Sri. LALIT KUMAR NAGPAL, MUMBAI V. ACIT CENT. CIR. - 14, MUMBAI

CO 320/MUM/2006

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7234 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-01-2010
• Assessment Year: misc
• Appeal Filed On: 06-09-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS USHA NAIR
• Assessee Lawyers: MANISH SANGHVI
• Keywords: Depreciation; Search and seizure; Share purchase agreement; Period of limitation; Block assessment
• Section: 143(3); 131; 132

Judgement Text

1 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI D.MANMOHAN VICE-PRESIDENT AND SHRI N.K. BILLAIYA (ACCOUNTANT MEMBER ) IT(SS)A NO. 185/MUM/2006 BLOCK PERIOD-1991-92 TO 2000-01 THE ACIT, CENT. CIR. 14, OLD C.G.O. ANNEXE BLDG., MUMBAI-400 020 VS. SHRI LALIT KUMAR NAGPAL, BUNGALOW NO. 36, ATUR PARK, CHEMBUR,MUMBAI-400 071 PAN - AAWPN 5414A (APPELLANT) (RESPONDENT) C.O. NO. 320/MUM/2006 (ARISING OUT OF IT(SS)A NO. 185/MUM/2006 BLOCK PERIOD-1991-92 TO 2000-01 SHRI LALIT KUMAR NAGPAL, BUNGALOW NO. 36, ATUR PARK, CHEMBUR, MUMBAI-400 071 VS. THE ACIT, CENT. CIR. 14, OLD C.G.O. ANNEXE BLDG., MUMBAI-400 020 (CROSS OBJECTOR) (RESPONDENT) IT(SS)A NO. 187/MUM/2006 BLOCK PERIOD-1991-92 TO 2000-01 THE ACIT, CENT. CIR. 14, OLD C.G.O. ANNEXE BLDG., MUMBAI-400 020 VS. SHRI ANIL KUMAR NAGPAL, A WING, 201-202 GANGA ESTATE, BEHIND ATUR PARK, MAIN S.T. ROAD,CHEMBUR, MUMBAI-400 071 PAN - ABTPN 8744N (APPELLANT) (RESPONDENT) C.O. NO. 350/MUM/2006 (ARISING OUT OF IT(SS)A NO. 187/MUM/2006 BLOCK PERIOD ENDED 26.7.2000 SHRI ANIL KUMAR NAGPAL, A WING, 201-202 GANGA ESTATE, BEHIND ATUR PARK, MAIN S.T. ROAD, CHEMBUR, MUMBAI-400 071 VS. THE ACIT, CENT. CIR. 14, OLD C.G.O. ANNEXE BLDG., MUMBAI-400 020 2 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL (CROSS OBJECTOR) (RESPONDENT) REVENUE BY: MRS. USHA NAIR ASSESSEE BY: SHRI MANISH SANGHVI DATE OF HEARING: 7.05.2012 DATE OF PRONOUNCEMENT: 18.5.12 O R D E R PER N.K. BILLAIYA (AM): THE APPEALS ARE FILED BY THE DEPARTMENT AND THE CR OSS OBJECTIONS ARE FILED BY THE ASSESSEE AGAINST THE TWO DIFFERENT ORDERS OF LD. CI T(A)-CENTRAL-III DT. 20.03.2006 FOR BLOCK PERIOD 1991-92 TO 2000-01RESPECTIVELY. BOTH THESE APPEALS AND CROSS OBJECTIONS ARE HEARD TOGETHER AND ISSUES ARE COMMON THOUGH QUANTUM MAY DIFFER THEREFORE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NO. 185/MUM/2006 REVENUES APPEAL AND CO 320 2. SEARCH U/S. 132 OF THE I.T. ACT 1961 WAS CARRIED OUT BY THE DEPARTMENT ON 26.7.2000 AT THE OFFICE AND RESIDENTIAL PREMISES OF THE ASSESSEE TOGETHER WITH HIS BROTHER SHRI ANILKUMAR NAGPAL. IN THE CASE OF THE ASSESSEE, A SEARCH WAS CARRIED OUT BY THE DEPARTMENT IN THE PAST ON 15.10.1996. THE U NDISCLOSED INCOME FOR THE EARLIER BLOCK PERIOD ENDED ON 15.10.1996 WAS ALREADY BEEN A SSESSED VIDE ORDER U/S. 158BC OF THE ACT DT. 31.10.1997 COVERING ALL UNDISCLOSED INC OME UPTO 15.10.1996. IN PURSUANCE TO THE NOTICE U/S. 158BC OF THE ACT, IN RELATION TO THE SECOND SEARCH RELEVANT FOR THE BLOCK ASSESSMENT UNDER CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE BLOCK PERIOD ON 12.3.2001 SHOWING UNDISCLOSED INCOM E OF RS. 20,00,000 CONSISTING OF : REGULAR INCOME A.Y. 1999-2000 10,35,462/- A.Y. 2000-01 5,07,736/- 3 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL A.Y. 2001-02(UPTO THE 39,307/- PERIOD OF SEARCH) TOTAL RS. 15,82,505/- . B) MISCELLANEOUS INCOME RS. 4,17,495/- TOTAL RS. 20,00,000/- ========== 3. THE ASSESSEE IS A PROPRIETOR OF TWO CONCERNS NAM ELY (I) M/S. PETRO RASAYAN CARRIERS AND (II) M/S. KAPIL PRODUCTS. M/S. PETRO RASAYAN CARRIERS IS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF LIQUID CARGO AND M/S. KAPIL PRODUCTS WAS ENGAGED IN THE BUSINESS OF CHEMICAL TRADING. THE BUSINESS OF M/S. KAPIL PRODUCTS WAS CLOSED DOWN BECAUSE THERE WAS NO BUSINESS ACTIVITIES FROM 15.10 .1996. THE ONLY SOURCE OF INCOME WAS INTEREST EARNED ON SURPLUS FUNDS. ALL THE INC OME OF BOTH PROPRIETARY CONCERNS UPTO 15.10.1996 HAVE BEEN ASSESSED TO TAX IN THE BLOCK A SSESSMENT ORDER U/S. 158BC OF THE ACT DT. 31.10.1997. AFTER THE COMPLETION OF THE FI RST BLOCK ASSESSMENT, THE ASSESSEE FILED HIS REGULAR RETURNS OF INCOME FOR THE ASSESSM ENT YEARS 1997-98 AND 1998-99 ON 10.3.2000 SHOWING TOTAL INCOME OF RS. 8,40,020/- AN D RS. 2,79,200/- RESPECTIVELY. THE ASSESSMENT FOR THE SAID TWO YEARS WERE COMPLETED U /S. 143(3) OF THE ACT ON 28.3.2002 AND 23.3.2001 RESPECTIVELY. NO RETURN OF INCOME WAS FILED FOR THE ASSESSMENT YEARS 1999-2000 AND 2000-01 UPTO THE DATE OF THE PRESENT SEARCH. ACCORDINGLY, INCOME FOR THE PERIOD FROM 1.4.1998 TO 26.7.2000 (UPTO THE DAT E OF THE SEARCH) FORMS PART OF THE PRESENT BLOCK ASSESSMENT. 4. ON THE BASIS OF THE STATEMENT RECORDED U/S. 132( 4) OF THE ACT ON 27.7.2000 WHEREIN ASSESSEE HAD ADMITTED CASH RECEIPTS OF RS. 1.50 CRORES IN CONNECTION WITH NORMAL BUSINESS ACTIVITIES IN HIS OWN ACCOUNT AND H IS BROTHERS (SHRI ANIL KUMAR NAGPAL) ACCOUNT. THE ASSESSING OFFICER WAS NOT CONVINCED W ITH THE MARGIN OF PROFIT SHOWN BY THE ASSESSEE. THE TOTAL CASH RECEIPTS ON ACCOUNT O F FREIGHT FOR THE PERIOD 1.4.1997 TO 26.7.2000 ARE AS UNDER: 4 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL YEAR LALIT NAGPAL RS. ANIL NAGPAL RS. TOTAL RS. 1997-98 9,75,000 0 9,75,000 1998-99 1,47,11,583 1,14,95,268 2,62,06,851 1999-2000 43,25,000 1,14,02,979 1,57,27,989 UPTO 26.7.2000 8,75,000 17,61,611 26,36,611 2,08,86,583/- 2,46,59,858 4,55,46,451 5. IT WAS THE CONTENTION OF ASSESSEE THAT ALL THE A BOVE FREIGHT RECEIPTS WERE ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT OF TH E ASSESSEE AND HIS BROTHER (ANIL NAGPAL) AND THE NET INCOME OUT OF SUCH RECEIPTS HAV E BEEN OFFERED FOR TAXATION AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD AND TAXES P AID ACCORDINGLY. HOWEVER, THE AO WAS OF THE OPINION THAT SINCE IN THE EARLIER BLOCK PERIOD NET PROFIT BEFORE DEPRECIATION IS ESTIMATED @ 8.5% THE SAME SHOULD BE THE PROFIT. TH E ASSESSEE IN HIS REPLY OBJECTED TO SUCH APPROACH OF THE AO. THE CONTENTION OF ASSESSEE DID NOT FIND ANY FAVOUR FROM AO. THE AO WENT ON ESTIMATING THE PROFIT @ 8.5% AND AC CORDINGLY COMPUTED THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD AS UNDER: ASSESSMENT YEAR TOTAL INCOME INCLUDING UNDISCLOSED INCOME RETURNED INCOME/ ASSESSED INCOME UNDISCLOSED INCOME 1991-92 RS. 38,85,377/- 38,85,377/- NIL 1992-93 RS. 34,08,010/- 34,08,010/- NIL 1993-94 RS. 24,88,830/- 24,88,830/- NIL 1994-95 RS. 19,63,916/- 19,63,916/- NIL 1995-96 NIL NIL NIL 1996-97(UPTO 15.10.96 (-)1,09,023 (-)1,09,023/- NIL 5 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL 97- 98(16.10.96 - 31.3.97) 8,40,160 8,40,160/- NIL 1997-98 5,19,200 5,19,200 NIL 1998-99 15,38,045/- NIL 15,38,045/- 1999-2000 16,40,092/- NIL 16,40,092 1.4.2000 TO 26.7.2001 4,18,301 NIL 4,18,301 1,51,77,068 1,15,80,630 35,96,438 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE QUESTIONED THE VALIDITY OF BLO CK ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSMENT WAS BARRED BY LIMITATION AS IT WAS MADE AFTER THE PERIOD OF LIMITATION AS SPECIFIED U/S. 158BE OF THE ACT. INTER -ALIA ASSESSEE ALSO QUTESTIONED THE QUANTUM ADDITIONS IN THE APPEAL BEFORE THE CIT(A) . THE LD. CIT(A) ALLOWED THE APPEAL OF ASSESSEE ON QUANTUM AGAINST WHICH THE DEPARTMENT IS IN APPEAL. HOWEVER, ON THE ISSUE RELATING TO THE PERIOD LIMITATION, THE LD. CI T(A) DISMISSED THE APPEAL AGAINST WHICH THE ASSESSEE FILED CROSS OBJECTION BEFORE US. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE INSI STED THAT THE CROSS OBJECTION SHOULD BE TAKEN UP FIRST. THE SUM AND SUBSTANCE OF THE CROSS OBJECTION RAISED BY THE ASSESSEE IS THAT THE ASSESSMENT MADE U/S. 158BC IS BARRED BY LIMITATION AND THE LD. CIT(A) OUGHT TO HAVE QUASHED THE ASSESSMENT MADE U /S. 158BC OF THE I.T. ACT. TO SUBSTANTIATE HIS CLAIM, LD. COUNSEL FOR THE ASSESSE E SUBMITTED A CHART DISPLAYING THE CHRONOLOGY OF EVENTS, THE SAME CHART IS EXHIBITED A S UNDER: BLOCK PERIOD 1.4.1990 TO 26.7.2000 APPEAL NO. IT(SS) 185/M/06 & CO 320/M/06 CHRONOLOGY OF EVENTS DATE REMARKS 6 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL 26.7.2000 AN ACTION U/S. 132 CONDUCTED AT THE PREMISES OF THE ASSESSEE AT 8.30 A.M. CONCLUDED ON 27.7.2000 AT 2.0 0 A.M. PROHIBITORY ORDERS U/S. 132(3) PLACED AT PREMI SES AND THE BANK LOCKERS OF THE ASSESSEE. 13.9.2000 RESTRAINT ORDERS U/S. 132(3) VACATED DETAILS OF PANCHNAMA NAME OF THE ASSESSEE PREMISES/LOCKERS STARTED CONCLUDED REMARKS LALIT NAGPAL BUNDLOW NO. 36, ATUR PARK,CHEMBUR, MUMABI 26.7.2000 AT 8.30 A.M. 27.7.2000 AT 2.00 A.M. PO PLACED AT THE RESIDENCE AND THE BANK LOCKERS DETAILS OF PROHIBITORY ORDERS NAME OF THE ASSESSEE PREMISES/LOCKERS STARTED CONCLUDED REMARKS LALIT NAGPAL LOCKER NO. 388B, BANK OF BARODA, CHEMBUR, MUMBAI 13.9.200 AT 1.30 P.M. 13.9.2000 AT 2.00 P.M. NO SEIZURE ONLY PO VACATED LALIT NAGPAL LOCKER NO. 521, SBI,MUMBAI 13.9.2000 AT 2.30. P.M. 13.9.2000 AT 3.00 P.M NO SEIZURE ONLY PO VACATED LALIT NAGPAL LOCKER NO. 718, CANARA BANK, MUMBAI 13.9.2000 AT 3.15 P.M. 13.9.2000 AT 3.45 P.M NO SEIZURE ONLY PO VACATED LALIT NAGPAL BUNDLOW NO. 36, ATUR PARK,CHEMBUR, MUMABI 13.9.2000 AT 5.45 P.M. 13.9.2000 AT 6.15 P.M NO SEIZURE ONLY PO VACATED 8. REFERRING TO THE CHART HEREIN ABOVE, THE LD. COU NSEL FOR THE ASSESSEE POINTED OUT THAT THE SEARCH U/S. 132 WAS STARTED ON 26.7.2000 A T 8.30 A.M AND CONCLUDED AT 27.7.2000 AT 2 A.M. PROHIBITORY ORDERS U/S. 132(3) WERE PLACED AT PREMISES AND THE BANK LOCKERS OF THE ASSESSEE. THE LD. COUNSEL FURT HER POINTED OUT THAT THE PROHIBITORY ORDERS U/S. 132(3) WERE VACATED AT 13.9.2000 AS EX HIBITED IN THE CHART. LD. COUNSEL 7 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL FOR THE ASSESSEE FINALLY CONCLUDED THAT NO SEIZURE WAS MADE FROM THE BANK LOCKERS OR FROM THE WOODEN CUPBOARD, ONLY PROHIBITORY ORDERS W ERE VACATED ON 13.9.2000. THE LD. COUNSEL THEREAFTER ARGUED THAT THE ASSESSMENT HAS BEEN MADE ON 30.9.2002 WHEREAS AS PER THE PROVISIONS OF SECTION 158BE(1)(B) THE TIME LIMIT FOR COMPLETION OF BLOCK ASSESSMENT IS TWO YEARS FROM THE END OF THE M ONTH IN WHICH THE LAST OF THE AUTHORIZATION FOR SEARCH U/S. 132 OR FOR REQUISITIO N U/S. 132A, AS THE CASE MAY BE EXECUTED. AS THE PRESENT CASE ACCORDING TO THE COU NSEL, THE SEARCH WAS COMPLETED ON 27.7.2000, THE PERIOD OF LIMITATION EXPIRED ON 31.7 .2002. THE LD. COUNSEL HEAVILY RELIED UPON THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS MRS. SANDYA P. NAIK (2002) 253 ITR 534 WHEREIN THE HONB LE JURISDICTIONAL HIGH COURT HELD THAT ON THE ISSUE OF RECKONING DATE OF EXECUTION OF SEARCH IN THE LIGHT OF PANCHANAMA REFERRED TO IN EXPLANATION 2 OF SECTION 158BE(1) OF THE ACT, THE HONBLE HIGH COURT HAS HELD AS FOLLOWS: THUS THE ITAT RIGHTLY HELD THAT THE PROCEEDI NGS ON OCTOBER 26,1996, COULD NOT BE CONSIDERED AS PART OF THE EXECUTION OF THE SEARCH PROCEEDINGS WHICH CONCLUDED ON OCTOBER 20,19 96. INDEED, BY SIMPLY STATING IN THE PANCHANAMA THAT THE SEARCH IS TEMPOR ARILY SUSPENDED, THE AUTHORIZED OFFICER CANNOT KEEP THE SEARCH PROCEEDIN GS IN OPERATION BY PASSING A RESTRAINT ORDER UNDER SECTION 132(3). RE LIANCE PLACED BY THE DEPARTMENT ON THE JUDGEMENT OF THE ALLAHABAD HIGH C OURT IN THE CASE OF SRIRAM JAISWAL VS UNION OF INDIA (1989) 176 ITR 261 , WAS CORRECT. THE RESTRAINT ORDER IN VIEW OF THIS AUTHORITY CANNOT BE CANCELLED AND RENEWED FROM TIME TO TIME. ACTION U/S. 132(3) OF THE I.T. ACT CAN BE RESORTED TO ONLY IF THERE IS ANY PRACTICAL DIFFICULTY THE OFFICE IS LEFT WITH NO OTHER ALTERNATIVE BUT TO SEIZE THE ITEM, IF HE IS OF THE VIEW THAT IT REPRESENTED UNDISCLOSED INCOME. POWER UNDER SECTION 132(3) OF THE I.T. ACT THUS CANNOT BE EXERCISED SO AS TO CIRCUMVENT THE PROVISIONS OF SEC TION 132(3) R.W.S 132(5) OF THE I.T. ACT. THE POSITION HAS BECOME MUCH MORE CLEAR AFTER THE INSERTION OF THE EXPLANATION TO SEC TO SEIZURE. THEREFORE, BY PASSING A RESTRAINT ORDER, THE TIME LIMIT AVAILABLE FOR FRAMING OF THE ORDER C ANNOT BE EXTENDED 9. THE LD. COUNSEL FURTHER RELIED UPON THE JUDGEMEN T OF MUMBAI BENCH OF ITAT IN THE CASE OF NANDLAL M. GANDHI VS CIT (2008) 115 ITD 01 WHEREIN THE MUMBAI BENCH HAS HELD AS FOLLOWS: 8 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL THUS, AS PER SECTION 158BE(1), ASSESSMENT UNDER SE CTION158BC SHOULD BE COMPLETED WITHIN ONE YEAR FROM THE END OF THE MONTH IN WHICH LAST OF THE AUTHORIZATION FOR SEARCH UNDER SECTION 132 WAS EXEC UTED. IN THE CASE UNDER CONSIDERATION BEFORE ME, SEARCH OPERATION IN PURSUA NCE TO THE WARRANT OF AUTHORIZATION ISSUED UNDER SECTION 132 WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 28-7-1997 AND IT CONTIN UED TILL 29-7-1997. ONLY ONE AUTHORIZATION FOR SEARCH WAS ISSUED. HOWEVER, P ROHIBITORY ORDER UNDER SECTION 132(3) WAS ISSUED IN RESPECT OF JEWELLERY, AND SHARES ON 29-7-1997. THE PROHIBITORY ORDER IN RESPECT OF JEWELLERY WAS R EVOKED ON 1-8-1997 WHILE PROHIBITORY ORDER IN RESPECT OF SHARE CERTIFICATES WAS REVOKED ON 8-9-1997. ON 8-9-1997, ANOTHER PANCHNAMA WAS PREPARED WHEREIN IT WAS STATED THAT SEARCH IS FINALLY CONCLUDED. NOW THE QUESTION IS WH ETHER FOR THE PURPOSE OF SECTION 158BE, THE WARRANT OF AUTHORIZATION WAS EXEC UTED ON 29-7-1997 WHEN THE SEARCH WAS ORIGINALLY CONCLUDED THOUGH SIM ULTANEOUSLY PROHIBITORY ORDER UNDERSECTION 132(3) WAS ISSUED IN RESPECT OF JEWELLERY AND SHARES, OR ON 8-9-1997 WHEN THE PROHIBITORY ORDER ISSUED UNDER SECTION 132(3) WAS WITHDRAWN AND A PANCHNAMA WAS PREPARED STATING THAT THE SEARCH WAS FINALLY CONCLUDED. THE DEPARTMENT WAS SEEKING EXTENSION OF TIME-LIMIT FOR FRAMING THE ASSESSMENT ON THE STRENGTH OF PROHIBITORY ORDER ISS UED U/S. 132(3) ON 29.7.1997 WHICH WAS FINALLY REVOKED ON 8.9.1997. T HE REVENUE WANTED THE PERIOD OF LIMITATION FOR THE PURPOSE OF SEC. 158BE T O BE RECKONED FROM 8.9.1997 WHEN THE PROHIBITORY ORDER U/S. 132(3) WAS REVOKED AND A PANCHNAMA WAS PREPARED STATING THAT THE SEARCH WAS FINALLY CONCLUDED. HOWEVER, FROM THE FACTS OF THE CASE IT WAS EVIDENT THAT SO FAR SEARCH WAS CONCERNED, IT WAS ALREADY COMPLETED ON 29.7.1997 WH EN THE PREMISES OF THE ASSESSEE WAS COMPLETELY SEARCHED AND ALL THE ASSETS FOUND WERE INVENTORISED AND A PANCHNAMA PREPARED. THEREAFTER, NO ACTION FOR FURTHER SEARCH HAD TAKEN PLACE AND AFTER THE VERIFICATION O F THE ASSESSEES EXPLANATION WITH REGARD TO JEEWELLERY AND SHARES, T HE PROHIBITORY ORDER IN RESPECT OF JEWELLERY WAS REVOKED ON 1.8.1997 AND IN RESPECT OF SHARE CERTIFICATES ON 8.9.1997. THUS, ON 8.9.1997 ONLY T HE PROHIBITORY ORDER IN RESPECT OF SHARES WAS REVOKED. THEREFORE, THE PANC HNAMA PREPARED ON 8.9.1997 COULD NOT BE SAID TO BE A PANCHNAMA PREPA RED IN PURSUANCE OF THE WARRANT OF AUTHORIZATION FOR SEARCH WITHIN THE MEAN ING OF SECTION 158BE(1). IF A PANCHNAMA PREPARED ON THE REVOCATION OF PROHIB ITORY ORDER U/S. 132(3) WHEREIN THE ONLY THING MENTIONED IS SEARCH IS FINA LLY CONCLUDED, IS HELD TO BE PANCHNAMA PREPARED ON THE CONCLUSION OF SEARCH W ITHIN THE MEANING OF EXPLANATION TO SEC. 158BE, IT WOULD AMOUNT TO EXTEND ING THE PERIOD OF LIMITATION FOR COMPLETION OF ASSESSMENT ON ACCOUNT OF RESTRAINT ORDER UNDER 9 SHRI LALIT KUMAR NAGPAL & ANIL KUMAR NAPAL SECTION 132(3). IT WOULD BE CONTRARY TO THE DECISI ON OF THE HIGH COURT IN CIT VS MRS. SANDHYA P. NAIK 253 ITR 534/124 TAXMAN 384 (BOM). THEREFORE, THE ORDER PASSED U/S. 158BC BY THE AO W AS TIME-BARRED WITHIN THE MEANING OF SECTION 158BE. 10. THE LD. COUNSEL FURTHER RELIED ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF C. RAMAIAH REDDY VS ACIT (BANG.) IN IT A NO. 503 OF 2003 WHEREIN THE HONBLE HIGH COURT HAS TAKEN A SIMILAR VIEW. THE L D. COUNSEL FINALLY CONCLUDED THAT FOLLOWING THE RATIO LAID DOWN BY HONBLE JURISDICTI ONAL BOMBAY HIGH COURT AND THE MUMBAI BENCH THE ASSESSMENT IS CLEARLY BARRED BY PE RIOD OF LIMITATION. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTING THE ORDE R OF LOWER AUTHORITIES ARGUED THAT THE PROHIBITORY ORDER U/S. 132(3) OF THE ACT ARE IS SUED FOR SOME SPECIAL REASONS AND IT CANNOT BE SAID THAT SUCH PROHIBITORY ORDERS DO NOT HAVE ANY SANCTITY SO FAR AS PERIOD OF SEARCH IS CONCERNED. THE LD. DR FURTHER ARGUED THAT SEARCH PARTY CANNOT FORESEE WHAT WOULD BE THE OUTCOME OF THE LOCKERS WHEN OPENED AND EVEN IF NOTHING IS FOUND THAT WILL NOT AMOUNT TO SHOW THAT THE SEARCH HAS NOT BEEN CON CLUDED ON THE DATE OF LIFTING THE PROHIBITORY ORDER. THE LD. DR SUBMITTED THAT IN AL L THE CASES RELIED UPON BY THE AR WHERE BANK LOCKERS WERE NOT INVOLVED AND THEREFORE FACTS ARE CLEARLY DISTINGUISHABLE. 11. THE POINT TAKEN BY THE LD. DR CANNOT BE BRUSHED ASIDE LIGHTLY. SUPPOSE SOME LOCKERS ARE IN DISTANT CITIES LIKE CALCUTTA OR CHEN NAI , OR DETAILS RELATING TO SOME BANK ACCOUNTS ARE FOUND IN THE COURSE OF SEARCH WHICH BA NK ACCOUNTS ARE IN SOME FOREIGN COUNTRIES , THEN , IT WOULD NOT BE POSSIBLE FOR THE SEARCH PARTY TO ISSUE PROHIBITORY ORDERS ON OUT STATION LOCKERS OR OUT OF THE COUNTRY BANK ACCOUNTS . THE ONLY COURSE AVAILABLE TO THE AUTHORISED OFFICERS, SO FAR AS OUT STATION LOCKERS ARE CONCERNED, TO ISSUE COMMISSION U/S 131 OF THE ACT TO HIS COUNTERPART OF THE OTHER CITY WHO IN TURN WOULD ISSUE PROHIBITORY ORDERS ACCORDING TO HIS JURISDICT ION AND SO FAR AS BANK ACCOUNTS IN SOME FOREIGN BANKS IN SOME FOREIGN COUNTRY IS CONCE RNED THE MATTER WILL BE TAKEN UP BY THE GOVERNMENT OF INDIA. IN SUCH A SCENARIO, IT CAN NOT BE SAID THAT THE SEARCH HAS ALREADY BEEN CONCLUDED WHEN THE SEARCH PARTY LEFT T HE PREMISES RAIDED BECAUSE 10 SHRI LALIT KUMAR NAGPA L & ANIL KUMAR NAPAL VERIFICATION OF OUT STATION LOCKERS AND BANK ACCOUN TS IN SOME FOREIGN COUNTRY WILL CONSUME SUBSTANTIAL TIME. IF THE PROCESS TAKES ONE YEAR AND IT IS LAID DOWN THAT FOR THE PURPOSES OF RECKONING THE PERIOD OF LIMITATION, THE DAY WHEN THE SEARCH PARTY LEFT THE PREMISES OF THE SEARCHED PERSON SHALL BE THE STARTI NG POINT, AND NOT THE DATE ON WHICH PROHIBITORY ORDERS ARE LIFTED. THIS WILL MAKE THE WHOLE PROCESS BARRED BY LIMITATION BECAUSE IN PRE-AMENDED PROVISIONS, THE ASSESSMENT H AS TO BE COMPLETED BEFORE ONE YEAR FROM THE DATE OF WHEN THE LAST PANCHNAMA IS DR AWN. THIS WILL SHAKE THE VERY FOUNDATION OF THE SEARCH & SEIZURE ASSESSMENTS AND DEFEAT THE LEGISLATIVE INTENT . 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITES AND ALSO VARIOUS CASE LAWS RELIED UPON BY LD. AR. THE FACTS WHICH ARE NOT IN DISPUTE ARE THAT THE SEARCH WAS CONCLUDED ON 27.7.2000 AND ONLY PROHIBITORY ORDER WAS LIFTED ON 13.9.2000. IT IS ALSO NOT DISPUTED THAT NO SEIZ URE WAS MADE WHEN THE LOCKERS AND THE WOODEN CUPBOARD WERE OPENED. IT IS ALSO A FACT THAT IN THE LAST PANCHNAMA, ONLY PROHIBITORY ORDER ISSUED U/S. 132(3) OF THE ACT WAS LIFTED. WE FIND THAT ON SIMILAR FACTS AND CIRCUMSTANCES, HONBLE JURISDICTIONAL HIGH COUR T OF MUMBAI IN THE CASE OF CIT VS MRS. SANDHYA P. NAIK (SUPRA) IN ITS WISDOM HAS HELD THAT THE POWER U/S. 132(3) OF THE ACT THUS CANNOT BE EXERCISED SO AS TO CIRCUMVENT TH E PROVISIONS OF SECTION 132(3) R.W.S 132(5) OF THE I.T. ACT. THE POSITION HAS BECOME MU CH MORE CLEAR AFTER THE INSERTION OF THE EXPLANATION TO SEC TO SEIZURE WITH EFFECT FROM J ULY, 1995 THAT IT DOES NOT AMOUNT TO SEIZURE. THEREFORE, BY PASSING A RESTRAINT ORDER, T HE TIME LIMIT AVAILABLE FOR FRAMING OF THE ORDER CANNOT BE EXTENDED. 13. THE ITAT MUMBAI BENCH E IN THE CASE OF NANDLAL M. GANDHI VS CIT (SUPRA) HAS FOLLOWED THE DECISION OF HONBLE JURISDICTIONAL HIG H COURT. WE ARE ALSO BOUND BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT O F BOMBAY. RESPECTFULLY FOLLOWING THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT AND THE CO ORDINATE BENCH, WE HOLD THAT 11 SHRI LALIT KUMAR NAGPA L & ANIL KUMAR NAPAL THE BLOCK ASSESSMENT ORDER U/S. 158BC DT. 30.9.2002 IS BARRED BY PERIOD OF LIMITATION AS PROVIDED U/S. 158BE (1)(B) OF THE ACT. 14. AS WE HAVE HELD THAT THE ASSESSMENT IS BARRED B Y LIMITATION, WE DO NOT FIND IT NECESSARY TO DISPOSE OF THE ISSUES RAISED BY THE DE PARTMENT IN IT(SS)A NO. 185 & 187/M/2006. 15. IN THE RESULT, THE APPEALS FILED BY THE DEPARTM ENT ARE DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 18 TH DAY OF MAY, 2012 SD/ - SD/ - (D.MANMOHAN) (N.K. BILLAIYA ) VICE-PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 18 TH MAY, 2012 RJ COPY TO : THE APPELLANT THE RESPONDENT THE CIT-CONCERNED THE CIT(A)-CONCERNED THE DR G BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI