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2005 (8) TMI 304 - AT - Income TaxBlock Assessment in search case - Validity of the Order passed by the Assessing Officer u/s 158BC - barred by limitation - Search and seizure Operation u/s 132 - HELD THAT:- In the present case, the three fisheries trawlers were found during the course of search on 6-11-1996 itself and the restraint order was passed in respect of the same mainly because it was not possible or practicable to take physical possession thereof and to remove the same to a safe place due to its volume, weight or other physical characteristics. In these circumstances, we are inclined to agree with the contention of the learned counsel for the assessee that the restraint order ought to have been passed under second proviso to section 132(1) and not u/s 132(3) and that there was a deemed seizure of the said trawlers making the lifting of the restraint order subsequently as well as preparation of panchnama totally irrelevant. It appears that the restraint order, however, was passed by the authorized officer u/s 132(3) wrongly and such order was utilized by the Assessing Officer to circumvent the provisions of section 132(1) read with section 158BE, which was not permissible as held by Hon'ble Bombay High Court in the case of Mrs. Sandhya P. Naik [2000 (12) TMI 21 - BOMBAY HIGH COURT]. As already observed, even in the letter dated 15-9-1998 issued by the ADIT (Inv.), Belgaum, it was clearly indicated by him that the search in the assessee's case was completed by him on 14-9-1998 just because he was called upon to do so and the panchnama was drawn as a mere formality without there being any seizure. In the case of Ananta N. Naik [1999 (6) TMI 65 - ITAT PUNE] held that a panchnama drawn on the last day without seizure but made for lifting the prohibitory order cannot be reckoned as the last panchnama in terms of Explanation 2 to section 158BE. In the case of Kuwer Industries Ltd. [2004 (8) TMI 722 - DELHI HIGH COURT], held that a prohibitory order u/s 132(3) without there being a seizure could not be a valid panchnama so as to extend the time limit available for the completion of the assessment u/s 158BC read with section 158BE. Even rule 112 of the Income-tax Rules is very specific in this regard wherein it has been stipulated that a panchnama is required to be drawn only in the case of seizure of any material and that too by the authorized officer. In the present case, nothing was seized by the panchnama stated to be prepared on14-9-1998 and this being the undisputed position, we hold that the panchnama so prepared was not a valid panchnama in terms of Explanation 2 to section 158BE. In the present case, the only panchnama validly drawn thus was that of 6-11-1996 and since the panchnama stated to be finally drawn on 14-9-1998 was not valid in the eye of law for the various reasons discussed, we are of the considered view that the assessment made for the block period u/s 158BC on 30-9-1998 i.e., beyond the period of one year from the end of the month in which the first panchnama was validly drawn, was clearly barred by limitation in terms of section 158BE. In that view of the matter, we hold the said assessment to be invalid being barred by limitation and annul the same. Keeping in view our decision on the preliminary legal issue rendered above holding the assessment passed by the Assessing Officer u/s 158BC to be invalid and annulling the same, we do not deem it necessary or expedient to consider and decide the other grounds raised by the assessee in the present appeal since the same have become only of academic nature. In the result, the appeal of the assessee is allowed.
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