1998 (6) TMI 53 - HC - Income Tax

Summary

Issues involved:
The judgment involves a challenge to an assessment order and search and seizure conducted under section 132(1) of the Income-tax Act, 1961.

Assessment Order Challenge:
The petitioners, a firm engaged in works contracts, challenged the assessment order (exhibit P-14) and the notice issued following it. They contended that the search and seizure at their premises were in violation of section 132(1) of the Income-tax Act.

Legal Interpretation - Time Limit for Block Assessment:
The petitioners argued that the block assessment became time-barred on April 30, 1997, as the search warrant was executed on April 30, 1996. The court considered the provisions of section 158BE, which sets a one-year time limit for completing block assessments starting from the execution of the authorization under section 132.

Block Period Definition and Assessment Error:
The definition of the block period under section 158B was analyzed, indicating the relevant assessment years preceding the search. The petitioners contended that the assessment order (exhibit P-14) erroneously excluded the assessment year 1987-88, potentially affecting the calculation of undisclosed income.

Arguments and Decision:
The petitioners' counsel argued that the assessment lacked jurisdiction due to the timing of the search warrant execution. However, the court upheld the assessment order, emphasizing that the one-year limitation for block assessment starts after the completion of the search, not from the initiation. The court also noted that the omission of an assessment year did not render the assessment illegal, suggesting that such issues could be raised in the statutory appeal process.

Conclusion:
The court dismissed the original petition challenging the assessment order, stating that there were no grounds for interference. The petitioners were advised to pursue their appeal rights and challenge the assessment order through the appropriate appellate authority.