Commr.Of Income Tax-I,New Delhi vs Vatika Township P.Ltd

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.

(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.

Anwer to the Reference

(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.

…......................................CJI.

September 15, 2014.