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2016 (10) TMI 937 - AT - Income TaxValidity of block assessment - period of limitation - Held that - the date of conclusion of search can not be taken as 14.02.2000 and has to be either 17.12.1999 or 23.12.1999 especially when nothing was found and seized on 14.2.2000. Moreover it is also clearly mentioned in the punchnama dated 17.12.1999 and dated 23.12.1999 that the search was finally concluded and not on 14.2.2000. - limitation shall not extend to the date of passing order u/s 132(3) of the Act. The facts of the assessee s case are squarely covered by the decision of Mrs.Sandhya B. Nayak & Others (2000 (12) TMI 21 - BOMBAY High Court ). The decisions relied by the revenue in its support are distinguishable on facts and therefore the ratio decendi of same is not applicable to the facts of the present case .In view of the above facts we set aside the order of AO and hold the block assessment as barred by limitation as discussed above
Issues Involved:
1. Validity of Assessment 2. Addition of ?3,35,000 as Undisclosed Income for Electronics Items 3. Addition of ?76,115 as Undisclosed Income for Unaccounted Jewellery 4. Addition of ?22,50,000 as Undisclosed Income for Shares of Arrochem Silvassa Ltd. 5. Addition of ?60,85,800 as Undisclosed Income for Shares of Phar East Laboratories Ltd. 6. Addition of ?74,200 under Section 68 Issue-wise Detailed Analysis: 1. Validity of Assessment: The assessee challenged the validity of the assessment, arguing that it was barred by the limitation period specified in Section 158BE of the Act. The search initiated on 17.12.1999 was concluded on the same date, and a prohibitory order under Section 132(3) was placed, which was vacated on 14.02.2000. The assessee contended that the assessment order should have been completed by 31.12.2001, but it was passed on 27.02.2002, making it time-barred. The CIT(A) dismissed this claim, stating that the search concluded on 14.02.2000 with the last panchanama, and the assessment was within the two-year limit from this date. The Tribunal, however, held that the search concluded on 17.12.1999 or at the latest on 23.12.1999, as no seizure occurred on 14.02.2000. Consequently, the assessment order dated 27.02.2002 was deemed barred by limitation and invalid. 2. Addition of ?3,35,000 as Undisclosed Income for Electronics Items: The CIT(A) confirmed the addition of ?3,35,000 as undisclosed income for certain electronics items. The assessee argued that the estimate by the Assessing Officer was high and unsupported by material evidence. The Tribunal did not delve into this issue in detail due to the decision on the preliminary technical issue regarding the validity of the assessment. 3. Addition of ?76,115 as Undisclosed Income for Unaccounted Jewellery: The CIT(A) confirmed the addition of ?76,115 out of ?1,58,598 made by the Assessing Officer for unaccounted jewellery. The assessee contended that the CIT(A) did not appreciate the material facts on record. This issue was also rendered academic due to the decision on the preliminary issue. 4. Addition of ?22,50,000 as Undisclosed Income for Shares of Arrochem Silvassa Ltd.: The CIT(A) confirmed the addition of ?22,50,000 as undisclosed income for 1,50,000 shares of Arrochem Silvassa Ltd. The assessee argued that the CIT(A) did not consider the facts and evidence on record. This issue was not addressed in detail due to the decision on the validity of the assessment. 5. Addition of ?60,85,800 as Undisclosed Income for Shares of Phar East Laboratories Ltd.: The CIT(A) confirmed the addition of ?60,85,800 out of ?82,27,100 as undisclosed income for 1,12,500 shares of Phar East Laboratories Ltd. The assessee claimed that the CIT(A) overlooked the facts and evidence on record. This issue was not examined in detail due to the decision on the preliminary technical issue. 6. Addition of ?74,200 under Section 68: The CIT(A) confirmed the addition of ?74,200 out of ?1,51,404 made by the Assessing Officer under Section 68. The assessee argued that the CIT(A) did not appreciate the facts, material evidence, and provisions of law. This issue was also not addressed in detail due to the decision on the preliminary issue. Conclusion: The Tribunal set aside the assessment order, holding it as barred by limitation. Consequently, the issues on merits became academic and were not addressed. The appeal of the assessee was partly allowed, and the block assessment was annulled based on the preliminary technical issue of the validity of the assessment.
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