M/s Sterlite Industries (India) Ltd., Mumbai V. DCIT, Mumbai

CO 336/CHNY/2005

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6176 (ITAT-CHENNAI)
• Duration Of Justice: 6 year(s) 2 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 20-04-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T VASUDE
• Keywords: Bogus purchase; Depreciation; Income from undisclosed sources; Search and seizure; Principle of natural justice; Period of limitation; Additional evidence; Block assessment; Onus to prove; Capital expenditure
• Section: 69C; 143(3); 133A; 32; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.(SS) A. NO. 182/MDS/2004 BLOCK ASSESSMENT YEARS : 1990-91 TO 1999-2000 AND THE PERIOD 01-04-1999 TO 08-12-1999 THE DEPUTY COMMISSIONER OF INCOME-TAX-2(3), MUMBAI. V. M/S. STERLITE INDUSTRIES (INDIA) LTD., 5 TH FLOOR, DHANRAJ MAHAL, CSM ROAD, APOLLO BUNDER, MUMBAI-400 039. (PAN : AABCS4955Q) (APPELLANT) (RESPONDENT) A N D C.O. NO.336/MDS/2005 (IN IT(SS)A NO. 182/MDS/2004) BLOCK ASST. YEARS 1990-91 TO 1999-2000 AND THE PERIOD 01-04-1999 TO 08-12-1999 M/S. STERLITE INDUSTRIES (INDIA) V. THE DEPUTY COMMISSIONER OF LTD., MUMBAI-400 039. INCOME-TAX-2(3), MU MBAI. (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI SHAJI P. JACOB ASSESSEE BY : DR. DEBI PRASAD PAL, SHRI R. JANAKIRAMAN & SHRI T. VASUDEVAN O R D E R I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 2 PER GEORGE MATHAN, JUDICIAL MEMBER : IT(SS) A. NO. 182/MDS/2004 IS AN APPEAL FILED BY T HE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-XXXIII, MUMBAI IN APPEAL NO. CIT(A)XXXIII/RG-2(3)/IT/13-S/02-03 DATED 15-04-2004 FOR THE BLOCK ASSESSMENT YEARS 1990-91 TO 1999-2000 AND A PART OF ASSESSMENT YEAR 2000-01 (UPTO 08- 12-1999). C.O. NO. 336/MDS/2005 IS A CROSS OBJECTI ON FILED BY THE ASSESSEE AGAINST THE ABOVE REVENUES APPEAL. 2. SHRI SHAJI P. JACOB, SR. DR REPRESENTED ON BEHAL F OF THE REVENUE AND SHRI DEVI PAL, SR. ADVOCATE ALONG WITH SHRI R. JANAKIRAM AN AND SHRI T. VASUDEVAN, ADVOCATES REPRESENTED ON BEHALF OF THE ASSESSEE. 3. THE FACTS IN THE PRESENT APPEAL ARE THAT THE ASS ESSEE IS A DOMESTIC COMPANY WHICH IS IN THE BUSINESS OF MANUFACTURE OF NON-FERROUS METALS AND TELECOMMUNICATION EQUIPMENTS. THERE WAS A SEARCH A ND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 CARRIED OUT AT VARIOUS LOCATIONS BEING THE OFFICES AND FACTORIES OF M/S. STERLITE INDUSTRI ES LTD. AND ALL THEIR GROUP COMPANIES AS ALSO AT THE RESIDENTIAL PREMISES OF AL L THE DIRECTORS AND TOP OFFICIALS OF THE COMPANY ON 08-12-1999. CONSEQUENT TO THE SE ARCH, BLOCK ASSESSMENT ORDERS HAVE BEEN PASSED ON 28-03-200002 UNDER SECTI ON 143(3) READ WITH SECTION 158BC OF THE ACT BY THE ASSISTANT COMMISSIO NER OF INCOME-TAX, CIRCLE- I(3), MUMBAI. THE ASSESSEE HAD FILED APPEAL AGAINS T THE BLOCK ASSESSMENT ORDER BEFORE THE LEARNED CIT(A)-XXXIII, MUMBAI AND CAME T O BE DISPOSED OF BY THE I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 3 LEARNED CIT(A) VIDE ORDER DATED 15-04-2004 WHICH WA S THE SUBJECT MATTER OF APPEAL BY THE REVENUE IN IT(SS) A NO. 426/MUM/2004 AND CROSS OBJECTION AGAINST THE SAID APPEAL WAS NO. 154/MUM/2005. THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE CAM E TO BE TRANSFERRED TO THE CHENNAI BENCHES AND THE SAME HAVE BEEN NUMBERED AS IT(SS) A NO. 182/MDS/2004 AND C.O. NO. 336/MDS/2005. 4. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ADDITION ONLY TO THE EXTENT OF ` 27,50,00,000/- BEING EXCESS DEPRECIATION ON ACCOUN T OF INFLATION OF COST OF THE FIXED ASSETS DUE TO INCLUS ION OF INFRUCTUOUS CAPITAL EXPENDITURE ON THE BASIS OF CHAIRMANS STAT EMENT DATED 08- 01-2000 AS AGAINST THE ADDITION OF ` 34,39,37,070/- MADE BY THE ASSESSING OFFICER BEING EXCESS DEPRECIATION WITH RE FERENCE TO THE INFLATED COST OF COPPER SMELTER AND SULPHURIC ACID PLANT ON ACCOUNT OF BOGUS PURCHASES OF STEEL AND CONSEQUENTLY DELETI NG ADDITION TO THE EXTENT OF ` 7,89,37,070/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE OF DEPRECIATION OF ` 60,21,808/- MADE BY THE ASSESSING OFFICER IN RESPECT OF THE JELLY-FILLED TELEPHONE CABLES, OPTIC AL FIBRE AND OPTICAL FIBRE CABLES PLANT AT AURANGABAD, THE NONFE RROUS ROD PLANT AT LONAVALA AND THE ALUMINIUM FOIL PLANT AT SANASWA DI ON ACCOUNT OF BOGUS PUCCHASES OF STEEL MADE FROM M/S. GOPAL RA I AND SONS AND M/S. G.R. ENTERPRISES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION OF ` I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 4 3,70,27,309/- MADE BY THE ASSESSING OFFICER BEING T HE DEPRECIATION RELATED TO THE CAPITALIZED COMPONENT OF FOREIGN EXC HANGE FLUCTUATION AND ATTRIBUTABLE TO PLANT AND MACHINERY PROCURED INDIGENOUSLY BY USE OF LOANS TAKEN IN FOREIGN EXCHA NGE, ON THE GROUND THAT THE INCREASE IN LIABILITY IN RESPECT OF THE LOANS IN FOREIGN CURRENCY IS A QUESTION WHICH SHOULD BE CONSIDERED I N THE NORMAL ASSESSMENT AND THE DISALLOWANCE CANNOT BE A PART OF THE BLOCK ASSESSMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION OF ` 5.60 LACS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CA SH SALARY TO MR.B.K. PANSARI. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION OF ` 5,91,36,878/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF EXPENDITURE INCURRED IN RELATION TO THE ATTEMPT BY THE ASSESSEE TO ACQUIRE THE SHARES OF INDAL BEING CAPITAL IN NATURE , HOLDING THAT THE DISALLOWANCE CANNOT BE MADE AS UNDISCLOSED INC OME IN THE BLOCK ASESSMENT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION OF ` 5 LACS, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF C OST OF THE THREE PAINTINGS FOUND AT THE RESIDENCE OF MR. D.P. AGARWA L, ACCEPTING THE SUBMISSION OF THE ASSESSEE THAT THE BURDEN TO PROVE THE ORIGIN OF THE PAINTINGS IN THAT OF MR. D.P. AGARWAL AND NOT O F THE ASSESSEE COMPANY WITHOUT TAKING INTO ACCOUNT THE EXPLANATION SUBMIITTED BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROC EEDINGS THAT THREE PAINTINGS FOUND HAVE ALREADY ACCOUNTED AND WE RE PART OF THE FURNITURE PROVIDED AT THE RESIDENCE OF THEIR CMD SH RI ANIL AGARWAL. I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 5 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE A DDITION OF ` 5 LACS, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF D ONATION TO ADIVASI VIKAS SANGATHAN, ON THE GROUND THAT IT CANN OT BE CONSIDERED AS UNDISCLOSED INCOME OF THE BLOCK PERIO D. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT T HE AMENDMENT TO SECTION 113 BEING PROSPECTIVE IN NATURE, NO SEPA RATE SURCHARGE IS LEVIABLE ON THE TAX RATE OF60% ON THE UNDISCLOSE D INCOME COMPUTED FOR THE BLOCK PERIOD IN THE CASE OF THE AS SESSEE FOR WHICH BLOCK ASSESSMENT ORDER HAS BEEN PASSED ON 28-03-200 2 I.E. BEFORE 01-06-2002 THE EFFECTIVE DATE OF AMENDMENT. 9. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR AMEND THE ABOVE GROUND OF APPEAL. 5. IN THE CROSS OBJECTION FILED BY THE ASSESSEE, TH E FOLLOWING GROUNDS HAVE BEEN RAISED: I 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXXIII, MUMBAI {(THE CIT(A)} LEGALLY ERRED IN UPHOLDING THE VALIDITY OF THE ASSESSMENT ORDER DATED 28 TH MARCH 2002 UNDER SECTION 143(3) R.W.S. 158BC OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. IT IS PRAYED THAT THE ASSESSMENT ORDER DATED 28 TH MARCH 2002 UNDER SECTION 143(3) R.W.S. 158BC OF THE ACT B E QUASHED AS BEING AB INITIO VOID AND ILLEGAL. II 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) LEGALLY ERRED IN HOLDING THAT THE ASSESSMENT ORDER DATED 28 TH I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 6 MARCH 2002 UNDER SECTION 143(3) R.W.S. 158BC OF THE ACT WAS NOT BARRED BY LIMITATION. 2. IT IS PRAYED THAT THE ASSESSMENT ORDER DATED 28 TH MACH 2002 UNDER SECTION 143(3) R.W.S. 158BC OF THE ACT B E CANCELLED AS BEING BARRED BY LIMITATION. III 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) LEGALLY ERRED IN HOLDING THAT UNDISCLOSED IN COME OF THE BLOCK ASSESSMENT COMPUTED WITHOUT REFERENCE TO THE PREVIO US YEAR TO WHICH IT PERTAINED TO WAS NOT IN VIOLATION OF SECTI ON158BB(1) OF THE ACT. 2. IT IS PRAYED THAT IT BE HELD THAT THE BLOCK ASS ESSMENT ORDER MADE WITHOUT DETERMINING THE UNDISCLOSED INCO ME FOR EACH PREVIOUS YEAR WAS VOID AND ILLEGAL. IV 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) LEGALLY ERRED IN HOLDING THAT THE BLOCK ASSE SSMENT MADE WITHOUT ISSUING A SHOW CAUSE NOTICE HAD NOT VIOLATE D THE PRINCIPLES OF NATURAL JUSTICE AND WAS VALID. 2. IT IS PRAYED THAT IT BE HELD THAT THE BLOCK ASS ESSMENT ORDER MADE IN VIOLATION OF THE PRINCIPLES OF NATURA L JUSTICE BE TREATED AS INVALID. V 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT(A) LEGALLY ERRED IN HOLDING THAT DISALLOWANCE O F DEPRECIATION COULD BE A SUBJECT OF BLOCK ASSESSMENT. 2. IT IS PRAYED THAT IT BE HELD THAT DISALLOWANCE OF DEPRECIATION COULD NOT BE THE SUBJECT OF BLOCK ASSE SSMENT. VI 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) LEGALLY ERRED IN HOLDING THE DISALLOWANCE OF DEPRECIATION WAS ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH AND I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 7 CONSEQUENTLY THAT THE ASSESSING OFFICER HAD JURISDI CTION TO CONSIDER THE DISALLOWANCE OF DEPRECIATION IN THE BLOCK ASSES SMENT. 2. IT IS PRAYED THAT IT BE HELD THAT THE DISALLOWA NCE OF DEPRECIATION WAS MADE WITHOUT JURISDICTION AND THE SAME COULD NOT BE PART OF THE BLOCK ASSESSMENT. VII 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) LEGALLY ERRED ION UPHOLDING THE DISALLOWANCE OF DEPRECIATION ON THE COPPER SMELTER AND THE SULPHURIC ACID PLANT OF ` 27,50,00,000 FOR THE PERIOD 1,04,1998 TO 08.12.1999. 2. IT IS PRAYED THAT THE ASSESSING OFFICER BE DIRE CTED TO DELETE THE DISALLOWANCE OF DEPRECIATION OF ` 27,50,00,000. VIII 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING UPON THE GROUND TH AT THE ENTIRE FOREIGN EXCHANGE FLUCTUATION TREATED AS COST WAS CO RRECTLY INCLUDIBLE AS COST AND ACCORDINGLY, DEPRECIATION OF ` 3,70,27,309 WAS ALLOWABLE ON SUCH COST. 2. IT IS PRAYED THAT IT BE HELD THAT THE FOREIGN E XCHANGE FLUCTUATION BE TREATED AS COST AND DEPRECIATION THE REON BE ALLOWED. X 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION OF 13,21,591 MADE ON ACCOUNT OF NOTINGS (PAGE 43 OF ANNEXURE A/2 TO PANCHNAMA DA TED 8 TH DECEMBER, 1999) ALLEGED TO REPRESENT UNACCOUNTED EX PENSES OF THE RESPONDENT UNDER SECTION 69C OF THE ACT. 2. IT IS PRAYED THAT THE ASSESSING OFFICER BE DIRE CTED TO DELETE THE ADDITION OF ` 13,21,591. XI 1. ON THE ACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION OF ` 19 LAKHS BASED ON A SCRIBBLING FOUND IN THE DIRECTORS CHAMBER (PAGE 44 OF ANNEXURE A/2 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 8 TO PANCHNAMA DATED 8 TH DECEMBER, 1999) REPRESENTING CREDIT TO DIRECTORS FOR TRAVEL AND OTHER EXPENSES. 2. IT IS PRAYED THAT THE ASSESSING OFFICER BE DIRE CTED TO DELETE THE DISALLOWANCE OF ` 19 LAKHS. XII 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION MADE ON ALLE GED CREDIT OF ` 5 LAKHS IN FAVOUR OF MS. SUMAN AGARWAL FOR HER ALLEGE D LONDON TRIP. 2. IT IS PRAYED THAT THE ASSESSING OFFICER BE DIRE CTED TO DELETE THE ADDITION OF ` 5 LAKHS. XIII 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION MADE ON ALLE GED CREDIT OF ` 14 LAKHS IN FAVOUR OF MS. VEDAVATI AGARWAL. 2. IT IS PRAYED THAT THE ASSESSING OFFICER BE DIRE CTED TO DELETE THE ADDITION OF ` 14 LAKHS. XIV 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION MADE ON ACCO UNT OF PAGE 15 OF ANNEXURE A/6 OF PANCHNAMA DATED 8 TH DECEMBER, 1999 ALLEGED TO REPRESENT UNDISCLOSED EXPENDITURE OF THE RESPONDENT UNDER SECTION 69C OF THE ACT BEING CASH PAYMENT OF SALARY OF ` 1.6 LAKHS TO MR. A.T. PANJWARI. 2. IT IS PRAYED THAT THE ASSESSING OFFICER BE DIRE CTED TO DELETE THE ADDITION OF ` 1.6 LAKHS. XV 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION OF ` 6.90 LAKHS ON ACCOUNT OF ALLEGED CASH PAYMENT FOR LAND AT PIPARIA ADJUSTED A GAINST BOGUS STEEL BILLS. 2. IT IS PRAYED THAT THE ASSESSING OFFICER BE DIRE CTED TO DELETE THE ADDITION OF ` 6.90 LAKHS. I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 9 XVI 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION MADE ON ACCO UNT OF LOOSE SHEET AT PAGE 42 OF A/2 OF PANCHNAMA DATED 8 TH DECEMBER, 1999 ALLEGED TO REPRESENT UNACCOUNTED INCOME OF THE RESP ONDENT BEING CASH PAYMENT OF ` 1,48,60,000 TO MR. TARUN JAIN. 2. IT IS PRAYED THAT THE ASSESSING OFFICER BE DIRE CTED TO DELETE THE ADDITION OF ` 1,48,60,000. XVII EACH OF THE ABOVE GROUND IS WITHOUT PREJUDICE T O THE OTHER. XVIII THE RESPONDENT CRAVES LEAVE TO ADD TO, A MEND AND/OR ALTER ANY OF THE ABOVE GROUNDS. 6. AT THE TIME OF HEARING IT WAS SUBMITTED BY THE L EARNED SENIOR COUNSEL ON BEHALF OF THE ASSESSEE THAT IN THE ASSESSEES CROSS OBJECTION GROUNDS I (1 & 2), II(1 & 2), III(1 & 2) AND IV(1 & 2) WERE LEGAL ISSU ES WHICH WENT TO THE ROOT OF THE ASSESSMENT INSOFAR AS THE ASSESSEE HAD CHALLENG ED THE VALIDITY OF THE ASSESSMENT ORDER ITSELF. IT WAS THE SUBMISSION THA T AS THESE GROUNDS WENT TO THE ROOT OF THE ASSESSMENT, THEY MAY BE HEARD FIRST . THE LEARNED DR DID NOT OBJECT TO THE SUBMISSIONS. CONSEQUENTLY GROUNDS I( 1 & 2), II(1 & 2), III(1 & 2) AND IV (1 & 2) WERE HEARD FIRST. 7. IT WAS THE SUBMISSION BY THE LEARNED SENIOR COUN SEL THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 08-09-1975 UNDER THE NA ME RAINBOW INVESTMENTS LTD. WITH ITS REGISTERED OFFICE AT CAL CUTTA. IN OCTOBER, 1976 THE COMPANYS NAME WAS CHANGED TO M/. STERLITE CABLE LT D. IN 1979 THE REGISTERED I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 10 OFFICE WAS SHIFTED TO THE STATE OF MAHARASHTRA. TH E COMPANY STARTED MANUFACTURE OF PVC POWER CABLES, OVERHEAD POWER TRA NSMISSION CONDUCTOR AND ENAMELED COPPER WIRE. IN 1986 THE COMPANYS NAME W AS CHANGED TO M/S. STERLITE INDUSTRIES (INDIA) LTD. IN 1988 THE COMPA NY CAME OUT WITH PUBLIC ISSUE OF SHARES AND CONVERTIBLE DEBENTURES TO POT FINANCE THE COMPANYS FIRST JELLY FILLED TELEPHONE CABLE PLANT AT WALUJ, AURANGABAD. IN 199 0 THE COMPANY DISCONTINUED PRODUCTION OF PVC CABLES AND ENAMELED COPPER WIRES. IN 1991 THE ASSESSEE COMPANY SET UP CONTINUOUS CAST COPPER ROD PLANT AT LONAVALA. IN 1993 THE COMPANY HAD SET UP ONE MORE JELLY FILLED TELEPHONE CABLE PLANT AT SILVASSA. IN 1996 THE ASSESSEE GOT OPTICAL FIBER PLANT AT WALUJ, AURANGABAD AND CONTINUOUS CAST COPPER ROD PLANT AT SILVASSA FROM M/S. STERLIT E COMMUNICATIONS LTD., ON ACCOUNT OF MERGER. IN 1998 THE COMPANY COMMISSIONE D COPPER SMELTING PLANT AT TUTICORIN (TAMILNADU) AND A COPPER REFINERY AT S ILVASSA. THIS COPPER SMELTING AND REFINERY WAS RELOCATED FROM RATNAGIRI, MAHARASH TRA DUE TO ENVIRONMENTAL PROBLEMS FACED BY THE COMPANY. TO POT FINANCE THE ABOVE PROJECTS, THE COMPANY CAME OUT WITH INDIAN PUBLIC/RIGHT ISSUES IN 1988, 1989, 1991 AND 1993. THUS THE COMPANY WAS HAVING ITS MANUFACTURING FACIL ITIES AT AURANGABAD, SILVASS, SANASWADI (PUNE), LONAVALA, KARANJWANA (PUNE) AND T UTICORIN. 8. IT WAS THE SUBMISSION THAT THE SEARCH HAD BEEN C ONDUCTED ON THE ASSESSEES PREMISES ON 08-12-1999. CONSEQUENT TO T HE SEARCH ON 08-12-1999 A PANCHNAMA WAS DRAWN UP AND ABOUT 108 FILES SEIZED. PROHIBITORY ORDERS HAD ALSO BEEN PASSED U/S 132(3) OF THE INCOME TAX ACT, 1961 ON THE DOCUMENTS IN I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 11 THE RECORD ROOM AND ALMIRAH IN THE ROOM OF THE GENE RAL MANAGER (F &A) AND SEALS HAD BEEN PLACED IN THE RECORD ROOM DOOR AT M/ . STERLITE INDUSTRIES (INDIA) LTD., TUTICORIN. THE LEARNED AUTHORISED REPRESENT ATIVE DREW OUR ATTENTION AT PAGES 1 & 2 OF THE DEPARTMENTAL PAPER BOOK I WHICH IS THE COPY OF THE PANCHNAMA DATED 8-12-1999 AND AT PAGE 16 OF THE DEP ARTMENTAL PAPER BOOK I WHICH SHOWED THE COPY OF THE PROHIBITORY ORDER PASS ED UNDER SECTION 132(3) ON 8.12.1999. IT WAS THE FURTHER SUBMISSION THAT THE SEARCH COMMENCED AT 8.30 A.M. AND WAS TEMPORARILY CONCLUDED AT 11.30 P.M. I T WAS THE FURTHER SUBMISSION THAT STATEMENTS HAD BEEN RECORDED FROM VARIOUS PERS ONS IN THE COURSE OF SEARCH ON 8.12.1999, SUCH AS SHRI V. RAMANATHAN, GENERAL M ANAGER (F & A), SHRI C.V. KRISHNAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT OF S TERLITE COPPER SIPCOT, TUTICORIN, SHRI K. RANGANATHAN, GENERAL MANAGER (CO MMERCIAL), WHO WAS IN CHARGE OF PURCHASE AND STORES ETC. IT WAS THE SUBM ISSION THAT ON 21.1.2000 THE PO PASSED U/S. 132(3) WAS REPEATED AND A FRESH PANC HNAMA WAS PASSED WHICH IS SHOWN AT PAGES 33 AND 34 OF THE PAPER BOOK. IT WAS THE SUBMISSION THAT ON 21.1.2000 THE PROCEEDINGS WERE STARTED AT 10 A.M. A ND WAS CONCLUDED AT AROUND 7 P.M. IT WAS THE SUBMISSION THAT ON 21.1.2000 ALS O 14 FILES WERE SEIZED AND TAKEN AND A PO WAS IMPOSED ON THE ALMIRAH IN THE RO OM OF GENERAL MANAGER (F & A) AS ALSO ON THE RECORD ROOM OF M/S. STERLITE IN DUSTRIES (INDIA) LTD. THE COPY OF PO WAS SHOWN AT PAGES 131 & 132 OF THE DEPARTMEN TAL PAPER BOOK II. IT WAS THE SUBMISSION THAT THE PANCHNAMA DATED 21.1.2000 A LSO SHOWED THAT THE SEARCH WAS TEMPORARILY CONCLUDED. IT WAS THE FURTH ER SUBMISSION THAT I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 12 SUBSEQUENTLY ON 2.3.2000 THE PROHIBITORY ORDER PLAC ED ON 21.1.2000 WAS LIFTED AT 2 P.M. AND THE SEARCH WAS TREATED AS FINALLY CON CLUDED AT 8 P.M. IT WAS THE SUBMISSION THAT AS PER THE PANCHNAMA DT. 2.3.2000 C ERTAIN OTHER DOCUMENTS WERE ALSO SEIZED AS ALSO A BACK UP OF COMPUTER WAS TAKEN. IT WAS THE SUBMISSION THAT OTHER THAN THE STATEMENTS RECORDED ON 8.12.1999, NO STATEMENTS HAD BEEN RECORDED ON EITHER 21.1.2000 OR 2.3.2000. IT WAS THUS THE SUBMISSION THAT THE PROHIBITORY ORDER PLACED ON 8.12.1999 AND 21.1.2000 WERE TOTALLY ILLEGAL INSOFAR AS, AS PER THE PROVISIONS OF SECTION 132(3) IT IS ONLY WHEN IT IS NOT PRACTICABLE TO SEIZE ANY SUCH BOOKS OF ACCOUNTS, OT HER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG THE PROHIBITORY ORDER COULD BE PLACED. IT WAS THE SUBMISSION THAT ALL THAT THE AU THORIZED OFFICER HAD PUT TO HIS PROHIBITORY ORDER WAS THE ALMIRAH IN THE ROOM OF TH E GENERAL MANAGER (F & A) AS ALSO THE RECORD ROOM. IT WAS THE FURTHER SUBMISSIO N THAT ALL THAT THE SEARCH PARTY HAD SEARCHED FOR AND HAD FOUND HAD BEEN SUBSTANTIAL LY TAKEN ON 8.12.1999 AND THE PROHIBITORY ORDER HAD BEEN PLACED ONLY FOR THE PURPOSE OF EXTENDING THE PERIOD OF SEARCH. IT WAS THE SUBMISSION THAT THE I TEMS IN REGARD TO WHICH THE PROHIBITORY ORDER HAD BEEN PLACED WERE NOT ITEMS WH ICH WERE NOT PRACTICABLE TO SEIZE. IT WAS THE SUBMISSION THAT A PERUSAL OF THE PANCHNAMA DT. 21.1.2000 AND 2.3.2000 CLEARLY SHOWED THAT NOTHING FRESH WAS FOUN D. IT WAS THE SUBMISSION THAT THIS CLEARLY SHOWED THAT WHATEVER WAS REQUIRED TO BE FOUND AND WHAT WAS LOOKED FOR AND FOR THE PURPOSE OF WHICH THE SEARCH HAD BEEN CONDUCTED, HAD ALREADY BEEN FOUND ON 8.12.1999 AND AFTER SEIZING S UBSTANTIAL PORTION OF THE I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 13 SAME, A FEW BALANCE PAPERS WERE LEFT IN THE ALMIRAH OF THE GENERAL MANAGER (F&A) AND PROHIBITORY ORDER IMPOSED ON THE SAID ALM IRAH AS ALSO THE RECORD ROOM JUST FOR THE PURPOSE OF EXTENDING THE LIMITATION IN REGARD TO THE EXECUTION OF THE WARRANT OF AUTHORIZATION. IT WAS THE SUBMISSION TH AT IN THESE CIRCUMSTANCES THE PROHIBITORY ORDER IMPOSED ON 8.12.1999 AND 21.1.000 SHOULD BE LOOKED UPON AS A GARB FOR EXTENDING THE DATE OF CONCLUSION OF THE SEARCH BY DRAWING UP OF THE LAST PANCHNAMA AND THE PANCHNAMA AND THE PANCHNAMA AS DRAWN ON 8.12.1999 SHOULD BE TREATED AS THE LAST PANCHNAMA DRAWN IN RE LATION TO THE ASSESSEE IN WHOSE CASE THE WARRANT OF AUTHORIZATION HAD BEEN IS SUED. THE LEARNED SENIOR COUNSEL PLACED RELIANCE ON THE DECISION OF THE HON' BLE DELHI HIGH COURT IN THE CASE OF B.K. NOWLAKHA AND OTHERS V. UNION OF INDIA AND OTHERS REPORTED IN 192 ITR 436 WHEREIN THE HON'BLE DELHI HIGH COURT HAD HE LD THAT WHEN AN ORDER U/S 132(3) IS ISSUED IT MUST BE RECORDED AS TO WHY IT I S NOT PRACTICABLE TO EFFECT SEIZURE. IN THE PRESENT CASE, IT WAS THE SUBMISSIO N THAT THERE WERE NO REASONS RECORD, NOR WAS THERE ANY CAUSE SHOWN AS TO WHY IT WAS NOT PRACTICABLE TO EFFECT THE SEIZURE OF THE DOCUMENTS WHICH WERE PLACED BEFO RE THE PROHIBITORY ORDER. IT WAS THE FURTHER SUBMITTED THAT WHEN A PROHIBITOR Y ORDER WAS PLACED, IT WAS A RESTRAINT ON THE OWNER OR THE PERSON IN POSSESSION OF THE GOODS FROM REMOVING AND PARTING WITH THE POSSESSION OR DEALING WITH THE ITEMS ON WHICH THE PROHIBITORY ORDER HAS BEEN PLACED. THE ORDER OF RE STRAINT IS EFFECTIVE AGAINST THE OWNER OR PERSON IN POSSESSION THEREOF AND WAS NOT T O AIM AT THE DEPARTMENT ITSELF WHICH HAD PLACED THE PROHIBITORY ORDER. HE D REW OUR ATTENTION TO PAGE 445 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 14 OF THE SAID DECISION OF THE HON'BLE DELHI HIGH COUR T WHEREIN IT HAD BEEN HELD AS FOLLOWS : IN OUR OPINION, EVEN WHEN AN ORDER UNDER SECTION 1 32(3) HAS BEEN PASSED, THE DEPARTMENTAL OFFICIALS ARE NOT RES TRAINED FROM EXAMINING THE GOODS. AN ORDER UNDER SECTION 1 32(3) RESTRAINS THE OWNER OR THE PERSON IN POSSESSION OF THE GOODS FROM REMOVING, PARTING WITH POSSESSION OR DEALING W ITH THEM. THE ORDER OF RESTRAINT IS EFFECTIVE AGAINST THE OWN ER OR THE PERSON IN POSSESSION THEREOF AND IS NOT AIMED AT TH E DEPARTMENT ITSELF. BY ISSUING AN ORDER UNDER SECTI ON 132(3), THE DEPARTMENT IS NOT RESTRAINED FROM EXAMINING THE GOODS IN RESPECT OF WHICH A RESTRAINT ORDER HAS BEEN PASSED. THERE WAS NO VALID REASON, THEREFORE, FOR SEEKING TO REVO KE THE ORDERS ON APRIL 9, 1991, AND JUNE 6, 1991. SEEING THE DATES WHEN SUCH AUCTION WAS TAKEN, WE FIND CONSIDERABLE F ORCE IN THE CONTENTION OF LEARNED COUNSEL FOR THE PETITIONE R THAT THIS DEVICE WAS RESORTED TO SOLELY WITH A VIEW TO CIRCUM VENT THE PROVISIONS OF SECTION 132(8A). THE FIRST REVOCATIO N WAS EFFECTED ON APRIL 9, 1991, ONLY ABOUT ONE OR TWO DA YS BEFORE THE EXPIRY OF 60 DAYS. SIMILARLY, THE SECOND REVOC ATION OF JUNE 6, 1991, WAS ALSO EFFECTED ONLY ABOUT ONE OR T WO DAYS BEFORE THE EXPIRY OF 60 DAYS FROM APRIL 9, 1991. IT WAS THUS THE SUBMISSION THAT THE PLACING OF THE PROHIBITORY ORDER ON 8.12.1999 ITSELF WAS ILLEGAL AND INVALID INSOFAR AS THERE WAS NO PRACTICAL DIFFICULTY IN SEIZING THE DOCUMENTS ON WHICH THE PROHIBITORY ORDER HAD BE EN PLACED AS ALSO THE PROHIBITORY ORDER IMPOSED ON 21.1.2000. IT WAS THE SUBMISSION THAT THE DRAWING I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 15 UP OF THE PANCHNAMAS ON 21.1.2000 AND 2.3.2000 WERE INVALID INSOFAR AS THE DOCUMENTS WERE AVAILABLE FOR THE REVENUE TO VERIFY AND THERE WAS NO NECESSITY FOR THE PROHIBITORY ORDER OR THE PANCHNAMAS. THE P ANCHNAMAS CONSEQUENTLY WERE ONLY FOR THE PURPOSE OF EXTENDING THE PERIOD O F LIMITATION. IT WAS THE SUBMISSION THAT AS PER THE PROVISIONS OF SECTION 15 8BE THE LIMITATION FOR PASSING THE ASSESSMENT ORDER EXPIRED ON THE EXPIRY OF 2 YEA RS FROM THE END OF THE MONTH IN WHICH THE LAST OF AUTHORISATION FOR SEARCH UNDER SECTION 132 WAS EXECUTED. IT WAS THUS THE SUBMISSION THAT THE PANCHNAMA DATED 8. 12.1999 WOULD BE THE LAST OF THE PANCHNAMA DRAWN IN RELATION TO THE ASSESSEE IN WHOSE CASE THE WARRANT OF AUTHORIZATION HAD BEEN ISSUED AND CONSEQUENTLY T HE ASSESSMENT WAS LIABLE TO BE COMPLETED BY 31.12.2001 AND AS THE ASSESSMENT HA D BEEN COMPLETED ON 28.03.2002 THE SAME WAS LIABLE TO BE TREATED AS BAR RED BY LIMITATION AND ANNULLED. 9. IT WAS THE FURTHER SUBMISSION THAT THE PROHIBITO RY ORDER HAVING BEEN PLACED ON THE ITEMS IN THE ALMIRAH OF THE GENERAL M ANAGER (F&A) AS ALSO THE RECORD ROOM OF THE ASSESSEE ON 8.12.1999 AND THE PR OHIBITORY ORDER HAVING BEEN LIFTED ON 21.1.2000 AND ANOTHER PROHIBITORY ORDER O N THE SAME ITEMS COULD NOT HAVE BEEN PLACED UNLESS A CATEGORICAL FINDING THAT THE ITEMS WERE IMPRACTICABLE OF BEING SEIZED, WAS SPECIFICALLY SHOWN, WHICH IN T HIS CASE HAS NOT BEEN DONE. HE ALSO PLACED RELIANCE UPON THE DECISION OF THE HON'B LE BOMBAY HIGH COURT IN THE CASE OF CIT V. MRS. SANDHYA P. NAIK REPORTED IN 253 ITR 534 WHEREIN THE HON'BLE BOMBAY HIGH COURT HAD ALSO CATEGORICALLY HELD THAT AN ACTION U/S 132(3) OF THE I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 16 ACT CAN BE RESORTED TO ONLY IF THERE IS ANY PRACTIC AL DIFFICULTY IN SEIZING THE ITEMS WHICH ARE LIABLE TO BE SEIZED AND WHEN THERE IS NO SUCH PRACTICAL DIFFICULTY THE OFFICER IS LEFT WITH NO OTHER ALTERNATIVE BUT TO SE IZE THE ITEMS. IT WAS THE SUBMISSION THAT A PERUSAL OF THE DECISION OF THE BO MBAY HIGH COURT ALSO CLEARLY SHOWED THAT BY PASSING A RESTRAINT ORDER THE TIME L IMIT AVAILABLE FOR FRAMING THE ASSESSMENT ORDER CANNOT BE EXTENDED. 10. THE LEARNED SENIOR COUNSEL FURTHER PLACED RELIE D UPON THE DECISION OF THE THIRD MEMBER DECISION OF THE ITAT IN THE CASE OF NA NDLAL M. GANDHI V. ASSISTANT COMMISSIONER OF INCOME-TAX, REPORTED IN 308 ITR (AT ) 314 (MUMBAI) WHEREIN THE LEARNED THIRD MEMBER HAS FOLLOWED THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. MRS. SANDHYA P. NAIK, R EFERRED TO SUPRA, TO HOLD THAT BY A RESTRAINT ORDER U/S 132(3), THE TIME LIMIT AVA ILABLE FOR FRAMING THE ASSESSMENT ORDER CANNOT BE EXTENDED. IT WAS THUS T HE SUBMISSION THAT THE SEARCH HAVING BEEN CONCLUDED ON 8-12-1999 THE ASSES SMENT ORDER WAS LIABLE TO BE PASSED BY 31-12-2001. CONSEQUENTLY, THE ASSESSM ENT ORDER PASSED ON 28.3.2002 WAS BARRED BY LIMITATION. 11. IT WAS THE FURTHER SUBMISSION THAT IN THE ASSES SMENT ORDER THE YEAR-WISE COMPUTATION OF THE UNDISCLOSED INCOME HAS NOT BEEN DONE AND THE SAME WAS IN VIOLATION OF SECTION158BB(1) OF THE ACT AND CONSEQU ENTLY THE ASSESSMENT WAS LIABLE TO BE ANNULLED. HE PLACED RELIANCE ON THE D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. SURESH N. GUPTA REPORTE D IN 297 ITR 322 TO SUPPORT I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 17 HIS CONTENTION THAT U/S. 158BB THERE IS A THEORY OF BLOCK PERIOD AND IT IS BASED ON THE PRINCIPLE OF AGGREGATION OF TOTAL INCOMES AND C ONSEQUENTLY THE COMPUTATION OF THE UNDISCLOSED INCOME YEAR-WISE HAS TO BE DONE AND IT IS ONLY THE AGGREGATE OF THE SAME WHICH COULD BE TREATED AS THE UNDISCLOS ED INCOME. HE FURTHER PLACED RELIANCE UPON THE DECISION OF THE ALLAHABAD BENCH OF THE ITAT IN THE CASE OF VERMA ROADWAYS V. ASSISTANT COMMISSIONER OF INCO ME-TAX REPORTED IN 75 ITD 183 (ALL.) WHEREIN VIDE PARA 52 THE TRIBUNAL HAS CA TEGORICALLY GIVEN A FINDING THAT AS PER THE PROVISIONS OF SECTION 158BB WHILE COMPUT ING THE UNDISCLOSED INCOME OF THE BLOCK YEAR, THE ASSESSING OFFICER SHALL WORK OUT THE AGGREGATE OF THE TOTAL INCOME OF THE PREVIOUS YEARS AND THIS HAS TO BE DON E YEAR-WISE ONLY. HE ALSO PLACED RELIANCE ON THE CIRCULAR OF THE CBDT REPORTE D IN 254 ITR (ST.) 162 TO SUPPORT HIS SUBMISSION THAT THE UNDISCLOSED INCOME IN THE BLOCK PERIOD IS TO BE COMPUTED YEAR-WISE AND THEN AGGREGATION OF THE SAME WAS TO BE DONE. 12. SHRI T. VASUDEVAN, ADVOCATE ON BEHALF OF THE AS SESSEE RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF RAKESH SARIN V. DEPUTY COMMISSIONER OF INCOME-TAX REPORTED IN 333 I TR 451 (MAD) TO SUPPORT HIS CONTENTION THAT A SEARCH U/S 132 SHOULD BE CONT INUOUS AND IF THERE WAS A GAP, THERE MUST BE A VALID EXPLANATION FOR THE GAP. IN THE ABSENCE OF A VALID AND ACCEPTABLE EXPLANATION, THE SEARCH HELD ON THE THREE OCCASIONS COULD NOT BE TREATED AS A CONTINUATION OF THE SEARCH. IT WAS TH E SUBMISSION THAT IN THE SAID DECISION THE HON'BLE JURISDICTIONAL HIGH COURT HAD CATEGORICALLY GIVEN A FINDING THAT THE PROVISIONS OF LAW, REFERRED TO IN THE PROH IBITORY ORDER WAS SECTION 132(3) I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 18 OF THE ACT AND THE CONTENTS OF THE WOODEN ALMIRAH A ND STEEL CABINET WHICH WERE THE SUBJECT-MATTER OF THE PROHIBITORY ORDERS WERE N OT SUCH IN VOLUME, WEIGHT OR OTHER PHYSICAL CHARACTERISTICS AND SO DANGEROUS IN NATURE THAT IT WAS NOT POSSIBLE OR PRACTICABLE TO TAKE PHYSICAL POSSESSION OF THE S AME AND TO REMOVE THEM FROM THAT PLACE. IT WAS THE SUBMISSION THAT IN THE ASSE SSEES CASE THE DOCUMENTS HAD ALREADY BEEN FOUND IN THE SEARCH HELD ON 8.12.1999. AN INVENTORY WAS ALSO TAKEN IN RESPECT OF THE SAME AND IT WAS THE SUBJECT MATTER OF THE PROHIBITORY ORDER AND SUCH DOCUMENTS WERE NOT SUCH IN VOLUME, WEIGHT OR OTHER PHYSICAL CHARACTERISTICS AND SO DANGEROUS IN NATURE THAT IT WAS NOT POSSIBLE OR PRACTICABLE TO TAKE PHYSICAL POSSESSION OF THE SAME AND TO REMO VE THEM FROM THAT PLACE AND ALL THAT WAS DONE ON 21.1.2000 WAS ONLY LIFTING THE PO AND TAKING PART OF THE DOCUMENTS OUT INTO PHYSICAL POSSESSION OF THE REVE NUE AND KEEPING THE BALANCE UNDER PO AND ON 2.3.2000 LIFTING THE PROHIBITORY OR DER AND TAKING POSSESSION OF THE BALANCE DOCUMENTS FROM THE ALMIRAH AND THE RECO RD ROOM WHICH WERE ALREADY UNDER PROHIBITORY ORDER. IT WAS THUS THE S UBMISSION THAT THE CONCLUSION OF THE ACTUAL SEARCH TOOK PLACE ON 8.12.1999 ITSELF WHEN ALL THE DOCUMENTS WHICH WERE SEARCHED AND WERE FOUND AND PUT UNDER PROHIBIT ORY ORDER, EVEN THOUGH THERE WAS NO IMPRACTICABILITY IN SEIZING AND TAKING AWAY THE SAID DOCUMENTS AND CONSEQUENTLY THE LIMITATION IN REGARD TO THE COMPLE TION OF THE BLOCK ASSESSMENT WAS EXPIRED ON 31.12.2001 AND CONSEQUENTLY THE ASSE SSMENT ORDER DATED 28.3.2002 WAS LIABLE TO BE ANNULLED AS BARRED BY LI MITATION. I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 19 13. IN REPLY, THE LEARNED DR SUBMITTED THAT THE PER SON WHO HAD CONDUCTED THE SEARCH WAS THE DY. DIRECTOR OF INCOME-TAX (INVE STIGATION), TIRUNELVELI AND HE WAS NOT A RESPONDENT IN THE APPEAL. IT WAS THE SUB MISSION THAT THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF B.K. NA ULAKHA AND OTHERS, REFERRED TO SUPRA, CLEARLY SHOWED THAT THE SAID DECISION WAS IN A WRIT PROCEEDINGS. IT WAS THE SUBMISSION THAT THE VALIDITY OF A SEARCH COULD NOT BE CONSIDERED BY THE ITAT AS HAS BEEN CATEGORICALLY HELD BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF M.B. LAL V. CIT REPORTED IN 279 ITR 298, WHEREIN TH E HON'BLE DELHI HIGH COURT HAD CATEGORICALLY HELD THAT IT WAS NO LONGER OPEN T O THE ASSESSEE TO REAGITATE THE QUESTION OF VALIDITY OF THE AUTHORIZATION AND THE L EGALITY OF THE SEARCH PROCEEDINGS EITHER BEFORE THE COMMISSIONER OR BEFOR E THE TRIBUNAL FOR THAT MATTER. THE QUESTION OF VALIDITY OR OTHERWISE OF TH E SEARCH PROCEEDINGS STOOD CONCLUDED BY THE JUDGMENT OF THE HIGH COURT IN THE WRIT PROCEEDINGS. HE FURTHER RELIED UPON THE DECISION OF THE HON'BLE CHATISGARH HIGH COURT IN THE CASE OF TRILOK SINGH DHILLON V. CIT REPORTED IN 332 ITR 185 , WHEREIN THE HON'BLE HIGH COURT HAD CATEGORICALLY HELD THAT IT IS NOT OPEN TO THE ASSESSEE TO QUESTION THE LEGALITY AND VALIDITY OF SEARCH AND SEIZURE PROCEED INGS DURING THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER OR IN APPE AL BEFORE THE COMMISSIONER OR THE TRIBUNAL. HE FURTHER RELIED UPON THE DECISI ON OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. PARAS RICE MILLS REPORTED IN 313 ITR 182, WHEREIN THE HON'BLE HIGH COURT HAD CATEGORICAL LY GIVEN A FINDING THAT THE TRIBUNAL CANNOT GO INTO THE QUESTION OF VALIDITY OR OTHERWISE OF ANY ADMINISTRATIVE I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 20 DECISION FOR CONDUCTING SEARCH AND SEIZURE. HE ALS O RELIED UPON THE DECISION OF THE KERALA HIGH COURT IN THE CASE OF CIT V. DR. C. BALAKRISHNAN NAIR AND ANOTHER REPORTED IN 282 ITR 158 TO SUPPORT HIS CONTENTION THAT THERE WAS NO INFIRMITY IN THE ACTION OF THE DEPARTMENT IN KEEPING THE DOCUMEN TS IN THE ALMIRAH KEPT IN THE PREMISES AFTER ISSUING AN ORDER UNDER SECTION 1 32(3). HE FURTHER RELIED UPON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. ANIL MINDA REPORTED IN 328 ITR 320 TO SUPPORT HIS CONTENTION T HAT THE PERIOD OF LIMITATION OF TWO YEARS WAS FROM THE DATE WHEN LAST PANCHNAMA WAS DRAWN IN RESPECT OF ANY WARRANT OF AUTHORIZATION, IF MORE THAN ONE WARRANTS OF AUTHORIZATION EXISTED. IT WAS THE SUBMISSION THAT IN REGARD TO THE DECISION O F THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF MRS. SANDHYA P. NAIK, REFERRED TO SUPRA, THE DECISION HAD NO APPLICABILITY INSOFAR AS THE DECISION WAS ON ACCOUN T OF THE FACT THAT THE OFFICER WHO CONDUCTED THE SEARCH WAS NOT ONE OF THE AUTHORI ZED OFFICERS MENTIONED IN THE SEARCH WARRANT. IT WAS THE FURTHER SUBMISSION THAT THE OTHER DECISIONS HAD NO APPLICABILITY INSOFAR AS THE LAST PANCHNAMA IN T HOSE CASES HAD BEEN TREATED AS INVALID AS THERE WAS NO SEIZURE ON THE DAY WHEN THE LAST PANCHNAMA WAS DRAWN. IT WAS THE SUBMISSION THAT IN THE PRESENT CASE THER E WAS PRACTICAL DIFFICULTY IN SEIZING THE DOCUMENTS INSOFAR AS THE VOLUME OF DOCU MENTS WAS SUBSTANTIAL. HE PLACED BEFORE US A COPY OF THE LETTER DATED 07-01-2 011 FILED BY THE OFFICER, WHO HAD CONDUCTED THE SEARCH ON THE ASSESSEES PREMISES ON 8.12.1999 ADDRESSED TO THE SR. DEPARTMENTAL REPRESENTATIVE OF THE INCOME T AX APPELLATE TRIBUNAL WHICH IS EXTRACTED BELOW : I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 21 GOVERNMENT OF INDIA OFFICE OF THE ADDITIONAL COMMISSIONER OF INCOM E-TAX T DS RANGE - I , 7 TH FLOOR , NEW BLOCK 121 M . G . ROAD , C HENNAI - 600 034 TDS RG-I/2010-11 DATED: 07-01-2011 TO THE SR. D EPART M E NT A L R E P RE S ENTA T IV E 0 / 0 C I T( DR ) INC O ME T AX A PP E LL A T E T RI BU N A L IT A , ' B ' BLO CK, ' D ' WIN G, R A JAJ I BHA W AN B ESA N T NAGAR C H E NN A I- 9 0 . SIR, SUB: SEARCH OP ER ATION U /S 1 32 IN THE C AS E O F M IS. S TE RLIT E IN D UST RI ES ( INDI A) L TD. - COMM E NT S ON POINT NO. 2 - REGARDING. REF: L ETTER IN IT ( SS) A . NO . 182 / CHNY / 04 DATED 03 -1 2-2 000 R EC EI V ED FROM % THE SR . D . R . ITAT , CHENNAI . -OOO- KI ND A TT E NT I ON I S IN V ITE D T O Y OUR LETT E R D A TED 03-1 2 - 2 010 , W H E R EIN , QUE RI ES H A VE BEEN R AISE D AB OUT TH E C OM P L E TION O F SEA R C H I N TH E CASE O F M I S . STER LIT E IN DU STRIES . AT THE OUTSET , I M U ST MENTION THA T MY INVOLVEMENT WITH THE C ONDU CT O F TH E S EARCH WAS LIMITE D TO THE FA C T, T H AT I WAS ON E O F TH E A U T HORI S ED O FF I CER S O N L Y . I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 22 T H E I NITIATION OF THE SEARC H A N D THE CON C LU S ION OF THE SE A RCH WA S NO T MY RESP ON SI B I L I T Y . THE SE A R C H ON M I S . STE R LIT E INDUSTRIES WA S ORG A NI Z ED BY SH RI R AJIV AGARWA L , DDI T ( IN V.,), VIII(4 ) O F MUMBAI . IT WAS UNDER THE BOMBA Y UN IT 'S GUI D ANCE EVE R YT H I NG W A S O RGANI Z ED. SHRI RAJI V AGARWAL HA D CONTACTED ME O V ER PHONE IN EA R LY DECEMBE R AND H A D REQUESTED ME TO ORGANIZE A TEAM CONSISTING OF 4 AUTHORISED OFF IC ERS AND ABOUT 30 PERSONNEL, IN ORDER TO COVER LARGE PREMISES . HE HAD NOT EVEN MENTIONED T HE LOCATION. ACCORDINGLY , T H E THEN ADDL . DIRECTOR (INV.,) MADURAI , SHRI A. S URYA N ARYA N A N DIRECTED SHRI ARUN C . BHARATH , DDIT, TRICHY TO JOIN ME AT TIR UN E L V ELI ALONG WITH HIS STAFF. TWO ITOS NAMELY SHRI KRISHNAKUMAR AND S ES HAN F ROM TIRUNEL V ELI AND MADURAI RESPECTIVELY WERE ALSO DEPUTED A S PART OF TH E TEAM OF AUTHORISED OFFICER S . E ARLY MORNING OF 8 T H DECEMBER, 1999 , A FA X WAS RECEIVED FROM MUMBAI . A S P E R THE DIRECTIONS THEREIN , THE TEAM PROCEEDED TO TUTICORIN FOR ACTION U /S 13 3A. THE FA X ED BRIEF CONTAINED CLEAR LINES OF ENQUIR Y. THE ALLEGATION WA S THAT CA PITAL EXPENSES IN THE CONSTRUCTION OF THE FACTORY/P ROJECT HAD BEEN GREATLY IN F L A TED . HENCE , THE Y HAD ASKED US TO PHYSICALLY VERIFY THE PLANT AND IDE NTI FY MAT E RIAL TH A T C OULD ES T A BLI S H IN F L A TION OF PURCHASE OF CAPITAL GOODS . B ES ID ES , TH E GE NER A L PO I NT S MENTIONED A BO V E , THE TEAM AT COPPER S MELTER PL A NT W AS ASKED TO F IND OUT THE FOLLOWING : A) OBTAIN THE DETAILS OF CAPITAL EXPENSES ON THIS PROJ ECT. THE TOTAL E X P E NSES A R E A BOUT R S .1200 CRORES . THE FINDINGS MAY BE COMMUNICATED TO THE CONTRO L ROOM A T MUMB A I . THI S LIST MAY BE SCRUTINIZED SPECIALLY FOR ANY MATERIAL RECEIVED FR OM KHAPOLI (N EA R MUMB A I) OR MUMBAI. I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 23 B) T A KE IN PO SS E S SION PRIMA R Y DOCUMENTS RELATING TO RECEIPT OF MATERIAL AT THE GA T E. SUCH DOC U M E NT S M AY B E O BTAINED RIGHT FROM THE TIME W H EN T HE E RE CT ION OF P LANT WAS S T ARTE D . C) STATE M ENT OF TEC H N I CAL PERS O N IN C HAR GE F O R E R EC TION O F PLANT MAY BE REC ORDED REGA RDIN G TH E TOTAL EX PENSES INCURRED. HE MAY ALSO BE AS KE D A BOUT Q UAN TIT Y OF STEEL PLATE S USED FOR T H E ERECTION OF PLANT . D) COPIES O F CI V IL AND MECHANICAL PLAN OF THE PLANT MAY BE OBTAINED . E) IN CA S E O F LIST OF REQUIREMENTS OF MATERIALS PREPARED AT THE P LANNIN G S TA GE CAN B E F OUND , A CO P Y MA Y B E OBTAIN E D . F) A COPY OF THE FIXED A SSET REGISTER MAY BE OBTAINED IF THE SAME IS FOUND AT THE PREMISES. G) DETAILED INVENTORY OF ALL THE CAPITAL EQUIPMENT INSTALLED MAY ALSO BE TAKEN. F ) THE TECHNICAL PERSON MAY BE ASKED ABOUT THE PERC ENTAGE OF RECOVERY FROM COPPER CONCENTRATE. WHILE PROCEEDING ON THESE LINES AND WHEN COMPUTERS WERE EXAMINED, IT WAS FOUND THAT CERTAIN BILLS WHICH HAD APPEARED IN THE COMPUTER SYSTEM HAD NOT BEEN ENTERED IN THE GATE REGISTERS. IN SHORT, THERE WAS A DISCREPANCY IN THE MATERIAL THAT HAD BEEN PHYSICALLY RECEIVED IN THE S ITE AS PER THE GATE REGISTER AND THE MATERIAL SHOWN AS PURCHASE FOR CONSTRUCTION OF THE PLANT, ESPECIALLY, I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 24 PURCHASE OF STEEL FLATS. THIS FACT WAS PUT ACROSS T O SHRI V. RAMANATHAN, GM (FINANCE & ACCOUNTS) WHO ADMITTED PRIMA FACIE THAT PURCHASE OF STEEL FLATS HAD BEEN INFLATED AND BOGUS PURCHASE ORDERS WERE ALSO P RESENT . STATEMENTS WERE ALSO RECORDED FROM SHRI K. RANGANATHAN, GENERAL MAN AGER, SHRI C.V. KRISHNAN, CEO & PRESIDENT OF STERLITE COPPER , SHRI J.R. VENKAT RANA, VICE PRESIDENT, SMELTER. FROM THE STATEMENT RECORDED AND MATERIAL UNEARTHED , IT WAS CLEAR THAT THERE WAS LARGE SCALE TAX EVASION AND THE MATERIALS FOUND WERE VOLUMINOUS. THIS WAS COMMUNICATED TO THE ORGANIZING DDIT, WHO THEN S UGGESTED THAT THE SAME SHOULD BE CONVERTED INTO A SEARCH. ACCORDINGLY, WAR RANT OF AUTHORIZATION WAS OBTAINED FROM JT . CIT , TIRUNELVELI , SHRI E. MANIKANDAN NAIR AND THE SEARCH WAS CONDUCTED. THE SEARCH PROCEEDING S CONTINUED UNBROKEN FOR NEARLY 48 HOUR S AND WERE TEMPORARILY CON C LUDED IN THE LATE HOURS OF 09-12-1999. THE SEARCH H AD TO BE TEMPORARIL Y C ON C LUDED BECAUSE THE FACTORY WAS SEVERAL ACRES LARGE ( MORE THAN 100 ACRES). THEIR MAIN RECORD ROOM HAD TO BE SEARCH ED COMPLETELY FOR BRINGING OUT ALL THE GATE PASS REGISTERS F OR THE RELEVANT PERIOD AND THE BOGUS VOUCHERS. THE SIZE OF THE RECORD ROOM ITSELF WAS ABOUT 30,000 S Q .FT. ADDITIONAL DOCUMENTS WERE STORED IN CONTAINERS OUT SIDE THE RECORD ROOM. LIST OF TENTATIVE BOGUS VOUCHERS HAD BEEN IDENTIFIED BY GENERATING A LIST O F VOUCHERS WITHOUT GATE PASS NUMBERS (MATERIAL INWARDS RECEIPT NUMBERS) FROM THE COMPANY ' S COMPUTER SYS T E M. T H IS T ENTATIVE LIST CONTAINED SEV E RAL 100S OF V OUCHERS. EACH OF THE V OUCH ERS W AS KEPT I N BOUND V OLUME , W HICH WA S F IRST TO BE LOCATED IN TH E RECORD ROOM A ND W HERE VE R POSSIBLE INDIVIDUAL VOUCH E RS WERE SEIZED , AFTER SEPARATION FR OM TH E FOLD. IN S EVER A L CASES, THE ENTIRE BOUND VOLUMES HAD TO BE SEIZED , A S I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 25 THE VOU C H E RS COULD NOT BE E X TRACTED INDIVIDUALLY . THE TASK OF IDENTIFYING THESE VOUCHERS ALONE CONSUMED NEARLY 2 4 HOURS S TARTING FROM ABO U T 8 . 00PM ON 08-12- 1999 AND UPTO 8 . 30PM OF 09-12-1999 . AFTER SECURING THESE VOUCHERS AND GATE PASSE S AND G ATE PASS REGISTER S THE S EARCH W A S TEMPORARIL Y CONCLUDED . THE RECORD ROOM W A S SEAL E D A S IT HAD TO BE THOROUGHLY S EARCHED . THE SEARCH OF THE CONTAINERS HAD A L S O BEEN COMPLETED BY THI S TIME . THE SEARCH COULD NOT BE FINALLY CON C LUDED BECAUSE THE ENTIR E R E CORD ROOM HAD TO BE S EARCH E D FOR MORE SUCH VOUCHERS OR ANY OTHER INCRIMINATING MATERIAL S. AS A MATT E R OF F AC T , DURING THE C OURSE OF SEARCH PROCEEDINGS , IT WA S A LSO FOUND T HAT TH E A SS E S SEE HAD C LAIMED BOGUS TRANSPORT EXPENSES ON THESE NON-E X IST E NT PURCHASES . THE SE VOUCHERS ALSO HAD TO BE L OCATED FOR FURTHER PROOF OF A S SESSEE ' S TA X EVAS I ON. TENTATIVE LIST OF INFLATED PURCHASES AND LIST O F ALLEGED TR A NSPORTS WER E F A X ED DURING THE COURSE OF SEARCH TO THE ORGANIZING DD IT 'S CONTROL R OOM A ND T HEY WERE CONSTANTLY BRIEFED . AT THIS JUNCTURE ONL Y , THE JN E UNIT W A S DE PLO Y ED A S OTHE R S L E FT THE S EARCH BY 8 TH E V ENING . ONLY 3 IT I S, 2 C L E RICAL S TA FF AN D I WE R E IN V OL V ED IN THE CONTINUING OF THE SEARCH. AS THE SE A RCH HAD C ONTINU E D F O R 2 D AYS, I T WA S IMPERATI V E TO TEMPORA R IL Y CON C LUDE THE S EARCH. THE M A TERI A L S U NE AR TH E D A L S O RE QUI RE D EN QUIRIES TO B E C ONDU C T E D , ABOUT THE MO VE MENT O F TR A N S PO RT VE HI C LE S A RRI V IN G A T TUTICORIN AND IN THE STATE OF TAM J ] NADU . ON TE MPOR ARY CON C LU S ION , I RETURNED TO MY HEAD QUARTERS IN T I R UNEL VE LI A T A BOUT 11.00 C LOCK AND PLAC E D THE MATERIALS IN A SMALL S AFE ROOM AT TIR UN E L VE L I. ON 10 TH MORNING ITSELF, WIT H HARDLY FEW HOURS OF SLEEP, I HAD TO RUSH T O T H E WI ND FA RM LOCAT I ON , AT KHAYATHAR, NEAR TIRUN E L V ELI , FOR V ERIFICATION OF THE IN S T A LLATION O F A ROUND 21 WIN D ENER GY GEN E RATORS EACH CO S TIN G A BOUT R S. 2 CRORES. E N Q U I RI ES I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 26 H A D T O BE CONDUCTED AT THE SITE , AT THE ELECTRICITY DISTRIBUTION OF F ICE AT KHAITAR , AT THE . W IND ENERG Y CELL AT TIRUNEL V ELI AND ELECTRICITY BOARD OFFICE AT TUTICORIN . A REPORT ON THI S HAD TO BE SENT URGENTLY A S THIS ALSO INVOLVED A SEARCH OF PARTICULAR GROUP AT KOLKOTTA WHICH HAD REVENUE IM P LICATION OF RS.37 CRORES. I AM ALSO EN C LOSING PHOTOCOPIES OF MY T A BILLS FOR THE PER I OD , WHICH C LEARLY DETAIL MY AVAILABIL I TY IN THE HEAD Q UARTERS. I WOULD LIKE TO S UBMIT THAT DURING THAT PERIOD I WA S DEPLOYED IN THE SEARCHES IN THE STAT E O F KER A LA , TIRUNELVELI , TAMILNADU AND IN CHENNAI AL S O. I HAVE ALSO CONDUCTED 2 SE ARCHES IN SURANDA I VILLAGE ON 18-0 2 - 2000 AND 2 SEARCHES IN AMBAS A MUDARAM DURING THE SAME PERIOD. A S A MATTER OF FA C T , MY PRESENCE IN HEADQUART E RS A T TIRU NE L V ELI WAS MINIMAL W I TH ADDITIONAL WO R K LOAD REGARDING ENQUIRIE S AND REPORT S TO B E SE NT . M Y SEARCHES AT AMBASAMUDARAM AND SURANDAI V ILLAGE WAS TIME BOUND. AN Y DELA Y IN MOUNTING TH ES E S E ARCHES WOULD ALSO HAVE OCCA S IONED IN LOSS OF INCRIMINATING M A TERIAL S. HENC E , IT WA S IMPERATI V E THAT THE SEARCHES WERE CONDUCTED A ND COULD NOT BE PO S TPONED. FINALL Y, IT MUST BE STATED THAT THE DDIT CONCERNED HAD PROMI S E D TO COME AND CONCLUDE THE SEARCH HIMSELF . HOWE V ER, BECAUSE OF HIS TIGHT SCH E DUL E AND ENQUIRY WOK AT MUMBAI, HE PROBABLY COULD NOT FIND T IME AND HE DEPUTED ON E ITO A ND ITI FROM MUMBAI WHO ARRI V ED ON 01-03-2000. ON THEIR ARRI V AL OUR T EA M HAD GON E TO THE PREMISES OF THE STERLITE FACTORY AND CON C LUDED THE SEARCH ON 0 2 -03- 2 000 . IN BET WE EN THIS TIME AL S O , W E EXAMINED THE RECORD R OOM , W HERE FRES H S EA LS W ERE PLACED IN GM ( F & A) R OO M, W H E R E CE RTA IN MATERI A L A ND LOOSE SHEE T S W ER E KEPT AND O N THE ARRIVA L O F T EAM FR OM M UMB AI T H E SEAR CH W A S FI N ALLY CON C LUDED . T HE MATERI A L S K EPT I N NEA R L Y 12 I RON BO XES W E RE HANDED O V ER TO THEM I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 27 ON 03 -03- 2 000 AND A COP Y OF THE HANDING OVER NOTE IS EN C LOSED FOR YOUR READ Y R E FERENC E . I F M Y MEMORY SER V ES ME CORRECT THE SEIZED MATERIAL WEIGHED MORE TH AN 400 TO 5 00 KILOGR A MS AND ALL THE ORIGINAL DOCUMENTS INCLUDING THE WAR RANT I N O R I G INAL, 1 2 ANCHAN AMA S, COPIES OF PAPER S W ERE HANDED OVER THE INCOME TAX O FF ICER A TTACH E D T O THE OR GA NIZING UN I T ON 03 - 03- 2 010 . I, THEREFORE, S U BMIT THAT T H ERE H AS B E E N N O UNRE A S O NA BL E DELAY IN SEARCH PR O CEE D I N GS IN T H E IN S T A NT C A S E . TH E V OLUME OF THE MAT E RI A L WA S S U CH TH A T SEA R C H HA D TO TAKE P L ACE ON VARIO U S D A TES. MY O TH ER O FF I CIA L D U T IES, M O ST OF WHICH WERE A L SO OF URGENT NATURE KEPT ME AWAY F RO M HEA DQU A R TERS F O R A LO NG PERIOD, REQ U IRED THE TEMPORARY CO N C LU S ION O F TH E SE AR CH. I WAS N OT AVA I L A BL E I N H EA D Q U ARTERS F O R A LONG PERIOD. M O RE O VER, T HE PERI OD S P ENT O N TRAVE L F O R P RE - SEARCH WORK L IKE C O N D UC T I N G O F DI SC R E T E E NQU I RI ES, R E CONNAI S SANC E A R E NOT REF LE C T E D IN THE BI LL . DU RING THE YEA R , I HA D C ON C LUD E D 14 SE AR C H ES A N D ORGANISE D A FURT H ER 12 CONSEQ U ENTIAL SEARCHES . THESE SEARCHES INV OL VE D ENQU I R Y AND O T H ER WORK IN A T I ME BOUN D MANNER, WHICH ALSO REQ U IRED T IME DURIN G THIS PERIOD . AS DEPUTY DIRECTOR OF INC OME-T AX, DU R IN G THI S P E RIOD SEVERAL CONF IDENTI A L AND DISCREET ENQUIRIES WERE ALSO MADE. AS MENTION ED EARLIER THESE ARE NOT REFLECTED IN THE TRAVE LL ING A LL OW ANCE BILL S. HENCE, I S U BMIT THAT T HERE WAS NO D E L AY . YOURS FAITHFULLY, SD/- (P . S E LVAGAN ES H ) A DD L . C OM MI SS I ON E R O F INCOME TAX T DS RANG E I , C H ENNAI-34 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 28 COPY SUBMITTED TO THE CIT (TDS), CHENNAI FOR INFO RMATION. COPY TO : 1. THE COMMISSIONER OF INCOME-TAX, CHENNAI-III, C HENNAI. 2. THE DIRECTOR OF INCOME-TAX (INVESTIGATION), MA DURAI. 3. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COM PANY CIRCLE-VI(4), CHENNAI. 14. IT WAS THE SUBMISSION BY THE LEARNED DR THAT TH E LAST PANCHNAMA HAVING BEEN DRAWN ON 2-3-2000 AND SEIZURE HAVING BEEN DONE VIDE THIS PANCHNAMA, THE ASSESSMENT ORDER PASSED ON 28.03.2002 WAS LIABLE TO BE HELD TO BE IN TIME AND NOT BARRED BY LIMITATION. IN REGARD TO THE SUBMISS ION ON BEHALF OF THE ASSESSEE THAT THE ASSESSMENTS HAD NOT BEEN DONE YEAR-WISE FO R THE PURPOSE OF COMPUTATION THE AGGREGATE OF THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD, IT WAS SUBMITTED THAT THIS LED ONLY TO AN IRREGULARITY OR ERROR IN THE ORDER WHICH CANNOT MAKE THE ASSESSMENT ORDER NULL AND VOID. IT WAS T HE SUBMISSION THAT HE HAD NO OBJECTION IF THE ISSUE IN THE ASSESSMENT ORDER WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO RE-COMPUTE THE UNDISCLOSED INC OME YEAR-WISE AND TO AGGREGATE THE SAME IN LINE WITH THE PROVISIONS OF S ECTION 158BB(1) OF THE ACT. FOR THIS PROPOSITION THE LEARNED DR RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF DEEPAK AGRO FOODS V. S TATE OF RAJASTHAN & ORS I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 29 REPORTED IN 2008-TIOL-134-HON'BLE SC-CT. HE VEHEME NTLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER AND THE LEARNED CIT(A) ON THE ISSUE OF JURISDICTION. 15. IN REPLY, THE LEARNED SENIOR COUNSEL VEHEMENTLY OBJECTED TO THE LETTER FILED BY THE LEARNED DR BEING THE LETTER OF THE OFFICER W HO HAD CONDUCTED THE SEARCH ON 8-12-1999 EXPLAINING HIS REASONS FOR THE IMPOSIT ION OF THE PROHIBITORY ORDER. IT WAS THUS THE SUBMISSION THAT NO DECISION CONTRAR Y TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF B.K. NOWLAK HA AND OTHERS, REFERRED TO SUPRA, WAS AVAILABLE AND AS THE PO HAD BEEN ISSUED ON THE SAME SUBJECT MATTER IT IS ONLY FOR THE PURPOSE OF EXTENDING THE LIMITAT ION WHICH SHOULD NOT BE PERMITTED. IT WAS THE SUBMISSION THAT NO PRACTICAL DIFFICULTY IN SEIZING THE DOCUMENTS WAS SHOWN AND CONSEQUENTLY THE PROHIBITOR Y ORDER ISSUED WAS INVALID AND THE SUBSEQUENT PANCHANAMAS DRAWN ON 21.1.2000 A ND 2.3.2000 WERE LIABLE TO BE DISCARDED AND THE SEARCH SHOULD BE DEEMED TO HAVE COMPLETED ON 8-12- 1999 ITSELF. 16. IN REPLY, THE LEARNED DR SUBMITTED THAT THE LET TER IS ON THE BASIS OF THE RECORDS AVAILABLE AND NO FRESH FACTS WERE BEING BRO UGHT OUT. HE ALSO FILED HIS WRITTEN SUBMISSIONS EXTRACTED HEREIN BELOW : I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 30 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 31 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 32 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 33 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 34 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 35 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 36 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 37 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 38 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 39 I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 40 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT T HE OUTSET WE HAVE TO DECIDE ON THE ADMISSIBILITY OF THE LETTER FILED BY THE LEARNED DR OF THE OFFICER, SHRI P. SELVAGANESH, ADDITIONAL COMMISSIONER OF INC OME-TAX, TDS RANGE-I, CHENNAI, WHO WAS ONE OF THE AUTHORIZED OFFICERS AT THE TIME OF SEARCH OF THE PRESENT ASSESSEE. A PERUSAL OF THE LETTER CLEARLY SHOWS THAT ALL THAT THE OFFICER HAS DONE WAS TO BRING ON RECORD WHAT WAS DONE IN TH E COURSE OF THE SEARCH AND WHY THE PROHIBITORY ORDER HAD BEEN PLACED. THIS LE TTER DATED 07-01-2011 CAN IN NO WAY BE CONSIDERED AS AN ADDITIONAL EVIDENCE AND WOULD HAVE TO BE CONSIDERED AS A STATEMENT GIVEN BY A RESPONSIBLE OF FICER OF THE DEPARTMENT WHO WAS INVOLVED IN THE COURSE OF SEARCH. CONSEQUENTLY , THE SAME IS TAKEN ON RECORD AND THE OBJECTION TAKEN BY THE LEARNED SENIOR COUNS EL IN REGARD TO THIS LETTER STANDS REJECTED. 18. THE FACTS IN THE PRESENT CASE CLEARLY SHOW THE FOLLOWING: A) A SEARCH WAS CONDUCTED ON THE PREMISES OF THE A SSESSEE ON 8-12- 1999 AT 8.30 A.M AT MUMBAI ON THE BASIS OF A WARRAN T OF AUTHORIZATION DT. 02-12- 1999 ISSUED U/S 132 OF THE ACT BY THE DIRECTOR OF I NCOME-TAX (INVESTIGATION), MUMBAI. B) THE SEARCH WAS TEMPORARILY CONCLUDED AT 11.30 P .M. ON 8-12-1999 AS PER PARA 8 OF THE PANCHNAMA DATED 8-12-1999. C) AS PER THE SAID PARA 8 SEALS WERE PLACED ON THE CABIN OF SHRI ANIL & SHRI NAVIN AGARWAL, CABIN OF SHRI TARUN JAIN AND TH E COMPUTER SERVER ROOM. I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 41 D) IT IS NOTICED THAT THIS PANCHNAMA IS IN RELATIO N TO THE OFFICE PREMISES OF THE ASSESSEE AT C.S.M. ROAD, APOLLO, BU NDER, MUMBAI-39. THE SEARCH IS FOUND TO HAVE BEEN FINALLY CONCLUDED ON 2 2-02-2000 AT 2 P.M. IN MUMBAI, I.E. THE WARRANT DATED 02-12-1999 IS SAID T O HAVE BEEN EXECUTED ON 22- 02-2000 AT 2 P.M. E) A SEARCH IS NOTICED TO HAVE BEEN CONDUCTED ON T HE FACTORY AND OFFICE PREMISES OF THE ASSESSEE AT SIPCOT INDUSTRIA L COMPLEX, MADURAI BYPASS ROAD, TUTICORIN ON 08-12-1999 ON THE BASIS OF A WAR RANT OF AUTHORIZATION ISSUED BY THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVEL I. THIS SEARCH IS SAID TO HAVE BEEN TEMPORARILY CONCLUDED ON 09-12-1999 AT AR OUND 7 P.M. F) IT IS FURTHER NOTICED THAT A PROHIBITORY ORDER U/S 132(3) HAS BEEN ISSUED ON 9-12-1999 AT 7 P.M. BY THE DY. DIRECTOR O F INCOME-TAX (INV.), TIRUNELVALI ON THE DOCUMENTS IN THE RECORD ROOM AND THE ALMIRAH IN THE ROOM OF GENERAL MANAGER (F & A) AND 4 SEALS WERE PLACED ON THE RECORD ROOMS DOOR. G) IT IS NOTICED THAT THE PROHIBITORY ORDER HAS BE EN ISSUED ON THE POWERS VESTED IN THE DY. DIRECTOR OF INCOME-TAX (IN V.) UNDER THE WARRANT OF AUTHORIZATION DATED 8-12-1999 ISSUED BY THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVELI. H) SUBSEQUENTLY, ON 21.1.2000 THE DY. DIRECTOR OF INCOME-TAX (INV.), TIRUNELVELI RE-ENTERED THE PREMISES OF THE ASSESSEE AT TUTICORIN AT 10 A.M. AND CONTINUED THE SEARCH TILL 7 P.M. ON 21.1.2000. THI S IS ALSO ON THE BASIS OF A WARRANT OF AUTHORIZATION DATED 8-12-1999. I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 42 I) ON 21.1.2000 AT 7 P.M. CERTAIN DOCUMENTS WERE S EIZED AND FURTHER PROHIBITORY ORDER ON THE SAME ALMIRAH IN THE ROOM O F GENERAL MANAGER (F& A) AND THE RECORD ROOM WAS PLACED. J) NOTHING FRESH WAS FOUND IN THE COURSE OF THE SE ARCH ON 21.1.2000 AS IS EVIDENT FROM PARA 5(B) OF THE PANCHNAMA. K) SUBSEQUENTLY, ON 2.3.2000 THE AUTHORIZED OFFICE R AGAIN RE-ENTERED THE PREMISES OF THE ASSESSEE AT TUTICORIN AT 2 P.M. AND THE PANCHNAMA RECORDED THE SEARCH TO HAVE BEEN FINALLY CONCLUDED AT 8 P.M. NOTHING WAS FOUND AGAIN AS PER THE SAID PANCHNAMA. HOWEVER, SEIZURES HAVE BEE N DONE. 19. THUS WHAT IS NOTICED HERE IS THAT THERE ARE TWO WARRANTS OF AUTHORIZATION. ONE DATED 2-12-1999 DULY SIGNED AND SEALED BY THE D Y. DIRECTOR OF INCOME-TAX (INVESTIGATION), MUMBAI AND ANOTHER DULY SIGNED AND SEALED BY THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVELI DATED 8-12- 1999. IT IS EVIDENT THAT THESE ARE TWO DIFFERENT SEARCHES AS TWO DIFFERENT W ARRANT OF AUTHORIZATION HAVE BEEN ISSUED BY TWO DIFFERENT OFFICERS FOR SEARCHING TWO DIFFERENT PREMISES. A PERUSAL OF THE LETTER OF THE AUTHORIZED OFFICER WHO CONDUCTED THE SEARCH I.E. DATED 07-01-2011 CLEARLY SHOWED THAT IN THE EARLY M ORNING OF 8-12-1999 FAX WAS RECEIVED FROM MUMBAI AND AS PER THE DIRECTION T HEREIN THE TEAM PROCEEDED TO TUTICORIN FOR ACTION UNDER SECTION 133A OF THE A CT. THE FAX IS CLEAR AND CONTAINED CLEAR LINES OF ENQUIRY. THE AREA OF ENQU IRY HAS CLEARLY BEEN BROUGHT OUT. IT IS NOTICED THAT THE STATEMENTS RECORDED FR OM SHRI V. RAMANATHAN, GENERAL MANAGER (F&A) ON 08-12-1999 IS A STATEMENT RECORDED U/S 131 OF THE I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 43 ACT. THE STATEMENT RECORDED FROM SHRI C.V. KRISHNA N ON 08-12-1999 IS U/S 133A OF THE ACT AND THE STATEMENT RECORDED FROM SHRI K. RANGANATHAN, GENERAL MANAGER (COMMERCIAL) IS U/S 133A OF THE ACT. THUS IT IS NOTICED THAT THE STATEMENT RECORDED FROM THE THREE EMPLOYEES AT TUTI CORIN IS IN THE COURSE OF A SURVEY U/S 133A AND NOT AS A CONSEQUENCE OF THE SEA RCH U/S 132 AS IS EVIDENT FROM THE STATEMENTS RECORDED. AS PER THE SAID LETT ER DATED 07-01-2011 WHEN IT WAS NOTICED THAT THERE WAS LARGE SCALE TAX EVASION AND THE MATERIALS FOUND WERE VOLUMINOUS IT WAS COMMUNICATED TO THE ORGANIZING DY . DIRECTOR OF INCOME-TAX (INV.) AT MUMBAI WHO THEN SUGGESTED THAT THE SAME S HOULD BE CONVERTED INTO A SEARCH AND ACCORDINGLY THE WARRANT OF AUTHORIZATION WAS OBTAINED FROM THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVELI AND THE SUR VEY WAS CONVERTED INTO A SEARCH. THUS WHAT BECOMES CLEAR IS THAT A SEARCH W AS CONDUCTED ON 8.12.1999 IN THE OFFICES OF THE ASSESSEE AT MUMBAI. A SURVEY WAS CONDUCTED ON THE FACTORY PREMISES AT TUTICORIN ON 8.12.1999 AND AFTER IT WAS NOTICED THAT THERE WAS LARGE SCALE TAX EVASION AND VOLUMINOUS MATERIALS WERE FOU ND THE SURVEY WAS CONVERTED INTO A SEARCH. IN THE PASSING WE MAY MEN TION HERE THAT IF ANYTHING HAS BEEN FOUND IN THE COURSE OF SURVEY, THEN SUCH E VIDENCES AND MATERIALS FOUND IN THE COURSE OF SURVEY, LOSES ITS CHARACTER OF UND ISCLOSED DOCUMENTS FOR THE PURPOSE OF THE SEARCH. THIS VIEW OF OURS FINDS SUPP ORT FROM THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T V. G.K. SENNIAPPAN REPORTED IN 284 ITR 220. THERE IS A DIFFERENCE BETWEEN THE P ROCEEDINGS U/S 132A AND SECTION 133A. ONE IS A REQUISITION AND THE OTHER I S A SURVEY. SECTION 132 IS A I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 44 SEARCH. AS PER THE LETTER DATED 07-01-2011, A LIST OF TENTATIVE BOGUS VOUCHERS HAD BEEN IDENTIFIED BY GENERATING A LIST OF VOUCHER S WITHOUT GATE PASS NUMBERS FROM THE COMPANYS COMPUTER SYSTEM AND THE VOUCHERS HAD BEEN LOCATED IN THE RECORD ROOM AND HAD ALSO BEEN SEIZED AND AFTER SECU RING THE VOUCHERS AND THE GATE PASS REGISTER, STATEMENTS WERE RECORDED ON SUC H EVIDENCES FOUND IN THE COURSE OF SURVEY U/S 133A. THE LETTER DATED 07-01- 2011 OF THE OFFICER ALSO CLEARLY SHOWS THAT ALL THE NECESSARY DOCUMENTS HAD BEEN FOUND. 20. THE SAID LETTER DATED 07-01-2011 ALSO CLEARLY S HOWS THAT WHEN IT WAS FOUND THAT THERE WAS LARGE SCALE TAX EVASION AND MA TERIALS WERE VOLUMINOUS AND THE SAME WAS CONNECTED TO THE ORGANIZING DY. DIRECT OR OF INCOME-TAX (INV.), IT WAS SUGGESTED THAT THE SURVEY SHOULD BE CONVERTED I NTO A SEARCH AND ACCORDING THE WARRANT OF AUTHORIZATION WAS OBTAINED FROM THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVELI. THIS RESULTED IN THE PANC HNAMA BEING ISSUED ON 08-12- 1999 BY THE JOINT COMMISSIONER OF INCOME TAX, TIRUN ELVELI. HERE WE MAY SPECIFICALLY MENTION THAT WE ARE UNABLE TO COMPREHE ND HOW A SEARCH TEAM LEFT FOR TUTICORIN ON THE EARLY MORNING OF 08-12-1999, R ECORDED STATEMENTS, VERIFIED DOCUMENTS AND VOUCHERS, CONTACTED THE DY. DIRECTOR OF INCOME-TAX, MUMBAI, OBTAINED A WARRANT OF AUTHORIZATION FROM JOINT COMM ISSIONER OF INCOME TAX, TIRUNELVELI AND WAS ABLE TO INITIATE A SEARCH PROCE EDINGS AT TUTICORIN ON THE SAME PREMISES AT 8.45 A.M. BE THAT AS IT MAY, THE OFFIC ER SAYS THAT THE SEARCH COULD NOT BE FINALLY CONCLUDE BECAUSE THE ENTIRE RECORD R OOM HAD TO BE SEARCHED FOR MORE SUCH VOUCHERS OR ANY OTHER INCRIMINATING MATER IAL WHICH HOWEVER IS NOT I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 45 SUPPORTED BY THE PANCHNAMA DATED 21.1.2000 OR DATED 2.3.2000 AS THE PANCHNAMA DATED 21.1.2000 AND 2.3.2000 DO NOT TALK OF ANYTHING HAVING BEEN FOUND BUT NOT SEIZED. THUS THE ONLY CONCLUSION THA T COMES OUT OF THIS LETTER WHEN READ ALONG WITH THE STATEMENTS RECORDED AND TH E PANCHNAMA IS THAT WHAT WAS REQUIRED TO BE FOUND WAS FOUND AND SEIZED OR KE PT UNDER THE PROHIBITORY ORDER ON 9.12.1999. A PERUSAL OF THE LETTER DATED 07-01-2011 ALSO CLEARLY SHOWS THAT BY 8 TH EVENING OUT OF THE GROUP OF 4 AUTHORISED OFFICERS AND 30 PERSONNEL WHO HAD GONE TO THE FACTORY PREMISES OF THE ASSESSE E ON 8.12.1999 ONLY 3 REMAINED, BEING 2 CLERICAL STAFF AND THE OFFICER WH O HAS WRITTEN THE LETTER. THIS ALSO CLEARLY SHOWS THAT BY 8 TH EVENING ALL THAT WAS REQUIRED TO BE TRACKED DOWN HAD BEEN TRACKED DOWN AS NO RESPONSIBLE OFFICER WOU LD LEAVE OR BE PERMITTED TO LEAVE THE PREMISES OF SEARCH UNTIL AND UNLESS EVERY THING THAT WAS REQUIRED TO BE SEARCHED AND FOUND HAD BEEN SEARCHED AND FOUND. 21. WE MAY ALSO MENTION HERE THAT THE STATEMENTS UN DER SECTIONS 131 AND 133A HAVE BEEN RECORDED BY ONE SHRI ARUN C. BHARATH , THE DY. DIRECTOR OF INCOME-TAX (INV.), UNIT-I, TRICHY. AS PER THE LETT ER DATED 07-01-2011 THIS OFFICER HAD ALSO LEFT THE PREMISES ON 8 TH EVENING. THE LETTER DATED 07-01-2011 INTERESTINGLY ALSO DOES NOT TALK OF WHAT HAD HAPPEN ED IN THE COURSE OF THE CONTINUATION OF THE SEARCH ON 21-01-2000. THERE IS ONLY A PASSING REFERENCE IN REGARD TO THE ACTION WHICH WAS DONE ON 21.1.2000. A FURTHER READING OF THE LETTER DATED 07-01-2011, EXTRACTED ABOVE, CLEARLY S HOWS THAT AN ITO AND AN ITI FROM MUMBAI HAD ARRIVED ON 01-03-2000 AND ON THEIR ARRIVAL THE TEAM WENT TO I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 46 THE FACTORY PREMISES ON 02-03-2000 AND THE MATERIAL KEPT IN NEARLY 12 IRON BOXES WERE HANDED OVER TO THEM ON 03-03-2000. THUS THE LETTER DATED 07-01- 2011 ITSELF CLEARLY SHOWS THAT ALL THAT WAS REQUIRE D TO BE FOUND AND SEIZED HAD BEEN FOUND AND EITHER SEIZED OR KEPT UNDER THE PROH IBITORY ORDERS ON 09-12- 1999 ITSELF. HERE IT IS SPECIFICALLY NOTICED THAT IF AN ITO AND AN ITI COULD TAKE AWAY NEARLY 12 IRON BOXES CONTAINING THE SEIZED DOC UMENTS, HOW IT WAS IMPRACTICAL FOR SEIZING THE SAID NEARLY 12 IRON BOX ES AND TAKING THEM AWAY ON 09- 12-1999 ITSELF WHEN EVERYTHING THAT WAS REQUIRED TO BE FOUND HAD ALREADY BEEN FOUND IN THE COURSE OF SURVEY BUT WAS SEIZED IN THE COURSE OF SEARCH. THUS ONCE IT IS FOUND THAT THE DOCUMENTS HAD BEEN FOUND AND S EIZED ON 09-12-1999 ITSELF AND ON 02-03-2000 MATERIALS WERE ONLY TAKEN AWAY FR OM THE PREMISES ON WHICH PROHIBITORY ORDERS HAD BEEN PLACED, THE PROHIBITORY ORDERS WHICH WERE PLACED ON 09-12-1999 WERE FOR KEEPING UNDER RESTRAINT DOCUMEN TS WHICH WERE PRACTICABLE OF SEIZURE AND CONSEQUENTLY THE PROHIBITORY ORDER P ASSED ON 09-12-1999 AND THE LIMITATION FOR PASSING THE ASSESSMENT ORDER AS PER THE PROVISIONS OF SECTION 158BE EXPIRED ON 31.12.2001. HERE WE MAY ALSO MENTI ON, IN PASSING, THAT A PERUSAL OF THE ASSESSMENT ORDER DOES NOT SHOW OF AN Y OF THE DOCUMENTS HAVING BEEN CONSIDERED IN REGARD TO THE SEARCH CONDUCTED O N THE ASSESSEES FACTORY PREMISES. 22. ANOTHER ISSUE WHICH COMES UP TO THE FOREFRONT I S THAT THERE ARE TWO WARRANTS OF AUTHORIZATION ONE WHICH WAS ISSUED ON 02-12-1999 WHICH RESULTED IN A SEARCH AT MUMBAI ON 08-12-1999 AND WHICH HAS B EEN MARKED AS TEMPORARILY I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 47 CONCLUDED ON 08-12-1999 AT 11.30 P.M. ANOTHER ON T HE BASIS OF A WARRANT OF AUTHORISATION DATED 08-12-1999 ISSUED BY THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVELI. THE WARRANT OF AUTHORIZATION DATED 08 -12-1999 ISSUED BY THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVELI RESULTED IN THE CONVERSION OF A SURVEY INTO A SEARCH AT THE FACTORY PREMISES OF THE ASSESS EE DATED 08-12-1999. THUS, THESE ARE TWO SEPARATE SEARCH PROCEEDINGS. ONLY ON E ASSESSMENT ORDER HAS BEEN PASSED. IF THE ASSESSMENT ORDER PASSED ON 28- 03-2002 IS TREATED AS A CONSEQUENCE OF THE SEARCH CONDUCTED ON THE ASSESSEE ON 08-12-1999 AS A CONSEQUENCE OF THE WARRANT OF AUTHORIZATION ISSUED BY THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVELI, THEN AS WE HAVE HELD BEFOR E, THE ASSESSMENT ORDER OUGHT TO HAVE BEEN PASSED BY 31-12-2001 AND THE ASS ESSMENT ORDER BARRED BY LIMITATION. IF THE ASSESSMENT ORDER IS DEEMED TO H AVE BEEN PASSED AS A CONSEQUENCE OF THE WARRANT OF AUTHORIZATION ISSUED BY THE DY. DIRECTOR OF INCOME-TAX (INV.), MUMBAI ON 02-12-1999, WHICH RESU LTED INTO A SEARCH AT THE MUMBAI PREMISES OF THE ASSESSEE ON 08-12-1999, AS I T IS NOTICED THAT THE PROHIBITORY ORDERS HAVE BEEN PLACED ON THE CABIN OF SHRI ANIL AGARWAL AND NAVIN AGARWAL AND IN THE CABIN OF SHRI TARUN JAIN AND THE COMPUTER SERVER ROOM AND AS IT IS NOTICED THAT THERE IS NO IMPRACTICABILITY IN REGARD TO THE SEIZURE WHICH HAS RESULTED IN THE ISSUANCE OF A PROHIBITORY ORDER U/S 132(3) OF THE ACT, THE SEARCH WOULD HAVE TO BE DEEMED TO HAVE BEEN COMPLETED ON 0 8-12-1999 IN WHICH CASE ALSO THE LIMITATION FOR COMPLETING THE ASSESSMENT I S ON 31.12.2001 AND CONSEQUENTLY THE ASSESSMENT ORDER PASSED ON 28.03.2 002 IS BARRED BY LIMITATION. I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 48 23. THE ARGUMENT OF THE LEARNED DR THAT THE SEARCH CONDUCTED AT TUTICORIN IS A CONSEQUENTIAL SEARCH DOES NOT CHANGE THE FACT THA T THERE ARE TWO SEARCHES. AS PER THE PROVISIONS OF SECTION 132(1) OF THE ACT, TH E SEARCH IS TARGETED ON A PREMISES. THE ASSESSEE MIGHT BE THE SAME. IF THER E ARE TWO WARRANTS OF AUTHORIZATION, THEN THERE MUST BE TWO ASSESSMENT OR DERS UNDER CHAPTER XIV-B. THIS IS BECAUSE AS PER THE EXPLANATION TO SECTION 1 58BE, THE EXECUTION OF WARRANT OF AUTHORIZATION IS AS RECORDED IN THE LAST OF THE PANCHNAMAS. THE SEARCH IN THE CASE OF THE ASSESSEE IN MUMBAI AS A R ESULT OF THE PANCHNAMA ISSUED BY THE DY. DIRECTOR OF INCOME-TAX (INV.), MU MBAI ON 02-12-1999 AS PER THE PANCHANAMA RECORDED IN REGARD TO THE SAID WARRA NT OF AUHORISATION IS SHOWN TO HAVE BEEN FINALLY CONCLUDED UON 22-02-2000. IF T HIS IS SO, ANY ASSESSMENT ON THE BASIS OF THE WARRANT DATED 02-12-1999 WOULD GET BARRED BY LIMITATION ON 28- 02-2002. THIS IS IF WE TAKE ALL THE PANCHNAMAS AS VALID IN RELATION TO MUMBAI SEARCH. IF THIS IS SO, THE ASSESSMENT ORDER DATED 2 8-03-2002 CANNOT HAVE ANY ADDITION IN RELATION TO THE SEARCH CONDUCTED ON THE BASIS OF THE WARRANT OF AUTHORIZATION DATED 02-12-1999. THEN ALL THAT IS L EFT IS THE SEARCH CONDUCTED ON THE ASSESSEE ON THE BASIS OF THE WARRANT OF AUTHORI ZATION ISSUED BY THE JOINT COMMISSIONER OF INCOME TAX, TIRUNELVELI ON 08-12-19 99. THIS WARRANT WE HAVE ALREADY EXPLAINED AS ALREADY BEEN EXECUTED ON 09-12 -1999 ITSELF AS WE HAVE HELD THAT THE PROHIBITORY ORDER ISSUED ON 09-12-1999 IS INVALID. CONSEQUENTLY, THE PANCHNAMA DRAWN ON 21-01-2000 AND 02-03-2000 BECOME INVALID. I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 49 24. THOUGH WE HAVE FOUND THAT THERE ARE TWO WARRANT S OF AUTHORIZATION AND CONSEQUENTLY THERE SHOULD BE TWO ASSESSMENTS, WE AR E OF THE VIEW THAT THIS IS ONLY A TECHNICAL HITCH WHICH COULD BE RECTIFIED INS OFAR AS THE ISSUES COULD BE SENT BACK TO THE ASSESSING OFFICER FOR PASSING TWO SEPAR ATE ASSESSMENT ORDERS. HOWEVER, WE ARE NOT DOING SO IN THE PRESENT CASE AS THE LIMITATION FOR PASSING THE ASSESSMENT ORDERS ITSELF EXPIRED ON 31-12-2001 AND AFTER 11 YEARS SENDING IT BACK WOULD IN NO WAY HELP INSOFAR AS THE LIMITATION WOULD CONTINUE TO OPERATE AGAINST THE ASSESSMENT ORDER THAT COULD BE PASSED A FRESH. 25. THE ARGUMENT OF THE LEARNED DR THAT THE TRIBUNA L CANNOT GO INTO THE VALIDITY OR OTHERWISE OF THE ADMINISTRATIVE DECISIO N CONDUCTING THE SURVEY AND SEIZURE RELIED UPON IN THE CASE OF PARAS RICE MILLS , REFERRED TO SUPRA, WOULD NOT APPLY TO THE PRESENT CASE INSOFAR AS IT IS NOT THE VALIDITY OR THE ADMINISTRATIVE DECISION FOR CONDUCTING THE SEARCH AND SEIZURE THAT HAS BEEN DECIDED BY THE TRIBUNAL. IT IS THE POINT OF START OF LIMITATION F OR THE PURPOSE OF COMPLETING THE ASSESSMENT THAT HAS BEEN DECIDED IN THE PRESENT CAS E. FURTHER, OUR VIEW IN REGARD TO THE PRACTICABILITY OF SEIZURE WHEN APPLYI NG THE PROVISIONS OF SECTION 132(3) IS SUPPORTED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF B.K. NOWLAKHA AND OTHERS, REFERRED TO SUPRA, AS ALS O THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAKESH SAR IN, REFERRED TO SUPRA. THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CA SE OF DR. C. BALAKRISHNAN NAIR AND ANOTHER, REFERRED TO SUPRA, IS CLEARLY DISTINGU ISHABLE ON THE FACTS OF THE PRESENT CASE INSOFAR AS IN THE CASE OF DR. C. BALAK RISHNAN NAIR THE PROHIBITORY I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 50 ORDER WAS ONLY FOR A PERIOD OF ABOUT 13 DAYS AND TH E HON'BLE HIGH COURT HAD THEREIN CLEARLY GIVEN A FINDING THAT THE DELAY OF 1 4 DAYS HAD BEEN EXPLAINED BY THE REVENUE WHEREAS IN THE PRESENT CASE THE DELAY I S FROM 09-12-1999 TO 02-03- 2000 WHICH IS MORE THAN 80 DAYS AND WHEREAS THE PRO HIBITORY ORDER ITSELF HAS A LIFE OF 60 DAYS WHICH ALSO CLEARLY SHOWS THAT THE A CTION CONDUCTED ON 21-01-2000 WAS ONLY TO GET OVER THE EXPIRY OF THE PROHIBITORY ORDER WHICH HAD BEEN ISSUED ON 09-12-1999 WHICH ITSELF WE HAVE HELD TO BE ILLEG AL. IN ANY CASE, THE DECISION OF THE HON'BLE KERALA HIGH COURT WOULD NOT APPLY IN VIEW OF THE SPECIFIC DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CAS E OF RAKESH SARIN, REFERRED TO SUPRA. OUR VIEW ALSO FINDS SUPPORT OF THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF MRS. SANDHYA P. NAIK, REFERRED TO SUPRA , WHEREIN THE HON'BLE HIGH COURT HAD CATEGORICALLY HELD THAT ACTION U/S 132(3) CAN BE RESORTED TO ONLY IF THERE IS ANY PRACTICAL DIFFICULTY IN SEIZING THE IT EM WHICH IS REQUIRED TO BE SEIZED. IN THE PRESENT CASE, IT HAS BEEN CATEGORICALLY FOUN D THAT THERE WAS NO PRACTICAL DIFFICULTY IN SEIZING THE ITEMS WHICH ARE LIABLE TO BE SEIZED AND WHICH THEMSELVES HAD BEEN SPECIFICALLY IDENTIFIED WHEN THE PROHIBITO RY ORDER WAS IMPOSED ON 09- 12-1999. 26. COMING TO THE SUBMISSION OF THE LEARNED SENIOR COUNSEL THAT THE ASSESSMENT HAS NOT BEEN COMPLETED ON THE BASIS OF T HE PROVISIONS OF SECTION 158BB(1) INSOFAR AS YEAR-WISE COMPUTATION OF UNDISC LOSED INCOME HAS NOT BEEN DONE FOR THE PURPOSE OF AGGREGATION OF THE UNDISCLO SED INCOME, WE ARE OF THE VIEW THAT IT IS ONLY AN IRREGULARITY IN REGARD TO T HE COMPUTATION OF THE UNDISCLOSED I.T.A. NO.182/MDS/2004 & CO NO. 336/MDS/2005 51 INCOME WHICH IS CURABLE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S. DEEPAK AGRO FOODS, REFERRED TO SUP RA. IN THE CIRCUMSTANCES, THE GROUNDS NO. I (1 & 2) AND II (1 & 2) STAND ALLO WED AND GROUND NO. III (1 & 2) STANDS DISMISSED. 27. IN THE CIRCUMSTANCES, THE CROSS OBJECTION FILED BY THE ASSESSEE ON THE TECHNICAL GROUNDS STANDS ALLOWED INSOFAR AS (I) WHA T HAS BEEN FOUND IN THE COURSE OF SURVEY CANNOT BE INCLUDED IN THE BLOCK AS SESSMENT AND (II) THE ASSESSMENT ORDER DATED 28-03-2002 IS BARRED BY LIMI TATION. AS WE HAVE QUASHED THE ASSESSMENT ORDER AS BARRED BY LIMITATION, WE AR E NOT GOING INTO THE MERITS OF EACH OF THE ADDITIONS. AS WE HAVE QUASHED THE ASSE SSMENT AS BARRED BY LIMITATION, THE APPEAL FILED BY THE REVENUE IN RESP ECT OF THE ADDITIONS WHICH HAVE BEEN DELETED BY THE LEARNED CIT(A) IS NOT BEING DIS POSED OF ON MERITS AND THE APPEAL IS DISMISSED. 28. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. 29. THE ORDER WAS PRONOUNCED IN THE COURT ON 08/07/ 2011. SD/- SD/ - (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 08 TH JULY, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE