2016 (5) TMI 1272 - HC - Income Tax

Validity of assessment as barred by limitation - is the period of limitation of two years to be reckoned from November 21, 2000? - Held that - The fact that the restraint order was not extended after January 15, 1999 is a pointer to show that the search was at an end on January 15, 1999 itself. It is not within the power of the revenue to keep a matter pending for as long as they desire. The object is to dispose of the proceedings as expeditiously as possible. In this case, almost two years after January 15, 1999, the officers of the revenue called at the house of the assessee for the purpose of recording that the search was at an end. Question may be raised, could they have done it after ten years? The answer has to be in the negative. The question as to when did the search come to an end has to be answered on the basis of the attending facts and circumstances of each case. The restraint order was not extended after a period of three months. That means, the search was also abandoned. Therefore, the search came to an end. The search did not stand revived when the officers called at the house of the assessee merely for the purpose of recording that the search was at an end. We, therefore, find that the order passed by the learned Tribunal is a perfectly justified order. Therefore, the appeal fails. - Decided in favour of the assessee.

Summary

Issues involved:
1. Interpretation of the period of limitation for passing an assessment order after the conclusion of a search.

Analysis:
The High Court of Calcutta addressed the issue of determining the period of limitation for passing an assessment order following the conclusion of a search. The appeal challenged a judgment and order by the Income Tax Appellate Tribunal, which allowed the assessee's appeal. The primary question formulated was whether the Tribunal erred in law by not considering the Assessing Officer's power under Section 158BB(2) to apply relevant provisions for computing income during the block period. However, the revenue-appellant argued that the real question for consideration was whether the assessment order was passed within two years after the search's conclusion.

The Court examined the timeline of events following the search conducted on October 15, 1998. It was noted that a restraint order was issued simultaneously with the search, valid for sixty days and extended for an additional thirty days until January 15, 1999. Subsequently, no further extension of the restraint order occurred, and the revenue authorities only visited the assessee's house on November 21, 2000, to record the search's conclusion. The crucial issue raised was whether the two-year limitation period should be calculated from November 21, 2000.

The Tribunal's decision was upheld by the High Court, emphasizing that the search effectively concluded on January 15, 1999, as evident from the non-extension of the restraint order. The Court highlighted the necessity for expedient disposal of proceedings and rejected the notion of indefinite delays by the revenue authorities. Drawing parallels to a previous case, the Court differentiated the circumstances where a search was deemed concluded due to specific actions like handing over keys and vacating restraint orders, which were absent in the current case.

Ultimately, the High Court affirmed the Tribunal's order, deeming it justified. The appeal was dismissed, with the initial question not pursued, and the revised question answered in the negative, favoring the assessee. The judgment underscored the importance of assessing the conclusion of a search based on the factual context of each case, ensuring timely resolution of tax matters.