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TMI Blog2006 (5) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... s drawn to third panchnama dated 25-4-1996. 5. The learned Authorised Representative submitted that as per panchnama dated 25-4-1996, nothing was found or seized. No prohibitory order was placed. Search commenced at 4.00 PM and concluded at 5.00 PM. The learned Authorised Representative submitted that it was a mere formality. The panchnama dated 25-4-1996 is not a valid panchnama. The learned Authorised Representative stated that col. 9 of panchnama dated 19-2-1996 is blank and it means that search was concluded on 19-2-1996. Accordingly the assessment should have been completed on or before 28-2-1997. 6. The learned Authorised Representative relied on the order of this Bench in the case of M/s. Madhuvana House Building Cooperative Society. This Bench vide order dated 31-12-2001 in IT(SS)A 175 /Bang./1997 held that search cannot be said to have been completed on the day of last panchnama, if there has been no search and seizure on the day of last panchnama. In that case, on the day when the last panchnama was drawn, there was no search and there was no seizure of material kept under P.O. Under these circumstances, it was held that the search cannot be said to be completed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the cupboard containing silver articles had been sealed. On 13-10-1997, the ACIT Shri Ashish Abrol who was not one of the authorized officer removed the seal and made a further order under section 132(3) of the Income-tax Act, releasing the said silver articles. Assessment was completed on 13-12-1997. The learned High Court upheld the finding of the Tribunal that there was no practical impediment to seizure of 45 kg. of silver. It was further held that Tribunal was right in holding that proceedings on 26-10-1996 could not be considered as part of the execution of search proceedings. Explanation to section 132(3) says that a restraint order does not amounts to seizure. Mr. Abrol was not an authorised officer. Validity of panchnama is to be looked as per the provisions of Criminal Procedure Code. In the circumstances the learned High Court held that impugned assessment dated 31-12-1997 is barred by limitation. 10. The learned Sr. counsel appearing for revenue stated that section 132 can be split into two compartments. Sub-sections (1) to (5) of this section relate to conducting of search. Search operations are administrative matter and these cannot be looked into by the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of P.O i.e. 6-4-1996. 15. The learned Sr. counsel then submitted that limitation is provided under section 158BE. The period is to be reckoned from the last day of the month in which authorization under section 132 is executed. Such execution may be through either section 132(3) or 132(4). Explanation 2to section 158BE is for removal of doubts. Section 158BE(1) does not refer to the panchnama. Hence the date on which statement under section 132(4) has been recorded is relevant. 16. The learned Authorised Representative in his counter reply admitted that there were two prohibitory orders as per panchnama dated 6-2-1996. 17. We have heard both the parties. Spl. Bench in the case of Promain Ltd. has clarified the issues on which Tribunal has jurisdiction to call for records in order to decide the issue before it. It will be relevant to reproduce the relevant extract from page 498 of 95 ITD. "As already discussed, the search action under section 132 has three limbs i.e., initiation of search, conduct of search and conclusion of search. Insofar as the validity of search is concerned, the first limb, i.e initiation of search, which includes all the action culminating into is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oversy regarding meaning of the word 'execution' while calculating the period of limitation in section 158BE of the Income-tax Act, the Act has inserted a new clarificatory Explanation. An authorization is deemed to have been executed 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 authorization has been issued. 22. Thus, it is clear that Explanation is clarificatory and has been introduced to settle the controversy. If the Explanation is clarificatory in nature and has retrospective effect then Explanation so brought in the statute simply explains the law as it has always been in the main provision. 23. An Explanation was introduced to section 194A. The learned Madras High Court in the case of ITO v. D. Manhorlal Kothari [1999] 236 ITR 357 observed at page 374. "From what is expressed by the Apex Court the Explanation cannot be treated as an amendment because the purpose of the Explanation is to explain or, in the words of the Apex Court, to clear any mental cobwebs surrounding the meaning of a statutory provision and to prevent the controversial interpretations without giving th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute, and particularly when the same has been made applicable with effect from a particular date should be construed prospectively and not retrospectively. But this principle will not be applicable in a case where the provision construed is merely explanatory, clarificatory or declaratory. It cannot be disputed that the object of the Explanation is to explain the meaning and intendment of the Act itself." 27. Thus, it is clear that execution of warrant of authorization under section 132(1) is to be seen in accordance with Explanation 2. 28. In view of Explanation 2 to section 158BE, execution of search warrant is to be inferred from the date recorded in respect of conclusion of search in the last panchnama. Panchnama is not defined in the IT Act. However, section 100 of Cr.PC governs the conducting of search. As per section 100(4) of Cr.PC the authorized officer to make search is required to call upon two or more independent and respectable inhabitant of the locality in which the place to be searched is situated. Search is to be made in the presence of these two respectable inhabitants list of things to be seized and placed where these have been found is to be prepared and such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. This prohibitory order was lifted on 19-2-1996 and panchnama was drawn on 19-2-1996. Vide this panchnama no further prohibitory order was passed. 31. Then, the last panchnama is 24-4-1996. As per this panchnama, nothing has been found or seized. Col. 5 of panchnama has been struck off. Col. 5 of the panchnama requires the following details to be given: (a) Books of a/c. or valuables found and seized. (b) Books of a/c. or valuables found but not seized. 32. However, annexures have been attached to panchnama dated 25-4-1996. In annexures, it has been mentioned. Date of search-6-2-1996 33. These details suggest that this panchnama is in respect of prohibitory order placed on 6-2-1996 in respect of an almirah. Though the department, has filed copy of order under section 132(3) in respect of cupboard on first floor but no copy of order under section 132(3) filed in respect of almirah. 34. Section 132(8A) as existing at that time was as under: "An order under section 132(3) shall not be in force for a period exceeding sixty days from the date of the order, except where the authorized officer, for reasons to be recorded by him in writing extends the period of operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to find out the date when the last panchnama with reference to last authorisation is drawn and nothing beyond that. Hence, the Tribunal can examine the date when last panchnama was drawn. It will be relevant to quote from pg. 51 in the case of Promain Ltd.: "It is, however, pertinent to mention about the significance of the panchnama. The panchnama is a document which is prepared in the presence of panchas (respectable local witnesses) containing the items found and seized in the course of search. So the Assessing Officer must satisfy himself for the purpose of calculating the period limitation that document in question is in reality a panchnama. There may be a case where inventory is prepared in respect of books of account or valuable articles found in the course of search but taking of or removal of such books of account or valuable article is not practicable. The authorized officer may issue a restraint order under the proviso to section 132(1). Such restraint is deemed to be a seizure as per the said proviso. Hence, in such a case, the preparation of inventory and panchnama would be relevant and any action of the authorized officer lifting the restraint order would, in ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is dated 19-2-1996 vide which certain books of account and documents were seized. Therefore, it is the last panchnama and according to it, the assessment order should have been passed on or before 28-2-1997. 42. This Bench, in the case of Madhuvana House Building Corpn. Society v. ACIT [2002] 76 TTJ (Bang.) 948 held vide para 12 that panchnama dated 25-4-1996 was not the date of last panchnama, as there was no search or seizure. In that the assessment order was held as barred by limitation. 43. During the course of proceedings, the learned Sr. counsel argued that statement of late Shri D.T.S Rao was recorded under section 132(4) on 23-4-1996 and, therefore, it will be considered that search continued up to 23-4-1996. Section 132(4) authorizes the Assessing Officer to examine, oath in person during the course of search or seizure. Mere mention of section on the top of the statement will not make the statement as recorded during the course of search. At top of the statement, it is written as under: "Statement of Shri D.T.S. Rao, Director, M.H.B.C.S, Mysore under section 132(4) continued on 23-4-1996." 44. Before this stage, statement was recorded on 6-3-1996 and at the end of ..... 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