2005 (5) TMI 247 - AT - Income Tax

Assessment made u/s 158BC - Search And Seizure - barred by the time-limitation - recruitment for foreign companies located in the middle east - HELD THAT - As per the provisions of s. 158BE the time-limitation starts from the end of the month in which the last of the authorisation for search was executed. The fact is not denied by the Revenue that only one authorisation was issued. In our opinion the authorisation issued was executed on 18th Sept., 1998. Action of the another officer Shri K.V. Narsimhacharya on 13th Nov., 1998 can be said to be execution of the same authorization shown to the assessee on 17th Sept., 1998 and as per the Panchnama it is dt. 16th Sept., 1998. The second Panchnama dt. 13th Nov., 1998 also does not mention about any fresh authorisation. The reliance placed by the Revenue on the decision of the Special Bench in the case of C. Ramaiah Reddy, cited supra, will be of no help before them. As the issue before the said Special Bench was, whether search is deemed to be continuing so long as all materials and valuables are either seized or released but P.O. is passed and time-limit will not commence so long as Panchnama declaring conclusion of search is not drawn. Here, the issue is that the officer who had drawn the second Panchnama and lifted the P.O. was not the same officer who conducted search on 17th Aug., 1998 and who prepared the first Panchnama. No fresh authorisation is shown to have been issued in favour of the officer who lifted the P.O. and prepared the second Panchnama. In our considered view, the authorization issued was executed on 18th Sept., 1998 and the time-limitation for completion of assessment, as per the provisions of s. 158BE, ended on 30th Sept., 2000. As such the assessment order passed on 28th Nov., 2000 was barred by time-limitation and is accordingly quashed. Thus, we do not consider it necessary to go into the merits of the case. Since the order is already quashed, no useful purpose will be served by adjudicating grounds of appeal on merit. We hold accordingly. In the result, appeal of the assessee is allowed.

Summary

Issues:
Assessment time-limitation under s. 158BC, Incorrect assessment amount

Analysis:
The appeal pertains to the block period from 1st April, 1988 to 17th Sept., 1998, challenging the order of the CIT(A) Central-V at Mumbai dated 3rd Oct., 2001, regarding assessment under s. 158BC of the IT Act. The key contentions raised by the assessee include the time-limitation of the assessment and the incorrect assessment amount of Rs. 8,00,000.

The assessee primarily argued that the assessment under s. 158BC was time-barred as the search concluded on 18th Sept., 1998, and not on 13th Nov., 1998, when only the P.O. was lifted. Additionally, the assessee contested the assessment amount of Rs. 8,00,000, claiming no undisclosed income was found during the search. However, the CIT(A) held that the search was temporarily concluded on 18th Sept., 1998, and since the assessee voluntarily declared the income at Rs. 8,00,000, the source did not need further verification.

During the proceedings, it was argued on behalf of the assessee that the assessment order passed on 28th Nov., 2000, was time-barred as the time-limitation expired on 30th Sept., 2000. The counsel emphasized discrepancies in the authorization execution dates and lack of fresh authorization for lifting the P.O. on 13th Nov., 1998. The Revenue, however, contended that the time-limitation issue was not raised before the AO and cited a different case to distinguish the facts.

The Tribunal analyzed the authorization process under s. 132(1) and concluded that the time-limitation for assessment completion ended on 30th Sept., 2000, as the authorization was executed on 18th Sept., 1998. It was noted that no fresh authorization was shown for the officer who lifted the P.O. on 13th Nov., 1998. Consequently, the assessment order passed on 28th Nov., 2000, was deemed time-barred and quashed.

In light of the time-limitation issue, the Tribunal refrained from delving into the merits of the case, as the order was already quashed, rendering further adjudication unnecessary. Consequently, the appeal of the assessee was allowed, and the incorrect assessment amount of Rs. 8,00,000 was not further deliberated upon.