2015 (4) TMI 556 - AT - Income Tax

Validity of the assessment orders u/s 153A, r.w.s. 143(3) - period of limitation - Held that - The language of provisions of Sections 158BE and 153B of the Act, so as it relate to computation of limitation, is same. The search is conducted on the basis of authorizations issued to the officers of the departments. In all these cases, the Courts have considered the authorizations issued by the departments to its officers and conclusions of such authorizations by way of punchnama in which the seizures made during the course of search are considered along with the requisitions made under Section 132A. A unanimous view has been taken by the Courts that the authorizations referred to in the provisions relating to computation of limitation is to be considered as a conclusion of search on the dates when seizures are made and practically the search is concluded. If the authorization is extended by way of passing prohibitory order then it would be relevant to look into the action of the department taken on subsequent dates till the prohibitory order passed are revoked or vacated. In various cases such prohibitory orders are being passed by the Revenue and according to unanimous view taken by the Courts more particularly Hon ble Jurisdictional High Court, that if on the date when such prohibitory orders are vacated, it would be relevant to see the action of the department and if no seizure is made on that date and nothing is done except lifting the prohibitory orders then the last punchnama drawn on that date would not be relevant to compute the limitation period for framing the assessment. We are of the opinion that the learned CIT(A) has committed an error in not accepting the submission of the assessee that the computation of the period of limitation should commence on 1st March, 2007 when for all practical purposes the authorization issued by the department for search in the case of the assessee was executed and subsequent punchnama drawn on 28th April, 2007 could not be considered as relevant for computing the period of limitation for framing the assessment. Therefore, we reverse the order of learned CIT(A) on this issue and it is held that the assessments framed by the Assessing Officer on 29th December, 2009 in respect of all the impugned assessment years are beyond the period of 21 months, therefore, barred by limitation and thus are invalid assessments. The impugned assessments are quashed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of assessment orders on the ground of limitation.
2. Additions sustained on merits contested by the assessee.
3. Additions contested by the Revenue.

Issue-Wise Detailed Analysis:

1. Validity of Assessment Orders on the Ground of Limitation:

The primary issue raised by the assessee is the challenge to the validity of the assessment orders on the ground of limitation. The assessee contends that the assessments made under Section 153A, read with Section 143(3), dated 29.12.2009, are barred by limitation as they should have been finalized on or before 31st December 2008. The search under Section 132(1) concluded on 28.02.2007, and thus, the assessment was required to be made within 21 months as prescribed by the second proviso to Section 153B(1) of the Act.

The learned CIT(A) decided against the assessee, and the assessee raised this ground before the Tribunal. The Tribunal noted that the search and seizure action was carried out on 28th February 2007, and a Punchnama dated 1st March 2007 was drawn. The search was recommenced on 28th April 2007, but no further seizure was made. The Tribunal referred to various decisions, including CIT Vs. D.D. Axles (P.) Ltd., CIT v. S.K. Katyal, and others, which held that the limitation period should be computed from the date when the search was practically concluded.

The Tribunal concluded that the assessment should have been made within 21 months from 1st April 2007, ending on 31st December 2008. Since the assessments were framed on 29th December 2009, they were barred by limitation. The Tribunal reversed the order of the learned CIT(A) and quashed the assessments as invalid.

2. Additions Sustained on Merits Contested by the Assessee:

Since the Tribunal held that the assessments were barred by limitation and invalid, it did not consider it necessary to go into the other grounds of appeal filed by the assessee regarding the additions sustained on merits. These grounds became academic only.

3. Additions Contested by the Revenue:

The Revenue contested the additions sustained by the learned CIT(A). However, given the Tribunal's decision on the ground of limitation, these appeals by the Revenue also became academic and were dismissed.

Conclusion:

In conclusion, the Tribunal allowed the appeals filed by the assessee on the ground of limitation, quashing the assessments as invalid. Consequently, the appeals filed by the Revenue were dismissed as academic. The decision was pronounced in the open court on 13th February 2015.