TMI Blog2008 (1) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... e employees were recorded and the books of accounts found were seized as per the inventory. A cash amount of Rs. 1,46,000 was also found out of which Rs. 1,40,000 was seized. A notice under s. 158BC was issued to the assessee on 31st March, 2003 for filing the return for the block within 35 days of the service of the notice and the same was further extended by 10 days on the application of the assessee. The return of income for the block period in Form No. 2B was finally filed on 1st Dec., 2004 declaring income of Rs. 2,00,000. The assessee derives income from manufacturing of Chuna, hydrated lime and Kali from limestone. The assessment was completed in this case on 31st Jan., 2005. The grounds raised, by the assessee are reproduced herein as under: "1. The impugned order passed by the learned CIT(A) is contrary to the provisions of law and against all cannons of natural justice and is also contrary to facts, material and evidence existing on records so far as it relates to the various grounds of appeal, which have been decided against the appellant. 2. The learned CIT(A) has erred in not accepting the assessee's contention that the assessment for block period made by the AO un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was rendered without noticing the fact that judgement of Delhi High Court in the case of CIT vs. Steller Investment Ltd. (1991) 99 CTR (Del) 40 : (1991) 192 ITR 287 (Del) was overruled by Full Bench decision of Delhi High Court in the case of CIT vs. Sophia Finance Ltd. (1993) 113 CTR (Del)(FB)472 : (1994) 205 ITR 98 (Del)(FB). Such observations by the learned CIT(A) are contrary to the constitutional provisions, which clearly provide that the judgement of Hon'ble apex Court will be binding on all the subordinate Courts. It will also be imperative to state that the Hon'ble Rajasthan High Court in the case of Barkha Synthetics Ltd. vs. Asstt. CIT (2005) 197 cm (Raj) 432 after making into consideration, the judgement of Full Bench of Delhi High Court in the case of CIT vs. Steller Investment Ltd. has held that addition in respect of investment of directors/shareholders in share application money/share capital cannot be made in the hands of the company by following the judgement of Hon'ble Supreme Court in the case CIT vs. Steller Investment Ltd. The facts and material existing in the case of the appellant, as revealed from the seized records, as well as from the findings given by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade no investment and therefore, the question of making any addition on account of alleged unexplained investment which falls within the ambit of s. 69 does not arise. No such addition can be validly made under s. 69 or under any other provision of IT Act, 1961, in the hands of the appellant company. 4(f) That on the facts and circumstances of the appellant's case including the facts stated in written submissions submitted before the learned CIT(A), the impugned addition of Rs. 50,80,000 ought to have been deleted by the learned CIT(A). 5. The learned CIT(A) has erred in confirming the addition of Rs. 2,60,349 out of addition of Rs. 6,37,964 made by the AO on account of alleged excess stock of hydrated lime found during the course of search. The aforesaid addition is contrary to the provisions of law, facts, material and evidence existing on records and has been erroneously confirmed by the learned CIT(A) without properly appreciating the explanations submitted on behalf of the appellant before the AO as well as before him. 6. The learned CIT(A) has erred in confirming an addition of Rs. 72,765 on account of alleged excess stock of quick lime allegedly found during the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the very root of the matter, we are proceeding to decide the same first of all. 5. The contention of the assessee is that the assessment framed for the block period in question is clearly barred by limitation. The further submission of the assessee is that the learned CIT(A) has failed to properly consider the elaborate submission made before him including the written submission dt. 27th Jan., 2005 and also of 12th Oct., 2005. According to learned Authorised Representative the assessment made on 31st Jan., 2005 is clearly barred by limitation under s. 158BE, as the time from which the starting point of limitation has to be reckoned is the time of valid Panchnama drawn by such party. According to learned Authorised Representative the valid Panchnama is that Panchnama which was drawn on 21st Dec., 2002 on which date the search was actually concluded. It is averred by the learned Authorised Representative that in order to extend the time-limit of search, a prohibitory order under s. 132(3) was again clamped on 21st Dec., 2002 in relation to the same office room from which prohibition was lifted/revoked on 3rd Jan., 2003 at 5:05 PM. On the contrary, the contention of the Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation for framing an assessment. When various other Hon'ble High Court's decisions were also available in the Special Bench decisions and there is no contrary decision of Hon'ble jurisdictional High Court, we have to decide this issue as per available precedents. A Special Bench decision cannot overrule a High Court decision. Be that as it may, the undeniable facts of this issue are that the search was initiated in this case on 20th Dec., 2002. The block assessment order was passed on 31st Jan., 2005. The books of accounts and cash found during search were inventorised on 20th Dec., 2002. The office room situated near the main gate of the factory premises in which documents, loose papers and books of accounts were lying was put under prohibitory order under s. 132(3) of the Act on 21st Dec., 2002. The requisite investigation regarding stock of goods as per Annex. G was taken. However, this room, was again put under prohibitory order and was released on 3rd Jan., 2003 at 5:05 PM within 10 minutes without making any seizure, verification etc. The lifting of prohibitory order on 3rd Jan., 2003 was merely a formality completed by the Asstt. Director of IT within 10 minutes. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohibitory order under s. 132(3) was clamped in the office room situated near the main gate of the factory premises in which documents, loose papers and books of accounts were lying. On the next day, i.e., 21st Dec., 2002 again search proceedings were resumed at 3: 15 PM which were concluded on the same day. Subsequently, on the same day in the presence of one Shri Om Prakash Sharma director of the assessee company, this prohibitory order was released on 3rd Jan., 2003 by drawing a Panchnama. According to learned Departmental Representative the search party verified the books of accounts, loose papers, documents and thereafter did not consider it fit to seize them, and thus as per s. 158BE(1)(b), the block assessment order can be passed Within two years from the end of the month in which the last authorisation for search. was executed which is on 3rd Jan., 2003. We may observe that there is no dispute within the parties with regard to the validity of the Panchnama insofar as their executing like presence of witness etc. is concerned. The only question to be decided by us, in view of these facts, is whether the last Panchnama drawn for lifting the prohibitory order on 3rd Jan., 2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of M. Sivaramakrishnaiah Co. vs. Asstt. CIT (2005) 93 TTJ (Vishakha) 1035 has held that Panchnama prepared for lifting the prohibitory order under s. 132(3), simpliciter, cannot extend limitation under s. 158BE. Recently, the Hon'ble Delhi High Court in the case of Shri S.K. Katyal has held that restraint order not amounting to seizure cannot be taken into account for calculating period of limitation for framing an assessment. The restraint order cannot extend the period of limitation. In that case jewellery was put under restraint and was released vide order dt. 3rd Jan., 2001 and the Panchnama drawn to lift prohibition on that date was not treated as valid execution of the Panchnama. In yet another decision of Hon'ble Tribunal Bombay in the case of Dy. CIT vs. Adolf Patric Pinto (2006) 101 TTJ (Mumbai) 1086 : (2006) 100 ITD 191 (Mumbai) it was held even after considering the Special Bench decision of C. Ramaiah Reddy, that time-limit prescribed in s. 158BE will commence once all materials and valuables which were found during search are appraised and search comes to an end regardless of the fact that the prohibitory order under s. 132(3) continues. In this case it is ..... 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