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2016 (10) TMI 937 - ITAT MUMBAI

2016 (10) TMI 937 - ITAT MUMBAI - TMI - Validity of block assessment - period of limitation - Held that:- the date of conclusion of search can not be taken as 14.02.2000 and has to be either 17.12.1999 or 23.12.1999 especially when nothing was found and seized on 14.2.2000. Moreover it is also clearly mentioned in the punchnama dated 17.12.1999 and dated 23.12.1999 that the search was finally concluded and not on 14.2.2000. - limitation shall not extend to the date of passing order u/s 132(3) of .....

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15-9-2016 - SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAJESH KUMAR, AM For The Assessee : Shri R C Jain For The Assessee : Shri Ashok Johri ORDER PER RAJESH KUMAR, A. M: This is an appeal filed by the assessee challenging the order of the ld.CIT(A) dated 28.10.2003 for the block assessment period 1.4.1989 to 17.12.2099. 2. Grounds of appeal taken by the assessee are as under : A. VALIDITY OF ASSESSMENT: 1. The Ld. CIT (Appeals) erred in holding that the assessment was not barred by limitation of .....

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essing Officer was on high side and that too without any material. 4. The Ld. CIT (Appeals) erred in confirming the addition in respect unaccounted jewellery as undisclosed income to the extent of ₹ 76,115/ - out of the addition of ₹ 1,58,598/ - made by the Assessing Officer. 4.1 In so doing the Ld. CIT (Appeals) did not appreciate the facts material on record. 5. The Ld. CIT (Appeals) erred in confirming the addition I of ₹ 22,50,000/- as undisclosed income in respect of 1,50, .....

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rming the addition u/s 68 of ₹ 74,200/ - out of ₹ 1,51,404/ - made by the Assessing Officer. 7. 1 In confirming the same the Ld. CIT (Appeals) did not appreciate the facts, material, evidence on record and provisions of law in this regard. 3. Brief facts of the case are that the assessee was a Director of M/s Macleods Pharmaceutical Ltd. A search action was conducted at the residence of assessee on 17.12.1999 and during the course of search action one key of locker No.554 of SBI Mala .....

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sessee by filing return of income in Form No.2B on 12.6.2000 declaring an income of ₹ 7 lakhs for the block period commencing from 1.4.1989 to 12.12.1999 along with the copy of self assessment tax chalan for ₹ 4,62,000/-. Finally, the AO completed the assessment u/s 143(3) read with section 158BC of the Act vide order dated 27.2.2002 at an amount of ₹ 1,39,96,439/- and tax thereon worked out to ₹ 92,37,650/-. 4. The assessee challenged the validity of reopening of the ass .....

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143(3) of the Act under appeal dated 27.02.2002 on the ground that the said order was passed beyond the period specified in section 158BE of the Act. It was submitted that in the instant case, the search initiated on 17.12.1999 was concluded on the same date. Thereafter, prohibitory order was only served on the appellant which was finally lifted on 14/02/2000 when a portion of the residence and the locker previously placed under the prohibitory order were searched. It was submitted that the proh .....

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o prolong the effective date for the completion of block assessment proceeding. Such action is not permissible as per law. 5. In this regard, the appellant s representative has relied upon the decision in the case of CIT V/s Mrs.Sandhya B. Nayak & Others 253 ITR 534 (Born); CIT Vs. Dr C Balakrishnan Nair and othes 237 ITR 70 (Ker.) and certain tribunal decisions. It was submitted that in view of the the judicial decisions, the search proceedings cannot be held to have continued beyond 17/12/ .....

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r XIV -B of the IT Act providing the procedure for Completion of an assessment in a case where search and seizure action taken place reveals that the assessment is to be completed within the time frame provided in section 158BE of the Act. The time limit for completion of the proceedings under section 158BC as applicable to the case of the appellant is provided in clause (b) of subsection (1) of section 158BE of the Act i.e. two years from the end of the month in which the last of the authorizat .....

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s such panchanama is validly drawn the time limit for the conclusion of block assessment proceedings is required to be taken and reckoned from the said date only. That date cannot be taken for considering the period of limitation only if the panchanama was not validly drawn. 7. If the case of Mrs. Sandhya B. Nayak is examined, the ratio-decendi of which has been relied upon by the appellant's representative, it is true that the Hon'ble IT AT had held that the block assessment order passe .....

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h on 17.12.1999 that was again started on 14.02.2000 and concluded on the same date. Moreover, the fact that the order under section 132(3) of the Act does not tantamount to seizure has been clarified in the Explanation below the said sub-section. 8. Further, in respect of the order of restraint under section 132(3) of the Act dated 17.12.1999 as well as the conclusion of the search proceedings vide the panchanama dated 14.2.2000 the appellant at no stage had challenged the proceedings of the De .....

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ch the decision has been rendered which has been sought to be relied upon by the appellant s representative to submit that the assessment order under appeal is barred by limitation. 9. In their decision in the case of CIT Vs. Sun Engineering Works (P) Ltd 197 ITR 297 (SC), the Hon'ble Apex court have held that it is neither desirable nor permissible to pick out a word or sentence form the judgment divorced from the context of the question under consideration. The judgement must be read on th .....

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ppellant where there is no infirmity in drawing of the last panchanama on the basis of which the AO has reckoned the limitation for the completion of the block assessment proceedings, The order passed by the Assessing Officer, having been passed within the time limit provided in section 158BE(1 )(b) of the Act is therefore, held as a legally valid order. The appeal in respect of ground No. 1 is. therefore. dismissed. 5. The ld.AR vehemently argued before us that the assessment as made by the AO .....

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warrant of authorizing in which the appellant was Director. The ld. Counsel submitted that nothing was seized in the search action at the residential premises of the assessee whereas the authorized officer Shri R.K. Vishwakarma inventorised jewellery found at the residence of assessee which value at ₹ 4,23,354/- by the department s valuer and was stored in the small cupboard in the residence of the assessee in the appellant s daughter and a prohibitory order u/s 132(3) of the Act the was .....

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operated on 14.02.2000 and the contents(jewellery) of the locker were got valued at ₹ 45,100/- from the departmental valuer in the presence of assessee s wife by the Shri M.V Patil. The prohibitary order u/s 132(3) dated 23.12.1999 was vacated on 14.02.2000. The jewellery found in the bank locker as well as kept at the residence aggregating to ₹ 4,68,954/- was handed over to the assessee s wife in terms of Panchnama dated 14.2.2002. The ld. Counsel submitted that panchanama dated 14. .....

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el argued that thereafter block assessment was initiated by the AO and framed assessment at an amount of ₹ 1,39,96,439/- against the returned income of ₹ 7 lakhs and a demand of ₹ 92,32,650/- was raised. The ld. Counsel vehemently submitted that the assessment order as framed by the AO and confirmed by the ld. CIT(A) was invalid , illegal and non-est as the same was not framed within a period of two years from the date of conclusion of search . The prohibitory order was vacated .....

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the same date the prohibitory order placed on the assessee on 17.12.1999 and the bank locker on 23.12.1999 were vacated. The ld submitted that the search was concluded on 17.12.1999 or latest on 23.12.1999 and therefore block assessment order passed on 27.2.2000 was barred by limitation for the reasons that as prohibitory orders was not seizer in terms of provision of section 132(3) of the Act which has been adequately explained in the case of Mrs.Sandhya B. Nayak & Others (supra). The ld. .....

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the Act. The said order should have been passed with reference to first panchnama dated 17.12.1999 or at the most 2nd panchanama dated 23.12.1999.Lastly the ld AR prayed that the assessment order passed by the AO be quashed on the ground of barred by limitation. 6. The ld. DR reiterated the facts as mentioned in the appellate order and heavily relied on the orders of authorities below. The ld Dr ,while vehemently opposing the arguments of the ld AR, submitted that the assessment was made well wi .....

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17.02.2000 was concluded on 14.02.2000 and the assessment was framed on 27.02.2000 which was well within limitation in terms of section 158BE(1)(b) of the Act. In defence of his arguments the ld DR relied on a number of decisions namely (i) VLS Finance Ltd Vs Commissioner of Income Tax (2016) 68 Taxman.com 368(SC) (ii) Navin Kumar Aggarwal Vs CIT ITA No 11 of 2005 dated 12.05.2015 and (iii)CIT Vs Mukund ray Shah. Finally the ld Dr prayed that the order of CITA) be upheld. 7. We have heard the ri .....

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rty but the authorised officers Shri K.J. Singh and Shri R.K. Vishwakarma inventorised the jewellery found at the residence of the assessee which was valued by the Deptt valuer at ₹ 4,23,354/- and was put in the cupboard at the residence of the assessee which was sealed by a prohibitory order u/s 132(3) of the Act. Similarly the key of Bank locker of the assessee with State Bank of India found during the search was sealed on 23.12.1999 in terms of warrant of authorisation dated 21.12.1999 .....

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assessee in term of punchnama dated 14.02.2000. Thus it is apparent from the above that nothing was found and seized on 14.02.2000 in terms of punchnama dated 14.02.2000. Now the legal issue qua the search is whether the block assessment as made by the AO was barred by limitation u/s 158BE(1)(b) of the Act. According to the provisions of section 158BE (1)(b) of the Act order in the block assessment has to be passed by the AO within two years from the end of the month in which the search was con .....

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.12.1999 especially when nothing was found and seized on 14.2.2000. Moreover it is also clearly mentioned in the punchnama dated 17.12.1999 and dated 23.12.1999 that the search was finally concluded and not on 14.2.2000. The case of the assessee also find support from the decision in the case of Sandhya P. Naik (supra) that limitation shall not extend to the date of passing order u/s 132(3) of the Act. The time limit for making assessment can not extended to the date of passing a restraint order .....

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