ANIL MINDA AND OTHERS versus COMMISSIONER OF INCOME TAX on 24 March 2023

1. Feeling aggrieved and dissatisfied with the impugned commonjudgment and order dated 14.09.2010 passed by the High Court of Delhiat New Delhi in ITA No. 582 of 2009 and other allied appeals, by whichthe Division Bench of the High Court has allowed the said appealspreferred by the Revenue and set aside the orders passed by the IncomeTax Appellate Tribunal, New Delhi (for short, ‘ITAT’) holding that theassessment orders passed in the case of the respective assessees weretime barred as the assessments were not completed within two yearsfrom the end of the month in which the last authorisation for searchunder Section 132 of the Income Tax Act, 1961 (hereinafter referred toas the ‘Act’) was issued, the respective assessees have preferred thepresent appeals.

2. For the sake of convenience, the facts arising out of the impugnedjudgment and order passed by the High Court in ITA No. 582/2009 arenarrated, which in nutshell are as under:

2.1 That the two warrants of authorization under section 132(1)of the Act for carrying out the search at bank locker with Canara Bank,Kamla Nagar were issued on 13.03.2001 and 26.03.2001. Warrants whichwere executed on 13.03.2001 were executed on various dates, whichare as under:

2.2 During the execution of the search warrants dated 13.03.2001,the Income Tax authorities got the information about a locker belongingto the assessee in a bank. Therefore on 26.03.2001,second authorizationwas issued for searching the said locker and the same was executed on A

B

C

D

E

F

G

H

A26.03.2001 itself. Therefore, the first authorization came on 13.03.2001was for search at the office and residence of the assessee and it continuedfor some time and culminated only on 11.04.2001 and the second searchauthorization dated 26.03.2001 came to be executed on the same dateand the Panchnama was drawn on 26.03.2001.B2.3 Thereafter, notice under Section 158 BC for filing blockassessment was issued. The assessee filed his return and the assessmentwas completed by passing assessment order in April, 2003. Similarassessment orders were passed in case of other assessees. Therespondents – assessees filed appeals challenging the assessment orders,inter alia, on the ground that the assessment was time barred. AccordingCto the assessees, limitation of two years as prescribed under section158BE of the Act, which was to be computed when Panchnama inrespect of the second authorization was executed, i.e., on 26.03.2001.Since that Panchnama was drawn on 26.03.2001, two years period asprescribed under Section 158BE(b) of the Act came to an end by March,D2003 and the assessment order was passed in April, 2003, which accordingto the assessee was thus time barred. On the other hand, the plea of thedepartment was that since the last Panchnama through related to searchauthorization dated 13.03.2001 was executed on 11.04.2001, limitationof two years was to be computed from that date and therefore the assessment was passed was well within the prescribed limitation.E

2.4 The CIT(A) dismissed the appeals. However, the ITAT allowedthe appeals and held that the respective assessment orders were barredby limitation since the Panchnama with respect to last authorization wasdrawn on 26.03.2001. Against the order passed by the ITAT settingaside the assessment orders on the ground that the same were beyond Fthe period of two years, the Revenue preferred the present appealsbefore the High Court. By the impugned common judgment and order,the Division Bench of the High Court has allowed the said appeals andhas set aside the order passed by the ITAT by holding that as the lastPanchnama though related to search authorization dated 13.03.2001 was executed on 11.04.2001, limitation of two years was to be computedGfrom 11.04.2001. The impugned common judgment and order passed bythe High Court is the subject matter of present appeals.

3. Dr. Rakesh Gupta, learned counsel has appeared on behalf ofthe appellants – assessees and Shri Balbir Singh, learned ASG hasappeared on behalf of the Revenue.H

3.1 Learned counsel appearing on behalf of the respectiveassessees has vehemently submitted that in the facts and circumstancesof the case, the High Court has erred in holding that the respectiveassessment orders were within the period of two years and thereforenot barred by limitation.

3.2 It is submitted that in the present case the last authorizationwas on 26.03.2001 and therefore as per Explanation 2 to Section 158BEof the Act the last authorization would be the starting point of limitation.It is submitted that therefore even if the first authorization dated13.03.2001 was executed on a later date i.e., on 11.04.2001, that wouldbe of no consequence and for the purpose of reckoning the limitationperiod, the first authorization is irrelevant and it is the “last of theauthorization” which has to be kept in mind. It is submitted that in thepresent case, the last authorization is dated 26.03.2001 which wasexecuted on the same date and therefore the period of two years is to becounted from that date.

3.3 Learned counsel appearing on behalf of the respectiveassessees has relied upon the decision of the Karnataka High Court inthe case of C.Ramaiah Reddy v. Assistant Commissioner of IncomeTax, (2011) 244 CTR 126 (Karn.) (para 47) in support of hissubmission.

4. Shri Balbir Singh, learned ASG appearing on behalf of theRevenue has vehemently submitted that as per Explanation 2 of Section158BE of the Act, when it is a case of search, period of limitation is to becounted from the date on which the last Panchnama was drawn. It issubmitted that in the present case, the last Panchnama on conclusion ofthe search was drawn on 11.04.2001 and therefore the limitation periodof two years would start from 11.04.2001. It is submitted that if thesubmission on behalf of the assessees is accepted, in that case, theExplanation 2 to Section 158BE would become nugatory and redundant.

4.1 It is further submitted by the learned ASG appearing on behalfof the Revenue that Explanation 2 to Section 158BE has been specificallyinserted with a view to give last of the Panchnama as the starting pointof limitation. It is submitted that the time for completion of the blockassessment under Section 158BC/158BE is the conclusion of search/drawing of last Panchnama which will be relevant and not the dates ofissuance of various authorizations. It is submitted that in a given casewhere number of authorizations are issued and relevant material/s is/arecollected during the search on different dates on the basis of the different A

B

C

D

E

F

G

H

Aauthorizations, ultimately the assessment proceedings would be on thebasis of the entire material collected during the search and on the basisof the Panchnama drawn. It is submitted that therefore the date onwhich the last Panchnama was drawn is the relevant date for the purposeof block assessment. In support of his submission, Shri Balbir Singh,learned ASG has heavily relied upon the decision of this Court in theBcase of VLS Finance Limited & Another v. Commissioner of IncomeTax & Another, (2016) 12 SCC 32 (paragraphs 26 to 28).

5. Having heard learned counsel for the respective parties, theshort question which is posed for the consideration of this Court is, whetherthe period of limitation of two years for the block assessment underCSection 158BC/158BE would commence from the date of the Panchnamalast drawn or the date of the last authorization?

6. While considering the aforesaid issue, Section 158BE whichprovides for time limitation for commencement of block assessment isrequired to be referred to, which is as under:

“Section 158BED

Time Limit for Completion of Block Assessment

(1) The order under Section 158-BC shall be passed—

(a) within one year from the end of the month in which the last ofthe authorisations for search under Section 132 or for requisitionunder Section 132-A, as the case may be, was executed in casesEwhere a search is initiated or books of account or other documentsor any assets are requisitioned after the 30th day of June, 1995but before the 1st day of January, 1997; (b) within two years from the end of the month in which the lastof the authorisations for search under Section 132 or for requisitionFunder Section 132-A, as the case may be, was executed in caseswhere a search is initiated or books of account or other documentsor any assets are requisitioned on or after the 1st day of January,1997.

(2) The period of limitation for completion of block assessment inthe case of the other person referred to in Section 158-BD shallGbe—

(a) one year from the end of the month in which the notice underthis Chapter was served on such other person in respect of searchinitiated or books of account or other documents or any assetsrequisitioned after the 30th day of June, 1995 but before the 1stHday of January, 1997; and (b) two years from the end of the month in which the noticeunder this Chapter was served on such other person in respect ofsearch initiated or books of account or other documents or anyassets are requisitioned on or after the 1st day of January, 1997.

[Explanation 1.—In computing the period of limitation for thepurposes of this section,—

(i) the period during which the assessment proceeding is stayedby an order or injunction of any court; or

(ii) the period commencing from the day on which the AssessingOfficer directs the assessee to get his accounts audited undersub-section (2-A) of Section 142 and ending on the day on whichthe assessee is required to furnish a report of such audit underthat sub-section; or

(iii) the time taken in reopening the whole or any part of theproceeding or giving an opportunity to the assessee to be re-heardunder the proviso to Section 129; or

(iv) in a case where an application made before the SettlementCommission under Section 245-C is rejected by it or is not allowedto be proceeded with by it, the period commencing on the date onwhich such application is made and ending with the date on whichthe order under sub-section (1) of Section 245-D is received bythe [Principal Commissioner or Commissioner] under sub-section(2) of that section,shall be excluded:

Provided that where immediately after the exclusion of theaforesaid period, the period of limitation referred to in sub-section(1) or sub-section (2) available to the Assessing Officer for makingan order under clause (c) of Section 158-BC is less than sixtydays, such remaining period shall be extended to sixty days andthe aforesaid period of limitation shall be deemed to be extendedaccordingly.]

[Explanation 2.—For the removal of doubts, it is hereby declaredthat the authorisation referred to in sub-section (1) shall be deemedto have been executed,—

(a) in the case of search, on the conclusion of search as recordedin the last panchnama drawn in relation to any person in whosecase the warrant of authorisation has been issued; A

B

C

D

E

F

G

A(b) in the case of requisition under Section 132-A, on the actualreceipt of the books of account or other documents or assets bythe Authorised Officer.]”

7. In the present case, the first authorization was issued on13.03.2001 which ultimately and finally concluded and/or culminated intoBPanchnama on 11.04.2001. However, in between there was one anotherauthorization dated 26.03.2001 with respect to one locker and the samewas executed on 26.03.2001 itself and Panchnama for the same wasdrawn on 26.03.2001. However, Panchnama drawn with respect toauthorization dated 13.03.2001 was lastly drawn on 11.04.2001. Asobserved and held by this Court in the case of VLS Finance LimitedC(supra), the relevant date would be the date on which the Panchnama isdrawn and not the date on which the authorization/s is/are are issued. Itcannot be disputed that the block assessment proceedings are initiatedon the basis of the entire material collected during the search/s and onthe basis of the respective Panchnama/s drawn. Therefore, the date of the Panchnama last drawn can be said to be the relevant date and canDbe said to be the starting point of limitation of two years for completingthe block assessment proceedings.

8. If the submission on behalf of the respective assessees that thedate of the last authorization is to be considered for the purpose of startingpoint of limitation of two years, in that case, the entire object and purposeEof Explanation 2 to Section 158BE would be frustrated. If the saidsubmission is accepted, in that case, the question which is required to beconsidered is what would happen to those material collected during thesearch after the last Panchnama. It cannot be disputed that there maybe number of searches. Thus, the view taken by the High Court that the Fdate of the Panchnama last drawn would be the relevant date forconsidering the period of limitation of two years and not the last date ofauthorization, we are in complete agreement with the view taken by theHigh Court.

9. In view of the above and for the reasons stated above, all theseappeals fail and the same deserve to be dismissed and are accordinglyGdismissed. However, in the facts and circumstances of the case, thereshall be no order as to costs.

H

Ankit Gyan

(Assisted by : Abhishek Pratap Singh and Mahendra Yadav, LCRAs)

Appeals dismissed.