2012 (8) TMI 148 - HC - Income Tax

Search - assessment order limitation Held that - Panchanama was drawn on 7.2.1996 - Again a third visit was made and a panchanama came to be drawn on 25.4.1996 - order of assessment came to be passed on 24.4.1997 - time starts running from the date of the first Panchanama assessment order should be passed within one year therefrom - entire order is set aside on the ground of bar of limitation

Summary

Issues:
Challenge to assessment order under Section 158BE as barred by limitation.

Analysis:
The High Court judgment in ITA No. 1350/2006 involved a challenge by the revenue against the Tribunal's order deeming the assessment order under Section 158BE as time-barred. The facts were undisputed, with the premises of the assessee being searched multiple times in 1996, leading to the issuance of a notice under Section 158BC and subsequent assessment order in 1997. The Tribunal held that the assessment order exceeded the one-year limitation period from the last valid panchanama dated 19.2.1996, rendering it time-barred.

The Tribunal's decision was based on the premise that the last valid panchanama was dated 19.2.1996, and as there was no seizure after that date, the subsequent panchanama on 25.4.1996 was deemed invalid. The Tribunal emphasized that the assessment order should have been passed within one year from the last valid panchanama, as per the provisions of the Act. The Tribunal's reasoning, supported by the appraisal report and relevant legal provisions, led to the conclusion that the assessment order was indeed barred by limitation.

Referring to a previous judgment, the Court reiterated that the time for assessment starts from the date of the first panchanama. In alignment with this legal principle, the Court upheld the Tribunal's decision, finding no legal flaw in the order and subsequently dismissing the revenue's appeal. As a result, the assessment order was deemed time-barred and upheld by the Court.

Additionally, the Court addressed the connected appeal, ITA No. 1257/2006, filed by the assessee challenging the findings on merits. However, since the entire order was set aside due to the limitation issue, the findings on merits became irrelevant, leading to the dismissal of the assessee's appeal as well. The Court directed the registry to return the original files to the Department, concluding the legal proceedings in the case.