Shri Gopal Dahyabhai Patel, Ahmedabad V. DCIT, Central Circle-1(1), Ahmedabad

ITSSA 1/AHD/2022

AI Insights

The case involves two appeals filed by the assessee, Shri Gopal Dahyabhai Patel, against the orders of the Commissioner of Income Tax (Appeals)-11, Ahmedabad, which arose from the assessment orders passed under section 143(3) read with section 153A of the Income Tax Act, 1961 for the assessment years 2014-15 and 2015-16. The primary contention was regarding the validity of the assessment orders, which the assessee argued were passed without proper jurisdiction and beyond the limitation period. The Tribunal examined the procedural adherence to the statutory provisions concerning the limitation period for passing assessment orders following a search and seizure operation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135828 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 26-07-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 16-02-2022
• Other Referred Cases: IT(SS)ANo.152/Ahd/2021, IT(SS)No88/Ahd/2019, IT(SS)No152/Ahd/2021, PCIT vs. PPC Business & Products Pvt. Ltd., C.Ramaiah Reddy vs. CIT, VLS Finance Ltd. vs. CIT, Nandlal M. Gandhi vs. ACIT, Sandhya P. Naik vs. CIT, Dr. C. Balakrishnan Nair vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKAMLESHMAKWANA; FORTHEAPPELLANTS; AMOUNTSTOLEGISLATING; FORTHEASSESSEESUBMITTEDTHATINTHISCASEHONBLE; FORTHEASSESSEEAREALSOTOTHISEFFECT; INTHECASE
• Assessee Lawyers: SHRIP.B.PARMAR

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’C’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRIT.RSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं./IT(SS)ANos.01-02/AHD/2022 धििाधरणवरध / Asstt.Years:(2014-2015&2015-2016) ShriGopalDahyabhaiPatel, 17/9/b, DevendraSociety, Naranpura, Ahmedabad. PAN:APZPP0855N Vs. D.C.I.T, CentralCircle-4(1), Ahmedabad. (Applicant)(Respondent) Assesseeby:ShriP.B.Parmar,with ShriVijayGovani,A.Rs Revenueby:ShriKamleshMakwana,CIT.D.R सुिवाईकीतारीख /DateofHearing:27/07/2023 घोरणाकीतारीख /DateofPronouncement:09/08/2023 आदेश /ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: Thecaptionedtwoappealshavebeenfiledattheinstanceoftheassessee againsttheorderoftheLearnedCommissionerofIncomeTax(Appeals)-11, Ahmedabadarisinginthematterofassessmentorderpassedunders.143(3) ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 2 r.w.s.153AoftheIncomeTaxAct,1961(here-in-afterreferredtoas"theAct") relevanttotheAssessmentYears2014-2015&2015-16. First,wetakeupIT(SS)ANo.01/AHD/2022forAY2014-15,anappealbythe assessee. 2.Theassesseehasraisedthefollowinggroundsofappeal: 1.TheLd.CIT(A)haserredonfactsandinlawinupholdingtheassessmentorderpassed bytheAssessingOfficeru/s143(3)r.w.s153A(1)oftheIncomeTaxAct,1961without providingcopy(ies)ofsearchwarrantwhichisthenecessaryconditionforvalidassumption ofjurisdictionu/s153AoftheAct. 2.TheLd.CIT(A)haserredonfactsandinlawinupholdingtheadditionsmadebythe AssessingOfficerrelyingontheallegedincriminatingmaterialwhichwasneitherseized fromaplacecoveredbysearchinthecaseofappellantnorevenallegedtobebelonging totheappellantincontraventionofthesettledlawonthescopeofassessmentu/s153Aof theIncomeTaxAct,1961. 3.TheLd.(A)haserredonfactsandinlawinupholdingtheinferencedrawnbythe AssessingOfficerthattheloosepaperfoundandseizedfromtheTerraceofCrystalArcade CGRoadAhmedabadrepresentedtheallegedunaccountedcashbookofVenusGroup, thatthedateoftransactionswererecordedinthecodedformtodisguisetherelevantdate oftransactions,thattheentrieswererecordedinsuchawaythattwozeroatendofeach entrywereomittedandthattheword'estimate'hadbeenmentionedagainsttheactual transactions. 4.TheLd.haserredonfactsandinlawinupholdingthevariousu/s69AoftheIncome TaxAct,1961relyingontheallegedcashbookwhichwasnotevenallegedtobe belongingtotheappellantespeciallyinviewoftheAOownfindingsthattheallegedcash bookbelongedtoVenusgroupandalsowithoutidentifyingthecorrespondingassetor investmentofexpenditurepertaining/relatingtotheappellant. 5.TheLd.CIT(A)haserredonfactsandinlawinupholdingtheadditionmadebythe AssessingOfficeronaccountofallegedunexplainedinconreceivedasbonusamountingto Rs.1,01,000/-withoutestablishingastowhomadetheallegedpaymentandwithoutany corroborationorconfirmationfromtheallegedpayer. 6.TheAssessmentOrderdeservestobequashedsincethesamehasbeenpassedbeyond thelimitationprescribedundersection153BoftheAct. 7.Theappellantcravesforlibertytoaddfreshground(s)ofappealandalsotoamend, alter,modifyanyofthegroundsofappeal. 3.TheassesseeingroundNo.1haschallengedthevalidityoftheassessment framedu/s143(3)r.w.s.153AoftheAct. ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 3 4.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to202and contendedthatsearchinthepresentcasewasconcludeddated10/03/2015, whereasassessmentorderhasbeenframeddated28/12/2017,afterthetimelimit providedundertheprovisionofsection153B(1)oftheAct.AspertheLd.AR,the assessmentshouldhavebeencompletedonorbefore31/03/2017,i.e.twoyears fromtheendoftheFinancialYearinwhichthesearchwasconcluded.Accordingly, itwaspointedoutbytheLd.ARthattheassessmentindisputeisinvalidand liabletobequashed. 5.Ontheotherhand,theLd.DRbeforeusvehementlysupportedtheorderof theauthoritiesbelow. 6.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Attheoutset,wenotethattheITATintheown caseoftheassesseefortheA.Y.2011-12bearingIT(SS)ANo.152/Ahd/2021with CONo.02/AHD/2022hasdecidedtheissueinfavouroftheassesseebyobserving asunder: 11.Wehaveheardtherivalcontentionsofboththepartiesandperusedthematerials availableonrecord.Theissuebeforeusislimitedtotheextentwhetherthesearchwas concludedason10 th March2015beingthedateofsearchorason07 th April2015being thedateofrevocationofprohibitoryorderundersection132(3)oftheActwhichwasput ononeofthebanklockersoftheassessee.Accordingly,whetherthetimelimittopassthe assessmentorderexpireason31 st March2017orason31 st March2018asperthe provisionsofsection153BoftheActi.e.2yearfromtheendoffinancialyearinwhichlast ofauthorizationforsearchundersection132oftheActwasexecuted.Attheoutset,we notethatissueonhandhasbeendecidedbythistribunalincaseofkeypersonofthe assesseegroupnamelyShriAshokSundardasVasnwaniinIT(SS)No88/Ahd/2019& othersvideorderdated12/11/2020.TheTribunalintheabove-mentionedappealhas consideredtheargumentofboththelearnedARandDRatlengthandvariouscaselaws referredbythemvideparagraphNo.40to68ofsaidorderandheldthatthesearchwas concludedinthemonthofMarch2015.Therelevantfindingofthecoordinatebenchofthe Tribunalisextractedasunder: 50.Wehavedulyconsideredtherivalcontentionsandgonethroughtherecord carefully.Section153Bhasadirectbearingonthecontroversy.Therefore,wetake noteoftherelevantpartofthisSection. 153B.(1)NotwithstandinganythingcontainedinSection153,the AssessingOfficershallmakeanorderofassessmentorreassessment,— (a)inrespectofeachassessmentyearfallingwithinsix assessmentyearsreferredtoinclause(b)of81[sub-Section(1)of] ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 4 Section153A,withinaperiodoftwoyearsfromtheendofthe financialyearinwhichthelastoftheauthorisationsforsearch underSection132orforrequisitionunderSection132Awas executed; (b)inrespectoftheassessmentyearrelevanttothepreviousyear inwhichsearchisconductedunderSection132orrequisitionis madeunderSection132A,withinaperiodoftwoyearsfromthe endofthefinancialyearinwhichthelastoftheauthorisationsfor searchunderSection132orforrequisitionunderSection132A wasexecuted: (2)Theauthorisationreferredtoinclause(a)andclause(b)ofsub- Section(1)shallbedeemedtohavebeenexecuted,— (a)inthecaseofsearch,ontheconclusionofsearchasrecorded inthelastpanchnamadrawninrelationtoanypersoninwhose casethewarrantofauthorisationhasbeenissued; (b)inthecaseofrequisitionunderSection132A,ontheactual receiptofthebooksofaccountorotherdocumentsorassetsby theAuthorisedOfficer. 51.AbareperusalofSectionwouldrevealthatitstartwithanonobsenateclause “–notwithstandinganythingcontainedinSection153......”Anassessmentorder hastobepassedwithintwoyearsfromtheendoftheFYinwhichthelastofthe authorizationforandeachunders.132oftheActwasexecutedorrequisition unders.132Aisexecuted.Theexpression“lastoftheauthorization”hasbeen explainedinsubSection(2).Theexplanationofexpressionlastofthe authorizationprovidedinsubSection(2)isidenticalinExplanation(2)ofSection 158BEwhichreadasunder: 'Explanation2.-Fortheremovalofdoubts,itisherebydeclaredthatthe authorisationreferredtoinsub-Section(1)shallbedeemedtohavebeen executed,- (a)inthecaseofsearch,ontheconclusionofsearchasrecordedinthe lastpanchnamadrawninrelationtoanypersoninwhosecasethewarrant ofauthorisationhasbeenissued; (b)inthecaseofrequisitionunderSection132A,ontheactualreceiptof thebooksofaccountorotherdocumentsorassetsbytheauthorised officer.' 52.Inthelargenumberofjudgmentscitedbeforeusbytheparties,this provisionsunders.158BEExplanation(2)hasbeenexplainedelaboratelyandthe firstjudgmentwewouldliketoputinserviceisthejudgmentoftheHon’ble KarnatakaHighCourt.Therelevantdiscussioninthatjudgmentiscontainedin para73to75whichreadsasunder: 73.Thesecondprovisotosection132(1)dealswiththe"deemedseizure". Wheninthecourseofsearch,itisnotpossibletoseizeforthereasonsset outintheaforesaidprovisions.Itispossibleunderfourcircumstances: (a)whereitisnotpossibleorpracticabletotakephysicalpossessionof anyvaluablearticleorthing; (b)removeittoasafeplaceduetoitsvolume,weight; (c)otherphysicalcharacteristics;and (d)duetobeingitsdangersnature. 74.Therefore,thelawrecognizessuchasituationandhasprovideda remedytotacklesuchproblems.Theauthorisedofficerhasbeengivena ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 5 discretionforthereasonstoberecordedinwritingtopassarestraint orderinrespectofthearticles,booksandothermaterialwhichhecould nottakephysicalpossessionof,i.e.,bymakinganinventoryandleavingit tothecustodyoftheassesseeanddirectinghimnottopartwiththesame withouthispermission. 75.Similarly,incircumstancesnotcoveredunderthoseprovisions,itis openforhimtopassaprohibitoryorderundersub-section(3)not amountingtoseizurewhichorderwillbeinforceforaperiodof60days aftersecuringthepossessionofthematerials,articles,etc.,inthe aforesaidmanner.Actionundersection132(3)oftheIncome-taxActcan beresortedtoonlyifthereisanypracticaldifficultyinseizingtheitem whichisliabletobeseized.Whenthereisnosuchpracticaldifficultythe officerisleftwithnootheralternativebuttoseizetheitem,ifheisofthe viewthatitrepresentedundisclosedincome.Powerundersection 132(1)(iii)oftheIncome-taxActthuscannotbeexercised,soasto circumventtheprovisionsofsection132(1)(iii)readwithsection132(1)(v) oftheIncome-taxAct.Itisopenfortheauthorisedofficertovisitthe placeforthepurposeofinvestigationsecuringfurtherparticulars.Under thescheme,thelawprovidesforsuchprocedure.Butnotwhenhevisits thepremisesforfurtherinvestigationforthematerialsalreadysecured.It doesnotamounttosearchasthematerialstobelookedintoand investigatedisalreadyknownandisthesubject-matterofaprohibitory orderorarestraintorder.Thoughitisnotseizureordeemedseizure,it amountstodeemedpossession.Whatisinyourpossessionistobelooked intotofindout,isthereanyincriminatingmaterial.Itdoesnotamountto searchasunderstoodundersection132oftheAct.Itisonlybecauseof paucityoftimehehasgonebackandwantstocomebackandlookinto thematterleisurely.ThereisnoprovisionintheCriminalProcedureCode orintheIncome-taxActortherulesforpostponingthesearchforalong period.Then,theconceptofsearchasunderstoodeitherunderthe provisionsoftheCriminalProcedureCodeortheActwhicharemade applicableexpressly,wouldloseitsmeaning.Ifsuchacourseisattracted, itisopentoanauthorisedofficertokeeptheauthorisationinhispocket likeaseasonticketandgoonvisitingthepremisesaccordingtohiswhims andfancies.Itseriouslyaffectsthevaluablerightoftheassessee conferredundertheConstitution.Tokeeptheaffectedpartiesina suspendedanimationabouttheprobablecontinuationofsearchwouldbe agonising.Itisinvadingtherightandfreedomofthepetitionersfora periodmorethanrequiredornecessary.Theorderswhicharepassed undersection132(3)mayhaveaveryfar-reachingeffectonthebusiness ofanassessee.Theorderofrestraintmayadverselyaffectthebusiness and,therefore,adequatesafeguardsaresoughttobeprovidedintheAct bytheinsertionoftheprovisionsofsub-section(8A)insection132.In orderthattherestraintordermustnotbecontinuedindefinitely,sub- section(8A)ofsection132providesthattherestraintordercanbe continuedonlyif,beforetheexpiryof60days,andforreasonstobe recorded,theCommissionergrantsanextension.Theprovisionsofsub- section(8A)cannotbebypassedorrenderednugatorybyrevokingan orderundersection132(3)and,thereafter,passanotherorderonthe samedate.Inthenatureofthings,thesearchistobedoneexpeditiously andtheundisclosedincomeistobeunearthedandproceedinghastobe initiatedagainstsuchpersonandthetaxlegitimatelyduetothe Governmentistoberecovered.Therecannotbeanylaxityonthepartof ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 6 theauthorisedofficerinthisregard.Anyotherinterpretationwouldrun countertotheschemeofsearchprovisionundertheAct.Therefore,by passingarestraintorder,thetimelimitavailableforframingoftheorder cannotbeextended.Onceanorderundersection132(3)hasbeenpassed, thenthelimitationperiodcommencesandsuchordercannotbecontinued unlessanduntiltheprovisionsofsection132(8A)aresatisfied. 53.ThoughHon’bleCourthasexplainedthescopeofexpression“executionof lastofauthorization”butweareoftheviewthatHon’bleCourtthereaftertook cognizanceofExplanation(2)insertedbyFinanceAct,1997andwedeemit appropriatetotakenoteofthediscussionmadebytheHon’bleCourtfrom paragraphnos.78to82whichreadsasunder: 78.Thelawexpresslyprovidesformorethanoneauthorisation.Asearch authorisationcouldspecifyonlyonebuilding/place/vessel/vehicle/aircraft. Thisisclearfromtheuseofthebuilding,etc.,inthesingularsense. Section132(1)usesbuilding/place/vessel/vehicle/aircraftinsingularsense. Further,clause(a)inForm45usestheword,"toenterandsearch,the saidbuilding/place/vessel/vehicle/aircraft.Whentherearemultipleplaces tosearchandsuchplacesarefaroff,itisimpracticaltohaveasingle authorisation.Differentpersonswillbecarryingoutsearchandeachone ofthemisrequiredtobeauthorisedthroughthesearchauthorisation.In otherwords,searchauthorisationshouldauthoriseaparticularofficialfor executingthesearch.Therefore,whentherearedifferentplacestobe searched,separatesearchauthorisationshouldbedrawnwithreferenceto eachplaceofsearch.Thesaidauthorisationsmaybeissuedondifferent datesinwhichcase,thelastofsuchauthorisationsistobelookedintofor thepurposeoflimitation.However,itispossiblethattheremaybemore thanoneauthorisationonthesameday.Thenthequestioniswhichisthe lastofsuchauthorisationsforthepurposeoflimitation.Whenallthe authorisationsareexecutedtherewillbeonepanchnamainrespectof eachsuchauthorisation.Theauthorisationsmaybeexecutedondifferent datesalso.Thenthedoubtwouldariseregardingwhichauthorisationto belookedintoforthepurposeoflimitationasallofthemarelast authorisation.ItisforremovalofthatdoubtsthattheExplanationis inserted.Forthepurposeofcomputingthelimitation,itistheoneyear fromtheendofthemonthinwhichthelastoftheauthorisationswas executed.Iftherearemorethanoneauthorisationissuedonthesame day,thenthelastpanchnamadrawninrelationtothewarrantof authorisationissuedonthesameday.Astheperiodcommencesfromthe endofthemonthoftheexecutionoftheauthorisation,thelawhas providedfortheauthorisedofficertovisitthepremisesforthepurposeof inspectionregardingthematerialwhichisthesubject-matterof prohibitoryorderortherestraintorder,evenaftersearch.However,the saidexercisehastobedoneexpeditiously,astheperiodoflimitation startsfromthedateofsearchwasconcludedasevidencedbythe panchnama,asotherwisetheveryobjectwithwhichtheseprovisionswas introducedwouldbedefeated. 79.CircularNo.772,dated23rdDecember,1998,issuedbyCentralBoard ofDirectTaxesexplainsthispositionasunder([1999]235ITR(St.)35): "Accordingtosection158BE,limitationof2yearshastobecountedfrom theendofthemonthinwhichlastoftheauthorisationswasexecuted. Useoftheword'authorisations'impliesissueofmorethanone authorisation.Supposinglytwoauthorisationsareissuedoneafterthe ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 7 otherandthelastauthorisationisexecutedfirstwhiletheauthorisation issuedearlierisexecutedlateron.Insuchcase,limitationshouldbe countedfromthedateofissueoftheexecutionofthelastauthorisation, thoughitisexecutedearlierandnotfromtheexecutionoftheearlier authorisationwhichisexecutedlater.Thisanomaloussituationisintended toberemovedbyinsertionofExplanation2belowsection158BEwith effectfromJuly1,1995,bytheFinance(No.2)Act,1998. ThisExplanationreadsasfollows: 'Explanation2.-Fortheremovalofdoubts,itisherebydeclaredthatthe authorisationreferredtoinsub-section(1)shallbedeemedtohavebeen executed,- (a)inthecaseofsearch,ontheconclusionofsearchasrecordedinthe lastpanchnamadrawninrelationtoanypersoninwhosecasethe warrantofauthorisationhasbeenissued; (b)inthecaseofrequisitionundersection132A,ontheactualreceiptof thebooksofaccountorotherdocumentsorassetsbytheauthorised officer.' AccordingtothisExplanation,limitationistobecountedwithreferenceto thelastpanchnamadrawnonexecutionofawarrantofauthorisationas referredtoinsection158BE.Themainattributeofthepanchnamais statedtobethatitshouldrecordtheconclusionofsearch." 80.Thelawdoesnotcontemplatetheauthorisedofficertosetoutinany ofthepanchnamathathehasfinallyconcludedthesearch.Ifforany reasontheauthorisedofficerwantstosearchthepremisesagain,itcould bedonebyobtainingafreshauthorisation.Thereisnoprohibitionin respectofthesamepremises.Itisopentotheempoweredauthorityto issueauthorisationbutwhentheauthorisationisissuedonce,the authorisedofficercannotgoonvisitingthepremisesundertheguiseof search.Therefore,itisclearonceinpursuanceofanauthorisationissued thesearchcommences,itcomestoanendwiththedrawingofa panchnama.Whentheauthorisedofficerentersthepremises,normally, thepanchnamaiswrittenwhenhecomesoutofthepremisesafter completingthejobentrustedtohim.Evenifaftersuchsearchhevisitsthe premisesagain,forinvestigationorinspectionofthesubject-matterof restraintorderorprohibitoryorder,ifapanchnamaiswritten,thatwould notbethepanchnamawhichhastobelookedintoforthepurposeof computingtheperiodoflimitation.But,suchapanchnamawouldonly recordwhattranspiresonare-visittothepremisesandtheincriminating materialseizedwouldbecomepartofthesearchconductedinpursuance oftheauthorisationandwouldbecomethesubject-matterofblock assessmentproceedings.But,suchapanchnamawouldnotextendthe periodoflimitation.Itisbecausethelimitationisprescribedunderthe statute.Ifproceedingsarenotinitiatedwithinthetimeprescribed,the remedyislost.Theassesseewouldacquireavaluableright.Sucharight cannotbeatthemercyoftheofficials,whodonotdischargetheirduties inaccordancewithlaw.Theprocedureprescribedundersection132ofthe Actiselaborateandexhaustive.Thesaidsubstantiveprovisionexpressly providesforsearchandseizure.Intheentireprovisionthereisno indicationofthatsearchoncecommencedcanbepostponed.Whatcanbe postponedisonlyseizureofthearticles.Therefore,oncesearch commencesithastocometoanendwiththesearchpartyleavingthe premiseswhetheranyseizureismadeornot.Thelimitationfor ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 8 completionofblockassessmentisexpresslyprovidedundersection158BE whichclearlydeclaresthatitistheexecutionofthelastofauthorisation whichistobetakenintoconsideration.Theword"seizure"is conspicuouslymissinginthesaidsection.Thesamecannotbereadinto thesectionforthepurposeoflimitation.Thenitamountstorewritingthe sectionbythecourt,whichisimpermissibleinlaw. 81.TheaforesaidCircularNo.772,datedDecember23,1998(see[1999] 235ITR(St.)35)referstothisdilemmafacedbytheDepartment. "127.Executionoflastoftheauthorisationorrequisition Theword'execute'isdefinedinBlack'sLawDictionary,fifthedition,page 509asfollows: 'tocomplete;tomake;tosign;toperform;todo;tocarryout accordingtoitsterms;tofollowup;tofulfilthecommandorpurposeof; toperformallnecessaryformalities;tomakeandsignacontract;tosign anddeliveranotes.' Theword'execution'isdefinedatpage510ofthesaidLawDictionaryas follows: 'Carryoutsomeactorcourseofconducttoitscompletion.Northwest SteelRollingMillsv.CommissionerofInternalRevenue,C.C.A.Wash.,110 F.2d286,290:completionofanact:puttingintoforce:completion fulfilment:perfectingofanythingorcarryingitintooperationandeffect. "Execution"aprocessinactiontocarryintoeffectthedirectionsina decreeorjudgment—Foustv.Foust,47Cal.2d121,302p.2d11,13.' Inthelightoftheabovedefinitionofthewords'execute'and'execution', onemayarguethatuntilandunlessthefinalactisperformed,thewarrant ofauthorisationshouldnotbetreatedasexecutedandthemereinitiation ofthesearchfollowedbyaninterregnumconsequentuponrestraintorder orforanyotherreasonmaynotbetreatedas'execution'ofthewarrant. Butthisinterpretationwouldbehypertechnicalanditneedsdetailed discussionasisdoneinthefollowingparas. Thequestionarisesastowhetherexecutionofawarrantofauthorisation orrequisitionreferstotheconclusionoftheproceedingsundersection 132and/or132Aoritrefersonlytotheexecutionofthewarranteven thoughasaresultofsuchexecutiontheproceedingsundersection132or 132Aareyettohecompleted.Thelattersituationwillincludeacasein whicharestraintorderundersection132(3)ispassed.Insuchacase,it canbesaidthatthoughthewarrantofauthorisationhasbeenexecuted, proceedingsundersection132(3)arepending.Sincetheword'execute', alsomeans'tocomplete',onehastowaitforconclusionofthe proceedingsundersection132(3)forthepurposeofcomputationof limitationundersection158BE(1)andtheperiodofoneyearhastobe computedfromtheendofthemonthinwhichtheproceedingunder section132(3)areconcluded.Iftherearemorethanonewarrant limitationwillbecountedfromtheexecutionofthelastone. Acontraryviewisasmuchpossibleifoneweretoconsiderthespiritof theschemewhichenvisagesexpeditiousdisposalofthesearchcasesand itwouldbereasonabletointerpretthatexecutionofwarrantisnot tantamounttocompletionofproceedingsundersection132or132Athe periodduringwhichtheproceedingsundersection132(3)remained pendinghastobeexcludedforthepurposeofcountinglimitationofone ortwoyearsundersection158BE.Otherwise,itmayleadtoabsurdresults ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 9 asitmaytakeseveralyearsbeforerestraintundersection132(3)islifted anditmaythusextendtheperiodofoneortwoyearsbyallthoseyears duringwhichproceedingsundersection132(3)remainedpendingitmay beagreedagainstthisviewthatsection132(8A)takescarethatthereis noextensionofproceedingsundersection132(3)andthattheview cannotbetakenwithoutdoingviolencetothelanguageoftheAct." 82.Therefore,theExplanationaddedtoremoveadoubtcannotbe construedasaprovisionprovidingalongerperiodoflimitationthanthe oneprescribedinthemainsection.Whenundertheschemeofthesection thereisnoindicationofasecondsearchonthebasisofthesame authorisationissuedunderthesaidprovision,thelegislativeintentionis clearandplainandtheinterpretationtobeplacedbythecourtsshouldbe inharmonywithsuchanintention.Therefore,oneauthorisationistobe issuedinrespectofonepremisesinpursuanceofwhichtherecanbeonly onesearchandsuchasearchisconcluded,whenthesearchingparty comesoutofthepremises,whichisevidencedbydrawingupa panchnama.Whentherearemultipleplacestosearchandwhenmultiple authorisationsareissued,ondifferentdatesoronthesamedateorin respectofthesamepremisesmorethanoneauthorisationisissuedon differentdates,thelastpanchnamadrawninproofofconclusionofsearch inrespectoftheauthorisationistobetakenintoconsiderationforthe purposeoflimitationforblockassessment. Conclusions (1)TheTribunalhasgotpowerstolookintoallaspectsofsearchanda validsearchissinequanonforinitiatingblockassessment. (2)Materialsseizedduringaninvalidsearchcannotbeusedinblock assessmentproceedingbutcanbeusedinotherassessment proceedingsundertheAct. (3)Thepowertoputprohibitoryorderundersection132(3)isunderlaw butthereasonsfordoingsohastoberecordedinwritingandare justiciable. (4)Theperiodoflimitationstartsonthedateonwhichthelastof authorisationhasbeenexecutedandnotwhentheauthorisedofficer statesthatthesearchisfinallyconcluded.Puttingaprohibitoryorder undersection132(3)doesnotelongatethestartingpointof limitation. 54.TheRevenuechallengedthisorderbeforetheHon’bleSupremeCourtSLPwas admittedbutultimatelyCivilAppealwasdismissed.Thenextjudgmentwhichhas beenputinservicebyboththepartiesisthejudgmentofHon’bleDelhiHighcourt inthecaseofPCITvs.PPCBusiness&ProductsPvt.Ltd.Inthiscase,twoplaces weresearchedoneauthorizationwasforthesearchtobeundertakenPithampura, DelhiandotherpremiseAshokVihar,Delhi.Intheauthorizationboththepremises wereshowntobeinpossessionoftheassesseeandhisbrotherbothbeingthe DirectorsoftheentityincludingJHM.Inrespectoftheauthorizationofthesearch ofAshokViharpremiseoffirstpanchnamadated22ndMarch,2007andthe warrantwasinthecaseofassessee’sbrotheri.e.Mr.SanjayJain.Thesearchwas closedon22ndMarch,2007astemporarilyconcluded.Secondpanchnamain relationtoauthorizationofAshokViharpremiseswaspreparedon15thMay2007 whenprohibitoryorderwaslifted.OneNeenaJainwasthepersonwhohasmade ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 10 acknowledgementofhavingreceivedthesecondpanchnamadated15thMay,2007 butaccordingtotheassessee,thejwellerybelongingtoNeenaJainatAshokVihar premisewasvaluedon21stMarch,2007whentheallegedsearchwastemporarily concluded.Thecaseoftheassesseewasthatsearchwasconcludedon 22ndMarch,2007whenpanchnamawaspreparedandrestrainorderwaspassed. ThecaseoftheRevenue,ontheotherhand,wasthatlimitationforpassingthe assessmentorderistobeseenfromthedatewhenprohibitoryorderwaslifted andsecondpanchnamawasdrawn.TheITAThasheldthatassessmentorders weretimebarred.Hon’bleDelhiHighCourtconsideredthejudgmentofHon’ble KarnatakaHighCourtinthecaseofC.RamyReddialsoconsideredthe Explanation(2a)toSection158BEandobservedthatthisExplanation(2a)ispare materiawithsub-Section(2a)ofSection153B.TheHon’bleCourtputreliance uponthejudgmentofC.RamyaReddiandupheldtheorderoftheITAT. 55.ThemuchrelianceplacedbythelearnedCITDRonthejudgmentofthe Hon’bleSupremeCourtinthecaseofVLSFinanceLtd.Wedeemitappropriateto takenoteofthefollowingobservationsoftheHon’bleSupremeCourtfromthis judgmentonwhichemphasizeswasputbythelearnedCITDR. “27.Wemaypointoutthattheappellantsneverchallengedsubsequent visitsandsearchesoftheirpremisesbytherespondentsontheground thatintheabsenceofafreshauthorisationthosesearcheswereillegal, nullandvoid.Notwithstandingthesame,itwasarguedthatatleastfor thepurposeoflimitationthesubsequentsearchescouldnotbetakeninto consideration,asaccordingtothelearnedcounsel,thelegalpositionwas thattheauthorisationdated19thJune,1998,wasexecutedon22ndJune, 1998andthesearchcametoanendwiththatwhenthesearchpartyleft thepremiseson23rdJune,1998aftermakingseizureofcertain documentsetcandissuingrestraintorderunderSection132(3)oftheAct inrespectofcertainitemswhichtheyallegedlycouldnotseizedueto impracticabilityonthatday.SomejudgmentsofvariousHighCourtsare reliedupontosupportthisproposition.Itwasalsoarguedthattherewas noconceptof'revalidationofauthorisation'providedundertheAct,which hasbeenappliedbytheHighCourtintheimpugnedjudgment,which accordingtothelearnedcounselfortheappellants,amountstolegislating anewconceptwhichiscontrarytolaw.” 56.ThelearnedcounselfortheassesseesubmittedthatinthiscaseHon’ble SupremeCourthasnotinterpretedthescopeofSection153B(2)orscopeof Explanation(2)toSection158BEthoughattentionoftheHon’bleSupremeCourt wasdrawnbytheAddl.SolicitorGeneralfromtheExplanation(2)ofSection 158BEbutinparagraphno.29,Hon’bleSupremeCourthadspecificallyobserved thatwithoutgoingintolegalniecety.Thusaccordingtothelearnedcounselforthe assessee,itisthejudgmentonthefactsofthatcase.Thisaspecthasbeen consideredbytheHon’bleDelhiHighCourtinthecaseofCITvs.S.K.Katiyal.In thiscasealso,anidenticalissuecameupbeforetheHon’bleDelhiHighCourtand Hon’bleCourthasconsideredthejudgementofBombayHighCourtinthecaseof SandhyaP.Naik,KeralaHighCourtinDr.C.BalakrishnanNair&hon’bleKarnataka HighCourtin,C.RamaiahReddy,whiledealingwithitsearlierdecisioninthe caseofVLSFinance.TheHon’bleCourtmadefollowingobservations: “30.ThedecisioninVLSFinance(supra)alsorestsonafactualbasis whichisdifferentfromthatofthepresentappeal.Firstofall,VLSFinance (supra)isadecisionrenderedinawritpetitionunderarticle226ofthe ConstitutionofIndia.InexerciseofitswritjurisdictionaHighCourt decidescasesonthebasisofaffidavits.ItisopentotheHighCourtto ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 11 arriveatconclusionsoffact(aswellasoflaw)basedupontheaffidavits. ThepresentcaseisanappealfromtheorderoftheTribunal,whichisthe finalfactfindingauthorityundertheIncomeTaxregime.Thefacts,as determinedbytheTribunal,unlesstheyareheldtobeperverse,formthe basisofthesubstantialquestionsoflawwhicharetobedeterminedby HighCourt'sinappealsunderSection260AofthesaidAct.Itoughttobe rememberedthattheTribunalwasoftheviewthatthesearchandseizure, inthepresentcase,wascompletedon17.11.2000.TheTribunalalsoheld thatthepanchnamaof03.01.2001was―merelyareleaseorderǁ. Secondly,inVLSFinance(supra),thesearchandseizureoperations commencedon22.06.1998andcontinuedtill05.08.1998.Asmanyas16 panchnamasweredrawnuponinrespectofthevisitsmadetothe assessee'spremises.Therewasamassofdocumentswhichwere searchedandseizedfromtimetotime.Thecourtfoundthatthesearch concludedon05.08.1998andnoton22.06.1998.Thecourtalsofound thatthesearchwasalsonotundulyprolonged.Thecourtheld:- “Consequently,weareoftheopinionthattherespondentsdidnot completethesearchon22-6-1998,asallegedbythepetitioners, nordidtheyundulyprolongit.Thesearchconcludedon5-8-1998, andsointermsofExplanation2toSection158BEoftheActthe periodoflimitationwouldbeginfromtheendofAugust,1998, thatis,31-8-1998onwards...”(p.297) 31.ThefactualbasisofthedecisioninVLSFinance(supra)isentirely differenttothatofthepresentcase.Onlaw,thereisnothinginVLS Finance(supra)whichcontradictswhatwehaveexplainedabove.Ifthe searchconcludedon5-8-1998,asheldbythecourt,andthepanchnama ofthatdatewasthelastofthestringof16panchnamas,obviouslythis wouldbethedateonwhichthesearchwasconcludedandthedateon whichthewarrantofauthorizationforsearchwasexecuted.But,inthe presentappeal,nosearchwhatsoeverwasconductedon03.01.2001. Hence,thepanchnamadrawnupon3-1-2001cannotberegardedasa documentevidencingtheconclusionofasearch.Ifthatbeso,3-1-2001 cannotberegardedasthedateonwhichthewarrantofauthorizationwas executed.Moreover,whileinVLSFinance(supra),thecourtheldthatthe searchwasnotundulyprolonged,inthepresentcasethegapbetween 17-11-2000and3-1-2001isunexplained.” 57.Inotherwords,theHon’bleDelhiHighCourtdidnotacceptthecontentionof VLSFinanceanddismisseditswritpetition.ThedecisionofHon’bleDelhiHigh CourtwastakenuptotheHon’leSupremeCourtandHon’bleSupremeCourt affirmedtheDelhiHighCourt.TheHon’bleDelhiHighCourtwhiledealingwiththis pointwasoftheviewthatpropositioninVLSFinancebasedonitsfactsis altogetherdifferent. 58.Thenextdecisionwhichwasrelieduponbythelearnedcounselforthe assesseeisthethirdmemberdecisioninthecaseofNandlalM.Gandhivs.ACIT 115ITD1.Thefactsinthiscasearethatasearchandseizureoperationwas carriedoutunders.132oftheActattheresidentialpremisesoftheassesseeon 28thJuly,1997andcontinuedtill02:30a.m.on29thJuly,1997.Duringthesaid search,certainincriminatingmaterialswhichinteraliaincludedjwelleryandshares, werefoundandthesearchpartypreparedaninventoryinrespectofsearch materialasperpara5ofthepanchnamaonlybooksofaccountsanddocuments asperAnnexure‘A’wereseizedandnoseizurewasaffectedinrespectofother materialsfoundduringthecourseofsearchincludingjewelleryandshares.Inpara ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 12 8ofthepanchnama,itwasstatedthatthesearchwastemporarilyconcludedfor thedaytobecommendedsubsequently.However,prohibitoryorderwasissued unders.132(3)inrespectofjewelleryandsharesfoundfromthecupboardkeptin thebedroomofassessee’ssonShriBakulN.Gandhi.Theprohibitoryorderissued unders.132(3)oftheActinrespectofjewellerythereforeliftedon1stAugust, 1997at04:00p.m.whileprohibitoryorderinrespectofsharecertificateswas liftedon08thSeptember,1997.On08thSeptember,1997,anotherpanchnama waspreparedwhereinitwasstatedthesearchisfinallyconcludedandnoother comments/remarkswererecordedtherein.Thedisputearosewhetheritistobe construedthatsearchwasconcludedon28thJuly1997oritwasconcludedon 08thSeptember,1997.Theperiodoftwoyearsfromtheendofthemonthin whichwarrantofauthorizationofsearchwasexecutedwasrequiredtobe computed.Thebenchwhoheardthematterhaddividedinitsopinion.Thehon’ble JudicialMemberhasassignedfourreasonsforconcludingthatthesubsequent panchnamaisnotavalidpanchnamaforcomputingthelimitationbecausethereis nosearchcarriedoutinSeptember1997butthepanchnamaispreparedandthis panchnamacannotbetreatedasapanchnamaforthepurposeofSection158BE readwithExplanation(2).Thehon’bleAccountantMemberdidnotconcurwith andtreatedthesecondpanchnamavalidforcomputingthelimitation.Thedispute referredtothethirdmemberforhisopinionandthequestionformulated602the thirdmemberwas; “Whetherinthefactsandcircumstancesofthecase,theorderunder s.158BCmadebytheAOistimebarredwithinthemeaningofSection 158BEoftheAct.?” 59.ThethirdmemberhastakenintoconsiderationthejudgmentofHon’ble BombayHighCourtinthecaseofSandhyaP.NaikandHon’bleKeralaHighCourt incaseofDr.CBalakrishnanNair.TheHon’blethirdmemberconcurwiththe JudicialMemberandheldthatissueindisputeiscoveredbythedecisionof hon’bleBombayHighCourtinthecaseofSandhyaP.Naikanditistobe construedthatthesearchwasconcludedon29thJuly1997andnotfromthedate whenpanchnamawaspreparedwhilerevokingtheprohibitoryorder.Thehon’ble BombayHighCourtinthecaseofSandhyaP.Naikwhileexplainingthescopeof Section132(3)hasobservedthatpassingrestraintorderunderSection132(3),the timelimitavailableforassessmentcannotbeextended.Theotherdecisions referredbythelearnedcounselfortheassesseearealsotothiseffect,inthecase ofPPCBusinesshon’bleDelhiHighCourthascategoricallyobservedthatwhen nothingwasrecoveredwhilerevokingtheprohibitoryordertherecannotgiverise tosecondpanchnama.TheHon’bleCourtinparagraph26ofthejudgment recordedthatwhennothingnewforbeingseizedwasfoundthentherewouldbe nooccasiontodrawupapanchnamaatall.Ithasbeendemonstratedbeforeus thatinthecaseofAshokSundardasVasvaninothingwasrecoveredwhen prohibitoryorderwaslifted. 60.TherelevantextractofthejudgmentofHon’bleKeralaHighcourtinthecase ofDr.CBalakrishnanNairvCITreportedin237ITR70readsasunder: 10.FromExt.P3secondPanchanamadated10-11-1995sevenitems, booksofaccountandothervaluablearticleswereseized.Thesearticles whichwereavailableon27-10-1995wereputinanalmirah,accordingto the2ndrespondent,andsealedsincescrutinycouldnotbecompleted duringthesearchandinvestigationandprohibitoryorderunderSection 132wasservedonthepetitioners.Sub-Section(3)ofSection132 empowerstheauthorisedofficertopassanorderontheownerthathe shallnotremove,partwithorotherwisedealwitharticlesandbooksof ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 13 account,etc.,exceptwiththepreviouspermissionoftheofficer.Butthis canbeservedonlyifitisnotpracticabletoseizeanysuchbooksof account,otherdocuments,etc.Itisnotstatedastowhythebooksof account,documents,etc.,wasnotpracticabletobeseizedon27-10-1995. The2ndrespondenthadcollectedthelisteddocumentsfromthepremises andhasputtheminthealmirahandsealedit.Intheabsenceofany satisfactoryexplanationastowhythebooksofaccount,passbookand thedocumentswerenotpracticabletobeseizedon27-10-1995itself,itis acaseofcontraventionofsub-Section(3)ofSection132.Thenumberof documents,passbookandthejewelleryfoundandultimatelyseizedwere fewinnumberandthestatementthatthescrutinycouldnotbecompleted, norpracticabletoseize,isimpossibletoacceptonthefaceofit.Itisin thiscontexttheallegationmadeagainstthesecondrespondentthathe carriedawaycertaindocumentsinhisbagunauthorisedlyon27-10-1995 andbroughtthembackon10-11-1995assumessignificance.However, theactionofthesearchpartyheadedbythesecondrespondentin collectingthedocumentsandvariousitemsfromdifferentpartsofthe premisesandagainputtingtheminthealmirahinthebedroomofthe firstflooroftheresidentialpremisesisunreasonableandnoprovisionis reliedonforsuchacauseofaction.Rule112(4C)oftheIncome-taxRules, 1962empowerstheauthorisedofficertoserveanorderontheownerthat heshallnotremove,partwithorotherwisedealwithitexceptwiththe previouspermissiononlyincaseswhereitisnotpracticabletoseizethe articleorthingoranybooksofaccountordocument.Therefore,the actionofthesecondrespondentandhismembersindumpingthe documents,etc.,seizedinthealmirahcannotbesupported,butviolates themandatoryrequirement. 61.Likewise,theHon’bleBombayHighCourtinthecaseofCITv.SandhyaP.Naik [2002]124Taxman384(Bom.)hasobservedthatwhereasearchpartyseizedand removedfromthepremisesoftheassessee5,729gms.ofgoldornaments,cashof Rs.1,69,000andbooksofaccountweighingnearly500kgs,thenargumentofthe departmentthat45kg.ofsilverornamentshadtobeplacedunderPOduetotheir weightwasnotfoundtenablebytheTribunalandconfirmedbytheHighCourtas noimpracticabilitywasvisualizedinnonseizureof45kg.ofsilverornaments. 62.Nowcomingtothecaseonhand,wefindthatontherevocationofthe prohibitoryorders,thesearchteamhasseizedonly277pageswhichwasvery muchpossibletoseizethemduringthesearchproceedingswhichwereconcluded on13thMarch2015.Thesearchteamhastojustifyintheorderpassedunder Section132(3)oftheActthatbooks/documents/valuablesarenotpracticableto seizealongwiththereasonsotherthanthosementionedinsecondprovisoto Section132(1). 63.AsituationalsoariseswheretheauthorisedofficersimposePOconsidering thatthegoodsfoundinthesearcharenotpracticabletoseize.Onthesubsequent visit,POisrevokedleadingtoinferencethattheyconsiderthatgoodsarenow practicabletoseize.Buttheauthorisedofficerhasnotbroughtanythingonrecord describinginthePanchnamaorintherevocationorderhowithasbecome practicabletoseizethedocuments. 64.InfactweareoftheviewthattheconditionsimposedunderSection132(3)of theActforpassingtheprohibitoryorderswerenotcompliedwith.Accordingly, theseorderspassedunderSection132(3)oftheActhavenovalidityintheeyesof law. ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 14 65.Oncetheprohibitoryordersinthecaseonhandhasbeenheldasinvalidthen thesearchconcludedinthemonthofMarch2015shallbetakenasthebasefor calculatingtheperiodofpassingtheassessmentorderasprovidedunderSection 153BoftheAct.Inotherwordsthetimelimitinthecaseonhandexpiresfor passingtheorderason31March2017.Therefore,inthepresentcasetheorders havebeenframedbeyondthetimeprescribedundertheprovisionsoflaw. 12.Beforeus,nomaterialhasbeenplacedonrecordbytheRevenuetodemonstrate thatthedecisionofTribunalasdiscussedabovehasbeensetaside/stayedoroverruledby theHigherJudicialAuthorities.Thus,respectfullyfollowingtheorderofthetribunalinthe groupcaseoftheassesseeasdiscussedabove,weholdthatthesearchwasconcludedas on10 th March2015andaccordingly,thetimelimittocompletetheassessmentunder section143(3)r.w.s.153AoftheActexpireason31 st March2017.Hence,theorder passedason28 th December2017isinvalidduetolimitationoftimeandweherebyquash thesame. 13.Since,wehavedecidedthetechnicalgroundandquashedtheassessmentbeing invalidduetolimitationoftimeasdiscussedabove,wearenotinclinedtodecidethe issuesonothertechnicalgroundraisedbytheassesseeinthecaptionedCOaswellthe issuesraisedbytheRevenueonmeritinIT(SS)ANo.152/Ahd/2021.Accordingly,we dismissthegroundsofotherobjectionraisedbytheassesseeandtheissuesraisedbythe Revenueonmeritasinfructuous. 14.Intheresult,theCOoftheassesseeispartlyallowedwhereastheappealofthe Revenueisdismissedasinfructuous. 6.1Beforeus,nomaterialhasbeenplacedonrecordbytheRevenueto demonstrateanythingcontrarytothedecisionasdiscussedabove.Likewise, beforeus,theRevenuehasnotplacedanymaterialonrecordtopointoutany distinguishingfeatureinthefactsofthecasefortheyearunderconsiderationand thatofthecasecitedabovenorhasplacedanycontrarybindingdecisioninhis support.Thus,respectfullyfollowingtheabovefinding,weherebyallowthe groundofappealoftheassessee. 6.2Astheassesseesucceedsonthetechnicalground,werefrainourselves fromgivinganyfindingonthegroundsraisedonmerits.Assuchthegrounds raisedonmeritbytheassesseebecomeinfructuousandtherefore,wedismissed thesame. 6.3Intheresult,appealoftheassesseeispartlyallowed. ITAnos.01-02/AHD/2022 A.Y.2014-15&2015-16 15 ComingtoIT(SS)ANo.02/Ahd/2022forAY2015-16,anappealbythe assessee. 7.Attheoutset,wenotethattheissuesraisedbytheassesseeinitsgrounds ofappealfortheA.Y2015-16areidenticaltotheissuesraisedbytheassesseein IT(SS)ANo.01/AHD/2022fortheassessmentyear2014-15.Therefore,the findingsgiveninIT(SS)ANo.01/AHD/2022shallalsobeapplicablefortheyear underconsiderationi.e.AY2015-16.Theappealoftheassesseeforthe assessment2014-15hasbeendecidedbyusvideparagraphNo.6ofthisorder partlyinfavouroftheassessee.ThelearnedARandtheDRalsoagreedthat whateverwillbethefindingsfortheassessmentyear2014-15shallalsobe appliedfortheyearunderconsiderationi.e.AY2015-16.Hence,thegroundsof appealfiledbytheassesseeareherebypartlyallowed. 7.1Intheresult,theappealoftheassesseeispartlyallowed. 8.Inthecombinedresults,boththeappealsoftheassesseearepartly allowed. OrderpronouncedintheCourton09/08/2023atAhmedabad. Sd/-Sd/- (T.RSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated09/08/2023 Manish