is  onerous  to  the  assessee.
Therefore, in a case like this, we have to proceed with the normal  rule  of
presumption  against  retrospective  operation.   Thus,  the  rule   against
retrospective operation is a fundamental rule of law that no  statute  shall
be construed to have a retrospective operation unless  such  a  construction
appears very clearly in the terms of the Act, or  arises  by  necessary  and
distinct implication.  Dogmatically framed, the  rule  is  no  more  than  a
presumption, and thus could be displaced by out weighing factors.

35.   Let us sharpen the discussion a little more.  We may note  that  under
certain  circumstances,  a  particular   amendment   can   be   treated   as
clarificatory or declaratory  in  nature.   Such  statutory  provisions  are
labeled  as  “declaratory  statutes”.   The  circumstances  under  which   a
provision can be termed as “declaratory statutes” is  explained  by  Justice
G.P. Singh[7] in the following manner:

“Declaratory statutes
The  presumption  against  retrospective  operation  is  not  applicable  to
declaratory statutes.  As stated in  CRAIES  and  approved  by  the  Supreme
Court : “For modern purposes a declaratory Act may be defined as an  Act  to
remove doubts existing as to the common law, or the  meaning  or  effect  of
any statute.  Such Acts are usually held to  be  retrospective.   The  usual
reason for passing a declaratory Act is to set aside what  Parliament  deems
to have been a judicial error, whether in the statement of  the  common  law
or in the interpretation of statutes.  Usually, if not invariably,  such  an
Act contains a preamble, and also the word 'declared' as well  as  the  word
'enacted'.  But the use of the words 'it  is  declared'  is  not  conclusive
that the Act is declaratory for these  words  may,  at  times,  be  used  to
introduced new rules of law and the Act in the  latter  case  will  only  be
amending  the  law  and  will  not   necessarily   be   retrospective.    In
determining, therefore, the nature of the Act, regard must  be  had  to  the
substance rather than to the form.  If a new Act is 'to explain' an  earlier
Act,  it  would  be  without  object  unless  construed  retrospective.   An
explanatory Act is generally passed to supply  an  obvious  omission  or  to
clear up doubts as to the meaning of the previous Act.  It is  well  settled
that if a statute is curative or merely  declaratory  of  the  previous  law
retrospective operation is  generally  intended.   The  language  'shall  be
deemed always  to  have  meant'  is  declaratory,  and  is  in  plain  terms
retrospective.  In the absence of clear words indicating that  the  amending
Act is declaratory, it would  not  be  so  construed  when  the  pre-amended
provision was  clear  and  unambiguous.   An  amending  Act  may  be  purely
clarificatory to clear a meaning of a provision of the principal  Act  which
was already implicit.  A clarificatory amendment of this  nature  will  have
retrospective effect and, therefore, if the principal Act was  existing  law
which the Constitution came into force, the amending Act also will  be  part
of the existing law.”

The above summing up is factually based on the judgments of  this  Court  as
well as English decisions.

A Constitution Bench of this Court in Keshavlal Jethalal  Shah  v.  Mohanlal
Bhagwandas & Anr.[8], while considering the nature of amendment  to  Section
29(2) of the Bombay Rents, Hotel and Lodging  House  Rates  Control  Act  as
amended by Gujarat Act 18 of 1965, observed as follows:

“The amending clause does not seek to explain any  pre-existing  legislation
which was ambiguous or defective.  The power of the High Court to  entertain
a petition for exercising revisional juris-diction was before the  amendment
derived from s. 115, Code of Civil Procedure, and  the  legislature  has  by
the amending Act attempted to explain the meaning  of  that  provision.   An
explanatory Act is generally passed to supply  an  obvious  omission  or  to
clear up doubts as to the meaning of the previous Act.”


36.   It would also be  pertinent  to  mention  that  assessment  creates  a
vested right and an assessee cannot be subjected to  reassessment  unless  a
provision to that effect inserted by amendment is  either  expressly  or  by
necessary  implication  retrospective.   (See  Controller  of  Estate   Duty
Gujarat-I v. M.A. Merchant[9].  We would also like  to  reproduce  hereunder
the following observations made by this Court in the case  of  Govinddas  v.
Income-tax Officer[10],  while holding Section 171 (6) of  the  Income-  Tax
Act to be prospective and inapplicable for any assessment year prior to  1st
April, 1962, the date on which the Income Tax Act came into force:

“11. Now it is a well settled rule of interpretation hallowed  by  time  and
sanctified by judicial  decisions  that,  unless  the  terms  of  a  statute
expressly so provide or  necessarily  require  it,  retrospective  operation
should not be given to a statute so as to take away or  impair  an  existing
right or create a new obligation or impose a new  liability  otherwise  than
as regards matters of procedure.  The general rule as stated by Halsbury  in
Vol. 36 of the  Laws  of  England  (3rd  Edn.)  and  reiterated  in  several
decisions of this Court as well as  English  courts  is  that  all  statutes
other than those which are  merely  declaratory  or  which  relate  only  to
matters of procedure or  of  evidence  are  prima  facie  prospectively  and
retrospective operation should not be given to a statute so  as  to  affect,
alter or destroy an existing right or create a new liability  or  obligation
unless that effect cannot be avoided without doing violence to the  language
of the enactment.  If the  enactment  is  expressed  in  language  which  is
fairly capable  of  either  interpretation,  it  ought  to  be  constued  as
prospective only.”

37.   In the  case  of  C.I.T.,  Bombay  v.  Scindia  Steam  Navigation  Co.
Ltd.[11], this Court held that as the  liability  to  pay  tax  is  computed
according to the law in force at  the  beginning  of  the  assessment  year,
i.e., the first day of April, any change  in  law  affecting  tax  liability
after that date though made during the  currency  of  the  assessment  year,
unless specifically made retrospective, does not  apply  to  the  assessment
for that year.

      Anwer to the Reference


38.   When we examine the insertion of proviso in Section 113  of  the  Act,
keeping in view the aforesaid principles,  our  irresistible  conclusion  is
that the intention of the legislature was to make it prospective in  nature.
 This proviso cannot be treated  as  declaratory/statutory  or  curative  in
nature.  There are various reasons for coming to this  conclusion  which  we
enumerate hereinbelow:

      Reasons in Support

39.         (a)        The first and foremost poser is as to whether it  was
possible to  make  the  block  assessment  with  the  addition  of  levy  of
surcharge, in the absence of proviso to Section  113?  In  Suresh  N.  Gupta
itself, it was acknowledged and admitted that  the  position  prior  to  the
amendment of Section 113 of the Act whereby the proviso was  added,  whether
surcharge was payable in respect of block assessment  or  not,  was  totally
ambiguous and unclear.  The Court pointed out that some  assessing  officers
had taken the view that no surcharge is leviable.  Others were at a loss  to
apply a particular rate of surcharge as they were  not  clear  as  to  which
Finance Act, prescribing such rates, was applicable.   It  is  a  matter  of
common knowledge and is also pointed out  that  the  surcharge  varies  from
year to year.  However, the assessing officers were  in-determinative  about
the date with reference to which rates provided for in the Finance Act  were
to be made applicable.  They had four dates before them viz.:

(i)  Whether surcharge was leviable with reference  to  the  rates  provided
for in the Finance Act of the year in which the search was inititated; or

(ii) the year in which the search was concluded; or

(iii)  the year in which the block  assessment  proceedings  under   Section
158 BC of the Act were initiated; or

(iv)  the year in which block assessment order was passed.


      The position which prevailed before amending Section 113  of  the  Act
was that some Assessing Officers were not levying any surcharge  and  others
who had a view that surcharge is payable were adopting different  dates  for
the application of a particular Finance Act,  which  resulted  in  different
rates of surcharge in the assessment orders.  In the absence of a  specified
date, it was not possible to levy surcharge and there could  not  have  been
an assessment without a particular rate of surcharge.  As stated  above,  in
Suresh N. Gupta itself, the Court  has  pointed  out  four  different  dates
which were bothering the assessees as well as the  Department.   The  choice
of a  particular  date  would  have  material  bearing  on  the  payment  of
surcharge.  Not only the surcharge is  different  for  different  years,  it
varies according to the category of assessees and for some years,  there  is
no surcharge at all.  This can be seen from the following table  prescribing
surcharge for different assessment years:

|          |         |PART – I                                       |
|Finance   |Relevant |Para - A |Para – B  |Para – |Para – D|Para - E |
|Act       |Section  |         |          |C      |        |         |
|          |of       |         |          |       |        |         |
|          |Finance  |         |          |       |        |         |
|          |Act      |         |          |       |        |         |
|          |         |IND, HUF,|Co-operati|Firm   |Local   |Companies|
|          |         |BOI, AOP |ve Society|       |Authorit|         |
|          |         |         |          |       |y       |         |
|          |         |         |          |       |        |         |
|1995      |Section 2|-        |-         |-      |-       |         |
|          |(3)      |         |          |       |        |         |
|1996      |Section 2|-        |-         |-      |-       |15%      |
|          |(3)      |         |          |       |        |         |
|1997      |Section 2|-        |-         |-      |-       |7.50%    |
|          |(3)      |         |          |       |        |         |
|1998      |Section 2|-        |-         |-      |-       |-        |
|          |(3)      |         |          |       |        |         |
|1999      |Section 2|-        |-         |-      |-       |-        |
|          |(3)      |         |          |       |        |         |
|2000      |Section 2|10%      |10%       |10%    |10%     |10%      |
|          |(3)      |         |          |       |        |         |
|2001      |Section 2|12% or   |12%       |12%    |12%     |13%      |
|          |(3)      |17%      |          |       |        |         |
|2002      |Section 2|2%       |2%        |2%     |2%      |2%       |
|          |(3)      |         |          |       |        |         |
|2003      |Section 2|5%       |5%        |5%     |5%      |5%       |
|          |(3)      |         |          |       |        |         |


Rate at which tax, or for that matter  surcharge  is  to  be  levied  is  an
essential  component  of  the  tax  regime  in  Govindasaran  Gangasaran  v.
Commissioner of Income Tax[12], this Court, while explaining the  conceptual
meaning of a tax, delineated four components therein, as is clear  from  the
following passage from the said judgment :

“The components which enter into the concept of a tax are well  known.   The
first is  the  character  of  the  imposition  known  by  its  nature  which
prescribes the taxable event attracting the levy,  the  second  is  a  clear
indication of the person on whom the levy is imposed and who is  obliged  to
pay the tax, the third is the rate at which the  tax  is  imposed,  and  the
fourth is the measure or value  to  which  the  rate  will  be  applied  for
computing the tax liability.   If  those  components  are  not  clearly  and
definitely ascertainable, it is difficult to say that  the  levy  exists  in
point of law.  Any  uncertainty  or  vagueness  in  the  legislative  scheme
defining any  of  those  components  of  the  levy  will  be  fatal  to  its
validity.”

It is clear from the above that the rate at which the tax is to  be  imposed
is an essential component of tax and where the rate is not stipulated or  it
cannot be applied with precision, it would be difficult  to  tax  a  person.
This very conceptualisation of tax was rephrased  in  C.I.T.,  Bangalore  v.
B.C. Srinivasa Shetty[13], in the following manner:

“The  character  of  computation  of  provisions  in  each  case   bears   a
relationship to the nature of the charge.  Thus, the  charging  section  and
the computation provisions together constitute  an  integrated  code.   When
there is a case to which the computation provisions cannot apply at all,  it
is evident that such a case was not intended to  fall  within  the  charging
section.”


In absence of certainty about the rate  because  of  uncertainty  about  the
date with reference to which the rate is to be applied, it  cannot  be  said
that  surcharge  as  per  the  existing  provision  was  leviable  on  block
assessment qua undisclosed income.  Therefore, it cannot be  said  that  the
proviso added to Section 113 defining the said date was  only  clarificatory
in nature.   From  the  aforesaid  table  showing  the  different  rates  of
surcharge in different years, it would be clear that choice of date  has  to
be formed as in some of the years, there would not be any surcharge at  all.

(b)   Pertinently, the Department  itself  acknowledged  and  admitted  this
fact which is clear from the manner the issue was debated  in  a  Conference
of Chief Commissioners which was held sometime in the year  2001.   In  this
Conference, some proposals relating to  simplification  and  rationalisation
of procedures and provisions were noted  in  respect  of  block  assessment.
The foofaraw  made  in  the  Conference  by  those  who  had  to  apply  the
provision, was not without substance because of the garboil situation  which
this provision had created and in amply reflected  in  the  proposals  which
was submitted in the following terms:

“In the case of a block assessment, there are two problems  in  relation  to
the levy of surcharge.  The first is that Section 113  does  not  mention  a
Central Act.  In the absence of a reference to another Central  Act  in  the
charging section, it becomes difficult to justify levy of  surcharge.   Even
if it is assumed that reference in the Finance  Act  to  section  113  is  a
sufficient authority to levy surcharge,  the  second  problem  is  that  the
Finance Act levies surcharge on the amount of income-tax on the income of  a
particular assessment year whereas in the block assessment tax is levied  on
the  undisclosed  income  of  the  block  period.   Absence  of  a  specific
assessment year in the block assessment may render the  levy  suspect.   Yet
another problem is the rate of surcharge applicable.  To illustrate, if  the
search took place on, say, April 4, 1996, whether the rate of  surcharge  is
to  be  adopted  as  applicable  to  the  assessment  year  1996-97  or  the
assessment year 1997-98, the rate of surcharge being different for  the  two
years? The provisions of section 113 or the provisions of  the  Finance  Act
do not offer any guidance on the issue.

Suggestions :

The foregoing problem  indicates  that  levy  of  surcharge  on  undisclosed
income is a matter of uncertainty  and  is  prone  to  litigation.   In  the
circumstances,  it  is  suggested  that   section   113   may   be   amended
retrospectively in order to provide  for  levy  of  surcharge  at  the  rate
applicable to the assessment year relevant to the financial  year  in  which
the search was concluded.”

The Chief Commissioners accepted the position, in no uncertain  terms,  that
as per the language of Section 113, as  it  existed,  it  was  difficult  to
justify levy of surcharge.  It was also acknowledged that  even  if  Section
113 empowered to levy surcharge, since block assessment  tax  is  levied  on
the undisclosed income of the block period, absence of  specific  assessment
year in the block assessment would render the levy suspect.
(c)   We would like to embark on a discussion on some basic and  fundamental
concepts, which would shed further light on the subject matter.   No  doubt,
there is no scope for accepting  the  Libertarian  theory  which  postulates
among others, no taxation by  the  State  as  it  amounts  to  violation  of
individual liberty and advocates minimal interference  by  the  State.   The
Libertarianism  propounded  by  the  Australian-born  economist  philosopher
Friedrich  A.  Hayek  and  American   economist   Milton   Friedman   stands
emphatically rejected by all civilised and democratically  governed  States,
in favour of strongly conceptualised “welfare  state”.   To  attain  welfare
state is our constitutional goal as well, enshrined  as  one  of  its  basic
feature, which runs through  our  Constitution.   It  is  for  this  reason,
specific  provisions  are  made  in   the   Constitution,   empowering   the
legislature to make laws for levy of taxes, including the  income-tax.   The
rationale behind collection of taxes is  that  revenue  generated  therefrom
shall be spent by the  governments  on  various  developmental  and  welfare
schemes, among others.
      At the same time, it is also mandated that there cannot be  imposition
of any tax without the authority of law.  Such a law has to  be  unambiguous
and should prescribe the liability to pay taxes  in  clear  terms.   If  the
concerned provision of the taxing statute is  ambiguous  and  vague  and  is
susceptible to two interpretations, the  interpretation  which  favours  the
subjects, as against there the revenue, has to  be  preferred.   This  is  a
well established principle of statutory interpretation, to help finding  out
as to whether particular category of assessee are to pay  a  particular  tax
or not.  No doubt, with the  application  of  this  principle,  Courts  make
endeavour to find out the intention of the legislature.  At the  same  time,
this very principle is based on “fairness” doctrine as it lays down that  if
it is not very clear from the provisions  of  the  Act  as  to  whether  the
particular tax is to be levied to a particular class of persons or not,  the
subject should not  be  fastened  with  any  liability  to  pay  tax.   This
principle also acts as a balancing factor between  the  two  jurisprudential
theories of justice – Libertarian theory on the one hand and Kantian  theory
along with Egalitarian theory propounded by John Rawls on the other hand.
      Tax laws are clearly in derogation of  personal  rights  and  property
interests and are,  therefore,  subject  to  strict  construction,  and  any
ambiguity must be resolved against imposition of the tax.   In  Billings  v.
U.S.[14], the Supreme  Court  clearly  acknowledged  this  basic  and  long-
standing rule of statutory construction:

“Tax Statutes .  .  .  should be strictly construed, and, if  any  ambiguity
be found to exist, it must be resolved in favor of the citizen.   Eidman  v.
Martinez, 184 U.S. 578, 583; United States v. Wigglesworth,  2  Story,  369,
374; Mutual Benefit Life Ins. Co. v. Herold, 198 F. 199, 201, aff'd  201  F.
918; Parkview Bldg. Assn. v. Herold, 203 F. 876, 880; Mutual  Trust  Co.  v.
Miller, 177 N.Y. 51, 57.”


      Again, in United States v.  Merriam[15],  the  Supreme  Court  clearly
stated at pp. 187-88:
      “On behalf of the Government it is urged that taxation is a  practical
matter and concerns itself with the substance of the thing  upon  which  the
tax is imposed  rather  than  with  legal  forms  or  expressions.   But  in
statutes levying taxes the literal meaning of the  words  employed  is  most
important, for such statutes are not to be extended  by  implication  beyond
the clear import of the language used.   If  the  words  are  doubtful,  the
doubt must be resolved against the Government and in favor of the  taxpayer.
 Gould v. Gould, 245 U.S. 151, 153”


      As Lord  Cairns  said  many  years  ago  in  Partington  v.  Attorney-
General[16]: “As I understand the principle of all fiscal legislation it  is
this : If the person sought to be taxed comes within the letter of  the  law
he must be taxed, however great the hardship  may  appear  to  the  judicial
mind to be.  On the other hand, if the Crown, seeking to  recover  the  tax,
cannot bring the subject within the letter of the law, the subject is  free,
however apparently within the spirit of the law  the  case  might  otherwise
appear to be.
(d)   There are some  other  circumstances  which  reflect  the  legislative
intent.  The problem which  was  highlighted  in  the  Conference  of  Chief
Commissioners on the rate of surcharge applicable is noted above.   In  view
of the aforesaid difficulties pointed out  by  the  Chief  Commissioners  in
their  Conference,  it  becomes  clear  that  as  per  the  provisions  then
enforced, levy of surcharge in  the  block  assessment  on  the  undisclosed
income was a difficult proposition.  It is  for  this  reason  retrospective
amendment to Section 113  was  suggested.   Notwithstanding  the  same,  the
legislature  chose  not  to  do  so,  as  is  clear  from   the   discussion
hereinafter.
      “Notes on Clauses” appended to  Finance  Bill,  2002  while  proposing
insertion of proviso categorically states that  “this  amendment  will  take
effect from 1st June, 2002”.  These become epigraphic words,  when  seen  in
contradistinction to other  amendments  specifically  stating  those  to  be
clarificatory  or  retrospectively  depicting   clear   intention   of   the
legislature.  It can be seen from the same notes that few  other  amendments
in the Income Tax Act were made by the same Finance Act specifically  making
those amendments retrospectively.  For example, clause  40  seeks  to  amend
S.92F.  Clause iii (a) of S.92F is  amended  “so  as  to  clarify  that  the
activities mentioned in the said clause include  the  carrying  out  of  any
work  in  pursuance  of  a   contract.”    This   amendment   takes   effect
retrospectively from 01.04.2002.  Various other amendments also  take  place
retrospectively.  The Notes on Clauses show that the  legislature  is  fully
aware of 3 concepts:
(i)   prospective amendment with effect from a fixed date;

(ii)  retrospective amendment with effect from a fixed anterior date; and

(iii) clarificatory amendments which are retrospective in nature.


      Thus, it was a conscious decision of the legislature,  even  when  the
legislature knew the implication thereof and took note of the reasons  which
led to the insertion of the  proviso,  that  the  amendment  is  to  operate
prospectively.  Learned counsel  appearing  for  the  assessees  sagaciously
contrasted the aforesaid stipulation while effecting  amendment  in  Section
113 of the Act, with various other provisions not only in the  same  Finance
Act but Finance  Acts  pertaining  to  other  years  where  the  legislature
specifically  provided  such  amendment  to  be  either   retrospective   or
clarificatory.  In so far as amendment to Section 113  is  concerned,  there
is no such language used and on the contrary, specific stipulation is  added
making the provision effective from 1st June, 2002.

(e)    There  is  yet  another  very  interesting  piece  of  evidence  that
clarifies the provision beyond any pale  of  doubt,  viz.  understanding  of
CBDT itself regarding this provision.  It  is  contained  in  CBDT  circular
No.8 of 2002 dated  27th August, 2002, with the subject “Finance  Act,  2002
– Explanatory Notes on provision relating to Direct Taxes”.   This  circular
has been issued after the  passing  of  the  Finance  Act,  2002,  by  which
amendment to Section 113 was made.  In this circular, various amendments  to
the Income Tax Act are discussed amply demonstrating as to which  amendments
are  clarificatory/retrospective  in  operation  and  which  amendments  are
prospective.  For example, explanation to Section  158BB  is  stated  to  be
clarificatory in nature.  Likewise,  it  is  mentioned  that  amendments  in
Section 145 whereby provisions of that section are made applicable to  block
assessments is made clarificatory  and  would  take  effect  retrospectively
from 1st day of July, 1995.  When it comes to amendment to  Section  113  of
the Act, this very circular provides that  the  said  amendment  along  with
amendments in Section 158BE, would be prospective i.e. it will  take  effect
from 1st June, 2002.
(f)   Finance Act, 2003, again makes the position clear  that  surcharge  in
respect of block assessment of  undisclosed  income  was  made  prospective.
Such a stipulation is contained in second  proviso  to  sub-section  (3)  of
Section 2 of Finance Act, 2003.  This proviso reads as under:

“Provided further that the amount of income-tax computed in accordance  with
the provisions of  section  113  shall  be  increased  by  a  surcharge  for
purposes of the Union as provided in Paragraph A, B, C, D or E, as the  case
may be, of Part III of the First Schedule of the Finance Act of the year  in
which the search is initiated under  section  132  or  requisition  is  made
under section 132A of the income-tax Act.”



Addition of this proviso in the Finance Act, 2003  further  makes  it  clear
that such a provision was necessary to provide for surcharge  in  the  cases
of block assessments and thereby  making  it  prospective  in  nature.   The
charge in respect of the surcharge, having been created for the  first  time
by the insertion of the proviso to Section 113,  is  clearly  a  substantive
provision and hence is  to  be  construed  prospective  in  operation.   The
amendment neither purports to be  merely  clarificatory  nor  is  there  any
material to suggest that it was intended  by  Parliament.   Furthermore,  an
amendment made to a taxing statute can be said  to  be  intended  to  remove
'hardships' only of the assessee, not of the Department.  On  the  contrary,
imposing a retrospective levy  on  the  assessee  would  have  caused  undue
hardship and for that reason  Parliament  specifically  chose  to  make  the
proviso effective from 1.6.2002.


40.   The aforesaid discursive of  ours  also  makes  it  obvious  that  the
conclusion of the Division Bench in Suresh N. Gupta treating the proviso  as
clarificatory  and  giving  it  retrospective  effect  is  not   a   correct
conclusion.  Said judgment is accordingly overruled.


41.   As a result of the aforesaid discussion,  the  appeals  filed  by  the
Income Tax Department are hereby dismissed.  Appeals of  the  assessees  are
allowed deleting the surcharge levied by  the  assessing  officer  for  this
block assessment pertaining to the period prior to 1st June, 2002.

                                 …......................................CJI.
                                                                (R.M. Lodha)


                                   …......................................J.
                                                      (Jagdish Singh Khehar)


                                   …......................................J.
                                                            (J. Chelameswar)


                                   …......................................J.
                                                                (A.K. Sikri)


                                   …......................................J.
                                                     (Rohinton Fali Nariman)

New Delhi;
September 15, 2014.
-----------------------
[1]   (2008) 4 SCC 362
[2]   (2009) 310 ITR 105 (SC)
[3]   (1870) LR 6 QB 1
[4]   (1994) 1 AC 486
[5]   (2005) 7 SCC 396
[6]   (2006) 6 SCC 286
[7]   Principles of Statutory Interpretation, 13th Edition 2012 published
by LexisNexis Butterworths Wadhwa, Nagpur
[8]   (1968) 3 SCR 623
[9]   1989 Supp (1) SCC 499
[10]  (1976) 1 SCC 906
[11]  1962 (1) SCR 788
[12]  155 ITR 144
[13]  125 ITR 294
[14]  232 U.S. 261, at p.265, 34 S.Ct. 421 (1914)
[15]  263 U.S. 179, 44 S.Ct. 69 (1923)
[16]  (1869) LR 4 HL 100