The main legal point established in the judgment is the mandatory applicability of Section 158BFA of the Income Tax Act to determine the liability of the appellant for interest on undisclosed income, considering the delay in filing the return and the statutory provisions.

D.KRISHNAKUMAR, J

This Appeal has been filed under Section 260A of the Income Tax Act 1961 against the order of the Income Tax Appellate Tribunal, Bench ‘A’, Chennai in I.T.SSA.No.95/MDS/2003 for the assessment year : Block period 1.4.1990 to 11.1.2001 , dated 29.5.2006.

2. A search under Section 132 of the Act was conducted at the residential and business premises of the appellant on 10.1.2001 and the same was concluded on 16.4.2001. During the search operation, cash of Rs.2,51,75,309/- forming part of Fixed Deposit Certificates worth Rs.5,98,75,340/- and 3031.5gms of jewellery were seized. In response to the notice dated 1.6.2001 issued under section 158BC of the Act to file the Block Return within 16 days, the assesee filed the return on 8.1.2002 admitting total undisclosed income of Rs.1,41,50,975/-. In the course of the Block Assessment Proceedings, the assessee admitted further undisclosed income of Rs.3,95,632/-. Based on the materials made available, the assessing authority determined the tax liability as Rs.1,20,55,160/- which included Surcharge @ 17% amounting to Rs.15,36,495/- and Interest u/s.158BFA for the period from 22.6.2001 to 08.1.2002 (for 7 months) Rs. 14,80,458/-. Challenging the levy of surcharge and interest, the appellant preferred an appeal before the Commissioner of Income Tax (Appeals) - II, Coimbatore.

3. The Commissioner of Income Tax (Appeals) - II, Coimbatore/the first appellate authority after considering the submissions of the parties concerned came to the conclusion that the levy of interest under Section 158BFA of the Income Tax Act is not justified and accordingly, it was held by order dated 26.2.2003 in ITA No.189-C/2002-03.

4. Aggrieved against the order of the Commissioner of Income tax, the appellant/assessee preferred an Appeal in IT (SS) A No.68 (Mds)/2003 questioning the levy of surcharge whereas the revenue has filed an Appeal in IT (SS)A No.95(Mds)/2003 questioning the waiver of interest by the lower appellate authority vide order dated 26.2.2003 in ITA No.189-C/2002-03, before the Income Tax Tribunal, Chennai Bench ‘D’ , Chennai. By order dated 29.5.2006, the Appellate Tribunal allowed the appeal filed by the appellant, viz., IT (SS) A No.68(Mds)/2003 holding that levy of surcharge was not in accordance with law whereas the Tribunal remanded the appeal filed by the revenue, viz., IT (SS) A. No.95(Mds)/2003 to the Commissioner (Appeals)/appellate authority to decide the issue of interest de novo after providing adequate opportunity to the assessee of being heard. It is against this order, the present appeal in Tax Case (Appeal) No.600 of 2013 has been preferred by the assessee/appellant, before this Court.

5. Heard Mr.A.S.Sriraman, learned counsel for the appellant and Mr.T.R.Senthilkumar, learned Standing Counsel for the respondent and perused the available materials.

6. A search under Section 132 of the Income Tax Act was conducted in the residential and business premises of the appellant on 10.1.2001 and the search was concluded on 16.4.2001. As a result of the search, cash of Rs.2,51,735,309/- forming part of fixed deposit certificates worth Rs.5,98,75,340/- and 3031.5 gms of jewelly were seized. In response to the notice dated 1.6.2001 issued u/s.158BC of the Act to file Block Return within 16 days, the appellant filed the return on 8.1.2002 admitting total undisclosed income of Rs.1,41,50,975/-. The year-wise particulars of undisclosed income for the block period is as under:-