2018 (12) TMI 469 - HC - Income Tax

Assessment u/s 158BE - period of limitation prescribed u/s.158BE(1)(b) - date of ending the search - ITAT held that the Assessment order dated 23.02.2000 is passed beyond the period of limitation prescribed u/s.158BE(1)(b) - Held that - In the process, the Tribunal relied on the decision of Delhi High Court in case of CIT Vs. Shri S. Katyal (2008 (11) TMI 46 - HIGH COURT DELHI) wherein facts which were substantially similar to the present case. The Court had come to the conclusion that the later events could not be equated with continuation of search. The Court had held that on 3rd January, 2001 i.e. the date which the Revenue wanted to be believe the search had ended, nothing was found or seized. All that was done on 3rd January, 2001, according to the High Court was that the seals were removed from the cash box and the almary and the keys were handed back to the assessee. It was in the nature of revocation of the seizure order passed earlier. Facts are substantially similar in the present case. Though the panchnama drawn on 13th January, 1998 records that the search was temporarily concluded, concededly no further search was carried out on 6th February, 1998. The panchnama of 6th February, 1998 also clearly shows that no articles or things were found or seized. Infact, the search commenced at 11.00 a.m. and ended about in 35 minutes. No hesitation in accepting the findings and conclusion of Tribunal. No question of law arises.

Summary

Issues:
1. Interpretation of Section 158BE(1)(b) of the Income Tax Act regarding the period of limitation for passing an assessment order after a search and seizure action.

Analysis:

The High Court considered an appeal filed by the Revenue against the judgment of the Income Tax Appellate Tribunal regarding the timeliness of an assessment order passed after a search and seizure action against the Respondent-Assessee. The main issue revolved around whether the assessment order dated 23rd February, 2000, was within the time permitted under Section 158BE(1)(b) of the Income Tax Act, 1961. The Tribunal held that the order of assessment was passed beyond the period of limitation prescribed, as the last action of search took place on 13th January, 1998, and not on 6th February, 1998, as contended by the Revenue. The Tribunal's decision was influenced by a previous judgment of the Delhi High Court in a similar case, where it was established that certain events did not constitute a continuation of the search process. The High Court concurred with the Tribunal's findings, noting that no further search was conducted on 6th February, 1998, and no items were found or seized during that time, leading to the conclusion that the search had effectively concluded on 13th January, 1998.

Furthermore, the High Court acknowledged the precedent set by various decisions of other High Courts, including its own, which supported the view adopted by the Tribunal. In light of the consistent legal interpretation and the absence of any legal question arising from the case, the High Court dismissed the tax appeal, affirming the findings and conclusion of the Tribunal. The judgment underscores the importance of adhering to the statutory timelines for conducting assessments following search and seizure actions under the Income Tax Act, ensuring procedural fairness and compliance with legal requirements.