2022 (1) TMI 1466 - HC - Income Tax

Time limit for the completion of the block assessment u/s 158BE - Whether Tribunal is right in law in holding that the assessment order dated 30.06.2003 was barred by limitation, especially when the last of Panchanama was dated 01.06.2001? HELD THAT - The prohibitory order was lifted on 29.01.2001 and hence, the Tribunal was of the opinion that the subsequent panchanama from 29.01.2001 are irrelevant and the time shall be reckoned for the purpose of determining the time limit for the completion of the assessment u/s 158BE from the end of the month of January 2001. Accordingly, the assessment order should be completed on or before 31.01.2003, whereas the assessing officer completed the assessment only on 30.06.2003, which is absolutely time barred. Tribunal set aside the assessment order. We do not find any infirmity or illegality in the order so passed by the Tribunal, warranting interference. This court has categorically held that 'mere fact that the panchanama contains the observation that 'search continues' per se would not enable the search party to keep the search in a suspended animation to carry on the search in future date to contend that the limitation has to be worked out on the last panchanama drawn' and the same is squarely applicable to the facts of the present case. It is also brought to the notice of this court that the appeal filed by the Revenue by way of Civil Appeal was dismissed by the Hon'ble Supreme Court in A. RAKESH KUMAR JAIN 2019 (10) TMI 1592 - SC ORDER We decide the substantial questions of law involved herein in favour of the assessee.

Summary

Issues:
1. Assessment order dated 30.06.2003 barred by limitation.
2. Quashing of block assessment as time-barred.
3. Validity of search conducted under Section 132 of the Income Tax Act.

Analysis:

1. Assessment Order Barred by Limitation:
The case involved tax appeals by the Revenue against the order passed by the Income Tax Appellate Tribunal related to a search and seizure action conducted on the assessee's premises. The Tribunal held that the assessment order was time-barred as the last panchanama was dated 01.06.2001, and the assessment should have been completed by 31.01.2003. However, the assessing officer completed the assessment on 30.06.2003, which was beyond the time limit, rendering it time-barred. The Tribunal set aside the assessment order based on this ground, a decision upheld by the High Court.

2. Quashing of Block Assessment as Time-Barred:
The Tribunal quashed the block assessment as time-barred due to the delay in completing the assessment beyond the statutory time limit. The search was conducted on various dates between 28.09.2000 and 01.06.2001, with the last panchanama dated 01.06.2001. The Tribunal considered the time limit for completion of assessment under section 158BE from the end of January 2001, as there were no seizures after that date. The assessing officer completed the assessment on 30.06.2003, exceeding the time limit, leading to the quashing of the assessment order.

3. Validity of Search Conducted under Section 132:
The Tribunal's decision to go into the issue of the validity of the search conducted under Section 132 of the Income Tax Act while dealing with block assessment was challenged. However, the High Court upheld the Tribunal's decision, citing the precedent that the search must be completed within a reasonable time frame, and any delays beyond the prescribed limits render the assessment time-barred. The Court also referenced a previous decision that emphasized the importance of concluding the search and assessment within the stipulated time to avoid time-barred assessments.

In conclusion, the High Court decided in favor of the assessee, dismissing the tax case appeals filed by the Revenue. The Court upheld the Tribunal's decision that the assessment order was time-barred and quashed the block assessment due to the delay in completing the assessment beyond the statutory time limit. The Court also affirmed the Tribunal's authority to consider the validity of the search conducted under Section 132 while dealing with block assessments, emphasizing the importance of adhering to the prescribed time limits in such cases.