TMI Blog2008 (4) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the block assessment before the Commissioner (Appeals) and not before the Tribunal and the Tribunal has no jurisdiction to entertain the appeals and its order could not be allowed to sustain in law. Since the search was initiated in both the case after January 1 1997, under section 158(1)(b), the limitation for completion of block assessment under section 158BC was two years. Therefore, the block assessment orders passed against the assessee were within the period of limitation. - 296 of 2003 and 324 of 2001 - - - Dated:- 2-4-2008 - V. GOPALA GOWDA and ARALI NAGARAJ JJ. E. R. Indrakumar for the appellant. D. L. N. Rao, Smt. S. R. Anuradha and Rajesh Chander Kumar for the respondents. JUDGMENT The judgment of the court was delivered by 1. ARALI NAGARAJ J. - In these two appeals, the appellant-Revenue has challenged the legality and correctness of the orders dated March 2, 2003 and May 31, 2001, passed by the Income-tax Appellate Tribunal (herein after referred to as "the Tribunal") respectively in IT(SS)A No. 183/Bang/2002 and IT(SS)A No. 4/Bang!1999. Though the respondent-assessees in these appeals are different, the substantial questions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xist at all. Considering all the materials, the assessing authority passed the block assessment order dated January 29, 1999 (annexure B) disallowing the depreciation claimed by the assessee and determining the undisclosed income at Rs. 48,43,42,261 as against Rs. 1,13,55,824 which was shown by the assessee in its return as undisclosed income. (c) Likewise in response to the said notice the respondent-assessee in Income-tax Appeal No. 324 of 2001 also filed in Form No. 2B on July 24, 1997 its return showing undisclosed income as "nil". During the said block period the assessee had carried on the business of pawn brokerage/money lending besides trading in jewellery. In response to the notice issued to him under sections 143(2) and 142(1) the assessee appeared through his rep resentative. After concluding the proceedings of the block assessment in respect of this assessee also the assessing authority passed the assessment order on January 29, 1999. (d) Thereafter the respondent in Income-tax Appeal No. 296 of 2003 filed Writ Petition No. 5053 of 1999 (T-IT) before this court seeking an order quashing the said impugned block assessment order dated January 29, 1999. However, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the case of the respondent assessees, and therefore the impugned orders of block assessment were barred by limitation?" 4. We have heard the arguments of the learned counsel for the parties and perused the entire records of the case. The first substantial question of law pertains to the jurisdiction of the Tribunal to entertain the appeals against the orders of block assessment and the second one pertains to the limitation prescribed for conclusion of block assessment by the assessing authority. 5. The learned senior counsel Sri Indra Kumar representing the appellant- Revenue contended that since "search was initiated" in these cases after January 1, 1997, as provided under section 246A(1) (k) the appeals against the block assessment orders passed under section 158BC ought to have been filed before the Commissioner of Income-tax (Appeals) (hereinafter referred to as "CIT(A)" for short) and therefore, the Tribunal committed serious error in holding that the said search was initiated before January 1, 1997, and as such the said appeals were maintainable before it as provided under section 253(1)(b) of the Act. He further submitted on the question of limitation for completi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedure to be followed for block assessment; section 158BE(1)(a) and (b) which provides for the limitation for completion of block assessment and, sections 253(1)(b) and 246A(1)(k) which provide for appeals to the Tribunal and Commissioner of Income tax (Appeals) respectively against the block assessment orders passed under section 158BC(c), which read as under: "158BA. Assessment of undisclosed income as a result of search. - (1) Notwithstanding anything contained in any other provisions of this Act, where after the 30th day of June, 1995 a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of any person, then, the Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter. (2) The total undisclosed income relating to the block period shall be charged to tax, at the rate specified in section 113, as income of the block period irrespective of the previous year or years to which such income relates and irrespective of the fact whether regular assessment for any one or more of the relevant assessment years is pending or not. Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile a revised return; (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142 sub-sections (2) and (3) of section 143 (section 144 and section 145) shall, so far as may be, apply; (c) the Assessing Officer, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment; 158BE. Time-limit for completion of block assessment. - (1) The order under section 158BC shall be passed: - (a) within one year from the end of the month in which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997; (b) within two years from the end of the month in which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1995 but before 1st January, 1997; (ii) within such time not being less than 15 days but not more than 45 days where the 'search was initiated' or the books of account or other documents or any other assets were requisitioned 'after 1st January 1997':" as may be specified in the notice, a return in the prescribed form in compliance with the provisions of section 142(1)(i) of the Act setting forth therein his total income including the undisclosed income for the block period. It is further provided under section 158BC(b) that after such person furnishes his return the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and sections 142, 143(2) and (3), 144 and 145 so far as they may be, apply to such assessment. Further, on determination of the undisclosed income the Assessing Officer shall pass an order of block assessment under clause (c) of section 158BC and determine the tax payable by such person (assessee) on the basis of such assessment. 10. As to the question of limitation for completion of block assessment under section 158BC and passing of assessment order in respect thereof, section 158 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be seen that in order to ascertain the period of limitation for completion of block assessment in these cases and also in order to ascertain the forum before which the appeals against the respective orders of block assessment would lie, we have to find out "the date on which the search was initiated in these cases". If it is found that search was initiated in these cases after June 30, 1995, but before January 1, 1997, the period of limitation for conclusion of block assessment would be "one year" and the appeal would lie to the Tribunal and, if it is found that the said search was initiated after January 1, 1997, then the period of limitation would be "two years" and appeal would lie to the Commissioner of Income-tax (Appeals). 13. There is no dispute about reckoning of the period of limitation, whether such period be one year or two years, from the end of February, 1997, in respect of the case of the respondent-assessee in Income-tax Appeal No. 296 of 2003 because it was on February 28, 1997, on which date the search under section 132 of the Act was concluded by executing last of the authorisations and in respect of the assessee in Income-tax Appeal No. 324 of 2001 such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this date has to be taken as the date on which date the search came to be initiated and not January 3, 1997 and January 8, 1997 on which the actual search was commenced in the respective cases inasmuch as "initiation of search" cannot be held to be "commencement of search" or "conducting of search" by executing the said authorisations. Per contra, the learned senior counsel for the appellant-Revenue strongly urged that merely because the Director of Income-tax, Bangalore, signed the authorisations under section 132 of the Act on December 30, 1996, for conducting search, this date could not be taken to be the date on which search came to be initiated inasmuch as signing of the authorisation cannot be taken to be "initiation of search" and search could be said to be initiated only on January 3, 1997 and on January 8, 1997, on which dates the officers conducting search entered upon the premises of the respective assessees and then commenced the actual conducting of the search after performing the formalities required to be complied with before proceeding to search the premises. 17. On a careful reading of various provisions under Chapter XIV-B which provide for the assessment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and Rs. 18 lakhs that was adopted by the assessing authority in the block assessment. The assessee objected to the said valuation. However, the assessee's objection was overruled and the assessment order dated April 29, 1997 was modified and pursuant thereto demand for the tax was raised. Aggrieved by the said order the assessee submitted his appeal to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) returned the appeal to the assessee for presenting the same before the Tribunal holding that as the proceedings were initiated under seclion 132 of the Income-tax Act, 1961 against the assessee on April 30, 1996 i.e., after June 30, 1995 but before January 1, 1997, the appellate 323 jurisdiction over the said order passed under section 158BC of the Act was vested in the Tribunal by virtue of the provisions of section 253(1)(b) of the Act." 19. On the above set of facts the hon'ble Kerala High Court held as under (headnote): "The Commissioner of Income-tax (Appeals) would not have jurisdiction on the action initiated prior to January 1, 1997. Further, the petitioner had already preferred an appeal before the Tribunal against the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that warrant of authorisation was issued on December 2, 1991, and therefore the provisions of new Chapter XJVB introducing special procedure for making block assessment did not apply. It was further contended by the assessee that such proceedings were initiated prior to July 1, 1995 on which date the new Chapter came into effect, the provisions of section 158BA could not be made applicable." 22. On those facts, analysing the provisions of sections 158BA(1) and 158BE(1)(a) and (b) of the Act, the Tribunal observed in its order as under: "On comparison we found that there is difference, in the use of the language between the two sections 158BA. Whereas section 158BA provides for its applicability on initiation of proceedings under section 132 or requisition of books of account and other documents or assets under section 132A, section 158BE providing for the time-limit start counting from the date of execution of the initiated search under section 132 or requisition of books of account, etc., under section 132A of the Act. The latter section 158BE used both the terms 'executed' as well as 'initiated' and it makes a clear difference between the two concepts. Under these circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Kolkata Bench in Nirmal Ghosh Bag's case (supra) cannot be accepted as correct proposition of law on the substantial questions of law which are framed in these cases. 24. 24 Learned senior counsel and other counsel for the respondent-assessees have also placed their reliance on the decision of the hon'ble High Court of Rajasthan Udyog v. State of Rajasthan, AIR 1978 Raj 31 wherein the court interpreted the meaning of the word "initiate" which occurred under some provisions of the Land Acquisition Act, in the context of the initiation of proceedings under the said Act. The initiation of proceedings under the provisions of the Land Acquisition Act cannot be equated with the initiation of search under the Income-tax Act. Therefore, the interpretation given to the word "initiate" by the High Court of Rajasthan in the context of initiation of proceedings under the Land Acquisition Act cannot be given to the said word in this case in the context of initiation of search under the Income-tax Act. However, at paragraph No. 34 of the judgment in the said case, the dictionary meaning of the word "initiate" has been extracted by the said High Court and the same reads as under (page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, (Permanent Edition) defines 'initiate' to mean an introductory step or action, a first move; beginning start, and 'to initiate' as meaning to commence. Black's Law Dictionary (Sixty Edition) defines 'initiate' to mean commence; start; originate; introduce; inchoate. In section 20, the word 'initiate' qualifies 'any proceedings for contempt'. It is not the initiation of just any proceedings the proceedings initiated have to be proceedings for contempt. 12. Several decisions of the High Courts dealing with the meaning of the above said word 'initiate' in various settings of facts were also brought to our notice. However, we would like to mention only three Division Bench decisions, namely, the Advocate General v. A. V. Koteswara Rao [1984] Cr1. L.J. 1171 and Kishan Singh v. T. Anjaiah [1985] Cr!. L. J. 1428 by the Andhra Pradesh High Court and Dineshbhai A. Parikh v. Kripalu Co-operative Housing Society , AIR 1980 Guj 194 by the Gujarat High Court. 13. Following this court's decision in Baradakanta Mishra , AIR 1974 SC 2255; [1975] Cr1. L. J. 1 in the two decisions above said the Division Benches of the Andhra Pradesh High Court speaking through Jagannadha Rao J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite of having applied its mind to the allegations and the material placed before it the court was not satisfied of the need for initiating proceedings for contempt; it was still desirous of ascertaining facts or collecting further material whereon to formulate such opinion. It is only when the court has formed an opinion that a prima facie case for initiating proceedings for contempt is made out and that the respondents or the alleged contemners should be called upon to show cause why they should not be punished then the court can be said to have initiated proceedings for contempt. It is the result of a conscious application of the mind of the court to the facts and the material before it. Such initiation of proceedings for contempt based on application of mind by the court to the facts of the case and the material before it must take place within a period of one year from the date on which the contempt is alleged to have been committed failing which the jurisdiction to initiate any proceedings for contempt is lost. The heading of section 20 is "limitation for actions for contempt". Strictly speaking, this section does not provide limitation in the sense in which the term is und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nister's speech before Parliament can be relied upon to throw light on the object and purpose of the particular provisions introduced by the Finance Bill." 30. Further, the relevant portion of the speech of the Finance Minister on the Finance Bill of 1995, which is referred to by the learned senior counsel for the appellant reads as under ([1995] 212 ITR (St.) 326, 349): "This new procedure for search cases is proposed to be made effective in respect of searches initiated on or after the 1st day of July, 1995. This means that the block assessment procedure will apply to cases where the initial search was conducted on or after 1st July, 1995. Where the initial search was conducted prior to this date and only the consequential searches continue beyond 30th June, 1995, such cases will be taken up according to the old procedure. (Clauses 24, 26, 32 and 45)." (emphasis supplied.) 31. Following the judgment of the hon'ble Supreme Court in Kerala State Industrial Development Corporation Ltd. v. CIT [2003] 259 ITR 51 referred to supra on which strong reliance is placed by the learned senior counsel for the appellant and on a careful reading of the above speech of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression "search initiated" we hold that in the case of the respective assesses herein search was initiated respectively on January 3, 1997 and January 8, 1997 (i.e., after June 30, 1995 and before January 1, 1997) but not either on December 30, 1996 on which date the authorisations were signed by the concerned authorities or on any date prior to January 3, 1997. Therefore, as provided under section 246A(1) (k) of the Act the assessees herein, aggrieved by the respective orders of block assessment, ought to have filed their appeals before the Commissioner of Income-tax (Appeals) and not before the Tribunal. This being so, we are of the considered view that the Tribunal had no jurisdiction to entertain both the appeals and therefore its finding in the impugned orders that it had jurisdiction to entertain the said appeals cannot be allowed to sustain in law. We further hold that since the search was initiated in both these cases after January 1, 1997, i.e., on January 3, 1997 and January 8, 1997, by virtue of the provisions of section 158BE(1)(b) of the Income-tax Act, limitation for completion of block assessment under section 158BC was two years from the 1st day of January, 1997 in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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