2010 (4) TMI 54 - HC - Income Tax

Search and Seizure under section 132 Block assessment The case of the Revenue is that since the last panchnama was drawn on the 18th November 1996 the search was concluded on that date. The assessee had submitted that the search having been conducted on the 29th August 1996/30th August 1996 the assessment made on 28th November 1997 was barred by limitation in view of the provisions contained in Section 158BE(1)(a) of the Act. - held that - the last panchnama dated the 18th November 1996 was merely a release order and could not extend the period of limitation as found by the Tribunal. The appeal is dismissed.

Summary

Issues:
1. Whether the block assessment order was barred by limitation.
2. Whether the search conducted under Section 132(1) of the Income Tax Act was completed on a specific date.
3. Whether the assessment made under Section 158BC was valid.

Analysis:
1. The appeal challenged an order passed by the Income Tax Appellate Tribunal regarding a block assessment order for the period from 1st April, 1986 to 29th August, 1996. The Tribunal held the assessment order to be barred by limitation as it was passed beyond the prescribed period. The appellant argued that the search was concluded on 30th August, 1996, while the assessee contended that it was completed on 29th August, 1996. The Tribunal found that the search was effectively completed on 29th August, 1996, and the assessment made on 28th November, 1997, was indeed barred by limitation under Section 158BE(1)(a) of the Act.

2. The Tribunal determined that the search was completed on 29th August, 1996, when the last panchnama was drawn and items were seized. It noted that the restraint order issued did not amount to seizure, and no further tangible action was taken by the Revenue after 18th November, 1996, to demonstrate that the search was ongoing. The Tribunal concluded that the block assessment framed on 28th November, 1997, was beyond the one-year time limit and, therefore, invalid. The judgment emphasized the importance of the date when the search party left the premises after seizing relevant items to determine the completion of the search.

3. Referring to a previous case, the judgment highlighted that the mere drawing of a panchnama or a release order did not extend the period of limitation if no further search was conducted and nothing new was found. Applying this principle to the present case, the Court agreed that the last panchnama drawn on 18th November, 1996, was merely a release order and did not extend the limitation period. Consequently, the Court dismissed the appeal, affirming the Tribunal's decision that the assessment order was indeed barred by limitation and invalid under the law.

In conclusion, the High Court upheld the Tribunal's decision that the block assessment order was time-barred and, therefore, invalid. The judgment emphasized the importance of the completion date of the search and the necessity for tangible actions to be taken by the Revenue within the prescribed time limit.