Search and seizure- Limitation for assessment- Period reckoned from date of conclusion of search- Restraint order not extended and no action taken pursuant to search after three months- Search to be taken to have been concluded on expiry of restraint order- Visit of officers to assessee’s premises two years later to record conclusion of search not material- Period of limitation to pass assessment order not to be reckoned from such date- Assessment barred by limitation

Pursuant to a search and seizure in the premises of the assessee, a restraint order was issued on October 15, 1998 for a period of sixty days which was later extended for another thirty days upto January 15, 1999. Thereafter it was not extended. On November 21 2000, the Department called on the assessee at his premises for the purpose of recording that the search was at an end. Thereafter assessment order was passed after January 2001. The Department took the view that the period of limitation of two years commenced from November 21, 2000 and therefore the assessment order is passed within the period of limitation. The Tribunal held that the period of limitation of two years for passing assessment order was to be reckoned from 15th January 1999 and not from 21st November 2000 and accordingly the assessment order was passed beyond the period of limitation.

On appeal by the Revenue, the Calcutta High Court upheld the decision of the Tribunal and held as under:

“i) The Tribunal’s order was unimpeachable. The restraint order was not extended by the Department after January 15, 1999, which meant that the search was also abandoned and had ended. The search did not stand revived when the officers of the Department called at the house of the assessee merely for the purpose of recording that the search was at an end almost after two years.

ii) The order of assessment was passed beyond the limitation period of two years after conclusion of the search and hence was invalid.”