Delhi H.C : the Tribunal held the block assessment order to be barred by limitation and, therefore, quashed the same

High Court Of Delhi

CIT vs. D.D. Axles (P) Ltd.

Section 158BE

Block period 1st April, 1986 to 29th Aug., 1996

Badar Durrez Ahmed & Siddharth Mridul, JJ.

IT Appeal No. 1652 of 2006

9th April, 2010

Counsel Appeared :

Ms. Prem Lata Bansal, for the Appellant : Manu Monga, for the Respondent

JUDGMENT

SIDDHARTH MRIDUL, J. :

This appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as ‘the Act’) is directed against the order dt. 28th April, 2006, passed by the Tribunal in IT(SS)A No. 313/Del/1997 pertaining to the block period 1st April, 1986 to 29th Aug., 1996. The appellant/Revenue is aggrieved by the fact that the Tribunal held the block assessment order to be barred by limitation and, therefore, quashed the same. The facts of the case are that search under s. 132(1) of the Act was conducted on the 29th Aug., 1996 which concluded on 30th Aug., 1996. A Panchnama was drawn on the 29th Aug., 1996 when books of accounts and other documents were seized. On that date a restraint order was passed. By another order passed on 28th Oct., 1996 the restraint order was extended till 18th Nov., 1996. On the 18th Nov., 1996 a Panchnama was drawn and nothing further was seized from the premises of the assessee. By the order dt. 18th Nov., 1996 the restraint placed vide order under s. 132(3) of the Act dt. the 18th Oct., 1996 on a steel almirah was vacated. The case of the Revenue is that since the last Panchnama was drawn on the 18th Nov., 1996, the search was concluded on that date. The assessee had submitted that the search having been conducted on the 29th Aug., 1996/30th Aug., 1996, the assessment made on 28th Nov., 1997, was barred by limitation in view of the provisions contained in s. 158BE(1)(a) of the Act. In other words, the assessment order has been passed beyond the period of one year from the end of the month in which the last authorization for search under s. 132 of the Act had been executed and, therefore, the assessment made under s. 158BC, deserves to be vacated.

The Tribunal noticed that the search must be considered to have been completed on the date of the last Panchnama drawn when certain seizure was affected. The Tribunal further noted that the restraint order issued under s. 132(3) of the Act does not amount to seizure. In order to search the premises again, in accordance with the provisions of s. 132(1) of the Act, the authority to initiate the search must have firm belief that some income remained undisclosed, that was represented by books of accounts, money, bullion etc. and issue an authorization for search. This was not done. Further, the officials who visited the premises on various dates, after gaps and after repeated action of lifting and reimposing the restraint order, did not feel any necessity for seizing any files. The Tribunal observed that, therefore, the last authorization was executed on the date when the search party left the premises of the assessee, after seizing those items considered to be related to the undisclosed income of the assessee. The assessment was to be completed within one year from the end of the month of that date. The Tribunal found that in the instant case the search was completed on the 30th Aug., 1996 and the Panchnama was drawn on 29th Aug., 1996 when books of accounts were seized. The restraint order placed on an alimrah was passed on the 30th Aug., 1996 which was extended further till 18th Nov., 1996 by an order passed on 18th Oct., 1996. The Tribunal found that on the 18th Nov., 1996 another Panchnama was drawn when nothing was seized and the restraint order was vacated. The Tribunal held that in the circumstances, for all practical purposes, the search concluded on the 29th Aug., 1996/30th Aug., 1996 when the Panchnama was drawn in execution of the warrant to search under s. 132(1) of the Act and the necessary seizure was made. The Tribunal also held that after that the Revenue has not done anything tangible on the 18th Oct., 1996 and the 18th Nov., 1996 to demonstrate that the search was still in progress. Hence, the Tribunal came to the conclusion that the last authorization was executed on the 29th Aug., 1996 and the one year time-limit for framing the block assessment started from the end of the month i.e., 31st Aug., 1996 and ended on the 31st Aug., 1997. Accordingly, the Tribunal held that the block period assessment framed on the 28th Nov., 1997 was barred by limitation and was, therefore, bad in the eyes of law. The Tribunal accordingly quashed the same.

5. In CIT vs. S.K. Katyal (2009) 221 CTR (Del) 310 : (2008) 16 DTR (Del) 285 : (2009) 308 ITR 168 (Del), a Division Bench of this Court observed as under : “17. This discussion leads us to the question—Was the Panchnama of 3rd Jan., 2001, of the type mentioned in the said Expln. 2(a) ? From the facts narrated above, it is clear that the Panchnama of 3rd Jan., 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 17th Nov., 2000, itself. Nothing remained to be searched thereafter. And, in fact, no further search was conducted after 17th Nov., 2000. Obviously, nothing else could be found. All that was done on 3rd Jan., 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 dt. 3rd Jan., 2001, was merely a release order and could not extend the period of limitation.”

6. In the present case, it is obvious that the search started on the 29th Aug., 1996 and continued till 30th Aug.,

1996, during which period various articles and documents were seized. On the 30th Aug., 1996 a restraint order was passed with regard to an almirah that had been sealed. Nothing remained to be searched thereafter. The restraint order passed on 30th Aug., 1996 was extended on the 18th Oct., 1996 till the 18th Nov., 1996, when the last Panchnama was drawn up. On the 18th Nov., 1996 restraint order was vacated. Therefore, essentially from the 30th Aug., 1996 when the Panchnama was drawn and restraint order passed, till the 18th Nov., 1996 when the last Panchnama was drawn and the restraint order vacated, nothing else was found and in fact no further search was conducted. Therefore, the last Panchnama dated the 18th Nov., 1996 was merely a release order and could not extend the period of limitation, as found by the Tribunal.

7. In view of the foregoing discussion, we agree with the learned counsel for the respondent/assessee that the impugned order does not call for any interference on our part and that no substantial question of law arises for our consideration.

8. The appeal is dismissed.

[Citation : 323 ITR 558]

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