TMI Blog2010 (9) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... vocates. A.K. SIKRI, J. 1. In all these appeals, an interesting question of law arises relating to the interpretation that needs to be given to the provisions of Section 132(1) of the Income Tax Act (hereinafter referred to as 'the Act') touching upon the limitation aspect contained therein. Following common question of law, in this behalf, is raised by the Revenue in all these appeals:- "Whether the learned Income Tax Appellate Tribunal erred in holding that the assessment framed by the Assessing Officer is barred by limitation? 2. The Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') has held that the assessment orders passed in the case of all these assessees were time barred, as the assessments were not completed within two years from the end of month in which the last authorization for search under Section 132 of the Act was issued. To appreciate this controversy, we have taken note of the dates as they appear in ITA No.582 of 2009. The assessee is the son of J.P. Minda, who is in the Minda Group of business, engaged in manufacturing of various automobiles components. The two warrants of authorization under Section 132(1) of the Act for carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 authorisations 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 authorisations 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 on or after the 1st day of January, 1997. (2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be - (a) One year from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets requisitioned after the 30th day of June, 1995 but before the 1st day of January, 1997; and (b) Two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation of litigants for an indefinite period on future unforeseen events. Proceedings which had attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings which had already concluded and attained finality.¡¬ 7. He has also referred to another judgment of the Supreme Court in the case of Nasiruddin and Ors. Vs. Sita Ram Agarwal [AIR 2003 SC 1543]. It was also submitted that when the period of limitation is statutorily prescribed, it has to be strictly adhered to and cannot be relaxed or departed from for equitable considerations. In support of this submission, the learned counsel relied upon the cases of Apex Court in India House vs. Kishan N. Lalwani [AIR 2003 SC 2084] and Municipal Board vs. State Transport Authority, Rajasthan [AIR 1965 SC 458]. In the latter case, the following passage was specifically read out: "In interpreting the provisions of limitation equitable considerations are out of place and the strict grammatical meaning o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the Amendment in 231 ITR 202 (St.) which reads as under:- "Clause-48 seeks to amend Section 158BE of the Income Tax Act relating to limit for completion of Block Assessment. The proposed amendment seeks to renumber the existing Explanation of sub-Section (2) of Section 158BE and to insert a new Explanation¡ª2 thereafter to provide that the execution of an authorization for search under Section 132 or for requisition under Section 132A will mean the date of conclusion of the search in respect of the authorization as recorded in the last Panchnama in the case of a person in whose case the warrant has been issued. In the case of requisition under Section 132A, the execution of an authorization will mean the date when the authorized officer receives books, document or assets. The amendment proposed is of a clarificatory in nature. The proposed amendment will take effect form 1st July, 1995. 11. According to Mr. Sabharwal, if the contention of the assessee is accepted, the very purpose of introducing the Explanation would become redundant. His argument was that the linkage of time/limitation of the completion of search in the context of Block Assessment is logical and rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation clarifies the position contained in clause (b) of sub Section (1) of Section 158 B? 14. By means of this Explanation-2, a deeming provision is added. Therefore, it creates a fiction in so far as the authorization referred to in sub section (1) is to be treated as executed. 15. The Supreme Court in the case of G. Viswanathan Vs. The Hon'ble Speaker, Tamil Nadu Legislative Assembly, Madras and another, AIR 1996 SC 1060 held as under:- "The scope of the legal fiction enacted in the explanation (a) to paragraph 2(1) of the Tenth Schedule assumes importance in this context. By the decision of this Court it is fairly well settled that a deeming provision is an admission of the non-existence of the fact deemed. The Legislature is competent to enact a deeming provision for the purpose of assuming the existence of a fact which does not even exist. It means that the Courts must assume that such a state of affairs exists as real, and should imagine as real the consequences and incidents which inevitably flow there from, and give effect to the same. The deeming provision may be intended to enlarge the meaning of a particular word or to include matters which otherwise may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction enacted by the legislature must be restricted by the plain terms of the statute. 17. Thus, when we look into the matter in that context and find that there was a definite purpose of inserting the said Explanation-2, we have to give an interpretation which sub-serves the purpose and shall not defeat the same. No doubt, in taxing statutes, literal interpretation is to be preferred more particularly when the language is clear and capable of one meaning and while giving effect to literal interpretation, one has not to see the consequences it would lead to. However, in the present case, application of this very rule is conditioned by the explanation contained in the same provision, and, therefore, sub Section (1) is to be read in accordance with the intention expressed in Explanation-2. Moreover, the Explanation-2 categorically states that authorization referred to in sub Section (1) shall be deemed to have been executed, in the case of search, on the conclusion such as recorded in the last panchnama drawn in relation to any person in whose case, warrants of authorization was issued. By this deeming provision, authorization referred to in sub Section (1) would be that authoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause at that point of time the search party has in its custody the complete material and is in a position to evaluate disclosed and undisclosed material/income and not before and only then issue notice for Block Assessment under Section 158 BD (C) and/or carry forward Block Assessment is to be issued. The courts, have construed 'conclusion of the search' to mean when there is scrutiny of all the material collected which may be searched or otherwise and when has resulted in drawing of last panchnama as the conclusion of the search. (See 319 (AT) 197 (SB), 238 ITR 501 at 504 (Kerala) and 279 ITR 298 (Del). 22. The primary function of the Court is to find out the intention of the legislature. According to us, the legislature has manifested its intention eloquently, in the manner stated by us above, by inserting Explanation-2. 23. In State of Tamil Nadu Vs. Kodaikanl Motor Union (P) Ltd. 2 SCR 927, the Supreme Court referring to K.P. Varghese Vs. I.T.O. 131 ITR 597 (SC) and Luke Vs. Inland Revenue Commissioners (1964) 54 ITR 692 observed:- "The courts must always seek to find out the intention of the legislature. Though the courts must find out the intention of the statute from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chanical task. It is more than a ??? ???carding of mathematical formulae because few words possess the precision of mathematical symbols. We must not adopt a strictly literal interpretation of Section 52(2) but construe its language having regard to the object and the purpose which the legislature had in view in enacting the provision and in the context of the setting in which it occurs. The literal construction would lead to manifestly unreasonable and absurd consequences. It is well recognised rule of construction that a statutory provision must be so construed if possible that absurdity and mischief may be avoided. It was held that construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the legislature. It was said that the literalness in the interpretation of Section 52(2) must be eschewed and the court should try to arrive at an interpretation which avoids the absurdity and the mischief and makes the provision rational, sensible, unless of course, the hands of the court are tied and it cannot find any escape from the tyranny of literal interpretation. It is said that it is now well-settled rule of const ..... X X X X Extracts X X X X X X X X Extracts X X X X
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