2011 (10) TMI 417 - HC - Income Tax

Search - Block Assessment - Period of Limitation - search conducted on subsequent date without authorization - Held That - When authorization is only for searching the premises on 9-11-1995 and the period of one year expires on 30.11.96 order of block assessment should have been passed before that date. Order passed on 31.12.96 is time barred. Order of Tribunal set aside.

Issues:
1. Validity of block assessment order upheld by Tribunal.
2. Grounds raised by appellant, including limitation.
3. Calculation of period of limitation for block assessment order.
4. Interpretation of authorization for search.
5. Decision on the appeal and setting aside of orders.

Analysis:

1. Validity of block assessment order upheld by Tribunal:
The appellant challenged the order passed by the Tribunal, which upheld the block assessment order by the assessing authority. The appellant raised several grounds for challenging the order, including the issue of limitation. If the assessing authority's order exceeded the period of limitation, it would be considered an order without jurisdiction. The Tribunal's decision to uphold the block assessment order was based on the authorization issued on 8-11-1995.

2. Grounds raised by appellant, including limitation:
The premises of the assessee were searched on multiple dates, and panchanamas were drawn at different times. The contention was that the order of block assessment was beyond the period of limitation. The assessment order was made on 31-12-1996, and the argument was that it should have been completed before 30-11-1996 to be within the time limit.

3. Calculation of period of limitation for block assessment order:
The period of limitation for the block assessment order was a crucial point of contention. The last panchanama was drawn on 19-12-1995, and if a one-year period was considered from that date, it would expire on 31st December 1997. However, based on the Special Bench judgment in C. Ramaiah Reddy's case, the period of limitation starts from the date of the last authorization executed, not when the search is concluded. The Court held that the order of assessment passed on 31-12-1996 was beyond the time limit.

4. Interpretation of authorization for search:
The Court clarified that the authorization for search was only for the premises searched on 9-11-1995. The period of one year for computation of limitation should have been from that date, which would have expired on 30-11-1996. The subsequent searches conducted without fresh authorization did not extend the period of limitation.

5. Decision on the appeal and setting aside of orders:
In light of the Court's declaration regarding the limitation period and interpretation of the authorization for search, the Court allowed the appeal. The Tribunal's order was set aside, and consequently, the assessing authority's order passed on 31-12-1996 was also set aside as it was deemed to be beyond the period of limitation.

This detailed analysis of the judgment highlights the key issues addressed by the Court regarding the validity of the block assessment order, grounds raised by the appellant, calculation of the period of limitation, interpretation of the authorization for search, and the final decision on the appeal.

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