ACIT Central Circle 18 & 19, V. Girdharlal L. Javeri,

ITSSA 469/MUM/2004

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0249 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 11 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-07-2014
• Assessment Year: misc
• Appeal Filed On: 16-08-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Search and seizure; Period of limitation; Block assessment; Time period of passing order; Documents seized
• Section: 132; 15

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER IT(SS)A NO. : 480/MUM/2004, BLOCK ASSESSMENT PERIOD 01/04/1990 TO 24/08/2000 SHRI SAGAR JAVERI, L/H OF LATE SHRI GRIDHARLAL L JAVERI, 181-B, URVASHI, NEPEAN SEA ROAD, MUMBAI .: PAN: AAHPJ 9588 K VS ACIT CEN. CIR. 18 & 19, R. NO. 402, AAYAKAR BHAVAN, MUMBAI -400 020 (APPELLANT) (RESPONDENT) IT(SS)A NO. : 469/MUM/2004, BLOCK ASSESSMENT PERIOD 01/04/1990 TO 24/08/2000 ACIT CEN. CIR. 18 & 19, R. NO. 402, AAYAKAR BHAVAN, MUMBAI -400 020 VS SHRI SAGAR JAVERI, L/H OF LATE SHRI. GRIDHARLAL L JAVERI, 41-B, URVASHI, NEPEAN SEA ROAD, MUMBAI .: PAN: AAHPJ 9588 K (APPELLANT) (RESPONDENT) APPLICANT-ASSESSEE BY : DR. K. SHIVARAM & SHRI AJAY SINGH RESPONDENT-REVENUE BY : SHRI SANTOSH KUMAR !'#$% /DATE OF HEARING : 10-07-2014 &'( #$%/ DATE OF PRONOUNCEMENT : 16-07-2014 * + * + * + * + O R D E R , , , , -'' -'' -'' -'' '. '. '. '. , . . . . . .. . PER VIVEK VARMA, J.M. : INSTANT CROSS APPEALS ARE FILED AGAINST THE ORDER O F CIT(A) VI, MUMBAI, DATED 11.06.2004, WHEREIN, THE FOLLOWING GR OUNDS HAVE BEEN TAKEN: IT(SS)A NO. : 480/MUM/2004 : ASSESSEES APPEAL : A) BLOCK ASSESSMENT ORDER IS TIME BARRED, BAD-IN- LAW & HENCE, LIABLE TO BE QUASHED 1. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRE D IN NOT CONSIDERING THE SUBMISSION OF THE APPELLANT THAT TH E BLOCK ASSESSMENT ORDER WAS BARRED BY LIMITATION IN AS MUC H AS THE SEARCH ACTION WAS CONTINUED FOR A PERIOD 'OF ABOUT 17 MONTHS L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 2 I.E. FROM 24/8/2000 TO 22/112002 BY MERELY ISSUING PROHIBITORY ORDERS IN RESPECT OF THE CUPBOARDS LYIN G IN THE BED ROOM WITHOUT ANY JUSTIFICATION FOR THE ISSUE OF PRO HIBITORY ORDERS FROM TIME TO TIME AND THEREBY CONTINUING SEARCH ACT ION FOR ALMOST ABOUT 17 MONTHS AND HENCE, THE BLOCK ASSESSM ENT ORDER PASSED ON 30/1/2004 IN RESPECT OF SEARCH ACTION CON DUCTED ON 24/8/2000 I.E. AFTER ABOUT 40 MONTHS OF THE DATE OF SEARCH IS TIME-BARRED, BAD-IN-LAW AND LIABLE TO BE QUASHED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) FAILE D TO APPRECIATE THAT LEGAL GROUND COULD BE RAISED AT ANY TIME AND THE SAME COULD BE EVEN RAISED ORALLY WHEREAS IN THE CAS E OF THE APPELLANT, THE SAME WAS DULY RAISED BY WAY OF DETAI LED WRITTEN SUBMISSION IN THE COURSE OF APPELLATE PROCEEDINGS A ND HENCE, EVEN THOUGH NO SPECIFIC GROUNDS OF APPEAL OR ADDITI ONAL GROUNDS OF APPEAL WAS RAISED, THE LEARNED CIT(A) OUGHT TO H AVE CONSIDERED THE SAME AND DEALT WITH THE SAID ISSUE B Y PASSING APPROPRIATE ORDER IN THIS RESPECT. WITHOUT PREJUDICE TO ABOVE, ON MERITS B) ESTIMATED ADDITION MADE OF RS. 4,34,037/- IN RESPECT OF METAL COINS IS UNJUSTDTED AND LIABLE TO BE DELETED 3. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ADDITION IN RESPECT OF METAL COINS B Y ESTIMATING THE VALUE OF THE SAME AT RS.4,34,037/- WITHOUT APPRE CIATING THE FACT THAT THE METAL COINS FOUND IN THE COURSE OF SE ARCH ACTION WERE DULY DISCLOSED TO THE DEPARTMENT AS THE SAME W ERE ALSO FOUND IN THE COURSE OF EARLIER SEARCH ACTION AND TH AT THERE WAS NO EVIDENCE TO CONCLUDE THAT THE APPELLANT HAD PURC HASED THE SAID METAL COINS DURING THE BLOCK PERIOD AND HENCE, THE ESTIMATED ADDITION MADE OF RS.4,34,037/- IS UNJUSTIF IED AND LIABLE TO BE DELETED. 4. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMM ISSIONER OF INCOME-TAX (A) FAILED TO APPRECIATE THAT THERE COUL D NOT BE ANY ADDITION ON ESTIMATED BASIS AS PER THE PROVISIONS O F CHAPTER XIV-B OF THE ACT WITHOUT THERE BEING ANY EVIDENCE TO THAT EFFECT, WHICH FACT IS ALSO NOTED BY THE LEARNED CIT(A) IN H IS ORDER AT PARA 20 THAT THERE IS NO EVIDENCE THAT THE COLLECTI ON OF THE COINS WAS ACQUIRED DURING THE BLOCK PERIOD AND HENCE, THE ADDITION MADE OF RS.4,34,037/- ON ESTIMATED BASIS IS UNJUSTIF IED AND LIABLE TO BE DELETED. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMM ISSIONER OF INCOME-TAX (A) FAILED TO APPRECIATE THAT THE DEPART MENT HAD APPOINTED 3 DIFFERENT VALUERS AND AS PER THE VALUAT ION REPORT OF ALL THE 3 VALUERS, THE VALUE OF THE METAL COINS WAS DETERMINED AT RS.1,50,951/- AND HENCE, THE ADDITION MADE OF RS.4,34 ,037/- ON ESTIMATED BASIS IS UNJUSTIFIED AND LIABLE TO BE DELETED. C) ESTIMATED ADDITION MADE OF RS.25,OO,OOO/- IN RESPECT OF CURRENCY NOTES IS UNJUSTIFIED AND LIABLE TO BE DELETED 6. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ADDITION IN RESPECT OF CURRENCY NOTE S BY ESTIMATING THE VALUE OF THE SAME AT RS.25,00,000/- W ITHOUT APPRECIATING THE FACT THAT THE MOST OF THE CURRENCY NOTES WERE L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 3 CURRENTLY RUNNING IN THE MARKET AND NOT OLD NOTES A ND FURTHER THAT THE OLD CURRENCY NOTES FOUND IN THE COURSE OF SEARCH ACTION WERE DULY DISCLOSED TO THE DEPARTMENT AS THE SAME W ERE ALSO FOUND IN THE COURSE OF EARLIER SEARCH ACTION CONDUC TED IN THE YEAR 1985 AND THE FACE VALUE OF THE SAME BEING RS. 1 7,522/- ONLY AND FURTHER THAT THERE WAS NO EVIDENCE TO CONC LUDE THAT THE APPELLANT HAD PURCHASED THE SAID CURRENCY NOTES DUR ING THE BLOCK PERIOD AND HENCE, THE ESTIMATED ADDITION MADE OF RS.25,00,000/- IS UNJUSTIFIED, WITHOUT ANY BASIS AN D LIABLE TO BE DELETED. 7. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMM ISSIONER OF INCOME-TAX (A) FAILED TO APPRECIATE THAT THERE COUL D NOT BE ANY ADDITION ON ESTIMATED BASIS AS PER THE PROVISIONS O F CHAPTER XIV-B OF THE ACT WITHOUT THERE BEING ANY EVIDENCE TO THAT EFFECT, WHICH FACT IS ALSO NOTED BY THE LEARNED CIT(A) IN H IS ORDER AT PARA 20 THAT THERE IS NO EVIDENCE THAT THE COLLECTI ON OF THE CURRENCY NOTES WAS ACQUIRED DURING THE BLOCK PERIOD AND HENCE, THE ADDITION MADE OF RS.25,00,000/- ON ESTIMATED BAS IS IS UNJUSTIFIED AND LIABLE TO BE DELETED. D) FURTHER ESTIMATED ADDITION MADE OF RS.12,87,602/- IN RESPECT OF SILVER COINS IS UNJUSTIFIED AND LIABLE TO BE ;DELETED 8. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ADDITION IN RESPECT OF SILVER COINS BY ESTIMATING THE VALUE OF THE SAME AT RS.19,74,332/- WITHOUT APPR ECIATING THE FACT THAT THE VALUE OF EXCESS SILVER COINS FOUN D AMOUNTING TO RS. 6,86,730/- WAS ALREADY OFFERED AS UNDISCLOSED INCOME (I.E. PART OF RS, 10 LACS RETURNED UNDISCLOSED INCOM E) AND SINCE, THERE WAS NO EVIDENCE TO CONCLUDE THAT THE APPELLAN T HAD PURCHASED THE SAID SILVER COINS FOR AN AMOUNT OVER AND ABOVE RS. 6,86,730/- AND THAT TOO DURING THE BLOCK PERIOD AND HENCE, THE ESTIMATED ADDITION MADE OF RS. 12,87,602/- OVER & ABOVE RS. 6,86,730/- ALREADY OFFERED, IS UNJUSTIFIED, WITH OUT ANY BASIS AND LIABLE TO BE DELETED. 9. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COMM ISSIONER OF INCOME-TAX (A) FAILED TO APPRECIATE THAT THERE COUL D NOT BE ANY ADDITION ON ESTIMATED BASIS AS PER THE PROVISIONS O F CHAPTER XIV-B OF THE ACT WITHOUT THERE BEING ANY EVIDENCE TO THAT EFFECT, WHICH FACT IS ALSO NOTED BY THE LEARNED CIT(A) IN H IS ORDER AT PARA 20 THAT THERE IS NO EVIDENCE THAT THE COLLECTI ON OF THE SILVER COINS WAS ACQUIRED DURING THE BLOCK PERIOD AND HENC E, THE FURTHER ADDITION MADE OF RS.12,87,630/- ON ESTIMATED BASIS IS UNJUSTIFIED AND LIABLE TO BE DELETED. 10. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED COM MISSIONER OF INCOME-TAX (A) FAILED TO APPRECIATE THAT THE DEPART MENT HAD APPOINTED 3 DIFFERENT VALUERS AND AS PER THE VALUAT ION REPORT OF ALL THE 3 VALUERS, THE VALUE OF THE EXCESS SILVER C OINS FOUND WAS DETERMINED AT RS.6,86,710/-, WHICH IS OFFERED AS UND ISCLOSED INCOME BY THE APPELLANT AND HENCE, FURTHER ADDITION MADE OF RS.12,87,630/- ON ESTIMATED BASIS IS UNJUSTIFIED AND LIABLE TO BE DELETED. E) RETURNED UNDISCLOSED INCOME TREATED AS SEPARATE INCOME OTHER THAN THE ADDITIONS MADE L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 4 11. THE LEARNED COMMISSIONER OF INCOME-TAX (A) ERRE D IN TREATING THE RETUNED UNDISCLOSED INCOME OF RS. 10 LA CS AS A SEPARATE UNDISCLOSED INCOME I.E. AVER AND ABOVE THE ESTIMATED UNDISCLOSED INCOME DETERMINED BY HIM WITHOUT APPREC IATING THE FACT THAT THE RETUNED UNDISCLOSED INCOME OF RS. 10 LACS WAS OFFERED IN ORDER TO COVER UP ANY DISCREPANCIES AND HENCE, THE SAME IS PART AND PARCEL OF THE TOTAL UNDISCLOSED IN COME AND NOT SEPARATE AND THEREFORE, THE SEPARATE ADDITION OF RE TURNED UNDISCLOSED INCOME OF RS. 10 LACS IS UNJUSTIFIED AND LIABLE TO BE DELETED. 12. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING LEVY OF SURCHARGE @ 17% ON TAX ON UNDISC LOSED INCOME. 13. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL. 2. THE FACTS ARE THAT SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT ON THE JHAVERI GROUP UNDER SECTION 132 OF THE I NCOME TAX ACT, 1961, ON 24.08.2000, THROUGH WARRANT OF AUTHORIZATI ON, ISSUED ON 23.08.2000, TO ENTER THE OFFICE PREMISES AND RESIDE NTIAL PREMISES OF THE ASSESSEE. THE SEARCH WAS CONCLUDED ON 26.08.200 0, BUT THE SEARCH PARTY, AFTER TAKING INVENTORY OF THE VALUABL ES FOUND, LOCKED AND SEALED THE SAME IN THE CUPBOARDS LYING IN THE BEDRO OM OF THE ASSESSEE U/S 132(3). SUBSEQUENT TO THE SEALING OF THE CUPBOA RDS, THE SEARCH PARTY, UNDER VARIOUS ORDERS, KEPT ON EXTENDING THE SEALING ORDER OF THE CUPBOARDS. THIS WAS FINALLY OPENED ON 22.01.2002. 3. CONSEQUENT TO THESE PROCEEDINGS, THE AO ISSUED N OTICE U/S 158BC, CALLING THE ASSESSEE TO FILE HIS RETURN OF U NDISCLOSED INCOME. THE ASSESSEE FILED THE RETURN U/S 158BC ON 11.03.20 02, DECLARING UNDISCLOSED INCOME OF RS. 10,00,000/-. THE AO, PASS ED THE ORDER U/S 158BC ON 30.01.2004 AT RS. 4,60,00,000/-. 4. AGAINST THIS ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO PASSED THE ORDER ON 11.06.2004, SUSTAINING PART OF THE ADDITIONS, THEREBY GIVING PART RELIEF TO THE ASSESSEE. 5. AGAINST THIS ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE ITAT. DURING THE PENDENCY OF THE APPEAL, THE ASSESSEE EXP IRED ON L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 5 26.11.2005. ON THE DEATH OF THE ASSESSEE, TWO SONS, MR. SAMEER JAVERI AND MR. SAGAR JAVERI STEPPED IN AS LEGAL HEIRS TO P ROSECUTE THE APPEAL. OF THE LEGAL HEIRS, MR. SAMEER JAVERI WAS AUTHORIZE D TO PROSECUTE THE PENDING PROCEEDINGS, INCLUDING THE APPEAL BEFORE TH E ITAT. DURING THE PENDENCY OF THE APPEALS BEFORE THE ITAT, MR. SAMEER JAVERI ALSO EXPIRED ON 08.05.2009. HENCE, THE PRESENT APPEAL IS PROSECUTED BY MR. SAGAR JAVERI AS THE LEGAL HEIR OF LATE MR. GIRDHARI LAL JAVERI. 6. IN THE FACT SHEET SUBMITTED BEFORE US, THE AR SU BMITTED THAT ADDITIONAL GROUND OF APPEAL, ON THE ISSUE OF LIMITA TION, THOUGH IT WAS NOT RAISED IN FORM NO. 35, WAS RAISED BEFORE THE CI T(A), IN THE COURSE OF APPEAL PROCEEDINGS, THROUGH THE SUBMISSIONS MADE BY THE ASSESSEE, WHICH WENT TO THE ROOT OF THE ISSUE. 7. THE ASSESSEE, THEREFORE, SUBMITTED THAT GROUND N O. 1 PERTAINS TO THE LIMITATION. 8. AS NARRATED IN THE BRIEF FACTS HERE ABOVE, THE S EARCH WAS CONDUCTED ON 24.08.2000 AND CONCLUDED ON 26.08.2000 . AT THE TIME OF LEAVING THE PREMISES, THE SEARCH PARTY SEALED THE C UPBOARDS OF BED ROOM AND FROM TIME TO TIME KEPT ON ISSUING PROHIBIT ORY ORDERS, AND THE LAST OF THE PROHIBITORY ORDERS WAS ISSUED ON 22 .01.2002. THE AO, THEREAFTER ISSUED NOTICE U/S 158BC(II) ON 01.02.200 2, CALLING FOR THE ASSESSEE TO FILE HIS RETURN. 9. THE MAIN AND SUMMARY OBJECTION OF THE ASSESSEE H AS BEEN THAT THE BLOCK ASSESSMENT HAS BEEN FRAMED WELL BEYOND TH E LIMITATION PERIOD PROVIDED BY THE LEGISLATURE. 10. ACCORDING TO THE ASSESSEE, THE ASSESSMENT COULD ONLY HAVE BEEN FRAMED WITHIN TWO YEARS ON THE LAST OF THE AUTHORIZ ATIONS. THEREFORE, L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 6 ACCORDING TO THE FACTS THE ASSESSMENT COULD HAVE BE EN FRAMED TILL 31.08.2002, AS THE WARRANT FOR AUTHORIZATION WAS DA TED 23.08.2000. 11. THE AR SUBMITTED THAT CONSEQUENT TO SEALING OF THE CUPBOARDS, ON 26.08.2002, WHEN THE SEARCH PARTY LEFT THE PREMI SES, THE DEPARTMENT ONLY MADE PROHIBITORY ORDERS, WHICH COUL D NOT BE SAID TO THE CONTINUANCE OF THE SEARCH ACTION AND PLACED REL IANCE ON THE SPECIAL BENCH DECISION OF THE ITAT, JODHPUR IN THE CASE OF ACIT VS SHREE RAM LIME PRODUCTS LTD,, REPORTED IN 137 ITD 2 20, WHERE THERE WERE FOLLOWING FACTS AND THE DECISION OF THE SPECIA L BENCH WAS, SEARCH PROCEEDINGS UNDER SECTION 132 WERE INITIATE D AT BHATTA PREMISES (BRICK KILNS) AND OFFICE PREMISES OF THE A SSESSEE. TWO AUTHORIZATIONS FOR SEARCH WERE ISSUED. THE FIRST AU THORIZATION WAS DATED 17-12-2002 AND THE SECOND AUTHORIZATION W AS DATED 20-12-2002. PROCEEDINGS WERE INITIATED AND PANCHNAM AS WERE DRAWN. FOR FIRST AUTHORIZATION PANCHNAMAS WERE DRAW N ON THREE DIFFERENT DATES VIZ: 20-12-2002, 21-12-2002 A ND 3-1-2003. FOR SECOND AUTHORIZATION PANCHNAMAS WERE DRAWN ON F OUR DIFFERENT DATES VIZ: 20-12-2002, 24-12-2002, 26-12- 2002 AND 27-12-2002. FINALLY ASSESSMENT ORDER UNDER SECTION 158BC WAS PASSED ON 31-1-2005 BY CONSIDERING THE PANCHNAM A DRAWN ON 3-1-2003 AS THE LAST PANCHNAMA OF THE PURP OSE OF RECKONING LIMITATION PERIOD UNDER' SECTION 158BE RE AD WITH EXPLANATION 2 THEREOF. ADDITIONS WERE MADE. ON APPEA L, THE COMMISSIONER (APPEALS) DELETED CERTAIN ADDITIONS AN D REDUCED CERTAIN OTHER ADDITIONS. BEING AGGRIEVED BY THE SAM E THE REVENUE PREFERRED INSTANT APPEALS. ON THE OTHER HAN D, THE ASSESSEE FILED CROSS OBJECTIONS RAISING ONE PRELIMI NARY OBJECTION AS TO THAT ASSESSMENT ORDER PASSED UNDER SECTION 15 8BC WAS TIME BARRED UNDER SECTION 158BE. THE ASSESSEE'S CAS E WAS THAT THE LAST PANCHNAMA DATED 3-1-2003 WAS NOT A VALID PANCHNAMA IN THE EYES OF LAW AS IT HAD BEEN EXECUTE D ONLY FOR THE PURPOSE OF REVOCATION OF A RESTRAINT ORDER PASS ED UNDER SECTION 132(3), WHICH TOOK JUST HALF AN HOUR TO GET COMPLETED; AND WHICH DID NOT DOCUMENT ANY SEARCH OR SEIZURE. AS PER THE ASSESSEE, SEARCH AND SEIZURE PROCEEDINGS WERE COMPLETED ON 20-12-2002 AND 21-12-2002 ON WHICH DAT ES PANCHNAMAS WERE DRAWN. ASSESSEE PLEADED THAT PANCHNA MA IS NOT JUST A FORMALITY, AND THE ACTUAL EVENT TO RECKO N TIME-LIMIT WILL BE THE EFFECTIVE STEPS TAKEN BY THE DEPARTMENT TO H AVE THE MATERIAL IN ITS POSSESSION ON THE BASIS OF WHICH AS SESSMENT COULD BE COMPLETED. AS TO WHAT WAS THE LAST AUTHORIZATION IN INSTANT CAS E, ASSESSEE, RELYING UPON LANGUAGE OF SECTION 158BE WHEREIN TERM 'USED IS LAST OF THE AUTHORIZATION, CONTENDED THAT LAST AU THORIZATION WAS AUTHORIZATION DATED 20~12-2002 IN RESPECT OF WHICH LAST L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 7 PANCHNARNA WAS DRAWN ON 20-12-2002. THE ASSESSEE, THEREFORE, CONTENDED THAT THE TIME-LIMIT WITHIN WHI CH THE ASSESSMENT COULD BE COMPLETED WAS 31-12-2004 AND AS ASSESSMENT HAD BEEN FRAMED ON 31-1-2005, IT WAS BAR RED BY THE LIMITATION PERIOD. THE REAL QUESTION INVOLVED IN THE INSTANT APPEAL IS THAT WHETHER OR NOT PANCHNAMA DRAWN ON 3-1-2003 IS RELEVANT FOR THE PURPOSE OF COMPUTING THE TIME-LIMIT DESCRIBED IN SE CTION 158BE. THE DOCUMENT KNOWN AS PANCHNAMA BY ITS NATURE IS NO THING BUT A DOCUMENT RECORDING THE PROCEEDINGS WHICH HAVE HAPPENED IN THE PRESENCE OF THE WITNESSES. AT THE SAME TIME, THE PANCHNAMA WHICH IS DESCRIBED IN SECTION 158BE SHOUL D BE A PANCHNAMA WHICH REVEAL THAT A SEARCH WAS CARRIED OU T ON THE DAY TO WHICH IT RELATES. IF IT IS FOUND THAT THE PA NCHNAMA DOES NOT REVEAL THAT A SEARCH WAS AT ALL CARRIED OUT ON THE DATE TO WHICH IT RELATES, THEN IT WOULD NOT BE A PANCHNAMA RELATING TO A SEARCH AND CONSEQUENTLY, IT WOULD NOT BE A PANCHNAM A WHICH FINDS MENTIONED IN EXPLANATION 2 TO SECTION 158BE. [PARA 26] THEREFORE, TO DETERMINE THE REAL NATURE OF PANCHNAM A DRAWN ON 3 -1-2003 IT WILL BE NECESSARY TO GO INTO THE FACTS RECORDED IN THE SAID PANCHNAMA. IT STARTED AT 5.50 P.M. AND IT IS I N RESPECT OF AUTHORIZATION DATED 17-12-2002. IT IS MENTIONED THA T THE SEARCH WAS IN CONTINUATION OF THE PROCEEDINGS ON 21-12-200 2 AND THE SEARCH PARTY HAD INSPECTED THE SEAL WHICH WERE PLAC ED ON 21- 12-2002 AND IT WAS FOUND THAT THE SEALS WERE INTACT AS NARRATED IN THE ORDER PASSED UNDER SECTION 132(3) DATED 3-1- 2003. IN THE COLUMN RELATING TO ASSETS OR DOCUMENTS SEIZED, ALL THE COLUMNS ARE FILLED AS NIL. NO STATEMENT OF ANY PERSON WAS R ECORDED ON THAT DATE. IT IS MENTIONED THAT ON 3-1-2003, THE PR OCEEDINGS WERE STARTED AT 5.5OPM AND THE PROCEEDINGS WERE CLO SED ON 3- 1-2003 AT 6.20 PM AND ALL OTHER COLUMNS ARE NIL. TH E PERUSAL OF THE PANCHNAMA WILL REVEAL THAT EXCEPT FROM PASSING THE REVOCATION ORDER UNDER SECTION 132(3) OF THE PROHIB ITORY ORDER PASSED ON 21-12-2002 NO OTHER ACTIVITY HAD TAKEN PL ACE. THEREFORE, FROM THE PERUSAL OF THE PANCHNAMA IT IS CLEAR THAT THERE WAS NO CONCLUSION OF SEARCH. WHATEVER MATERIA L WAS REQUIRED TO BE SEIZED OR IMPOUNDED WAS ALREADY SEIZED/IMPOUNDED BY THE DEPARTMENT THE PROCEEDINGS ON 3-1- 2003 ARE ONLY A FORMALITY COMPLETED WITHIN A VERY S HORT SPAN OF TIME AND WAS ONLY TO LIFT THE PROHIBITORY ORDER. [P ARA 27] IN VIEW OF ABOVE DISCUSSION, IT IS HELD THAT IN THE INSTANT CASE PANCHNAMA DATED 3-1-2003 IS NOT A PANCHNAMA WHICH F INDS MENTIONED IN EXPLANATION 2 TO SECTION 158BE. HENCE, THE LIMITATION CANNOT BE GOVERNED BY THE SAID PANCHNAMA . THE SEARCH ESSENTIALLY WAS CONCLUDED AND COMPLETED VIDE PANCHNAMA DATED 21-12-2002, WHEN ORDER UNDER THE SE COND PROVISO TO SECTION 132(1) WAS PASSED AT STATEMENT O F ONE PERSON WAS RECORDED AND A RESTRAIN ORDER UNDER SECTION 132 WAS PASSED. PANCHNAMA DATED 21-12-2002 WAS THE LAST PAN CHNAMA AS DESCRIBED IN EXPLANATION 2 TO SECTION 158BE AND, THEREFORE, THE LIMITATION HAS TO BE COMMENCED FROM THE SAID PA NCHNAMA. IT IS AN UNDISPUTED POSITION THAT, IF PANCHNAMA DATED 21-12-2002 IS CONSIDERED AS LAST PANCHNAMA THEN THE TIME-LIMIT TO FRAME L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 8 ASSESSMENT UNDER SECTION 158BC WILL BE 31-12-2004. AS AGAINST THAT, THE IMPUGNED ASSESSMENT IS PASSED ON 31-1-2005 WHICH IS NOT PASSED WITHIN THE LIMITATION DESCRIBED IN SECTION 158BE. THE ASSESSMENT, THEREFORE, IS BAD IN LAW ARI D HAS TO BE QUASHED. [PARA 29] 12. THE AR ALSO SUBMITTED THAT TIME LIMIT COULD NOT BE EXTENDED IF THE PROHIBITORY ORDER IS ISSUED ON CUPBOARD TO KEEP THE VALUABLES. THIS HAS BEEN AFFIRMED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS PLASTIKA ENTERPRISES, REPORTED IN 180 TAXMAN 293 (BOM). THE AR ALSO SUBMITTED THAT ON THIS PROPOSITION ITSELF I N THE CASE OF DCIT VS ADOLF PATRIC PINTO, REPORTED IN 100 ITD 191 (MUM), THE COORDINATE BENCH HELD, ONCE ALL MATERIAL AND VALUABLES WHICH WERE FOUND D URING SEARCH ARE APPRAISED, SEARCH WILL COME TO AN END. P ROHIBITORY ORDER U/S 132(3) WILL NOT EXTEND LIMITATION U/S 158BE. THIS WAS APPROVED BY THE HONBLE BOMBAY HIGH COURT AND FINALLY THE SLP FILED BY THE DEPARTMENT BEFORE THE HONBLE SUPREME COURT HAS ALS O BEEN DISMISSED, AS REPORTED IN 322 ITR 3 (ST). 13. THE AR HAS RELIED ON A NUMBER OF DECISIONS ON T HIS ISSUE ITSELF, WHICH WE HAVE TAKEN NOTE OF. 14. THE AR, SUBMITTED THAT THE ASSESSMENT PROCEEDIN GS U/S 158BC IS THEREFORE, AGAINST LAW AND MERITS TO BE QUASHED. 15. THE DR, ACCEPTED THE FACTS AND ACCEPTED THAT TH IS LEGAL ISSUE IS COVERED BY THE DECISION OF THE SPECIAL BENCH IN THE CASE OF SHREE RAM LIME PRODUCTS LTD. ( SUPRA ) AND BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ADOLF PATRIC PINTO (SUPRA) , WHERE DEPARTMENTS SLP HAS SINCE BEEN DISMISSED. HE, HOWEVER, RELIED ON THE DE CISIONS OF THE REVENUE AUTHORITIES. 16. WE HAVE HEARD THE ARGUMENTS AND HAVE PURSUED TH E SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES AND BEFORE US AND THE CASE LAWS RELIED UPON BY THE AR. L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 9 17. FROM THE PATENT FACTS, AS NARRATED IN PRE PARAS , WE FIND THAT THE CASE LAWS CITED ARE FULLY APPLICABLE ON THE ASSESSE E. EVEN GOING STRICTLY BY THE PROVISIONS OF LAW, EXPLANATION 2 IS VERY CLE AR WHERE IT SAYS AUTHORIZATION REFERRED TO IN SUB SECTION (1) SHALL BE DEEMED TO HAVE BEEN EXECUTED (A) ON THE CONCLUSION OF SEARCH AS RECORD ED IN THE LAST PANCHNAMA DRAWN IN RELATION TO ANY PERSONS IN WHOSE CASE THE WARRANT OF AUTHORIZATION HAS BEEN ISSUED . IN THE PRESENT CONTEXT, IT WAS ONLY THE PROHIBITORY ORDERS THROUGH WHICH THE TIME WAS B EING EXTENDED. IT WAS CERTAINLY NOT THE SEARCH PROCEEDINGS, BECAUSE T HE SEARCH CONCLUDED, WHEN THE SEARCH PARTY SEALED THE CUPBOAR DS AFTER TAKING THE INVENTORY. BESIDES THAT, THE LEGISLATURE HAS BR OUGHT IN THE EXPLANATION TO SECTION 132(3) W.E.F. 01.07.1995, SA YING THAT A RESTRAINT ORDER DOES NOT AMOUNT TO SEIZURE. THUS BY PASSING R ESTRAINT ORDERS, NEITHER THE SEARCH IS KEPT ALIVE NOR THE TIME LIMIT FOR FRAMING THE ASSESSMENT COULD BE EXTENDED. 17. IN THESE CIRCUMSTANCES, THE FACTS ARE IDENTICAL TO THE FACTS OF THE SPECIAL BENCH AND THE CASE OF ADOLF PATRIC PINTO ( SUPRA ) WHERE THE DEPARTMENTS SLP WAS DISMISSED ON THE ISSUE THAT 13 2(3) CANNOT EXTEND THE LIMITATION. 18. WE, THEREFORE HOLD THAT THE PROCEEDINGS U/S 158 BC ARE BAD IN LAW AND WE, THEREFORE, QUASH THE SAME. AS A CONSEQU ENCE, ALL CONSEQUENTIAL PROCEEDINGS ARE ANNULLED. 19. SINCE WE HAVE ALLOWED GROUND NO. 1, BY QUASHING THE INITIATION OF PROCEEDINGS U/S 158BC, ANNULLING THEM AND HOLDIN G THE SAME TO BE INVALID AND VOID , ALL OTHER GROUNDS, AS RAISED IN THE IMPUGNED APPE AL BECOME INFRUCTUOUS, HENCE WE ARE NOT ADJUDICATING O N THE SAME. 20. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS ALLOWED L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 10 IT(SS)A NO. : 469/MUM/2004 : REVENUES APPEAL : THE DEPARTMENT HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) ERRED IN DIRECTING TO DELETE THE ADDITION OF RS. 10 LAKHS MADE ON ACCOUNT OF PROFIT ON SALE OF GOLD COINS WEI GHING 977 GMS. WITHOUT APPRECIATING THE FACT THAT THE ASSESSE E FAILED TO SHOW THE EXISTENCE OF SUCH COINS AND ESTABLISH THAT THESE COINS ARE NOT BEING SOLD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) THOUGH ACCEPTED THAT CURRENCY NOTES FOUND AT THE ASSESSEE'S PREMISES ARE OF ANTIQUE IN NATURE AND A CQUIRED OUT OF UNDISCLOSED INCOME, ERRED IN ESTIMATING THE VALU E AT RS.25 LAKHS WITHOUT ANY EVIDENCE OR BASIS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) THOUGH ACCEPTED THAT THE INVESTMENT IN AC QUISITION OF OTHER METAL COINS WEIGHING 1012.900 GMS. IS OUT OF UNDISCLOSED INCOME, ERRED IN ESTIMATING THE VALUE OF THE SAME A T RS.4,34,037/- WITHOUT ANY BASIS AND WITHOUT APPRECIA TING THE FACT THAT ALL THE COINS ARE OF ANTIQUITY AND VALUE OF SUCH COINS IS MORE THAN 20 TIMES THE METAL VALUE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) THOUGH ACCEPTED THAT THE INVESTMENT IN AC QUISITION OF SILVER COINS WEIGHING 102 KG. IS OUT OF UNDISCLOSED INCOME, ERRED IN ESTIMATING THE VALUE OF THE SAME AT RS.19,74,332/ - WITHOUT ANY BASIS AND WITHOUT APPRECIATING THE FACT THAT AL L THE COINS ARE OF ANTIQUITY AND VALUE OF SUCH COINS IS MORE TH AN 20 TIMES THE METAL VALUE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) DID NOT APPRECIATE THAT THE ASSESSEE FAILED TO DISCHARGE ONUS CASTED ON HIM UNDER SECTION 158BB(3) OF THE INCOME-TAX ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) ERRED IN DIRECTING TO DELETE THE ADDITION MADE ON ACCOUNT OF VALUE OF ANTIQUE COINS AND NOTES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO GIVE THE VALUE OF THESE COINS AND NOTES FOUND IN HIS POSSESSION, FAILED TO ESTABL ISH THAT THESE COINS AND NOTES ARE NOT ACQUIRED DURING THE PERIOD RELEVANT TO THE BLOCK ASSESSMENT ALSO FAILED TO SHOW THAT THESE COINS AND NOTES HAVE BEEN ACQUIRED OUT OF DISCLOSED SOURCE OF INCOME. 20. SINCE WE HAVE QUASHED THE INITIATION OF PROCEED INGS U/S 158BC AS INVALID AND VOID , IN ASSESSEES APPEAL IN ITSS NO. 480/MUM/2004, AN NULLING THE BLOCK ASSESSMENT PROCEEDINGS, ALL PROCEEDINGS A ND ALL ADDITIONS BECOME INFRUCTUOUS. 21. HENCE, THE APPEAL, FILED BY THE DEPARTMENT IS D ISMISSED. L/H SHRI SAGAR JAVERI LATE SHRI GIRDHARLAL L JAVERI IT(SS) 480/MUM/2004 IT(SS)469/MUM/2004 11 TO SUM-UP: ASSESSEES APPEAL STANDS ALLOWED & REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2014. SD/- SD/- (B R BASKARAN) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 16 TH JULY, 2014 $/ COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A)-CENTRAL-VI, MUMBAI. 4) / CENTRAL _____CONCERN_____ , MUMBAI / THE CIT-CENTRAL/CONCERN _______, MUMBAI. 5) -'01$! D , THE D.R. D BENCH, MUMBAI. 6) 12.3 COPY TO GUARD FILE. *+! / BY ORDER / / TRUE COPY / / [ 4/56 , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *895! '.!. * CHAVAN, SR. PS