2023 (3) TMI 1200 - SC - Income Tax

Block assessment u/s 158BC/158BE - Period of limitation - time limitation for commencement of block assessment - scope of relevant date - whether the period of limitation of two years for the block assessment u/s 158BC/158BE would commence from the date of the Panchnama last drawn or the date of the last authorization? - HELD THAT - As observed and held by this Court in the case of VLS Finance Limited 2016 (4) TMI 1133 - SUPREME COURT the relevant date would be the date on which the Panchnama is drawn and not the date on which the authorization/s is/are are issued. It cannot be disputed that the block assessment proceedings are initiated on the basis of the entire material collected during the search/s and on the basis of the respective Panchnama/s drawn. Therefore, the date of the Panchnama last drawn can be said to be the relevant date and can be said to be the starting point of limitation of two years for completing the block assessment proceedings. If the submission on behalf of the respective assessees that the date of the last authorization is to be considered for the purpose of starting point of limitation of two years, in that case, the entire object and purpose of Explanation 2 to Section 158BE would be frustrated. If the said submission is accepted, in that case, the question which is required to be considered is what would happen to those material collected during the search after the last Panchnama. It cannot be disputed that there may be number of searches. Thus, the view taken by the High Court that the date of the Panchnama last drawn would be the relevant date for considering the period of limitation of two years and not the last date of authorization, we are in complete agreement with the view taken by the High Court. Appeal dismissed.

Summary

Issues involved:
The main issue in this case is whether the period of limitation of two years for block assessment under Section 158BC/158BE of the Income Tax Act, 1961 should commence from the date of the Panchnama last drawn or the date of the last authorization.

Facts and Decision:
The case involved appeals against a judgment allowing the Revenue's appeals and setting aside orders passed by the Income Tax Appellate Tribunal, New Delhi, regarding assessments being time-barred. The High Court held that the limitation period should start from the date of the last Panchnama drawn, not the last date of authorization, as argued by the assessees. The assessees contended that the last authorization on 26.03.2001 should be the starting point of limitation, while the Revenue argued that the last Panchnama on 11.04.2001 should be considered. The Court referred to Section 158BE of the Act, emphasizing that the date of the Panchnama last drawn is the relevant starting point for the limitation period. It noted that block assessment proceedings are based on the material collected during the search and the Panchnama drawn. Therefore, the Court agreed with the High Court's view that the date of the last Panchnama drawn is crucial for determining the limitation period of two years. The appeals were dismissed, and no costs were awarded.

Significant Legal Points:
- The relevant date for the limitation period in block assessment proceedings is the date of the last Panchnama drawn, not the date of the last authorization.
- Explanation 2 to Section 158BE clarifies that in cases of search, the limitation period starts from the conclusion of the search as recorded in the last Panchnama drawn.
- The purpose of Explanation 2 is to ensure that the material collected during the search after the last Panchnama is considered in the assessment proceedings.
- The High Court's interpretation aligns with the statutory provision and the objective of determining the limitation period based on the material collected during the search and recorded in the Panchnama.

This summary captures the key issues, facts, and legal reasoning of the judgment while maintaining the original legal terminology and structure.