TMI Blog2011 (7) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... 99. The cross objection filed by the assessee on the technical grounds stands allowed insofar as (i) what has been found in the course of survey cannot be included in the block assessment and (ii) the assessment order dated 28-03-2002 is barred by limitation. As we have quashed the assessment order as barred by limitation, we are not going into the merits of each of the additions. - Decided in favor of assessee. - IT(SS) No.182/Mds/2004 - - - Dated:- 8-7-2011 - Shri Abraham P George, and Shri George Mathan, JJ. Represented By: Shri Shaji P Jacob for Appellants Dr Debi Prasad Pal, Shri R Janakiraman Shri T Vasudevan for Respondent ORDER Per: George Mathan: IT(SS) A. No. 182/Mds/2004 is an appeal filed by the Revenue against the order of the learned CIT(Appeals)-XXXIII, Mumbai in appeal No. CIT(A)XXXIII/Rg-2(3)/IT/13-S/02-03 dated 15-04-2004 for the block assessment years 1990-91 to 1999-2000 and a part of assessment year 2000-01 (upto 08- 12-1999). C.O. No. 336/Mds/2005 is a cross objection filed by the assessee against the above Revenue s appeal. 2. Shri Shaji P. Jacob, Sr. DR represented on behalf of the Revenue and Shri Devi Pal, Sr. Advocate alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l plant at Sanaswadi on account of bogus pucchases of steel made from M/s. Gopal Rai and Sons and M/s. G.R. Enterprises. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition of Rs. 3,70,27,309/- made by the Assessing Officer being the depreciation related to the capitalized component of foreign exchange fluctuation and attributable to plant and machinery procured indigenously by use of loans taken in foreign exchange, on the ground that the increase in liability in respect of the loans in foreign currency is a question which should be considered in the normal assessment and the disallowance cannot be a part of the Block assessment. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition of Rs. 5.60 lacs made by the Assessing Officer on account of cash salary to Mr.B.K. Pansari. 5. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition of Rs. 5,91,36,878/- made by the Assessing Officer on account of expenditure incurred in relation to the attempt by the assessee to acquire the shares of IND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 28th Mach 2002 under Section 143(3) r.w.s. 158BC of the Act be cancelled as being barred by limitation. III 1. On the facts and circumstances of the case, the learned CIT(A) legally erred in holding that undisclosed income of the block assessment computed without reference to the previous year to which it pertained to was not in violation of Section158BB(1) of the Act. 2. It is prayed that it be held that the block assessment order made without determining the undisclosed income for each previous year was void and illegal. IV 1. On the facts and circumstances of the case, the learned CIT(A) legally erred in holding that the block assessment made without issuing a show cause notice had not violated the principles of natural justice and was valid. 2. It is prayed that it be held that the block assessment order made in violation of the principles of natural justice be treated as invalid. V 1. On the facts and circumstances of the case, the learned CIT(A) legally erred in holding that disallowance of depreciation could be a subject of block assessment. 2. It is prayed that it be held that disallowance of depreciation could not be the subject of block assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the learned CIT(A) erred in upholding the addition made on alleged credit of Rs. 14 lakhs in favour of Ms. Vedavati Agarwal. 2. It is prayed that the Assessing Officer be directed to delete the addition of Rs. 14 lakhs. XIV 1. On the facts and circumstances of the case the learned CIT(A) erred in upholding the addition made on account of page 15 of Annexure A/6 of Panchnama dated 8th December, 1999 alleged to represent undisclosed expenditure of the Respondent under Section 69C of the Act being cash payment of salary of Rs. 1.6 lakhs to Mr. A.T. Panjwari. 2. It is prayed that the Assessing Officer be directed to delete the addition of Rs. 1.6 lakhs. XV 1. On the facts and circumstances of the case the learned CIT(A) erred in upholding the addition of Rs. 6.90 lakhs on account of alleged cash payment for land at Piparia adjusted against bogus steel bills. 2. It is prayed that the Assessing Officer be directed to delete the addition of Rs. 6.90 lakhs. XVI 1. On the facts and circumstances of the case the learned CIT(A) erred in upholding the addition made on account of loose sheet at page 42 of A/2 of Panchnama dated 8th December, 1999 alleged to represent unaccounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1988, 1989, 1991 and 1993. Thus the company was having its manufacturing facilities at Aurangabad, Silvass, Sanaswadi (Pune), Lonavala, Karanjwana (Pune) and Tuticorin. 8. It was the submission that the search had been conducted on the assessee s premises on 08-12-1999. Consequent to the search on 08-12-1999 a Panchnama was drawn up and about 108 files seized. Prohibitory Orders had also been passed u/s 132(3) of the Income Tax Act, 1961 on the documents in the record room and almirah in the room of the General Manager (F A) and seals had been placed in the record room door at M/. Sterlite Industries (India) Ltd., Tuticorin. The learned authorised representative drew our attention at pages 1 2 of the departmental paper book I which is the copy of the Panchnama dated 8-12-1999 and at page 16 of the departmental paper book I which showed the copy of the Prohibitory Order passed under section 132(3) on 8.12.1999. It was the further submission that the search commenced at 8.30 a.m. and was temporarily concluded at 11.30 p.m. It was the further submission that statements had been recorded from various persons in the course of search on 8.12.1999, such as Shri V. Ramanathan, Gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was the submission that this clearly showed that whatever was required to be found and what was looked for and for the purpose of which the search had been conducted, had already been found on 8.12.1999 and after seizing substantial portion of the same, a few balance papers were left in the almirah of the General Manager (F A) and Prohibitory Order imposed on the said almirah as also the record room just for the purpose of extending the limitation in regard to the execution of the warrant of authorization. It was the submission that in these circumstances the Prohibitory Order imposed on 8.12.1999 and 21.1.000 should be looked upon as a garb for extending the date of conclusion of the search by drawing up of the last Panchnama and the Panchnama and the Panchnama as drawn on 8.12.1999 should be treated as the last Panchnama drawn in relation to the assessee in whose case the warrant of authorization had been issued. The learned senior counsel placed reliance on the decision of the Hon'ble Delhi High Court in the case of B.K. Nowlakha And Others v. Union of India and Others reported in 192 ITR 436 wherein the Hon'ble Delhi High Court had held that when an order u/s 132(3) is issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.3.2000 were invalid insofar as the documents were available for the Revenue to verify and there was no necessity for the Prohibitory Order or the Panchnamas. The Panchnamas consequently were only for the purpose of extending the period of limitation. It was the submission that as per the provisions of section 158BE the limitation for passing the assessment order expired on the expiry of 2 years from the end of the month in which the last of authorisation for search under section 132 was executed. It was thus the submission that the Panchnama dated 8.12.1999 would be the last of the Panchnama drawn in relation to the assessee in whose case the warrant of authorization had been issued and consequently the assessment was liable to be completed by 31.12.2001 and as the assessment had been completed on 28.03.2002 the same was liable to be treated as barred by limitation and annulled. 9. It was the further submission that the Prohibitory Order having been placed on the items in the almirah of the General Manager (F A) as also the record room of the assessee on 8.12.1999 and the Prohibitory Order having been lifted on 21.1.2000 and another Prohibitory Order on the same items could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax reported in 75 ITD 183 (All.) wherein vide para 52 the Tribunal has categorically given a finding that as per the provisions of section 158BB while computing the undisclosed income of the block year, the Assessing Officer shall work out the aggregate of the total income of the previous years and this has to be done year-wise only. He also placed reliance on the circular of the CBDT reported in 254 ITR (St.) 162 to support his submission that the undisclosed income in the block period is to be computed year-wise and then aggregation of the same was to be done. 12. Shri T. Vasudevan, Advocate on behalf of the assessee relied upon the decision of the Hon'ble jurisdictional High Court in the case of Rakesh Sarin v. Deputy Commissioner of Income-tax reported in 333 ITR 451 (Mad) to support his contention that a search u/s 132 should be continuous and if there was a gap, there must be a valid explanation for the gap. In the absence of a valid and acceptable explanation, the search held on the three occasions could not be treated as a continuation of the search. It was the submission that in the said decision the Hon'ble jurisdictional High Court had categorically given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee to reagitate the question of validity of the authorization and the legality of the search proceedings either before the Commissioner or before the Tribunal for that matter. The question of validity or otherwise of the search proceedings stood concluded by the judgment of the High Court in the writ proceedings. He further relied upon the decision of the Hon'ble Chatisgarh High Court in the case of Trilok Singh Dhillon v. CIT reported in 332 ITR 185, wherein the Hon'ble High Court had categorically held that it is not open to the assessee to question the legality and validity of search and seizure proceedings during the assessment proceedings before the Assessing Officer or in appeal before the Commissioner or the Tribunal. He further relied upon the decision of the Hon'ble Punjab Haryana High Court in the case of CIT v. Paras Rice Mills reported in 313 ITR 182, wherein the Hon'ble High Court had categorically given a finding that the Tribunal cannot go into the question of validity or otherwise of any administrative decision for conducting search and seizure. He also relied upon the decision of the Kerala High Court in the case of CIT v. Dr. C. Balakrishnan Nair And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the fact, that I was one of the Authorised Officers only. The initiation of the search and the conclusion of the search was not my responsibility. The search on Mis. Sterlite Industries was organized by Shri Rajiv Agarwal, DDIT (Inv.,), VIII(4) of Mumbai. It was under the Bombay Unit's guidance everything was organized. Shri Rajiv Agarwal had contacted me over phone in early December and had requested me to organize a team consisting of 4 Authorised Officers and about 30 personnel, in order to cover large premises. He had not even mentioned the location. Accordingly, the then Addl. Director (Inv.,) Madurai, Shri A. Suryanaryanan directed Shri Arun C. Bharath, DDIT, Trichy to join me at Tirunelveli along with his staff. Two ITO's namely Shri Krishnakumar and Seshan from Tirunelveli and Madurai respectively were also deputed as part of the team of Authorised Officers. Early morning of 8th December, 1999, a fax was received from Mumbai. As per the directions therein, the team proceeded to Tuticorin for Action u/s 133A. The faxed brief contained clear lines of enquiry. The allegation was that capital expenses in the construction of the factory/project had been greatly inflated. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a search. Accordingly, warrant of authorization was obtained from Jt. CIT, Tirunelveli, Shri E. Manikandan Nair and the search was conducted. The search proceedings continued unbroken for nearly 48 hours and were temporarily concluded in the late hours of 09-12-1999. The search had to be temporarily concluded because the factory was several acres large (more than 100 acres). Their main record room had to be searched completely for bringing out all the gate pass registers for the relevant period and the bogus vouchers. The size of the record room itself was about 30,000 Sq.ft. Additional documents were stored in containers out side the record room. List of tentative bogus vouchers had been identified by generating a list of vouchers without gate pass numbers (material inwards receipt numbers) from the company's computer system. This tentative list contained several 100s of vouchers. Each of the vouchers was kept in bound volume, which was first to be located in the record room and wherever possible individual vouchers were seized, after separation from the fold. In several cases, the entire bound volumes had to be seized, as the vouchers could not be extracted individually. The ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 searches in Surandai Village on 18-02-2000 and 2 searches in Ambasamudaram during the same period. As a matter of fact, my presence in headquarters at Tirunelveli was minimal with additional work load regarding enquiries and reports to be sent. My searches at Ambasamudaram and Surandai village was time bound. Any delay in mounting these searches would also have occasioned in loss of incriminating materials. Hence, it was imperative that the searches were conducted and could not be postponed. Finally, it must be stated that the DDIT concerned had promised to come and conclude the search himself. However, because of his tight schedule and enquiry wok at Mumbai, he probably could not find time and he deputed one ITO and ITI from Mumbai who arrived on 01-03-2000. On their arrival our team had gone to the premises of the Sterlite factory and concluded the search on 02-03- 2000. In between this time also, we examined the record room, where fresh seals were placed in GM (F A) room, where certain material and loose sheets were kept and on the arrival of team from Mumbai the search was finally concluded. The materials kept in nearly 12 iron boxes were handed over to them on 03-03-2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer to re-compute the undisclosed income year-wise and to aggregate the same in line with the provisions of section 158BB(1) of the Act. For this proposition the learned DR relied upon the decision of the Hon'ble Supreme Court in the case of Deepak Agro Foods v. State of Rajasthan Ors reported in. He vehemently supported the orders of the Assessing Officer and the learned CIT(A) on the issue of jurisdiction. 15. In reply, the learned senior counsel vehemently objected to the letter filed by the learned DR being the letter of the Officer who had conducted the search on 8-12-1999 explaining his reasons for the imposition of the Prohibitory Order. It was thus the submission that no decision contrary to the decision of the Hon'ble Delhi High Court in the case of B.K. Nowlakha And Others, referred to supra, was available and as the PO had been issued on the same subject matter it is only for the purpose of extending the limitation which should not be permitted. It was the submission that no practical difficulty in seizing the documents was shown and consequently the Prohibitory Order issued was invalid and the subsequent Panchanamas drawn on 21.1.2000 and 2.3.2000 were li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rai Sons 27-12-2001 Q.No. 14 3 to 5 of PB-II Himanshu Mehta, Bellary steels 15-03-2000 Q. No. 41 to 49 43 of PB-I Balbir Goyal, Geetanjali Roadways Q.No.3 Page 18 19 of asst. order Navin Agarwal 09-12-1999 Q.No. 16 to 20 22 of PB-I Anil Agarwal, Chairman M.D. 08-01-2000 Q. No. 18 29 to 31 of PB-I E) On the basis of the above findings and as admitted by senior functionaries of the assessee company, inflation was arrived at as under : Sl. No. Name of the supplier Amount 1 Bellary steel 11,53,03,548 2 Gopal Rai Sons 11,96,29,881 3 Quartz metal 1,44,54,880 4 Rakhi Enterprises 22,14,113 5 Reliable Agencies 15,20,78,546 6 Reliable Enterprises 12,64,77,193 7 Singhal Products (I) Ltd. 33,95,76,906 8 Singhal Trading 18,36,84,558 9 Udit Steels 28,36,571 TOTAL 115,32,56,196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also and bogus depreciation claim was disallowed as under: A.Y. 2000-01 : Rs. 6,97,70,947 [pages 36 of PB-II] A.Y. 2001-02: Rs. 19,30,39,595 [pages 62 to 65 of PB-II] A.Y. 2002-03: Rs. 6,40,08,209 [pages 77 to 78 of PB-II] A.Y. 2003-04: Rs. 4,77.81,157 [pages 98 of PB-II] These additions are not yet reversed. K) Considering the same, it is submitted that the addition made by the A.O. may be upheld. Gr. 3: Disallowance of depreciation related to the capitalized component of foreign exchange fluctuation - Rs. 3,70,27,309 A) During the course of search it was found that though assessee raised foreign currency loan (by issuing foreign currency convertible bonds) to part finance Copper Smelter project, a part of such funds were used for acquiring plant and machinery indigenously. Foreign exchange fluctuation on such loan was capitalized by the assesse u/s 43A and claimed depreciation on the same. B) A.O. held that sec. 43A is applicable only when assets are purchased from a country outside India and accordingly worked out forex fluctuation related to indigenous component at Rs. 9,77,13,279 ( page 37 of assessment order). Depreciation on the said sum was disallowed si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5 : Capital expenditure relating to takeover of INDAL - Rs. 5,91,36,878 A) Pages 130 to 142 of Ann. A/2 to Panchanama dated 23-12-1999 drawn at Dhanraj Mahal office [ pages 115 to 127 of PB-II] showed various expenditure incurred by assessee for the takeover of INDAL. In fact, the regular return of income filed by assessee as well as printed Balance sheet and profit loss a/c with annexures does not reveal such expenditure. Assessee treated it as revenue expenditure and debited to the respective revenue heads such as financial charges, professional charges, advertisement, postage, printing, travel expense etc. B) A.O. relied on decision in Assam Bengal Cement Co. Ltd. (27 ITR 34) wherein it was held that if the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business, the expenses would be capital expenditure. He also relied on Apex Court decisions in CIT Vs Coal shipment Pvt. Ltd. (82 ITR 902) and Empire Jute Company Ltd. Vs CIT (124 ITR 1). In the latter decision it was held that if the disbursement is made for acquisition of a source of profit or income it will ordinarily in the absence of any other counte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tailed inventory of furniture did not disclose such an item, A.O. estimated a sum of Rs. 5 lakhs as cost of such paintings and treated it as undisclosed income of the block period. B) CIT(A) deleted the addition [ para. 14.1 ] holding that it does not belong to the assessee company. Such a stand taken by the assessee and accepted by the CIT(A) is contradictory to the stand taken before the A.O. Gr. 7: Donation given to Adivasi vikas Sanghathan - Rs. 5 lakhs A) This disallowance was made in view of sec. 40A(9) as the conditions therein are not satisfied. Gr. 8: surcharge on block assessment Covered in favour of revenue by CIT Vs Suresh N. Gupta (SC) 297 ITR 322. CO. 336/05 Gr. I. XVII XVIII: General Gr. II: Whether block assessment order time barred ? A) On the strength of Warrant of Authorization dated 08-12-1999, search was initiated on 08-12-1999 at Tuticorin office of the assessee and other locations. The search was temporarily concluded on 09-12-1999 and prohibitory order u/s 132(3) was made on 09-12-1999 [page 16 of Paper Book-I]. Search proceedings were resumed on 21-01-2000 after lifting the prohibitory order u/s 132(3) dated 09-12-1999. As per the parcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss-verified and the relevant documents were seized on the day of conclusion of search. Decision of Delhi High Court in the case of Nowlakha is distinguishable since the said decision was in a writ proceeding and the powers of High Court in writ proceedings is much higher and wider than the powers of ITAT in an appeal proceeding. It is relevant to note that the present assessee did not approach the Hon'ble high court since it felt that none of the basic rights were curtailed in the search proceedings by the I.T. authorities. Gr. III : Whether block assessment order illegal since undisclosed income of each year was not computed separately ? A) There is no rule that undisclosed income of each year has to be computed separately in the block assessment. The only condition is that income assessed should be undisclosed income ie. which are not reflected in the return of income already filed by the assessee or reflected in the books of account maintained regularly by the assessee (for the period where due date of filing of return has not expired). B) Chapter XIV-B does not prescribe any such year-wise computation. Sec. 158BB only says that undisclosed income of the block period shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m in relation to the part which is found to be "excessive". B) The computation of "Undisclosed Income" as per sec. 158BB requires determination of the total income on the basis of evidence found as a result of search and other material or information available with the A.O. and relatable to the evidence found. Such computation would be made on the basis that o part of the depreciation computed with reference to the cost of assets as recorded in the books of accounts would be disallowable in computing the income of the assessee inasmuch as the cost of the assets as recorded in the books is excessive or bogus. From the total income so determined, the section requires the A.O. to reduce, in a case like that of assessee where the due date of filing the return of income has not expired or where the previous year has not ended on the date of the search, the income computed on the basis of entries relating to such income or transactions as recorded in the books of account and other documents maintained in the normal course on or before the date of search. Such computation would naturally be after allowing for depreciation on the cost as recorded in the books of account. It is not for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition is an inclusive one and not exhaustive. In this regard, I rely on Raghav Bahl Vs DCIT (ITAT, Del 111 ITD 174. F) Assessee's argument that the words used in sec. 158B(b) is "claimed under this Act" and since it has not filed regular return claiming such depreciation, it will not form part of undisclosed income, is misplaced. If such an interpretation is adopted, it will make sec. 158B(a) and sec. 158BB redundant as under :- Sec. 158B(a) defines block period which includes the period upto the date of search. If the interpretation of assessee is adopted, for the year of search and for the preceding year where the due date for filing return has not expired, no addition on account of inflation of expenses can be made even though search party obtained necessary evidence. Sec. 158BB prescribes the method of computation of undisclosed income for the Block period. If the interpretation of assessee is adopted, for the year of search and for the preceding year where the due date for filing return has not expired, no addition on account of inflation of expenses could be made and the computation provisions will be redundant. Any interpretation which defeats the very object of le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Agarwal or Smt. Vedavati Agarwal the same were held as incurred outside the books of account of the assessee and consequently undisclosed income of the assessee. Gr. XIV : Addition on account of unaccounted salary payment - Rs. 1.6 lakhs A) Page 15 of Ann. A/6 to Panchanama dated 08-12-1999 drawn at Dhanraj Mahal office [ page 114 of PB-II ] showed cash payment of Rs. 1.6 lakhs to Sri A.T. Panjwani, a senior executive of assessee company. When there are two columns mentioning accounted and unaccounted payments to the employees and the accounted portion are reflected in the regular accounts, it presupposes that the unaccounted portion have been paid outside the books. Presumption given in sec. 132(4A) makes the contents of such seized material as correct. This fact. was not successfully controverted by the assessee. Sec. 292C provides for use of such presumption in assessment proceedings also. Gr. XV : Addition on account of unaccounted payment for land at Piparia - Rs. 6.9 lakhs A) As per the letter of Shri S.B. Goswami [ pages 138 139 in PB-II ] addressed to Shri V. Ramanathan, AGM of the assessee company, the mode of payment is Rs. 3.10 lakhs by cheque and balance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s 132 of the Act by the Director of Income-tax (Investigation), Mumbai. b) The search was temporarily concluded at 11.30 p.m. on 8-12-1999 as per para 8 of the Panchnama dated 8-12-1999. c) As per the said para 8 seals were placed on the cabin of Shri Anil Shri Navin Agarwal, cabin of Shri Tarun Jain and the computer server room. d) It is noticed that this Panchnama is in relation to the office premises of the assessee at C.S.M. Road, Apollo, Bunder, Mumbai-39. The search is found to have been finally concluded on 22-02-2000 at 2 p.m. in Mumbai, i.e. the warrant dated 02-12-1999 is said to have been executed on 22- 02-2000 at 2 p.m. e) A search is noticed to have been conducted on the factory and office premises of the assessee at SIPCOT Industrial Complex, Madurai Bypass Road, Tuticorin on 08-12-1999 on the basis of a warrant of authorization issued by the Joint Commissioner of Income Tax, Tirunelveli. This search is said to have been temporarily concluded on 09-12-1999 at around 7 p.m. f) It is further noticed that a Prohibitory Order u/s 132(3) has been issued on 9-12-1999 at 7 p.m. by the Dy. Director of Income-tax (Inv.), Tirunelvali on the documents in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is noticed that the statement recorded from the three employees at Tuticorin is in the course of a survey u/s 133A and not as a consequence of the search u/s 132 as is evident from the statements recorded. As per the said letter dated 07-01-2011 when it was noticed that there was large scale tax evasion and the materials found were voluminous it was communicated to the organizing Dy. Director of Income-tax (Inv.) at Mumbai who then suggested that the same should be converted into a search and accordingly the warrant of authorization was obtained from the Joint Commissioner of Income Tax, Tirunelveli and the survey was converted into a search. Thus what becomes clear is that a search was conducted on 8.12.1999 in the offices of the assessee at Mumbai. A survey was conducted on the factory premises at Tuticorin on 8.12.1999 and after it was noticed that there was large scale tax evasion and voluminous materials were found the survey was converted into a search. In the passing we may mention here that if anything has been found in the course of survey, then such evidences and materials found in the course of survey, loses its character of undisclosed documents for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 07-01-2011 also clearly shows that by 8th evening out of the group of 4 authorised Officers and 30 personnel who had gone to the factory premises of the assessee on 8.12.1999 only 3 remained, being 2 clerical staff and the Officer who has written the letter. This also clearly shows that by 8th evening all that was required to be tracked down had been tracked down as no responsible Officer would leave or be permitted to leave the premises of search until and unless everything that was required to be searched and found had been searched and found. 21. We may also mention here that the statements under sections 131 and 133A have been recorded by one Shri Arun C. Bharath, the Dy. Director of Income-tax (Inv.), Unit-I, Trichy. As per the letter dated 07-01-2011 this Officer had also left the premises on 8th evening. The letter dated 07-01-2011 interestingly also does not talk of what had happened in the course of the continuation of the search on 21-01-2000. There is only a passing reference in regard to the action which was done on 21.1.2000. A further reading of the letter dated 07-01-2011, extracted above, clearly shows that an ITO and an ITI from Mumbai had arrived on 01-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have held before, the assessment order ought to have been passed by 31-12-2001 and the assessment order barred by limitation. If the assessment order is deemed to have been passed as a consequence of the warrant of authorization issued by the Dy. Director of Income-tax (Inv.), Mumbai on 02-12-1999, which resulted into a search at the Mumbai premises of the assessee on 08-12-1999, as it is noticed that the Prohibitory Orders have been placed on the cabin of Shri Anil Agarwal and Navin Agarwal and in the cabin of Shri Tarun Jain and the computer server room and as it is noticed that there is no impracticability in regard to the seizure which has resulted in the issuance of a Prohibitory Order u/s 132(3) of the Act, the search would have to be deemed to have been completed on 08-12-1999 in which case also the limitation for completing the assessment is on 31.12.2001 and consequently the assessment order passed on 28.03.2002 is barred by limitation. 23. The argument of the learned DR that the search conducted at Tuticorin is a consequential search does not change the fact that there are two searches. As per the provisions of section 132(1) of the Act, the search is targeted on a prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of limitation for the purpose of completing the assessment that has been decided in the present case. Further, our view in regard to the practicability of seizure when applying the provisions of section 132(3) is supported by the decision of the Hon'ble Delhi High Court in the case of B.K. Nowlakha And Others, referred to supra, as also the decision of the Hon'ble jurisdictional High Court in the case of Rakesh Sarin, referred to supra. The decision of the Hon'ble Kerala High Court in the case of Dr. C. Balakrishnan Nair And Another, referred to supra, is clearly distinguishable on the facts of the present case insofar as in the case of Dr. C. Balakrishnan Nair the Prohibitory Order was only for a period of about 13 days and the Hon'ble High Court had therein clearly given a finding that the delay of 14 days had been explained by the Revenue whereas in the present case the delay is from 09-12-1999 to 02-03- 2000 which is more than 80 days and whereas the Prohibitory Order itself has a life of 60 days which also clearly shows that the action conducted on 21-01-2000 was only to get over the expiry of the Prohibitory Order which had been issued on 09-12-1999 which itself we have h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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