TMI Blog2008 (11) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.11.2000. The appellant/revenue is aggrieved by the fact that the Tribunal held the block assessment order to be beyond the time specified under section 158BE(1)(b) of the said Act. 2. On the basis of a warrant of authorization dated 16.11.2000, a search, under the provisions of section 132 of the said Act, was conducted on 17.11.2000 in the residential premises of the assessee at E-147 Kalkajee, New Delhi. As per the panchnama drawn up on 17.11.2000, in the course of the search certain documents, cash and key no.765 of locker No. 725-B with Bank Of India, Nehru Place, New Delhi belonging to the assessee were purportedly seized. In the course of the said search conducted on 17.11.2000, amongst other things, jewellery was also found. The jewellery was inventorised and valued as per Annexure-5 to the panchnama. Paragraphs 8 and 9 of the panchnama are relevant and they are as follows:- '8. The search commenced on 17.11.2000 at 8 a.m./p.m. The proceedings were closed on 17.11.2000 at 7 a.m./p.m. as finally concluded/ as temporarily concluded for the day to be commenced subsequently for which purpose seals were placed on the entire place/ on Cash Box of the right hand side Almira ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11.2000 and had even been valued as per Annexure-5 to the panchnama of 17.11.2000. Paragraphs 8 and 9 of the panchnama of 03.01.2001 read as under:- '8. The search commenced on 3/1/2001 at 5:05 a.m./p.m. The proceedings were closed on 3/1/2001 at 5:45 a.m./p.m. as finally concluded/ as temporarily concluded for the day to be commenced subsequently for which purpose seals were placed on the entire place/ on in our presence. 9. An order under section 132(3) of the I.T. Act, 1961 in respect of the sealed premises/ lockers/ bank A/c any other (specify) was served on Shri/Smt by the said authorized officer.' 7. The notice under section 158BC was issued on 12.04.2002 and served upon the assessee on 22.04.2002. The block assessment order was passed on 30.01.2003. Before the Commissioner of Income Tax (Appeals) [hereinafter referred to as 'the CIT(A)'], the assessee, inter alia, contended that the search had, in fact, concluded on 17.11.2000 as there was no search at all on 03.01.2001. The consequence of this would be that the period of limitation for passing the assessment order would end on 30.11.2002, being two years from the end of the month in which the search was concluded. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BE stipulates the time limit for completion of block assessment. For the present appeal, we need notice only section 158BE(1)(b) and Explanation 2(a) which are as under:- '158BE. Time limit for completion of block assessment.-- (1) The order under section 158BC shall be passed,-- (a) xxxx xxxx xxxx xxxx (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. xxxx xxxx xxxx xxxx Explanation 2.-- For the removal of doubts, it is hereby declared that the authorisation referred to in sub-section (1) shall be deemed to have been executed,-- (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued ; (b) xxxx xxxx xxxx xxxx' 11. The time limit for making a block assessment order has reference to the date of execution of the last of the authorizations for search under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; xxxx xxxx xxxx xxxx (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search; xxxx xxxx xxxx xxxx (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing: xxxx xxxx xxxx xxxx Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii). xxxx xxxx xxxx xxxx (3) The authorised officer may, where it is not practicable to seize any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easons other than those mentioned above, the order, as clarified by the Explanation to section 132(3), would not operate as a seizure. In the present case, the restraint order with regard to the the cash box in the Alimirah where the jewellery was placed was one which was passed under section 132(3). It follows that the restraint order did not amount to a seizure of the jewellery or the cash box or the Almirah. It is also pertinent to mention that by virtue of sub-section (8A), the restraint order under section 132(3) can operate for only a period of 60 days, in the first instance. We also note that by virtue of sub-section (13), the provisions of the Code of Criminal Procedure, 1973, relating to searches and seizure have been made applicable, so far as may be, to searches and seizure under 132(1) of the said Act. 13. This takes us to the consideration of section 100 of the Code of Criminal Procedure. The relevant provisions are as under:- '100. Persons in charge of closed place to allow search.' xxxx xxxx xxxx xxxx xxxx (4) Before making a search under this Chapter, the officer or other person about to make it shall call upon two or more independent and respectable inhab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... craft is to be searched, call upon any two or more respectable persons to attend and witness the search and may issue an order in writing to them or any of them so to do. (7) The search shall be made in the presence of the witnesses aforesaid and a list of all things seized in the course of such search and of the places in which they were respectively found shall be prepared by the authorised officer and signed by such witnesses; but no person witnessing a search shall be required to attend as a witness of the search in any proceedings under the Indian Income-tax Act, 1922 (11 of 1922), or the Act unless specially summoned. (8) The occupant of the building, place, vessel, vehicle or aircraft searched, including the person in charge of such vessel, vehicle or aircraft, or some person on his behalf, shall be permitted to attend during the search and a copy of the list prepared under sub-rule (7) shall be delivered to such occupant or person. A copy thereof shall be forwarded to the Chief Commissioner or Commissioner and, where the authorisation has been issued by any officer other than the Chief Commissioner or Commissioner, also to that officer. xxxx xxxx xxxx xxxx' (emphasis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation 2(a)' From the facts narrated above, it is clear that the panchnama of 03.01.2001 itself reveals that nothing was seized on that date. Nor was anything 'found' on that date. In fact, no search was conducted. The jewellery that was put in the cash box of the almirah had already been searched, found, inventorised and valued by the DVO on 17.11.2000 itself. Nothing remained to be searched thereafter. And, in fact, no further search was conducted after 17.11.2000. Obviously, nothing else could be found. All that was done on 03.01.2001, in the presence of the witnesses (panchas), was that the seals were removed from the cash box and the almirah and the keys were handed back to the assessee. Essentially, the revocation of the restraint order was given effect to. This is exactly what the Tribunal found as a fact and meant when it concluded that the panchnama dated 03.01.2001 was merely a release order and could not extend the period of limitation. 18. In G.M. Agadi v. The Commercial Tax Officer, Belgaum: [1973] 32 STC 243 (Kar), the meaning of the word 'search' in contrast to a mere inspection was considered. The Karnataka High court noted that the Corpus Juris Secundum ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the fact of the matter is that no further search was conducted after 17.11.2000. It follows that it is the panchnama of 17.11.2000 which is relateable to the conclusion of the search and not the panchnama of 03.01.2001. Consequently, the authorization for search was executed on 17.11.2000 and not on 03.01.2001. 20. It is now time to consider the decisions cited at the bar. We begin with those referred to by the learned counsel for the respondent/assessee. In Dr C. Balakrishnan Nair (supra) an unexplained hiatus of 14 days between two searches was held to be unreasonable by the Kerala High court and, consequently, the second search was considered to be illegal. The relevant portion of the said decision is extracted below:- 'The second undisputed fact is that the search was discontinued on October 27, 1995, and resumed only on November 10, 1995. The reasons stated for the gap of 14 days is hardly convincing. There is no provision in the Criminal Procedure Code or in the Income-tax Act or the rules for postponing the search for such a long period. N. Subramanian in his book Search and Seizure stated at page 108 that when once the search starts it can go on continuously day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132 of the Act should be continuous and if it is discontinued and thereafter resumed, then there must be a valid explanation for the gap. In so far as the present case is concerned, the facts on record show that prima facie there was absolutely no justification for keeping the search pending for more than one year and ten months without any semblance of any activity by the Revenue.' 24. The facts in Sarb Consulate (supra) were that a search under section 132 was conducted on 06.11.1996 and some documents were seized and a restraint order under section 132(3) was passed in respect of some fishing vessels/trawlers belonging to the assessee. The restraint order was extended upto 30.09.1997. No further orders were passed in respect of the restraint order. A further 'search' was conducted on the fishing vessels/trawlers on 14.09.1998, though no seizure was made. However, a panchnama was drawn up. The block assessment order was passed on 30.09.1998. The question for consideration was whether the panchnama of 06.11.1996 or the panchnama of 14.09.1998 was the 'last' panchnama for the purposes of Explanation 2(a) to section 158BE' The Court came to the conclusion that the search and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have to be seen as a fact as to whether the search continued or had concluded; (vi) merely because a panchnama is drawn up on a particular date, it does not mean that a search was conducted and/or concluded on that date; (vii) the panchnama must be a record of a search or seizure for it to qualify as the panchnama mentioned in Explanation 2(a) to section 158BE of the said Act. 27. Do the decisions in M.B. Lal (supra) and VLS Finance (supra), on which heavy reliance has been placed by the learned counsel for the revenue/appellant, alter the position indicated above ' In M.B. Lal (supra), a Division Bench of this court observed:- 'From a plain reading of Explanation 2(a), it is evident that an authorisation referred to in sub-section (1) is deemed to have been executed on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued. What is noteworthy is that the time-limit for the making of an order under section 158BC read with section 158BE(1) will start from the last of the panchnamas.' On the strength of this, it was argued on behalf of the revenue that the panchnama of 03.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years prescribed by law. The Tribunal was, in that view, justified in repelling the contention of the assessee that the order of assessment was beyond the period of limitation prescribed for the same.' (emphasis supplied) 29. It is obvious that the search started on 02.02.2000 and continued till 29.06.2000, during which period various articles and documents were seized. So, there was no unexplained break in the search. A finding was also recorded to the effect that there was no delay in executing the search. And that, there was no artificial extension of the search proceedings. It is in these circumstances that the court observed ' 'If that be so, the search would end only upon revocation of the order passed under section 132(3) which, in the instant case, was revoked only on June 29, 2000'. The facts in the present appeal are entirely different and would not warrant such a deduction. In any event, there is nothing in M.B. Lal (supra) which takes away anything from what has been said in the decisions cited on behalf of the respondent. 30. The decision in VLS Finance (supra) also rests on a factual basis which is different from that of the present appeal. First of all, VLS F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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