2019 (2) TMI 415 - HC - Income Tax

Assessment u/s 158BC - period of limitation - proper authorization - search u/s 132 - continuous search operation or not - search and seizure were conducted on two days by two different authorised persons - The limitation commences from the last day of the month in which the last panchnama was recorded - Held that - Even if the search operations continue for a number of days or are conducted on days not continuous or consequent, that would not be relevant in so far as computing limitation which has to be from the last date on which incriminating material was recovered and seized, which seizure is also evidenced by a panchnama. Once on the basis of an authorisation a search is initiated, then it has to be continuous unless there is a restraint order issued against any documents or materials. This is also logical since once the search party leaves the premises, no one would leave any incriminating material in the premises for further seizure. Once the search party leaves the subject premises, for a further search there should be a fresh authorisation. However, if a restraint order is issued against any material and the same allowed to be kept in the premises itself, then within sixty days a further search could be carried out on the very same authorisation but; confined to the materials against which a restraint order is issued under Section 132 (3). The panchnama drawn up last, would be that drawn up seizing incriminating materials; a seizure as provided in Section 132. Whether it be on the first authorisation or the last under a series of such authorisations is not relevant for our case, which has only one authorisation. A panchanama was drawn up and the other documents which the authorised officer wished to examine were placed in an almirah and the same issued with a restraint order under Section 132(3). Tribunal has rightly found that at the time when the search was proceeded with, it would not have been in the contemplation of the authorised officer that an assessment order would be issued only after the period of limitation. It cannot also be assumed that the authorised officer had at the time of search itself decided to issue an order after the limitation as provided under Section 158BE. Here is not a case where there was unexplained delay in carrying out the further seizure of the documents against which a restraint order is issued. Regarding the issue that, search and seizure were conducted on two days by two different authorised persons - Held that - at the first appellate stage, the specific contention was that both the officers though authorised had independently conducted the search on the two separate days. This contention cannot vitiate the search and seizure and was not accepted by the first appellate authority or the Tribunal. Here too, the contention is reiterated, which we find to be a mere after thought to delay the finalisation by realisation of the demand. Appeal rejected - Decided against the assessee.

Summary

Issues Involved:
1. Whether the limitation period expired when the assessment order was passed under Section 158 BC of the Income Tax Act, 1961.
2. Validity of the second search conducted on 04.04.2000 under the warrant of authorization dated 08.03.2000.

Detailed Analysis:

Limitation Period for Assessment Order:
The primary issue addressed was whether the assessment order passed on 24.04.2002 was within the limitation period prescribed under Section 158BE of the Income Tax Act, 1961. The limitation period commences from the last day of the month in which the last panchnama was recorded.

The facts presented showed that the initial search was conducted on 16.03.2000, during which a panchnama was prepared, and a wooden almirah containing documents was issued with a restraint order under Section 132(3). A subsequent search on 04.04.2000 led to the seizure of seven documents, and another panchnama was prepared.

The court emphasized that if the last panchnama was the one recorded on 16.03.2000, the limitation period would expire on 31.03.2002, making the assessment order dated 24.04.2002 invalid. However, if the panchnama recorded on 04.04.2000 was found to be proper and valid, the limitation would commence from 30.04.2000, and the order would be within the limitation period.

The court examined various decisions from other High Courts, including the Division Bench decision in Commissioner of Income-Tax v. Dr. C. Balakrishnan Nair, which outlined the procedures under Section 132 and the validity of subsequent searches without fresh authorization.

The court concluded that the second panchnama prepared on 04.04.2000, which specifically effected the seizure of seven documents, was the last panchnama for the purpose of computing the limitation period. Therefore, the assessment order passed on 24.04.2002 was within the limitation period.

Validity of the Second Search:
The second issue was whether the second search conducted on 04.04.2000 under the warrant of authorization dated 08.03.2000 was valid. The appellant contended that the second search was conducted by a different officer who was not authorized.

The court noted that this contention was not raised before any of the fact-finding authorities. The court referred to Rule 112(7) of the Income Tax Rules, which requires the list of all things seized in the course of the search to be prepared by the authorized officer and signed by witnesses.

The court observed that the appellant’s case before the appellate authority was that the search and seizure were conducted on two different days by two different authorized persons. This indicated that both officers were authorized, but they conducted searches independently.

The court found no merit in the appellant's contention and held that the second search and seizure conducted on 04.04.2000 were valid. The court rejected the appeal and upheld the assessment order.

Conclusion:
The court concluded that the assessment order passed on 24.04.2002 was within the limitation period as the last panchnama was recorded on 04.04.2000. The second search conducted on 04.04.2000 was valid, and the appeal was rejected without any order as to costs.