TMI Blog2008 (4) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... In our opinion, the entire exercise of concluding the search temporarily on September 15, 2000, drawing the first panchnama on that date, passing a prohibitory order on September 15, 2000, revoking the said prohibitory order subsequently on October 3, 2000, and concluding the search finally on October 4,2000, by making the seizure of the remaining material as per the second panchnama thus was in accordance with the relevant provisions of law and there was no infirmity much less a legal infirmity making the second panchnama drawn on October 4, 2000, invalid in so far as the assessee's case is concerned as sought to be contended by the ld DR. In that view of the matter, we hold that the second panchnama dated October 4, 2000, was a valid panchnama having been drawn in accordance with law and since the same was the last panchnama drawn in the present case, the warrant of authorisation was finally executed and the search was finally concluded on the date on which the said panchnama was drawn, i.e., October 4, 2000, as per Explanation 2(a) to section 158BE. The block assessment completed by the AO on October 31, 2002, i.e., within a period of two years from the month in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries found recorded therein. Accordingly, submissions were made on behalf of the assessee-company from time to time during the course of hearing before the Assessing Officer offering its explanation as sought by the Assessing Officer. The said explanation, however, was not found to be fully satisfactory by the Assessing Officer and after analysing the contents of the documents found during the course of action under section 132(1), the Assessing Officer completed the assessment under section 158BC vide his order dated October 31, 2002, assessing the undisclosed income of the assessee for the block period at Rs. 2,03,40,780 as against the undisclosed income of Rs. 1,49,660 declared by the assessee-company in its return. 3. Aggrieved by the aforesaid order passed by the Assessing Officer under section 158BC, an appeal was preferred by the assessee-company before the learned Commissioner of Income-tax (Appeals) challenging the validity of the said order as well as challenging the additions made by the Assessing Officer on merits. In this regard a detailed written submission was filed on behalf of the assessee-company before the learned Commissioner of Income-tax (Appeals) offering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the said panchnama was that a prohibitory order was passed. He invited our attention to the copy of the said prohibitory order passed under section 132(3) on September 15, 2000, placed at page No. 93 of his paper book and submitted that the same was issued in the case of M/s. Mahaan Dairies Ltd. only. According to him, even though copy of the said prohibitory order was marked to the assessee-company as mentioned in the said order, it cannot be said that the said prohibitory order was issued in the case of the assessee. He also invited our attention to the order passed on October 3, 2000, revoking the prohibitory order issued on September 15, 2000, placed at page No. 109 of his paper book and pointed out that the same again was issued in the name of M/s. Mahaan Dairies Ltd. with a copy to the assessee-company. He also invited our attention to the letter dated September 28, 2000, issued by the Joint Director of Income-tax (Inv.), Unit-III to the assessee-company wherein it was mentioned that the prohibitory order issued under section 132(3) was being revoked on October 4, 2000, for the purpose of completing the search proceedings. He contended that the prohibitory order under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, submitted that both the concerns i.e., the assessee-company and M/s. Mahaan Dairies Ltd. belonged to the same group and as is evident from the copy of panchnama placed at page Nos. 94 to 97 of the assessee's paper book, the same were operating from the same premises where the search operation was conducted. He submitted that the search and seizure operation commenced on September 14,2000, at 8.30 a.m. was initially continued up to September IS, 2000, at 6.15 a.m. and keeping in view the voluminous documents found during the course of the said operation which could not be fully scrutinised and seized even after a period of about 24 hours, the same was temporarily concluded and an order under section 132(3) was passed. In this regard, he invited our attention to the various annexures to the first panchnama as well as the second panchnama to point out that voluminous documents were seized on the first day of operation as well as on October 4, 2000. According to him, this seizure made of voluminous documents as indicated in both the panchnamas is sufficient to show the reasons as to why it was not possible to complete the seizure at the initial stage itself and why the order und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132(3), it cannot be said that the said prohibitory order was issued only in the case of M/s. Mahaan Dairies Ltd. and not in the case of the assessee-company. As regards the judicial pronouncements cited by learned counsel for the assessee in support of the assessee's case on this issue, he submitted that the facts involved in the said cases were entirely different from the facts involved in the present case and the same, therefore, cannot be of any help to support the assessee's case on this issue. For example, he submitted that in the case of B.K. Nowlakha v. Union of India [1991] 192 ITR 436, extension of prohibitory order was not obtained and there was no prohibitory order validly in existence when the seizure was made and panchnama was drawn. He submitted that in the case of CIT v. Sarb Consulate Marine Products P. Ltd. [2007] 294 ITR 444, the search started m 1996 was claimed to be completed in the year 1998 by drawing a second panchnama and considering this inordinate delay as well as other facts of the case including the fact that there was no seizure made by the second panchnama, the same was held to be not valid in the eye of law. 9. We have considered the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed under section 132(3). First of all, he has contended that the said order was not issued in the name of the assessee but the same was issued only in the name of M/s. Mahaan Dairies Ltd. and merely a copy thereof was marked to the assessee. He has contended that the said order thus was not issued in the case of the assessee and in the absence of any such order issued under section 132(3) in the case of the assessee, the search operation stood finally concluded on September 15, 2000, itself and the second panchnama drawn on October 4, 2000, in the name of the assessee was not a valid panchnama. Secondly, he has contended that an order under section 132(3) can be validly issued by the Department only when it is found to be not practicable to seize the material found during the course of search and the existence of such circumstances has to be established by the Department as a pre-requisite condition to pass an order under section 132(3). According to him, the Department, however, has failed to discharge this onus in the present case and this being so, the order passed under section 132(3) even otherwise could not be said to be a valid one. 11. After having considered the riva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person who is in immediate possession or control of the relevant material/document. As is evident from the order dated September 15, 2000, passed under section 132(3) in the present case, the contents of which are extracted above, the relevant steel safe in respect of which the restraint order was passed had been lying along with the other old records in the record room of accounts section of M/s. Mahaan Dairies Ltd. and the said record room was sealed by the search team. The relevant material found during the course of search which was not practicable to be seized thus was in the immediate possession and control of M/s. Mahaan Dairies Ltd. and the order under section 132(3) was thus served on the said party as stipulated in the relevant provisions of section 132(3). Since some of the said documents were belonging to the assessee as is evident from the subsequent seizure made as per panchnama dated October 4, 2000, a copy thereof was marked to the assessee. The said order under section 132(3) thus was passed in accordance with law and having regard to all the facts of the case as well as the relevant provisions of law, it cannot be said that there being no name of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was cancelled and renewed from time to time beyond 60 days without any justification and that too without obtaining the approval of the Commissioner under section 132(8A). There was thus no prohibitory order validly in existence when the seizure was finally made and panchnama was drawn. Moreover, no case was made out by the Department therein to show how it was not practicable to effect seizure of stocks so as to justify passing the restraint order under section 132(3). Keeping in view these peculiar facts of this case, it was held by the hon'ble Delhi High Court that the powers under section 132(3) could not be so exercised to circumvent the provisions of section 132(1) read with section 132(5). Similarly, in the case of CIT v. Sarb Consulate Marine Products P. Ltd. [2007] 294 ITR 444, the search initially conducted in 1996 was sought to be claimed as completed in the year 1998 by drawing a fresh panchnama and taking into account this inordinate delay in concluding the search as well as the fact that there was no seizure made by the second panchnama, the same was held to be invalid by the hon'ble Delhi High Court and the search was held to be concluded on the date of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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