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2015 (5) TMI 1214 - AT - Income TaxBlock assessment order u/s.158 BC - Assessment order passed beyond the period of limitation prescribed under the Act - undisclosed income for block period - whether or not the panchnama of 6.2.1998 is of the type mentioned in the Explanation 2(a) to Section 158BE(1)? - HELD THAT - It has to be inferred that the panchnama of 6.2.1998 cannot be understood as a panchnama of type mentioned in Explanation 2(a) to section 158BE(1) - A natural collorary of the aforesaid is that the period of limitation prescribed in section 158BE(1) for passing the block assessment order u/s. 158BC in the present case cannot be computed by considering the panchnama of 6.2.1998 as execution of the last of the authorizations for search initiated by the authorization u/s 132 dated 8.12.1997. Search operations were also carried out at two other premises i.e. at Sonawala Building and at Krishna Niwas. The search operations at these premises came to an end on 16.1.1998 and 8.1.1998 respectively as is revealed by the Panchnama s on record. In any case on these aspects there is no dispute between the assessee and the Revenue. Last day when the authorization of search dated 8.12.1997 was finally executed / concluded is 16.1.1998 for the purpose of section 158BE(1)(b) of the Act. Considered in the said light the assessment order passed by the Assessing Officer on 23.2.2000 is beyond the period of limitation prescribed in section 158BE(1)(b) of the Act. As a consequence the assessment order dated 23.2.2000 is untenable in the eyes of the law and it is hereby quashed. - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction of the Assessing Officer. 2. Validity of the Block Assessment Order due to lack of notice under Section 143(2). 3. Validity of the Block Assessment Order due to the period of limitation. Issue-wise Detailed Analysis: 1. Jurisdiction of the Assessing Officer: The appellant contended that the Assessing Officer (AO) did not have the jurisdiction to pass the Block Assessment Order dated 23.02.2000. However, during the hearing, the appellant's representative did not wish to press this ground. Consequently, this ground was dismissed as 'Not Pressed'. 2. Validity of the Block Assessment Order due to lack of notice under Section 143(2): The appellant argued that the Block Assessment Order was invalid because no notice under Section 143(2) of the Income Tax Act, 1961 was served. This ground was also not pressed by the appellant during the hearing and was dismissed as 'Not Pressed'. 3. Validity of the Block Assessment Order due to the period of limitation: The primary issue for consideration was whether the Block Assessment Order was passed within the prescribed period of limitation under Section 158BE(1)(b) of the Income Tax Act, 1961. Facts and Arguments: - The search action under Section 132 was initiated on 08.12.1997 at various premises associated with the appellant. - The search at the Rotunda Building was temporarily concluded on 13.01.1998, and a Prohibitory Order under Section 132(3) was issued, sealing a wooden cabinet containing share certificates and other documents. - The Prohibitory Order was revoked on 06.02.1998, and a panchnama was drawn up, indicating that no further search was conducted, and no items were seized on that date. - The appellant argued that the search concluded on 16.01.1998, and therefore, the period of limitation for passing the assessment order ended on 31.01.2000. The assessment order passed on 23.02.2000 was beyond the period of limitation. - The Revenue contended that the panchnama dated 06.02.1998 was the 'last panchnama,' and thus, the assessment order was within the limitation period. Legal Position and Judgment: - The Tribunal referred to the judgment of the Hon'ble Delhi High Court in CIT Vs. Shri S. Katyal (2009) 308 ITR 168 (Del), which clarified that a panchnama documenting the revocation of a restraint order without any search being conducted does not extend the period of limitation. - The Tribunal found that the panchnama dated 06.02.1998 merely revoked the Prohibitory Order and did not document any search or seizure. Therefore, it could not be considered the 'last panchnama' for determining the limitation period. - The search at the other premises concluded on 16.01.1998 and 08.01.1998, respectively, and there was no dispute regarding these dates. - Consequently, the Tribunal held that the period of limitation for passing the assessment order ended on 31.01.2000. Since the assessment order was passed on 23.02.2000, it was beyond the prescribed period of limitation and was therefore invalid. Conclusion: The Tribunal quashed the assessment order dated 23.02.2000 as it was passed beyond the period of limitation prescribed under Section 158BE(1)(b) of the Income Tax Act, 1961. The appellant succeeded on this ground, and the appeal was allowed in favor of the appellant. Order Pronouncement: The order was pronounced in the open court on 29th May 2015.
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