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TMI Blog2020 (7) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent only on the basis of oral requirement is factually incorrect. The allegation that adequate opportunity was not given to the petitioner before the completion of the block assessment is factually incorrect since the case was discussed with the petitioner and his representatives on as much as six occasions. Block Assessment Orders as barred by limitation - Search operation commences at the second premises of the petitioner on 25.01.2001, continued till 12.06.2001, therefore each time separate panchanamas were drawn and prohibitory orders were issued with the endorsement that, search continues . However it has been misquoted by the petitioner that, even though the panchanama, dated 25.01.2001 discloses with an endorsement of the Revenue that, the search concluded , subsequent issuance of prohibitory order and on that strength, subsequent searches made till 12.06.2001 was unauthorised - in the second premises the search continued and in view of the specific provisions referred to above in Section 132(1)(iib), which, even though came into effect only from 01.06.2002, the continuous search went up to 12.06.2001 can very well said to be authorised and therefore the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was doing some business along with some of his family members. The petitioner was the income tax assessee from 1978-79 onwards. He was residing at No.4/181, Kodambakkam High Road, Chennai - 34 and he was having a clinic at No.87, N.S.C.Bose Road, Chennai along with his father Dr.M.J.Mehta. (ii) The said residential premises, i.e., No.4/181, Kodambakkam High Road, Chennai - 34 seems to be the joint family property, where some family business also is being undertaken by the family members including the petitioner and his brother one Hemant Mehta. (iii) While so, in the year 2001, i.e., in January 2001, on 25.01.2001, the premises of the petitioner was searched for the block period from 01.04.1990 to 31.03.2000 and 01.04.2000 to 24.01.2001 under the warrant / authorisation issued in this regard, by the team of respondents / Revenue and on 25.01.2001, a panchanama were recorded, where according to the petitioner, the search was concluded on 25.01.2001, however, on that day, under Section 132(3) of the Income Tax Act 1961 (herein after referred to as the Act ), a prohibitory order was issued by the Revenue. (iv) Simultaneously the other premises, i.e., at No.23, Noor Veera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 12.09.2017 and who contested this case. 3. Mr.M.P.Senthil Kumar, learned counsel appearing for the petitioner has raised the following grounds in order to assail the impugned Block Assessment Order : (a) The Block Assessment Order under Section 158BC r/w Section 158BD is barred by limitation as per Section 158BE (1)(b). (b) The notice under Section 143(2) which is mandatorily to be issued even in respect of 158BC proceedings, had not been issued and assuming if it is issued belatedly, that is also barred by limitation. (c) Under Section 158BG, prior approval was to be obtained to proceed, from JCIT, which was not obtained and the learned counsel also raised the ground that, there has been no opportunity given to the petitioner during the entire proceedings, which ended in the impugned Block Assessment Order, thereby the Revenue violated the principles of natural justice. 4. By raising the aforesaid grounds, the learned counsel tried to assail the impugned Block Assessment Order. In support of his contention, the learned counsel for the petitioner would contend that, totally two premises of the petitioner was searched and documents were seized and accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) so far as may be applied, which means that, whenever Section 158BC proceedings is initiated to proceed to determine the undisclosed income of block period, the provisions which includes Section 143 of the Act would apply, therefore, a notice under Section 143(2) should have been issued, which has either not been issued or if it is issued, which is beyond the limitation. 8. The learned counsel would further submit that, under Section 158BG, the order of Assessment for the block period shall be passed by an Assessing Officer not below the rank of Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director as the case may be, however such order shall not be passed without the previous approval of the Principal Commissioner or Principal Director or Director in case of search initiated under Section 132. 9. Here in the case in hand, since it is after 1st January 1997, Section 158BG proviso (b) shall apply, under which, the Joint Commissioner or the Joint Director, as the case may be has to give approval. 10. The learned counsel in this context would submit that, no such approval seems to have been obtained by the Revenue and such approval order ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search was conducted on the aforesaid dates, separate panchanama were drawn and prohibitory orders were issued. 15. In so far as the long continuation of search starting from 25.01.2001 and ends up on 12.06.2001, the learned standing counsel for Revenue would contend that, during the search, certain electronic devices were found, where lot of documents were uploaded or saved by the assessee / petitioner and when the same was questioned, the petitioner, till the last search, was not co-operating with the Revenue to disclose the password to have access with those documents, therefore for these kind of purposes, the search operation was continued in the premises at No.4/181, Kodambakkam High Road, Chennai - 34 and it ended only on 12.06.2001, where the Revenue was able to access with the software documents stored in the computer and thereafter only the search operation was completed and the Revenue proceeded to further. 16. The learned standing counsel would also submit that, the search at No.23, Noor Veeraswamy Street, Chennai - 34 was commenced at 1 p.m, on 25.01.2001 and concluded at 1.45 p.m, on the same date and therefore in so far as the said search is concerned at tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sake of making it to approach this Court by filing writ petition under Article 226 of the Constitution of India, since the petitioner is very well aware that, there is a statutory alternative efficacious appellate remedy, which admittedly the petitioner has not availed and has approached straight away this Court by invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution and only for the sake of approaching this Court by invoking the writ jurisdiction, the said allegation of violation of principles of natural justice has been made. 21. On the side of the citations referred to by the learned counsel for the petitioner, the learned standing counsel for the Revenue would submit that, the two Judgments, namely Rakesh Kumar Jain as well as Ramaiah Reddy cases ( cited supra ) cannot be made applicable to the facts of the present case, instead, a Division Bench of this Court order made in Deputy Commissioner of Income-Tax, Central Circle II(1) v. Rakesh Sarin, reported in (2014) 222 Taxman 84 (Madras) : (2014) 362 ITR 619 (Madras) would apply to the facts of the present case, where the earlier two decisions, namely Rakesh Kumar Jain and Ramaiah Redd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case to the DCIT, Central Circle I(5), Chennai to DCIT, Central Circle I(3) Chennai, w.e.f., 16.04.2003. Though no specific averment has been made that, the initial approval was given by JCIT under Section 158BG, it is the vehement contention on the part of the Revenue that, only pursuant to the approval given by the JCIT, the search in the premises of the assessee / petitioner was made, of course on specific authorisation. Taking into account of these factors, since it is an allegation and the denial and the Revenue has maintained that Section 158BG has been complied with, this Court accept the same. 25. In so far as the allegation that, there was no notice under Section 143(2) served on the petitioner is concerned, the specific averment made in the counter affidavit reads thus : 33. The notice u/s 158BC was issued in this case on 05.10.2001 requiring the petitioner to file a return of his undisclosed income for the block period in Form 2B. In this connection, the allegation that the block period was not specified in the said notice is not correct in so far as in the notice itself it is made known that the block period is as mentioned in section 158B(a) of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner side is that, on 25.01.2001, first search was made in both the premises and on that date, a panchanama was drawn, where it has been specifically mentioned that, search concluded , however on the very same date, the prohibitory order under Section 132(3) of the Act was issued by the Revenue which is unwarranted. Therefore on the strength of the said prohibitory order continuous search was made on various dates till June 2001 and therefore by taking advantage of those subsequent searches, which are unauthorised, the Revenue cannot claim that, the last panchanama was drawn only on 12.06.2001 and therefore the limitation for the purpose of Section 158BE(1)(b) would commence only after the end of the month where the last such panchanama was drawn, i.e., 30.06.2001 and therefore the impugned order, since was passed on 30.06.2003, is within the limitation, cannot be accepted, is concerned, as has been pointed out by the learned standing counsel for the Revenue, the search was conducted on 25.01.2001 in two premises, one is at 23, Noor Veeraswamy Street, Chennai - 34 and another one is at No.4/181, Kodambakkam High Road, Chennai - 34. 29. I have perused the copy of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are requisitioned on or after the 1st day of January, 1997. 34. Explanation (2) to Section 158BE is very relevant, that is also extracted hereunder for easy reference : 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 panchanama 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. 35. For any assessment under Section 158BC, there must be a search under Section 132 and if a search is conducted under Section 132, on the conclusion of such search, as recorded in the last panchanama drawn, it shall be deemed to have been executed as authorisation for the purpose of limitation as contemplated under Section 158BE(1) (a) (b) and in this case, 158BE(1)(b) would apply since it is a case after 1st January 1997. 36. This provision of Section 158BE with the explanation (2) has been widely discu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be authorised through the search authorisation. In other words, search authorisation should authorise a particular official for executing the search. Therefore, when there are different places to be searched, separate search authorisation should be drawn with reference to each place of search. The said authorisations may be issued on different dates in which case, the last of such authorisations is to be looked into for the purpose of limitation. However, it is possible that there may be more than one authorisation on the same day. Then the question is which is the last of such authorisations for the purpose of limitation. When all the authorisations are executed there will be one panchnama in respect of each such authorisation. The authorisations may be executed on different dates also. Then the doubt would arise regarding which authorisation to be looked into for the purpose of limitation as all of them are last authorisation. It is for removal of that doubts that the Explanation is inserted. For the purpose of computing the limitation, it is the one year from the end of the month in which the last of the authorisations was executed. If there are more than one authorisat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be that it should record the conclusion of search. 80.The law does not contemplate the authorised officer to set out in any of the panchnama that he has finally concluded the search. If for any reason the authorised officer wants to search the premises again, it could be done by obtaining a fresh authorisation. There is no prohibition in respect of the same premises. It is open to the empowered authority to issue authorisation but when the authorisation is issued once, the authorised officer cannot go on visiting the premises under the guise of search. Therefore, it is clear once in pursuance of an authorisation issued the search commences, it comes to an end with the drawing of a panchnama. When the authorised officer enters the premises, normally, the panchnama is written when he comes out of the premises after completing the job entrusted to him. Even if after such search he visits the premises again, for investigation or inspection of the subject-matter of restraint order or prohibitory order, if a panchnama is written, that would not be the panchnama which has to be looked into for the purpose of computing the period of limitation. But, such a panchnama would only reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Execution a process in action to carry into effect the directions in a decree or judgment-Foust v. Foust, 47 Cal. 2d 121, 302 p. 2d 11, 13. In the light of the above definition of the words execute and execution , one may argue that until and unless the final act is performed, the warrant of authorisation should not be treated as executed and the mere initiation of the search followed by an interregnum consequent upon restraint order or for any other reason may not be treated as execution of the warrant. But this interpretation would be hypertechnical and it needs detailed discussion as is done in the following paras. The question arises as to whether execution of a warrant of authorisation or requisition refers to the conclusion of the proceedings under section 132 and/or 132A or it refers only to the execution of the warrant even though as a result of such execution the proceedings under section 132 or 132A are yet to he completed. The latter situation will include a case in which a restraint order under section 132(3) is passed. In such a case, it can be said that though the warrant of authorisation has been executed, proceedings under section 132(3) are pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is to be taken into consideration for the purpose of limitation for block assessment. 37. The said position of C.Ramaiah Reddy case was in fact accepted by a Division Bench of this Court in the case of A.Rakesh Kumar Jain v. Joint Commissioner of Income tax reported in (2012) 254 CTC 0576 : (2012) 80 DTR 0257 and in order to understand the said decision, the relevant portion of the said Judgment is extracted hereunder : 11 . Before going into the merits of the contention, sub-clause (1) of Section158BE reads as under: Time limit for completion of block assessment 158BE (1). The order under Section 158BC shall be passed-[a) within one year from the end of the month in which the last of the authorisations for search under s. 132 or for requisition under s. 132A as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th June 1995, but before the 1st Jan., 1997; (b) within two years from the end of the month in which the last of the authorisations for search under s. 132 or for requisition under s. 132A, as the case may be, was executed in cases where a search i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be only one search and one Panchnama. 13 . As reasoned out therein, there could be only one authorisation and a Panchanama drawn as regards the conduct of the search, i.e., once when the search party concluded the search and leaves the premises after carrying with them the seized material, the authorisation for the search is fully implemented upon and execution completed. There afterwards, if the Department has to enter the premises again, as by way of search, certainly, one requires fresh authorisation; however, as stated by the Karnataka High Court, no such authorisation is required to enter the premises to inspect the materials, which are the subject-matter of prohibitory order or restraint order. The said order itself acts as an authorisation to enter the premises and inspect the materials, which are the subject-matter of those orders. However, after entering the premises of such person, he has to confine his actions only for inspection of the subject-matter of prohibitory order or restraint order. He cannot search the premises over again. Any material seized after such inspection would be the undisclosed income for the purpose of the block assessment in pursuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch as understood under Section 132 of the Act. It is only because of paucity of time he has gone back and wants to come back and look into the matter leisurely. There is no provision in the Criminal Procedure Code or in the Income-tax Act or the Rules for postponing the search for a long period. Then, the concept of search as understood either under the provisions of the Criminal Procedure Code or the Act which are made applicable expressly, would lose its meaning. 15. As already seen, merely because, more than one Panchanama is drawn in the given case on one authorisation, one cannot construe that the subsequent and the last of the Panchanama issued as one flowing out of the search as a last of the Panchanama referable to Explanation 2 to Section 158BE. Once the warrant of authorisation has been issued and the premises is searched and the search party leaves the premises, there is the end of the search and what could be postponed is only seizure of the articles and issuance of prohibitory order; however, limitation for the completion of the block assessment begins on the conclusion of the search and issuance of Panchanama and in case of single authorisation, the moment such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last panchanama of the last authorisation shall be treated as the last authorisation for the purpose of starting point of the limitation under Section 158BE(1)(b) and in case of one authorisation with multiple panchanamas, it cannot be said that, the last such panchanama drawn by the Revenue under one authorisation would be the starting point of the limitation as that has not been intended in Explanation 2 referred to above. This was exactly held by the aforesaid two decisions. 40. However, Mr.A.P.Srinivas, learned standing counsel appearing for the Revenue has relied upon Deputy Commissioner of Income-Tax, Central Circle II(1) v. Rakesh Sarin , reported in (2014) 222 Taxman 84 (Madras) : (2014) 362 ITR 619 (Madras) , which is a decision subsequently made by a Division Bench of this Court after Ramaiah Reddy and Rakesh Kumar Jain cases. In this Judgment, the Division Bench has held as follows : 12... As is evident from the reading of the provision to Section 158BE of the Act, in the case of search conducted after 01.01.1996, it was declared that limitation for passing the order under Section 158BE of the Act is given as 2 years from the end of the month in which last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.1240 of 2006 dated 25.09.2012 (A.Rakesh Kumar Jain (supra)). In such circumstances, we do not find that there is any justification to accept the plea of the assessee to confirm the order of learned Single Judge. 15. Learned counsel appearing for the assessee pointed out that in any extent, there is only one search, therefore, limitation has to be worked out taking the search conducted on 27.03.2003 as the date where the last panchanama was drawn; if the Revenue had any case, whatever be the annexures to the contents of the panchanama in the second search, it is open for the Revenue to make such of the assessment based on the materials covered in the course of second search. In the circumstances, the assessment fails in this case. 16. We do no accept the above said line of submission of learned counsel for the assessee. As already pointed out in the preceding paragraphs, in cases where there is more than one authorisation, the starting point of limitation is to be computed from the last of the authorisation which as per Explanation 2 to Sub Section 2 of Section 158 BE of the Act is deemed to have been executed on the conclusion of the search as recorded in the last panchanam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be applied in respect of all cases in all circumstances and situations falling under Section 158BE(1)(b). 44. In the case in hand, though the authorisation and first search was made on 25.01.2001 and the first panchanama was drawn on 25.01.2001 for two separate premises of the petitioner, for which two separate authorisation had been made, in respect of one premises, i.e., at No.23, Noor Veeraswamy Street, Chennai - 34, the Revenue concluded the search on the very first day itself and this is evident from the panchanama issued in that premises, dated 25.01.2001. Therefore on the said premises, there was no prohibitory order and no further search was made. 45. However in so far as the second premises, i.e., at No.4/181, Kodambakkam High Road, Chennai - 34 is concerned, where also the search was conducted on 25.01.2001 first time, in the panchanama dated 25.01.2001, the Revenue has made it clear that, the search continues , therefore they issued the prohibitory order. 46. In this context, by relying upon the interpretation given in the two Division Bench Judgments referred to above in Ramaiah Reddy and Rajesh Kumar Jain cases, the learned counsel appearing for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itory orders were placed as the search could not be completed. The volume of books and documents to be seen were huge. They related to various assessees of the group and to various years. The search operations were conducted on the basis of valid warrant of authorisation issued by the DIT (Inv), Chennai. The search operations continued till 25.06.2001 preciously because of the reason that the petitioner did not provide the password in respect of files contained in the computers and also voluminous books of account found during the course of proceedings. The prohibitory order were issued on various occasions in view of the non completion of the search on the respective dates but not for the purpose of harassing the petitioner. As such there is no truth in the allegation that search proceedings were invalid. I state that because more time was required to go through the contents of the computers and the books, in order to verify their contents, it was necessary to place prohibitory orders and to continue the search. There was no intention of harassing the petitioner. All the rooms which were prohibited also contained computer(s) which contained password protected files. The petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration commences at the second premises of the petitioner on 25.01.2001, continued till 12.06.2001, therefore each time separate panchanamas were drawn and prohibitory orders were issued with the endorsement that, search continues . However it has been misquoted by the petitioner that, even though the panchanama, dated 25.01.2001 discloses with an endorsement of the Revenue that, the search concluded , subsequent issuance of prohibitory order and on that strength, subsequent searches made till 12.06.2001 was unauthorised. However the fact remains that, in the second premises the search continued and in view of the specific provisions referred to above in Section 132(1)(iib), which, even though came into effect only from 01.06.2002, the continuous search went up to 12.06.2001 can very well said to be authorised and therefore the Revenue cannot be found fault with by compelling them to calculate the limitation within the meaning of Section 158BE(1)(b) from 01.02.2001 by taking into account the panchanama, dated 25.01.2001 as the last panchanama and by not taking the 12.06.2001 panchanama as the last panchanama. 54. Therefore independently, on the basis of Section 132(1)(iib), t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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