2006 (5) TMI 115 - AT - Income Tax

Block Assessment in search case - time-barred - three warrants of authorization issued u/s 132 - HELD THAT - The section 158BE clearly states that the limitation will start from the end of the month in which last of the authorizations was executed. It pre-supposes that there can be a situation where more than one authorizations for search u/s 132 are issued and the execution of the last of the such authorizations is to be considered as the starting point for the purpose of limitation. It clearly refers to the last authorization in case where more than one authorizations are issued. As such it cannot be held that all the authorizations issued should be treated as a common kitty and anyone of the authorization which is executed at the end should be considered for the purpose of limitation. Thus we hold that the last of the authorizations issued in the case of the assessee dated 23-12-1996 was executed on that day itself. The assessment was required to be concluded with one year from the end of the month in which last of the authorizations were executed. Meaning thereby that as per the provision of section 158BE the assessment was required to be completed by 31-12-1997. Hence the assessment order passed u/s 158BC on 23-1-1998 was barred by time limitation and same is quashed. Having quashed the assessment being barred by time limitation on the basis of the one of the contentions raised. We do not see any need to go into the other issues raised by both the parties as same will only be an academic exercise. We also see no reason to go into the merits of the case which have been raised in other grounds of the appeal as assessment has been quashed on the legal issue. In the result appeal of the assessee is allowed.

Issues Involved:
1. Whether the block assessment order was passed beyond the time permitted by law and hence was time-barred, illegal, and invalid.
2. Validity of the Prohibitory Order (P.O.) imposed on 23-12-1996.
3. Validity of the panchanama dated 30-1-1997.
4. Determination of the date from which the time limitation for the purpose of section 158BE starts.

Detailed Analysis:

1. Time-Barred Block Assessment Order:
The primary issue was whether the block assessment order passed on 23-1-1998 was within the time limitation prescribed under section 158BE. The assessee argued that the limitation period should start from 23-12-1996, the date when the last of the authorizations was executed, making the assessment time-barred. The revenue contended that the limitation period should start from 30-1-1997, when the P.O. was lifted, making the assessment within the permissible time frame.

2. Validity of the Prohibitory Order (P.O.):
The assessee argued that the P.O. imposed on 23-12-1996 was invalid because the jewellery found was of a small amount (Rs. 8.67 lakhs) and did not justify the imposition of a P.O. The assessee relied on the decision in CIT v. Mrs. Sandhya P. Naik [2002] 253 ITR 534 (Bom.), arguing that the search was concluded on 23-12-1996. The revenue countered that the P.O. was an administrative action and within the discretion of the Authorized Officer, and therefore, not subject to appeal.

3. Validity of the Panchanama Dated 30-1-1997:
The assessee contended that the panchanama dated 30-1-1997 was invalid as no seizure was made on that date, and thus, the time limitation should start from 23-12-1996. The revenue argued that a valid panchanama does not require a seizure and that the panchanama on 30-1-1997 was a continuation of the search process initiated earlier.

4. Determination of the Date for Time Limitation:
The Tribunal examined the relevant provisions of section 158BE and Explanation 2, which state that the limitation period starts from the end of the month in which the last of the authorizations for search was executed. The Tribunal found that the last authorization was dated 23-12-1996 and was executed on the same day. The Tribunal rejected the revenue's argument that all authorizations should be treated as a common kitty and that the last date of any authorization should be considered for limitation purposes.

Conclusion:
The Tribunal concluded that the last of the authorizations was executed on 23-12-1996, and therefore, the block assessment order should have been completed by 31-12-1997. Since the assessment order was passed on 23-1-1998, it was barred by time limitation and was quashed. Consequently, the Tribunal did not find it necessary to address the other issues raised by both parties or the merits of the case.

Result:
The appeal of the assessee was allowed, and the block assessment order was quashed as being time-barred.

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