2014 (10) TMI 359 - HC - Income Tax

Passing of block assessment Block assessment made - whether the block assessment order was passed in time or not Held that - The assessee contended that the search was conducted on 14.11.1996 in pursuance of an authorization and a mahazar was drawn in C.RAMAIAH REDDY VS. ASSISTANT COMMISSIONER OF INCOME-TAX 2010 (9) TMI 862 - Karnataka High Court it has been held that the period of limitation starts on the date on which the last of authorization has been executed and not when the authorized officer states that the search is finally concluded - putting a prohibitory order u/s 132 (3) does not elongate the starting point of limitation - there was only one authorization dated 05.11.1996 in pursuance of which search was conducted on 14.11.1996 - the search was continued on the two consecutive dates and it ended on 16.11.1996, the block assessment orders should have been passed on or before 30.11.1997 - Whereas the block assessment order is passed on 29.01.1998 which is clearly barred by law of limitation - the block assessment order passed is liable to be set aside as barred by limitation Decided against revenue.

Summary

Issues:
1. Block assessment order passed within the time period
2. Validity of the block assessment order based on the time limitation
3. Interpretation of the starting point of limitation for block assessment

Analysis:

Issue 1: The appeals were filed by the revenue challenging the Tribunal's order granting relief to the assessee on merits, while the assessee appealed against the Tribunal's finding that the block assessment order was not passed within the time limit. All appeals were consolidated and addressed together.

Issue 2: The search was conducted on the assessee's premises under Section 132 of the Act, with documents seized on various dates. The contention was whether the block assessment order was passed within the statutory time limit. The Court analyzed the authorization date for the search and held that the assessment order passed on 29.01.1998 was beyond the limitation period, as it should have been completed by 30.11.1997 based on the search dates.

Issue 3: The Court referred to the judgment in C.RAMAIAH REDDY VS. ASSISTANT COMMISSIONER OF INCOME-TAX, which clarified that the limitation period starts from the date of the last authorization executed, not when the authorized officer concludes the search. The Court emphasized that putting a prohibitory order does not extend the limitation period. As there was only one authorization dated 05.11.1996 for the search, the block assessment order passed on 29.01.1998 was deemed time-barred and set aside.

The Court allowed the assessee's appeal, dismissed the revenue's appeals, and set aside the block assessment order dated 29.01.1998. The parties were directed to bear their own costs, with the option to seek revival of appeals pending the Apex Court's judgment in Ramaiah Reddy's case. The revenue's counsel was granted permission to file the power for revenue within four weeks.