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2020 (8) TMI 313 - AT - Income TaxBlock assessment u/s 158BC - period of limitation u/s 158BE - search and seizure action under section 132 of the Act was carried out on the residential and business premises - Panchnama issued by the Investigation Wing of the Department on various dates - HELD THAT - In the present case of the assessee the period between the second last panchnama and the last panchnama is almost one year for which there is no explanation given by the Revenue and as per section 132(8A) of the Act the said prohibitory order has come to an end around 04-12-2001. Even prohibitory order dated 04-12-2000 comes to an end after 60 days and there is no extension after the expiry of 60 days. In the case of the assessee herein on 07-11-2001, the investigation wing of department after almost one year has only converted the non-existent prohibitory order into deemed seizure, and therefore in the present case the panchnama dated 07-11-2001 is only for the purposes of extending the limitation period. During the period of one year no examination of any items was done whereas in the case of VLS Finance Ltd. 2006 (12) TMI 77 - HIGH COURT, DELHI the Revenue was scrutinising 5000 documents during the intervening period. It is, therefore, submitted that the facts before the Delhi High Court being totally different than the facts of the present assessee, limitation should start, even in the worst case, from 04-12-2000. Therefore, the assessment order dated 28-11-2003 is barred by limitation. Hence, we quash the block assessment order and on this jurisdictional issue and allow the appeal of the assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Validity of the block assessment and whether it was barred by limitation. Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeal was initially barred by a delay of 84 days. The learned Counsel for the assessee explained that the delay was due to internal disputes among the family members of the assessee group, which led to one of the Directors refusing to give consent for filing the appeal on time. Despite the objection from the learned CIT-DR, the Tribunal found that the reasons provided constituted a good prima facie case. Given the family dispute and the relatively short delay, the Tribunal condoned the delay and admitted the appeal. 2. Validity of the Block Assessment and Limitation: The primary issue was whether the block assessment framed by the AO was barred by limitation. The assessee argued that the block assessment was invalid as it was not completed within the prescribed time limit under Section 158BE of the Income-tax Act, 1961. The assessee contended that the limitation period should start from the date of the first panchnama (04.12.2000) or, at the latest, from the date of the prohibitory order (04.12.2000). The Revenue argued that the limitation period should start from the date of the last panchnama (07.11.2001). Key Points from the Tribunal's Analysis: - Search and Seizure Actions: The Tribunal noted that the search and seizure actions were conducted on various dates, and the last visit by the investigation team was on 07.11.2001, which was almost a year after the initial search. - Prohibitory Order vs. Deemed Seizure: The Tribunal distinguished between a prohibitory order under Section 132(3) and a deemed seizure under Section 132(1)(iii). It was emphasized that a prohibitory order is not a seizure but a temporary suspension of the search, while a deemed seizure indicates that the search has concluded. - Explanation 2 to Section 158BE: The Tribunal held that the explanation cannot override the main section and must be read together with Section 132. The authorization for search is executed the moment the investigating agency enters the premises and conducts the search, and each fresh entry after a significant gap requires a new authorization. - Judicial Precedents: The Tribunal relied on several judicial precedents, including the Karnataka High Court's decision in C. Ramaiah Reddy vs. ACIT, which emphasized that a search must be concluded swiftly and cannot be kept in abeyance for an extended period. The Tribunal also referred to decisions from the Delhi High Court and the Bombay High Court, which supported the view that the limitation period cannot be extended by subsequent panchnamas based on the same authorization without valid reasons. Conclusion: The Tribunal concluded that the block assessment order dated 28.11.2003 was barred by limitation. The Tribunal found that the last valid authorization was on 04.12.2000, and the subsequent panchnama dated 07.11.2001 was an attempt to extend the limitation period illegally. Therefore, the assessment order was quashed, and the appeal of the assessee was allowed. Final Order: The appeal of the assessee was allowed, and the block assessment order was quashed on the grounds of being barred by limitation. The Tribunal did not address the other grounds on merits due to the quashing of the assessment order. The order was pronounced in the open court on 10.08.2020.
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