2011 (9) TMI 54 - HC - Income Tax

Block assessment - Limitation - Search and seizure u/s 132(1) - Stay granted in Writ Petition No.2905 of 1999 was restricted to the case of Shri M.N. Dugad and not to the case of other members of Dugad family - Consequently, the statement made by the counsel for the Revenue in Writ Petition No.2905 of 1999 on 29th November 1999 that the special audit would be completed within the date recorded therein would be restricted to the case of Shri M.N. Dugad and would not apply to the other members of the Dugad family including the assessee - It is not in dispute that if the statement made by the Counsel for the Revenue in Writ Petition No.2905 of 1999 on 29th November 1999 is held not applicable to the assessee, then the block assessment order passed in the case of the assessee would be time barred - Accordingly,no merit in the appeal and the same is dismissed with no order as to costs.

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal was justified in holding the block assessment order as time-barred.

Analysis:
1. The case involved a search and seizure action under Section 132(1) of the Income Tax Act, 1961, at the residential premises of the assessee and other members of the Dugad Family. Subsequently, a notice under Section 158BC of the Act was issued to the assessee, leading to the filing of a block return.

2. An order under Section 142(2A) of the Act was passed by the assessing officer for auditing the books of Shri M.N. Dugad. The assessee sought clarification on the applicability of this order to all members of the Dugad family, including themselves, who had filed block returns. Another order was later issued for the assessee to get the books audited.

3. A Writ Petition was filed challenging the orders related to the audit. While an ad interim stay was initially granted, it was later vacated, specifying that the stay was restricted to the case of Shri M.N. Dugad. Subsequently, a special audit was conducted, leading to the block assessment order.

4. The Commissioner of Income Tax (Appeals) set aside the assessment order and sent the issue back to the assessing officer. Both the Revenue and the assessee appealed to the Income Tax Appellate Tribunal, with the Revenue contesting the setting aside of the block assessment order and the assessee raising the issue of the order being time-barred.

5. The Income Tax Appellate Tribunal ruled in favor of the assessee, deeming the block assessment order as time-barred. The Revenue challenged this decision, arguing that the special audit completion statement made by their counsel indicated the order was within the time limit.

6. The High Court rejected the Revenue's argument, emphasizing that the Writ Petition and stay were specific to Shri M.N. Dugad and not applicable to the assessee. As a result, they upheld the Tribunal's decision that the block assessment order was indeed time-barred, leading to the dismissal of the appeal.