2011 (3) TMI 166 - HC - Income Tax

Block assessment - Search and seizure - The combined appreciation of section 158BE and explanation 2(a) would lead to an irresistible conclusion that the warrant is deemed to be executed on the conclusion of search as recorded in the last panchanama - It is definitely recorded in the panchanamas that search in respect of both residential and business premises is finally concluded on 17.06.2003 and 14.06.2003 - the search is finally concluded on 17.06.2003 and 14.06.2003 respectively, the respondents cannot be permitted to introduce a new theory as if the search held on 28.08.2003 is in continuation of the earlier search initiated on 26.03.2003 - Prohibitory Order passed under section 132(3) shall be in force for 60 days and any search and seizure by lifting Prohibitory Order after 60 days does not amount to actual search and seizure - The legal and factual aspects involved herein as discussed above will only establish that the impugned block assessment order dated 30.06.2005 is barred by limitation and is without jurisdiction and cannot be enforced against the assessee and the assessee is entitled to get the reliefs as sought for herein - Decided in the favour of the assessee

Issues Involved:
1. Validity of the block assessment order.
2. Limitation period for completing the block assessment.
3. Maintainability of the writ petition alongside a statutory appeal.
4. Determination of the date of conclusion of the search.

Detailed Analysis:

1. Validity of the Block Assessment Order:
The petitioner contested the validity of the block assessment order dated 30.06.2005, arguing that it was passed beyond the statutory two-year period from the end of the month in which the last authorization for search was executed. The petitioner claimed that the search was concluded on 27.03.2003 and 28.03.2003, and thus, the assessment order should have been completed by 30.03.2005.

2. Limitation Period for Completing the Block Assessment:
According to Section 158BE of the Income Tax Act, the time limit for completing a block assessment is two years from the end of the month in which the last of the authorizations for search under Section 132 was executed. Explanation 2(a) under Section 158BE states that the authorization is deemed to have been executed on the date the last panchanama was drawn. The petitioner argued that the search was concluded on 27.03.2003 and 28.03.2003, making the last panchanamas dated 27.03.2003 and 28.03.2003. The respondents contended that the search was concluded on 28.08.2003, thus making the assessment order within the two-year limit.

3. Maintainability of the Writ Petition Alongside a Statutory Appeal:
The respondents argued that the petitioner could not maintain both a statutory appeal and a writ petition simultaneously. The court, however, upheld the maintainability of the writ petition, noting that the statutory appeal addressed the assessment order on merits, while the writ petition challenged the order on jurisdictional and limitation grounds. The court referenced various legal authorities supporting the maintainability of the writ petition under such circumstances.

4. Determination of the Date of Conclusion of the Search:
The core issue was determining the date of conclusion of the search. The court examined the panchanamas and found that the search in the residential and business premises was recorded as finally concluded on 17.06.2003 and 14.06.2003, respectively. The search in the Standard Chartered Bank on 28.08.2003 was considered a fresh search based on a new warrant of authorization. The court rejected the respondents' argument that the search on 28.08.2003 was a continuation of the earlier search, noting that the last panchanamas dated 17.06.2003 and 14.06.2003 recorded the final conclusion of the search.

The court also addressed the validity of the Prohibitory Orders under Section 132(3), which are valid for only 60 days. The Prohibitory Orders dated 27.03.2003 and 28.03.2003 expired on 27.05.2003 and 28.05.2003, respectively. The search and seizure actions taken on 17.06.2003, 12.06.2003, and 14.06.2003 were not considered valid as they were conducted after the expiry of the Prohibitory Orders. Therefore, the court concluded that the actual search was concluded on 27.03.2003 and 28.03.2003, making these dates the basis for calculating the two-year limitation period for completing the block assessment.

Conclusion:
The court held that the block assessment order dated 30.06.2005 was barred by limitation and without jurisdiction. The writ petition was allowed, and the impugned assessment order was quashed. The court emphasized that the last panchanamas dated 27.03.2003 and 28.03.2003 were the relevant dates for determining the conclusion of the search and the commencement of the limitation period for completing the block assessment.

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