2004 (8) TMI 373 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessments made by the AO are time-barred and consequently invalid.
2. Whether the writ petition filed by one assessee affects the limitation period for other assessees.
3. Validity of the block assessment order passed by the AO.
4. Whether the CIT(A) considered the issue of time-barred assessments.

Detailed Analysis:

1. Whether the assessments made by the AO are time-barred and consequently invalid:

The primary issue for consideration is whether the assessments made by the AO are time-barred and hence invalid. The search and seizure action under Section 132(1) was conducted on 26th June 1997, and the last authorization was executed on 16th July 1997. According to Section 158BE(1)(b), the assessments should have been completed within two years from the end of July 1997, i.e., by 31st July 1999. However, the AO ordered a special audit under Section 142(2A) on 16th April 1999, extending the period of limitation by 124 days, making the new deadline 2nd December 1999. Since the assessments were completed on 28th July 2000, they were clearly beyond the prescribed time limit and hence null and void.

2. Whether the writ petition filed by one assessee affects the limitation period for other assessees:

The writ petition filed by Shri M.N. Dugad sought a stay against the AO's order under Section 142(2A). The Hon'ble Bombay High Court, in its order dated 29th November 1999, explicitly stated that the writ petition should be treated as one filed by Shri M.N. Dugad alone, and other assessees were free to file separate writ petitions if needed. This means that the writ petition filed by Shri M.N. Dugad did not extend the period of limitation for other assessees. Therefore, the assessments for other assessees were required to be completed by 2nd December 1999, and any assessments made beyond this date were invalid.

3. Validity of the block assessment order passed by the AO:

The CIT(A) initially set aside the assessments for fresh adjudication, which led to the AO passing fresh assessments on 28th March 2002. However, the issue of time-barring was raised again, and the AO rejected the contention, stating that the assessments were made within the statutory time frame. The Tribunal found that the CIT(A) had not properly addressed the issue of time-barring in its order dated 30th March 2001. The Tribunal concluded that the assessments were indeed time-barred and, therefore, null and void.

4. Whether the CIT(A) considered the issue of time-barred assessments:

The Tribunal noted that the issue of time-barring was raised before the CIT(A), but the CIT(A) chose not to deal with it in its order dated 30th March 2001. The Tribunal held that if an issue is raised before the CIT(A) and not dealt with, it still arises out of the CIT(A)'s order and can be adjudicated by the Tribunal. Therefore, the Tribunal rejected the objection of the senior Departmental Representative that the issue of time-barring does not arise out of the CIT(A)'s order.

Conclusion:

The Tribunal concluded that the assessments made by the AO were time-barred and hence null and void. The writ petition filed by Shri M.N. Dugad did not extend the limitation period for other assessees. The CIT(A) had not properly addressed the issue of time-barring, and the Tribunal had the authority to adjudicate on this issue. Consequently, the orders of the CIT(A) and the AO were quashed, the appeals filed by the assessees were allowed, and the appeals filed by the Revenue were dismissed.