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TMI Blog2010 (9) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleted within two years from the end of month in which the last authorization for search under Section 132 of the Act was issued. To appreciate this controversy, we have taken note of the dates as they appear in ITA No.582 of 2009. The assessee is the son of J.P. Minda, who is in the Minda Group of business, engaged in manufacturing of various automobiles components. The two warrants of authorization under Section 132(1) of the Act for carrying out the search at bank locker with Canara Bank, Kamla Nagar, were issued on 13.03.2001 and 26.03.2001. Warrants which were executed on 13.03.2001 were executed on various dates, which are as under: 1. 13.03.2001 1st Authorization/search warrant issued 2. 19.03.2001, 20.03.2001, 26.03.2001, 27.03.2001, 28.03.2001 & 11.04.2001 Panchnama drawn/executed and search completed in regard to 1st search warrant 3. During the execution of the search warrants dated 13.03.2001, the Income Tax authorities got the information about a locker belonging to the assessee in a bank. Further, on 26.03.2001, second authorization was issued for searching this locker and this was executed on 26.03.2001 itself. It is, thus, clear from the aforesaid that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letion of block assessment in the case of the other person referred to in section 158BD shall be - (a) One year from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995 but before the 1st day of January, 1997; and (b) Two years from the end of the month in which notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. Explanation : In computing the period of limitation for the purposes of this section, the period - (i) During which the assessment proceeding is stayed by an order or injunction of any court, or (ii) Commencing from the day on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending on the day on which the assessee is required to furnish a report of such audit under that sub-section, shall be excluded. Explanation 2 : For the removal of doubts, it is hereby declared that the authorisat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel relied upon the cases of Apex Court in India House vs. Kishan N. Lalwani [AIR 2003 SC 2084] and Municipal Board vs. State Transport Authority, Rajasthan [AIR 1965 SC 458]. In the latter case, the following passage was specifically read out: "In interpreting the provisions of limitation equitable considerations are out of place and the strict grammatical meaning of the words is the only safe guide. The words should not be read as ‗from the date of the knowledge of the order' in the absence of clear indication to that effect. If the legislature had intended that an application may be made within 30 days from the date of intimation or knowledge of the order, it would have said so as it did in Sections 13, 15, 16 and 35. In the absence of any such thing the Court is bound to hold that the application will be barred unless made within 30 days from the date of the order by which the person is aggrieved. 8. It was also argued that when there is a conflict between law and equity, it is the law which has to prevail, in accordance with the Latin maxim "dura lex sed lex", which means "the law is hard, but it is the law". Equity can only supplement the law, but it cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larificatory in nature. The proposed amendment will take effect form 1st July, 1995. 11. According to Mr. Sabharwal, if the contention of the assessee is accepted, the very purpose of introducing the Explanation would become redundant. His argument was that the linkage of time/limitation of the completion of search in the context of Block Assessment is logical and rational. It is rational for the reason that unless Assessing Officer has completed search, obtained all the material, has custody of relevant material and has overall picture, he cannot frame Block Assessment. Therefore, it is only when all material is made available to the Assessing Officer (on completion of last search) that the limitation would run against the Assessing Officer and it surely cannot run from a date interior to the same as he is under disability to initiate Assessment. The issuance of authorization, execution of said authorization by drawing last Panchnama and making available complete search material to the AO for Block Assessment cannot be completed as Chapter XIVA beginning with authorization under Section 132(1) and framing of Block Assessment is sequential and unless the first stage of collecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a fact which does not even exist. It means that the Courts must assume that such a state of affairs exists as real, and should imagine as real the consequences and incidents which inevitably flow there from, and give effect to the same. The deeming provision may be intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provision. The law laid down in this regard in East End Dwellings Co. Ltd. case (1952) AC 109 : (1951) 2 All. E.R. 587 has been followed by this Court in a number of cases, beginning from State of Bombay v. 1953CriLJ1049 and ending with a recent decision of a three Judge Bench in M. Venugopal v. (1994)ILLJ597SC . N.P. singh, J., speaking for the Bench stated the law thus at page 329 : The effect of a deeming clause is well-known. Legislature can introduce a statutory fiction and courts have to proceed on the assumption that such state of affairs exists on the relevant date. In this connection, one is often reminded of what was said by Lord Asquith in the case of East End Dwellings Co. Ltd. v. Finsbury Borough Council that when one is bidden to treat an imaginary state of affairs as real, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly states that authorization referred to in sub Section (1) shall be deemed to have been executed, in the case of search, on the conclusion such as recorded in the last panchnama drawn in relation to any person in whose case, warrants of authorization was issued. By this deeming provision, authorization referred to in sub Section (1) would be that authorization which is executed on the conclusion of search as recorded in the last panchnama. Therefore, by this deeming provision, even an authorization which may not be otherwise the last authorization would become last authorization, if that is executed and if the panchnama in respect thereto is drawn last. Therefore, the purport of this explanation is to count the period of limitation of two years from the date when the last panchnama was drawn in respect of any warrant of authorisation, if there were more than one warrants of authorization. This interpretation would be in consonance with the intent and purpose of the legislature on behalf of the said explanation. 18. We are agree with Mr. Sabharwal, learned counsel appearing for the revenue that the very purpose of introducing the Explanation would become redundant if the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Tamil Nadu Vs. Kodaikanl Motor Union (P) Ltd. 2 SCR 927, the Supreme Court referring to K.P. Varghese Vs. I.T.O. 131 ITR 597 (SC) and Luke Vs. Inland Revenue Commissioners (1964) 54 ITR 692 observed:- "The courts must always seek to find out the intention of the legislature. Though the courts must find out the intention of the statute from the language used, but language more often than not is an imperfect instrument of expression of human thought. As Lord Denning said it would be idle to expect every statutory provision to be drafted with divine prescience and perfect clarity. As Judge Learned Hand said, we must not make a fortress out of dictionary but remember that statutes must have some purpose or object, whose imaginative discovery is judicial craftsmanship. We need not always cling to literalness and should seek to endeavour to avoid an unjust or absurd result. We should not make a mockery of legislation. To make sense out of an unhappily worded provision, where the urpose is apparent to the judicial eye "some" violence to language is permissible." 24. The Apex Court has opined, time and again, that in a taxation statute where literal interpretation leads to a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 52(2) must be eschewed and the court should try to arrive at an interpretation which avoids the absurdity and the mischief and makes the provision rational, sensible, unless of course, the hands of the court are tied and it cannot find any escape from the tyranny of literal interpretation. It is said that it is now well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the legislature, the court may modify the language used by the legislature or even `do some violence' to it, so as to achieve the obvious intention of the legislature and produce a rational construction. In such a case the court may read into the statutory provision a condition which though not expressed, is implicit in construing the basic assumption underlying the statutory provision. Bearing in view these principles the court held that on a fair and reasonable construction of Section 52(2) the court would read into it a condition that it would apply only where the consideration for the transfer is understated or in other words, the assessee has actually received a larger cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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