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2013 (9) TMI 871 - HC - Income TaxBlock assessment - Limitation period for the block assessment under section 158BC Held that - Panchnama dated 13.04.1999 itself reveals that nothing was seized on that date nor was anything found on that date. In fact no search was conducted and the drawing of the Panchnama on 13.04.1999 was an empty formality and was executed merely for the purpose of vacating the restraint order issued on 03.02.1999, when a restraint order under Section 132(3) of the Act was passed in respect of an Almirah in the last bed room of residence of assessee and subsequently the search party visited the residence of the asseesee on 13.04.1999 and withdrew the prohibitory order under Section 132(3) relating to the Almirah and prepared a Panchnama showing that nothing was found nor anything was seized from the said Almirah, therefore, essentially from 03.02.1999 when the last Panchnama was drawn and the restraint order passed, till 13.04.1999 when the last Panchnama was drawn whereby the restraint order was vacated, nothing else was found and in fact no further search was conducted, therefore, the last Panchnama dated 13.04.1999 was merely a release order and the same could not extend the period of limitation. Time limit for completion of the block assessment will have to be reckoned from 3-2-1999 on which date the search was concluded against the appellant. Consequently, the block assessment order was required to be passed on or before 28-2-2001 as against which the block assessment order was passed on 27-4-2001. Therefore, said block assessment order was not passed within the time limit prescribed in the Act and is time-barred Decided against the Revenue.
Issues:
1. Interpretation of Section 158BE of the Income Tax Act, 1961 regarding the time limit for completion of block assessment. 2. Determination of whether the block assessment order was passed within the prescribed time limit. 3. Analysis of the Panchnama drawn during the search operations and its impact on the assessment timeline. Issue 1: Interpretation of Section 158BE of the Income Tax Act The judgment involved the interpretation of Section 158BE of the Income Tax Act, particularly regarding the time limit for completing block assessment. The provision states that the order under Section 158BC shall be passed within two years from the end of the month in which the last authorization for search was executed. The contention of the Revenue was based on the interpretation of the last Panchnama drawn on 13.04.1999, considering it as the conclusion of the search. Issue 2: Compliance with Time Limit for Block Assessment The key issue was whether the block assessment order was passed within the prescribed time limit. The CIT(A) and the Tribunal concluded that the block assessment order was time-barred as it was not passed within the stipulated time frame. The Tribunal highlighted that the search operations and incriminating findings were all concluded on the initial date of the search, and subsequent events, like the Panchnama drawn on 13.04.1999, did not extend the time limit for passing the assessment order. Issue 3: Impact of Panchnama on Assessment Timeline The detailed analysis of the Panchnama drawn during the search operations was crucial in determining the timeline for the assessment. Both the CIT(A) and the Tribunal observed that the Panchnama drawn on 13.04.1999 did not reveal any new findings or seizures, indicating that the search effectively concluded on the initial search date. The Panchnama drawn on 13.04.1999 was deemed as a mere formality to vacate the restraint order, with no new discoveries made during that time. In conclusion, the judgment delved into the interpretation of relevant provisions of the Income Tax Act, the sequence of events during the search operations, and the impact of subsequent formalities like the Panchnama on the assessment timeline. The Court dismissed the appeal by the Revenue, upholding the decisions of the CIT(A) and the Tribunal that the block assessment order was time-barred due to not being passed within the statutory time limit as per Section 158BE of the Act.
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