By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
fiogf49gjkf0d
New Page 1
7 Nandlal M. Gandhi v. ACIT
ITAT ‘E’ Bench, Mumbai
Before G. D. Agrawal (VP)
as Third Member
IT(SS)A No. 11 (Mum.) of 2000
A.Ys. : 1-4-1987 to 28-7-1997. Decided on : 16-6-2008.
Counsel for assessee/revenue : K. Shivaram & Ajay Singh/Rajiv
Nabar
S. 158BE of the Act, 1961 — Time limit for completion of
block assessment — On the day of search (i) panchnama prepared with the remark
that ‘search temporarily concluded for the day to be commenced subsequently’;
and (ii) prohibitory order u/s.132(3) issued — After a period, prohibitory order
revoked and panchnama prepared with the remark ‘search is finally concluded’ —
Whether the period of limitation is to be computed from the date search was
originally initiated or from the later date of panchnama — Held that the period
of limitation is to be computed from the former date.
Facts :
The search u/s.132 was carried out on 28-7-1997 and continued
till 29-7-1997. During the search certain incriminating materials which,
inter alia, included jewellery and shares were found. The search party
prepared an inventory in respect of the material found and a panchnama was
drawn. As per the panchnama, only books of accounts and certain documents were
seized and no seizure was effected in respect of other materials found,
including those of jewellery and shares. In the panchnama it was stated that
search was temporarily concluded for the day to be commenced subsequently.
However, on the same day i.e., 29-7-1997, a prohibitory order was issued
u/s.132(3) in respect of jewellery and shares, which was subsequently revoked on
1-8-1997 and 8-9-1997 in respect of jewellery and shares, respectively. On
8-9-1997, another panchnama was prepared, wherein it was stated that ‘search is
finally concluded’, and no other comments/remarks were recorded therein. During
the period 29-7-1997 to 8-9-1997, certain statements were recorded by the I.T.
authorities.
In response to notice u/s.158BC, the assessee filed his block
return of income declaring undisclosed income of Rs.16.35 lacs which was
assessed by the AO in his order dated 30-9-1999 at Rs.55.69 lacs. Being
aggrieved the assessee challenged the order passed by the AO, on the grounds,
amongst others, that u/s.158BE, the order passed by the AO was beyond the
stipulated period of 2 years from the end of the month in which the warrant of
authorisation of search was executed. However, the CIT(A) did not agree with the
contention of the assessee and upheld the addition made by the AO.
The assessee appealed before the Tribunal. There was a
difference of opinion between the two members, in relation to the assessee’s
ground relating to time limit prescribed u/s.158BE for completion of block
assessment u/s.158BC. Therefore, the matter was referred u/s.255(4) to the Third
Member.
Before the Third Member, the Revenue contended that the
second panchnama drawn on 8-9-1997 was in continuation of the first panchnama
dated 29-7-1997 and therefore, it should be taken that the first panchnama dated
29-7-1997 was finally concluded on 8-9-1997. According to it, the search had
been completed on the date when the prohibitory order u/s.132(3) was revoked,
which in this case was 8-9-1997. It was further submitted that between the
period of first panchnama dated 29-7-1997 and second panchnama dated 8-9-1997,
statements u/s. 132(4)/131 on five different occasions were recorded and after
considering the statements recorded, the authorised officer considered it
appropriate to lift the prohibitory order. Therefore, it was contended that the
search got concluded on 8-9-1997 when finally the prohibitory order u/s.132(3)
was revoked.
Held :
The Tribunal noted that the Department was seeking extension
of time limit for framing the assessment on the strength of prohibitory order
issued u/s.132(3) on 29-7-1997, which was finally revoked on 8-9-1997 and the
panchnama was prepared stating that the search was finally concluded.
