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TMI Blog2012 (6) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... BE and, therefore, the limitation has to be commenced from the said panchnama, rendering time limit to frame assessment u/s 158BC to be 31.12.2004. As against that, the impugned assessment is passed on 31.1.2005 which is not passed within the limitation described in section 158BE. The assessment, therefore, is bad in law and has to be quashed. It is also held that the point of time of issue of authorization will not have any relevance but it is a point of time when last panchnama is drawn in respect of authorization whether it is first authorization or it is last authorization. “Last panchnama” as relevant for Explanation 2 to Section 158BE will be the panchnama which show the conclusion of the search. Hence, assessment is barred by limitation and is not a valid assessment in the eyes of law - Decided against the Revenue. - IT (SS) A No. 27/Jodh/2006 - - - Dated:- 11-6-2012 - SHRI H.L. KARWA, SHRI I.P. BANSAL, SHRI P.M. JAGTAP, JJ. Assessee by : Shri Mahavir Jain Revenue by : Shri M.N. Maurya, CIT, DR O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: The appeal in the present case is filed by the revenue and the Cross Objections by the assessee and they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals for allowing these expenses. 5. That without any prejudice to the aforesaid grounds of cross-objections and on the facts and in the circumstances of the case, regarding the sustenance of trading addition to the extent of Rs.1,86,090/- by the learned CIT (Appeals), Jodhpur, the respondent-company appeals that as the addition was not made in accordance with the provisions of the Chapter XIV-B of IT Act, 1961, the learned CIT (Appeals) did not justify in sustaining the same. 6. That without any prejudice to the aforesaid grounds of cross-objections even in view of the facts and circumstances of the case, the learned CIT (Appeals), Jodhpur did not justify in sustaining the trading addition to the extent of Rs.1,86,090/- and, therefore, the respondent-company appeals for deleting the same. 7. That the appellant appeals for consequential relief from the interest charged u/s 158BFA(1). 8. That the appellant craves opportunity for furnishing any other ground/s of appeal on or before the date of appeal hearing. 2. At the outset, it may be mentioned here that a reference u/s 255(3) was made by the Division Bench vide its order dated 25th July, 2007 to Hon ble President for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17/12/2002 (DIT, Jaipur) - Do- 03/01/2003 5:50 pm to 6:20 pm (Finally Concluded; as per Panchnama) S.S. Mantri DDIT (Inv.I), Jodhpur. 20/12/2002 (Addl. DIT, Jodhpur) Jodhpur Office (Basement of 39A, Dharma Narayanji ka Hatta, Paota, Jodhpur) 20/12/2002 8:00 am to 10:45 pm Raj Mehra, ADIT (Inv.3), Jaipur, D.C. Sharma, ITO K.V.C. Pillai, ITO 20/12/2002 (Addl. DIT, Jodhpur) - Do - 24/12/2002 4:00 pm to 9:00 pm S.S. Mantri, DDIT (Inv.I), Jodhpur. 20/12/2002 (Addl. DIT, Jodhpur) - Do- 26/12/2002 3:10 pm to 7:50 pm S.S. Mantri, DDIT (Inv.I), Jodhpur. 20/12/2002 (Addl. DIT, Jodhpur) - Do - 27/12/2002 3:15 pm to 8:15 pm (Finally Concluded; as per Panchnama) S.S. Mantri, DDIT (Inv.I), Jodhpur. 6. Referring to the facts described in the above mentioned chart and also the provisions of Section 158BE, various contentions were raised by Ld. AR to contend that the impugned assessment is bad in law as the same has not been framed within the time limit prescribed in the aforementioned provisions. For better appreciation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod commencing on the date on which such application is made and ending with the date on which the order under sub-section (1) of section 245D is received by the Commissioner under sub-section (2) of that section, shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in subsection (1) or sub-section (2) available to the Assessing Officer for making an order under clause (c) of section 158BC is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly.] [Explanation 2. For the removal of doubts, it is hereby declared that the authorisation referred to in sub-section (1) shall be deemed to have been executed, (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer.] 7. It was submitted that in the present case two authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge nos.21 to 26 of the paper book), were found and seized. b. Cash as per Annexure C-1 and stock as per annexure A-4 (page nos.27 28 of the paper book) were found but not seized. c. Statements of six persons were recorded. d. An order u/s 132(3) of the IT Act, 1961 (page no.29 of the paper book) showing the following narration, was passed. Inner room of office containing books of A/cs, files, etc. duly sealed at window door of the room. Two main gates of the factory premises duly locked sealed. 2. As per the Panchnama dated 21.12.2002 (page nos.30 to 32 of the paper book): a. Order under the Second Proviso to sec.132(1) of the IT Act, 1961 was passed for deemed seizure of stock of goods of Rs.25,43,500/- as per annexure N (page nos.33 34 of the paper book). b. Stock as per Stock Inventory Annex. S (page no.35 of the paper book) was found but not seized. c. Statements of one person were recorded. d. Revocation of the aforesaid order u/s 132(3) of the IT Act, 1961 dated 20.12.2002 was made (page no.36 of the paper book). e. An order u/s 132(3) of the IT Act, 1961 (page no.37 of the paper book) showing the following narration, was passed:- Inner r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orized officer are named as Shri S.C. Maurya and Shri Hari Shankar, ITO. As against that in the third Panchnama dated 3.1.2003, the name of authorized officer is written as Shri S.S. Mantri DDIT (Inv.), Jodhpur. Ld AR submitted that Shri S.S. Mantri being not an authorized officer, the Panhnama is invalid. For this purpose Ld AR relied on following decisions:- i) CIT vs. Mrs. Sandhya P. Naik (2002) 253 ITR 534 (Bom); ii) Late DTS Rao through L/H D.S. Manjunath vs. ACIT (2007) 108 TTJ (Bang) 686; and iii) Javed Mohd. Peshimam vs. DCIT (2006) 100 TTJ (Mum) 434 12. To cut short this issue, it may be mentioned that Ld. DR has produced before us copy of authorization on which name of Shri S.S. Mantri is also described as authorized officer. Copy of the said authorization was also given to Ld AR. After perusing the copy of authorization dated 17th December, 2002, Ld. AR did not further argue on this aspect, therefore, this contention of the assessee is rejected. 13. On second aspect it was submitted by ld AR that Panchnama dated 3.1.2003 is executed only for the purpose of revocation of the order passed u/s 132(3) dated 21.12.2002. He submitted that except passing revocation or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound during the search were inventorised on 20th December, 2002. The office room situated near the main gate of the factory premises in which documents, lose papers and books of account were lying was put under prohibitory order under section 132(3) of the Act. On 21st December, 2002 the requisite investigation regarding stock of goods as per Annexure G was taken. However, the said room was again put under prohibitory order and was released on 3rd January, 2003 at 5.05 pm within ten minutes without making any seizure verification, etc. Lifting of prohibitory order on 3rd January, 2003 was merely a formality completed by the ADIT within ten minutes. On these facts it was held that on 3rd January, 2003 there was no execution of the authorization dated 17th December, 2002. Therefore, the panchnama dated 3rd January, 2003 was not the last panchnama as contemplated in Explanation 2 to Section 158BE and it was held that assessment order dated 31st January, 2005 passed u/s 158BC was a time barred assessment. The last panchnama for such execution was panchnama dated 21st December, 2002, therefore, the assessment order was required to be passed by 31st December, 2004. Thus, Ld. AR contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that he is aware of the contrary view taken by Hon ble Delhi High Court in the case of CIT vs. Anil Minda Ors. (2010) 328 ITR 320 (Del) wherein it has been held that what is relevant is the last panchnama and not the last authorization. He submitted that even in a case where two reasonable constructions are permissible, the construction which favours the assessee must be adopted and, for this contention Ld AR relied upon the decision of Hon ble Supreme Court in the case of Hon ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192 (SC). He also submitted that according to the decision of Hon ble Madras High Court in the case of Visvas Promoters (P) Ltd. vs. ITAT Anr. (2009) 226 CTR (Mad) 628, the decision of High Court of different jurisdiction is not binding on the Tribunal. 19. In this manner, Ld. AR concluded his arguments. 20. On the other hand, Ld. DR pleaded that according to the plain language of the provisions what is relevant to be seen is that on which date last panchnama has been drawn. Referring to the aforementioned chart, it was submitted by Ld. DR that the last panchnama in the present case has been drawn on 3rd January, 2003. He submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not before. He submitted that from the aforementioned decision two things are very clear. First is that the date of authorization has no relevancy and what will be relevant is the last panchnama drawn in respect of that authorization. Secondly, the starting point of the limitation is the point of time when search party had in its custody the complete material and would be in a position to evaluate the disclosed and undisclosed material/income. He submitted that from the aforementioned chart it is clear that before 3rd January, 2003, the department was not in a position to commence the assessment proceedings as it would not have the custody of the complete material, therefore, it was not in a position to evaluate the disclosed/undisclosed material/income. He submitted that the similar proposition has been laid down in the following decisions:- i) CIT vs. Durga Shankar Kansara (2008) 305 ITR 249 (Raj) wherein referring to the provisions of Explanation 2 to Section 158BE inserted w.e.f. 1st July, 1995, it was observed that since the assets were received by the IT authorities on 5th June, 1997, the period of one year was to be computed from that date the assessment order being pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission of Ld AR that panchnama is not a mere formality and the actual event to reckon the time limit will be effective steps taken by the Department to have the material in its possession on the basis of which assessment could be completed. As against these contentions of Ld AR, it is the contention of the Ld DR that panchnama executed on 03.01.2003 was not a mere a formality as the prohibitory order was lifted on the said date and the language of provision is clear according to which the reckoning of time limit will be the point of time when last panchnama is drawn. 24. We have carefully considered these contentions of both the parties. We have also carefully considered the facts found in the case of White White Minerals Pvt. Ltd. (supra) in which under almost identical facts and circumstances, it was held by the Tribunal that last panchnama drawn on 3.1.2003 was only to lift the prohibitory order and thus was a mere formality not having the effect of extending the limitation and therefore, the assessment order passed on 31.1.2005 was barred by limitation. Briefly discussed the facts of that case was that a search seizure operation was conducted on 20th December, 2002 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a panchnama relating to a search and, consequently, it would not be a panchnama of the type which finds mentioned in Explanation-2(a) to section 158BE. Finding that on 3.1.2003, there was no conclusion of search but it was only lifting of prohibitory order, the Tribunal in the case of White White Minerals Pvt. Ltd. (supra) had held that for the purpose of computing limitation as described in section 158BE, Panchnama dated 3rd January, 2003 did not have any relevance and the only panchnama from which the limitation was to be computed was panchnama dated 21st December, 2002 when actually search and seizure operation took place. 25. The Department had preferred an appeal against the aforementioned order of the Tribunal which was decided by the Hon'ble Rajasthan High Court vide its decision dated 15.5.2009 reported at 239 CTR Raj. 330 wherein the order of Tribunal was upheld. 26. The facts of the aforementioned case are almost resembling with the facts of the present case. The real question involved in the present appeal is that whether or not panchnama drawn on 3.1.1.2003 is relevant for the purpose of computing time limit described in section 158BE. As it has already been po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly a formality completed within a very short span of time and was only to lift the prohibitory order. The same was the factual condition in the case of White White Minerals Pvt. Ltd. (supra). The search itself in the present case was completed on 21st December, 2002. The details of proceedings happened on 03.01.2003 and already described in the details submitted by the Ld AR which have been reproduced above. The above conclusion is also supported by the decision of Hon'ble Delhi High Court in the case of CIT v., SK Katyal (supra) which was later on followed by Hon'ble Delhi High Court in the case of CIT v,. D.D. Axles Pvt. Ltd. reported at 323 ITR 558 wherein a search was conducted at the premises of the assessee on 29th August, 1996 which was concluded on 30th August, 1996. A panchnama was drawn on 29th August, 1996 when books of accounts and other documents were seized and on the same day a restrain order was also passed with regard to an almirah that has been seized. The restrain order was extended till 18th November, 1996 on which date a panchnama was drawn and nothing was seized from the premises of the assessee. On 18th November, 1996 by an order, the restrain placed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed to discuss the third contention of Ld. AR according to which the term used in section 158BE (1) Last authorization indicates the last authorization issued in the case of the assessee which in the present case is 20th December, 2002. According to the submission of Ld AR, the last panchnama drawn in respect of last authorization dated 20th December, 2002 being 20th December, 2002, the assessment framed in the month of January, 2005 will be barred by limitation. For raising such contention, Ld AR has relied upon mainly on the decision of Hon'ble Karnataka High Court in the case of C. Ramaiah Reddy v. ACIT (supra). Ld AR has also submitted that he is aware of the contrary decision of Hon'ble Delhi High Court in the case of CIT v. Anil Minda others (supra) in which a view has been taken that what is relevant is the last Panchnama and not the last authorization. It is also the case of Ld AR that in any case, according to well settled principle of law, as discussed in the decision of Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. (supra), the view favourable to the assessee has to be adopted. To examine such contentions of Ld. AR we have to see the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gathered from the word used in panchnama and not panchnama. It can be noted from the facts involved before the Hon ble Karnata High Court that only one authorization was issued in that case whereas in the case of the present assessee two authorizations have been issued. According to well settled principle of law, as described in the decision of Hon'ble Supreme Court in the case of CIT v. Sun Engineering Works Pvt. Ltd. reported in 198 ITR 297 (SC), a decision of Court takes it colour from the question involved in the case in which decision is rendered. While applying the decision to a later case, the court must carefully try to ascertain the true principle laid down in the decision and not to pick out words or sentences from the judgment, divorced from the context of the question considered by the Court to support their reasoning. Therefore, solely relying upon the aforementioned decision of Hon'ble Karnataka High Court, on the facts of the present case, it cannot be held that the last authorization in the present case having been executed in the month of December itself, the same will be considered as reckoning point for computing the time limit. 31. Here it will be relevant t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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