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2013 (11) TMI 1284 - AT - Income TaxPeriod of Limitation - Whether the assessment order had been passed within the period of limitation Held that - As per the provisions of section 158BE, order u/s 158BC had to be passed within a period of two years from the end of the month in which the last of the authorization for search ended u/s 132 and for requisition u/s 132A - Relying upon C. Ramaiah Reddy Vs. ACIT 2010 (9) TMI 862 - Karnataka High Court - The limitation for passing the assessment order comes to an end on 31.05.2002 by taking into consideration the last valid panchanama dated 4.5.2000 - The remaining two panchanams dated 30.06.2000 and 28.08.2000 are nothing but abuse of the process of law for enlarging the time of passing the order - A perusal of panchanama dated 30.06.2000 would show that search lasted for only one hour i.e. from 11.30 am to 12.30 pm and panchanama dated 28.08.2000 shows the duration of search as 55 minutes i.e. from 11.15 am to 12.10 pm. It can be safely concluded the last two panchanamas were mere formalities to keep the search proceedings alive - In the instant case, even if we enlarge the period as per the provisions of section 132(8A) authorization ended on 18.06.2000. Therefore, the period of limitation for passing assessment order ended on 30.06.2002, whereas the assessment order had been passed on 30.08.2002 i.e. beyond the period of limitation provided in the Act - Therefore, in our considered opinion, the assessment order was bad in law and was set aside being barred by limitation. Validity of Assessment Order u/s 158BC - No seizure of any incriminating documents/evidence - Held that - No incriminating evidence or document had been recovered against the assessee during the search, the addition made against the assessee was unsustainable - The properties do not form investment or the properties of the assessee - They have to be assessed in the hands of the respective registered owners - It was also not the case of the Revenue that the owners of the said properties have denied ownership of the properties alleged to be registered in their respective names - The Revenue had also not stated that in the income returned, the assessee had not included the properties registered in his name the notice issued to the assessee company under section 158BD suffers from limitation - the notice and the proceedings arising are bad in law thus set aside - Decided in favour of Assessee.
Issues Involved:
1. Validity of notice under section 158BC. 2. Validity of the second search conducted during the pendency of the first search. 3. Whether the assessment order is barred by limitation. 4. Validity of the assessment order under section 158BC without seizure of incriminating material. 5. Validity of the block assessment proceedings under section 158BD. Detailed Analysis: 1. Validity of Notice under Section 158BC: The assessee challenged the notice under section 158BC as void ab-initio, arguing that the search conducted on 4.5.2000, which continued until 20.8.2000, was invalid since no seizure was made, and no incriminating material was found. The CIT(A) dismissed this contention, stating that the assessment was based on sworn statements recorded during the second search, thus validating the notice under section 158BC. 2. Validity of the Second Search: The assessee contended that a second search during the pendency of the first search was not permissible under the Income Tax Act. The Tribunal noted that the first search commenced on 25.11.1999 and concluded on 4.5.2000, while the second search started on 4.5.2000 and ended on 28.8.2000. The Tribunal found that the search was prolonged unjustifiably, as no fresh authorization was issued after the initial 60 days, making the second search invalid. 3. Whether the Assessment Order is Barred by Limitation: The Tribunal examined whether the assessment order was passed within the period of limitation as per section 158BE. The Tribunal concluded that the last valid panchanama was dated 4.5.2000, and thus, the period of limitation ended on 31.05.2002. Since the assessment order was passed on 30.08.2002, it was held to be barred by limitation and thus invalid. 4. Validity of the Assessment Order under Section 158BC without Seizure of Incriminating Material: The Tribunal observed that no incriminating documents were seized during the search proceedings. The addition made against the assessee was based on voluntary disclosure rather than any seized material. The Tribunal held that, as per section 158BB, the assessment should be based on evidence found during the search. Since no such evidence was seized, the assessment under section 158BC was invalid. 5. Validity of the Block Assessment Proceedings under Section 158BD: In the case of the assessee company, the Tribunal examined the validity of the block assessment under section 158BD. The Tribunal noted that the satisfaction note for initiating proceedings under section 158BD was recorded after the completion of the block assessment under section 158BC for the person searched. Citing the Special Bench decision in Manoj Aggarwal and the Punjab & Haryana High Court decision in Mirdula, the Tribunal held that the satisfaction note must be recorded before the completion of the block assessment of the person searched. Since this was not done, the notice under section 158BD and the subsequent proceedings were held to be invalid. Conclusion: - The appeals of the assessee were allowed, and the assessment orders were set aside as being barred by limitation and invalid due to the lack of seizure of incriminating material. - The appeal of the Revenue was dismissed, affirming that the block assessment proceedings under section 158BD were invalid due to the satisfaction note being recorded beyond the period of limitation.
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