2008 (6) TMI 263 - AT - Income Tax

Summary

Issues Involved:
1. Limitation for passing the block assessment order under Section 158BC of the IT Act, 1961.
2. Validity of the warrants of authorization signed by the Addl. Director of IT (Inv.) and Jt. Director of IT (Inv.).
3. Competence of the Tribunal to examine the validity of warrants of authorization.
4. Applicability of Section 24 of the General Clauses Act to the substituted authorities.

Detailed Analysis:

1. Limitation for Passing the Block Assessment Order:
The primary issue raised by the assessee in the cross-objection was that the block assessment order dated 29th Sept., 2001, was barred by limitation as per Section 158BE of the IT Act, 1961. The last valid authorization of search dated 5th Aug., 1999, was executed on 13th Aug., 1999, and hence, the block assessment order should have been passed by the AO by 31st Aug., 2001. However, it was passed on 29th Sept., 2001, making it beyond the limitation period and thus illegal, bad in law, and void ab initio.

2. Validity of the Warrants of Authorization:
The assessee contended that the warrants of authorization signed on 23rd Aug., 1999, and 7th Sept., 1999, were invalid as they were signed by the Addl. Director of IT (Inv.) and Jt. Director of IT (Inv.), who were not authorized by the CBDT as required by Section 132 of the IT Act, 1961. The Tribunal had to examine whether these warrants were valid and if they extended the limitation period for passing the block assessment order.

3. Competence of the Tribunal to Examine the Validity of Warrants of Authorization:
The Tribunal considered whether it could examine the validity of the warrants of authorization, particularly in light of the decision in Promain Ltd. vs. Dy. CIT. It was determined that the Tribunal could examine whether the authority lacked the inherent jurisdiction to issue the warrant of authorization, which would affect the limitation period for passing the assessment order.

4. Applicability of Section 24 of the General Clauses Act to the Substituted Authorities:
The Tribunal examined whether the circulars dated 11th June, 1979, and 11th Oct., 1990, continued to be applicable to the substituted authorities (Jt. CIT) in view of Section 24 of the General Clauses Act. It was concluded that Section 24 applies to amendments by substitution, ensuring continuity of statutory instruments unless a different intention appears.

Conclusion:
The Tribunal concluded that the assessment order was passed within the limitation period, as the limitation was to be reckoned from the last warrant of authorization duly executed on 7th Sept., 1999. The cross-objection filed by the assessee was dismissed, and the appeal of the Revenue was to be fixed for a fresh hearing on merits before the regular Bench.