D.b. Income Tax Appeal v. Shri Om Prakash Mandora

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR : J U D G M E N T : D.B. INCOME TAX APPEAL NO.17/2013Commissioner of Income Tax-I, JodhpurVs. Shri Om Prakash Mandora Date of Judgment :: PRESENT 23[rd] August, 2013 HON'BLE MR. JUSTICE NARENDRA KUMAR JAINHON'BLE MR. JUSTICE ARUN BHANSALI Mr. K.K. Bissa, for the appellant. ---- BY THE COURT: This appeal under Section 260A of the Income Tax Act,1961 ['the Act'] has been preferred by the Revenue aggrievedagainst order dated 12.09.2012 passed by the Income TaxAppellate Tribunal, Jodhpur Bench, Jodhpur ['the Tribunal'],whereby, the appeal preferred by the Department against orderdated 20.02.2008 passed by the Commissioner of Income Tax(Appeals), Jodhpur ['CIT (A)'] was dismissed. The facts in brief are that search operations were carriedout at the residential premises of the assessee-respondent on03.02.1999. The Assessing Officer ('AO') framed assessmentunder Section 158BC of the Act by assessment order dated27.04.2001. Aggrieved against the said assessment order, the assesseepreferred appeal before the CIT(A), which was allowed on the CIT(A) coming to the conclusion that the block assessment orderwas not passed within the time limit prescribed in the Act and,therefore, the same was treated as time barred. The appeal preferred by the Department against the orderdated 20.02.2008 passed by the CIT(A) was dismissed by theTribunal on coming to the same conclusion that the blockassessment order was barred by limitation. It is submitted by learned counsel for the appellant thatthe CIT(A) and the Tribunal fell in error in coming to theconclusion that the block assessment order was time barred. Itwas submitted that the Explanation-2(a) to Section 158BE of theAct was not properly construed, which has resulted in passing ofthe orders impugned. The learned CIT(A) while dealing with the factual aspect of the search and the Panchnama prepared observed thus:- “I have given a careful consideration to the materialfacts on record as also the submissions madebefore me and it is observed that search wasconducted on 03.02.1999 and as per thepanchnama dated 3-2-1999 drawn, it is observedthat books of accounts and documents as per parano.5(b)(i) to the Panchnama were found whereasother valuable articles or thing including moneywere found as per para 5(b)(ii) to the Panchnamadated 3-2-1999. Books of accounts and documentswere seized as per para no.5 (a)(i) of thePanchnama. No cash or jewellery or silver articlesor other valuable items were seized. During thecourse of search, statement of the assessee wasrecorded (Para No.6 of the Panchnama). Para No.8of the Panchnama dated 3-2.1999 reveals that thesearch commenced on 3-2-1999 at 8:45 AM theproceedings were temporary concluded on 3-2-1999 at 10:30 PM. Para No.09 of the Panchnamadated 3-2-1999 reveals that an order u/s 132(3)was passed in respect of an Almirah in last bedroom of residence of the appellant. Subsequently,the search party visited the residence of theappellant on 13.4.1999 and withdrew theprohibitory order u/s 132(3) relating to the Almirahsealed earlier on 3-2-1999 and a fresh Panchnamadated 13-4-1999 was drawn. Perusal of the said Panchnama dated 13-4-1999 shows that nothingwas found nor any thing was seized from the saidsealed Almirah. This fact is clear from Para No.5(a)and 5(b) to the Panchnama dated 13-4-1999.During the course of proceedings on 13-4-1999, nostatement was recorded. The proceedings on 13-4-1999 commenced at 2:30 PM and closed on 3:00PM on the same day. What was the purpose ofissuing a prohibitory order for an empty Almirah isnot known. Panchnama dated 13-4-1999 shows that nothingwas found nor any thing was seized from the saidsealed Almirah. This fact is clear from Para No.5(a)and 5(b) to the Panchnama dated 13-4-1999.During the course of proceedings on 13-4-1999, nostatement was recorded. The proceedings on 13-4-1999 commenced at 2:30 PM and closed on 3:00PM on the same day. What was the purpose ofissuing a prohibitory order for an empty Almirah isnot known. On perusal of the Panchnama dated 13-4-1999, it becomes abundantly clear that nothing wasfound nor anything was seized on vacating theprohibitory order. In other words, the said Almirahwas vacant at the time of passing order u/s 132(3)on 3-2-1999 and whatever books of a/c,documents, jewellery etc. were found, either theywere seized or not seized on 3-2-1999 itself.Therefore, I am of the view that the Almirah, whichwas sealed on 3-2-1999, was without any basis orpurposes as nothing was found from the saidAlmirah and nothing was accordingly, seized. Inother words, drawing of a Panchnama on 13-4-1999 was an empty formality to vacate therestraint order issued earlier on 3-2-1999. In otherwords, the entire action on 13-4-1999 relating towithdrawing the prohibitory order issued earlier wasan empty formality through which the alreadyconcluded search was unnecessarily dragged toshow continuity thereof. Therefore, the searcheffectively concluded on 3-2-1999.” “In the light of the entire discussion as above, Ihave no hesitation to hold that the time limit forcompletion of the block assessment will have to bereckoned from 3-2-1999 on which date the searchwasconcludedagainsttheappellant.Consequently, the block assessment order wasrequired to be passed on or before 28-2-2001 asagainst which the block assessment order waspassed on 27-4-2001. Therefore, it has to be heldthat the said block assessment order was notpassed within the time limit prescribed in the Actand, therefore, has to be treated as time barred.” Similarly, the Tribunal in its order dated 12.09.2012observed thus:- “We have considered the submissions of ld DR andgone through the orders of the authorities below.In the present case, it is an admitted fact that thesearch was conducted on 03.02.1999 at theresidential premises of the assessee and thePanchnama was drawn on the same date. All theincriminating documents, valuable jewellery, cashetc. were found only on that date. On the said dateof search, one almirah was sealed by passing the prohibitory order u/s 132(3) of the Act on03.02.1999 and the said prohibitory order was liftedon 13.04.1999. However, nothing was seized orfound from the said almirah. Even no statementwas recorded during the course of proceedings on13.04.1999 and the proceedings on the said datewere closed within half an hour i.e. it started at2.30 PM and closed at 3.00 PM, therefore, it is notknown that what was the purpose for issuing aprohibitory order for an empty almirah particularlywhen nothing is brought on record to substantiatethat the assessee was not cooperating for openingof almirah, if it was locked at the time of search on3.2.1999.” “In the instant case, nothing was done on13.4.1999 except merely preparing the Panchnamaand the search commenced at 2.30 PM which wasconcluded at 3.00 PM. Therefore, in view of theratio laid by the Hon'ble Supreme Court in theaforesaid referred to case, the said exercise wouldnot extend the time limit for passing an order ofblock assessment. In that view of the matter, wedo not see any infirmity in the order of ld CIT (A)onthis issue. Accordingly, we do not see any merit inthe appeal of the Department and dismiss thesame.” Provision of Section 158BE of the Act, in so far as relevant,reads thus:- “158BE Time limit for completion of blockassessment.(1) The order under section158BC shall be passed-assessment.(1) The order under section158BC shall be passed- (a) ...... “In the instant case, nothing was done on13.4.1999 except merely preparing the Panchnamaand the search commenced at 2.30 PM which wasconcluded at 3.00 PM. Therefore, in view of theratio laid by the Hon'ble Supreme Court in theaforesaid referred to case, the said exercise wouldnot extend the time limit for passing an order ofblock assessment. In that view of the matter, wedo not see any infirmity in the order of ld CIT (A)onthis issue. Accordingly, we do not see any merit inthe appeal of the Department and dismiss thesame.” Provision of Section 158BE of the Act, in so far as relevant,reads thus:- “158BE Time limit for completion of blockassessment.(1) The order under section158BC shall be passed-assessment.(1) The order under section158BC shall be passed- (a) ...... (b) within two years from the end of themonth in which the last of theauthorisations for search under section132 or for requisition under section 132A,as the case may be, was executed incases where a search is initiated or booksof account or other documents or anyassets are requisitioned on or after the 1[st]day of January, 1997.month in which the last of theauthorisations for search under section132 or for requisition under section 132A,as the case may be, was executed incases where a search is initiated or booksof account or other documents or anyassets are requisitioned on or after the 1[st]day of January, 1997. (2)....... Explanation-1......... Explanation-2.- For the removal of doubts, it ishereby declared that the authorisation referred toin sub-section (1) shall be deemed to have beenexecuted,- (a)in the case of search, on the conclusionof search as recorded in the lastpanchnama drawn in relation to anyperson in whose case the warrant ofof search as recorded in the lastpanchnama drawn in relation to anyperson in whose case the warrant of authorisation has been issued; (b) in the case of requisition under section132A, on the actual receipt of the booksof account or other documents or assetsby the Authorised Officer.” The contention of the Revenue is that since the lastPanchnama was drawn on 13.04.1999, the search was concludedon that date and, as such, the assessment made on 27.04.2001was within limitation in view of provisions contained in Section158BE(1)(b) of the Act. A bare look at the Explanation-2(a) would reveal that thesame provides for deeming authorisation to have been executedon the conclusion of search as recorded in the last panchnamadrawnin relation to any person in whose case the warrant ofauthorisation has been issued. The explanation nowhere providesthat it would be the last Panchnama drawn irrespective of thefact as to whether the conclusion of search has been recorded inthe said Panchnama or not. From the facts noticed by both the CIT(A) and the Tribunal,which are not in dispute, it is clear that the Panchnama dated13.04.1999 itself reveals that nothing was seized on that datenor was anything found on that date. In fact no search wasconducted and the drawing of the Panchnama on 13.04.1999was an empty formality and was executed merely for thepurpose of vacating the restraint order issued on 03.02.1999,when a restraint order under Section 132(3) of the Act waspassed in respect of an Almirah in the last bed room of residenceof assessee and subsequently the search party visited theresidence of the asseesee on 13.04.1999 and withdrew the From the facts noticed by both the CIT(A) and the Tribunal,which are not in dispute, it is clear that the Panchnama dated13.04.1999 itself reveals that nothing was seized on that datenor was anything found on that date. In fact no search wasconducted and the drawing of the Panchnama on 13.04.1999was an empty formality and was executed merely for thepurpose of vacating the restraint order issued on 03.02.1999,when a restraint order under Section 132(3) of the Act waspassed in respect of an Almirah in the last bed room of residenceof assessee and subsequently the search party visited theresidence of the asseesee on 13.04.1999 and withdrew the prohibitory order under Section 132(3) relating to the Almirahand prepared a Panchnama showing that nothing was found noranything was seized from the said Almirah, therefore, essentiallyfrom 03.02.1999 when the last Panchnama was drawn and therestraint order passed, till 13.04.1999 when the last Panchnamawas drawn whereby the restraint order was vacated, nothingelse was found and in fact no further search was conducted,therefore, the last Panchnama dated 13.04.1999 was merely arelease order and the same could not extend the period oflimitation as concurrently found by the CIT(A) and the Tribunal. This Court in CIT v. White & White Minerals P. Ltd. : (2011)330 ITR 172 in similar circumstances upheld the order passedby the Tribunal, Special Leave Petition filed against which, wasalso dismissed by the Hon'ble Supreme Court reported at (2010)322 ITR (St.)4. In view of the foregoing discussion, there is no substancein the appeal filed by the Revenue, the impugned orders passedby the CIT(A) and the Tribunal do not call for any interferenceand no substantial question of law arises for consideration bythis Court. Consequently, the appeal is dismissed. (ARUN BHANSALI),J. (NARENDRA KUMAR JAIN),J.