AO should include fictitious transactions in block Assessment instead of regular Assessment

A.O. can include transactions which he treats as fictitious in block Assessment instead of regular Assessment despite the fact that same were reflected in the return

Dheeraj Construction and Industries Ltd. Versus CIT – Principle laid down in the case of Mc Dowel and Co. Ltd. (supra), has no application in deciding the dispute involved herein. It is absurd to suggest that even though the finding of fictitious claim is not based on any material discovered during search and seizure, by taking aid of the decision in the case of Mc Dowel and Co. Ltd. (supra), the special rate of tax specified in Section 113 of the Act would be applicable to such assessment instead of the rate fixed for regular assessment.

As regards the last point formulated by the Division Bench, we find that the said question has already been answered by the Supreme Court, in the case of CIT vs. Suresh N. Gupta reported in (2008) 4 SCC 362, thereby holding that the proviso to Section 113 of the Act is curative in nature. We, therefore, hold that surcharge is applicable to the Income tax fixed under Section 113 of the Act even though the search and seizure took place before insertion of the proviso to Section 113 of the Act.

IN THE HIGH COURT AT CALCUTTA

Special Jurisdiction (Income Tax) (Original Side)

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