2023 (11) TMI 48 - HC - Income Tax

Revision u/s 263 - period of limitation - whether the assessment order for AY 2015-16, issued on 31st March, 2023, was barred by the limitation prescribed in Section 153B? - restraint and revocation orders pertaining to Locker - HELD THAT - Petitioner has sought to mislead the Court, arguing that status of last panchnama remains unchanged despite the subsequent searches on 29th and 30th April, 2021 of Lockers 299, 2070, and 1320. While, there is strength in Petitioner s argument that panchnamas logging nil recovery from the scrutiny of Lockers 2070 and 1320 on 30th April, 2021, which were also searched previously in March, 2021, cannot be classified as last panchnama ; however, the restraint and revocation orders pertaining to Locker 299 (extracted above) unequivocally establish that Locker 299 underwent its initial search on 29th April 2021, even though it resulted in no recoveries. This date marks the onset of the limitation period prescribed under Section 153B of IT Act. The Petitioner s assertion, which suggests that the searches spanning through 02nd to 06th March, 2021, as logged in the panchnamas, should be viewed as the execution of last authorization u/s 132 of IT Act, does not align with the factual reality. Search operation was an ongoing process that definitively concluded on 29th April, 2021, when Locker 299 was inspected. This renders the assessment under Section 153A, which culminated on 31st March, 2023, within the time limit prescribed u/s 153B of IT Act. Consequently, the basis for Petitioner s challenge to the invocation of revisional jurisdiction under Section 263, is untenable. It is indisputable that the limitation period for assessment warrants strict interpretation; however, the facts presented to us confirm conclusively that the search concluded on 29th April, 2021. Therefore, it is implausible to assert that the assessment order of 31st March, 2023 notified under Section 153A of IT Act exceeds the twelve-month limitation period. Since there is no jurisdictional error in the assessment order dated 31st March, 2023 pertaining to AY 2015-16, on the ground of limitation, we are not inclined to entertain the present petition.

Summary

Issues Involved:
1. Validity of the search and seizure operations.
2. Limitation period for completion of assessment under Section 153A of the Income Tax Act.
3. Validity of the invocation of revisional jurisdiction under Section 263 of the Income Tax Act.

Summary:

1. Validity of the Search and Seizure Operations:
The Petitioner, an entrepreneur in apparel design and consultancy, was subjected to search and seizure operations under Section 132 of the Income Tax Act in March 2021. The searches included various premises and lockers held by the Petitioner and her family. The searches were conducted in two phases: initially from 02nd to 06th March 2021, and subsequently on 29th and 30th April 2021. No articles were seized during the second phase of the searches, and panchnamas were drawn accordingly.

2. Limitation Period for Completion of Assessment:
The Petitioner received notices under Section 153A for AY 2015-16 to 2020-21 and submitted returns accordingly. The assessment orders were issued in March 2023. The Petitioner contended that the assessment order for AY 2015-16 was barred by the limitation period prescribed under Section 153B, arguing that the limitation should be calculated from the first search in March 2021. The Court analyzed Section 153B and determined that the limitation period should be twelve months from the end of the financial year in which the last authorization for search was executed. The Court found that the search concluded on 29th April 2021, making the assessment order dated 31st March 2023 within the prescribed time limit.

3. Validity of the Invocation of Revisional Jurisdiction:
The Respondent issued a notice under Section 263, observing that the assessment order was erroneous and prejudicial to the interest of revenue. The Petitioner challenged this, asserting the notice was barred by limitation. The Court concluded that the search operation definitively concluded on 29th April 2021, and thus, the assessment under Section 153A, completed on 31st March 2023, was within the limitation period. Consequently, the invocation of revisional jurisdiction under Section 263 was found to be valid.

Conclusion:
The Court dismissed the petition, finding no jurisdictional error in the assessment order dated 31st March 2023 for AY 2015-16. The merits of the assessment order were not examined, and all rights and contentions of the parties were left open.