ORDER
Vimal Gandhi, President
1. This appeal by the assessee for block assessment period 1st April, 1990 to 17th Nov., 2000 is directed against order of CIT(A), New Delhi dt. 28th June, 2004.
2. Assessee in the memo of appeal has raised many objections against addition of Rs. 13,79,000 as income from undisclosed sources and assessed under Section 158BC of IT Act. However, the main objection raised was that search in the case of the assessee carried under Section 132(1) was concluded on 17th Nov., 2000 when Panchnama was prepared and restraint order was issued against the assessee. The limitation to make and complete assessment started from the above date and accordingly order under Section 158BC was to be passed before 30th Nov., 2002. The same was passed on 30th Jan., 2003 and was hopelessly out of time. It was contended that no seizure was effected on 3rd Jan., 2001 and , therefore, question of issuing any Panchnama on the above date did not arise. In fact in the so-called Panchnama issued on 3rd Jan., 2001, it is specifically admitted by the competent authority that it was a release order. From the copy of the aforesaid Panchnama available at pp. 20 to 25 of the paper book, the learned Counsel drew our attention to p. 25 where it is specifically stated as under:
Dated : 3rd Jan., 2001.
Revocation Order
Restraint order under Section 132(3) of IT Act, 1961 dt. 17th Nov., 2000 in respect of cash box of Rigal Wood side Almirah in the bed room of Sh. S.K. Katyal at GF of premises E-147 Kalkajee New Delhi is hereby revoked. The seals placed on the Almirah on the date of search were found to be intact.
Sd/- S.G. Agarwal
ITO (Inv.) Unit-1, New Delhi.
Copy to :
Mrs. Ranjana Katyal, W/o Sh. S.K. Katyal,
E-147, Kalkajee, New Delhi.
The period of limitation could not be counted from the aforesaid document dt. 3rd Jan., 2001.
The learned Counsel also drew our attention to letter dt. 8th Nov., 2002 of the AO to the DVO wherein it was specifically admitted in para 3 that assessment was getting time barred by 30th Nov., 2002. The said para is as under:
3. The assessment is get time-barred by 30th Nov., 2002.
Again in letter dt. 8th Nov., 2002, the AO admitted as under:
(c) The assessment is likely to be The block assessment is getting time barred on for assessment year for barred by limitation on 30th Nov., the block period i.e. 1989-90 to 2000- 2002
01(upto l7th Oct, 2000)
Copies of above letters are placed at pp. 27 and 29 of the paper book.
In support of the claim that order passed on 30th Jan., 2003 did not make any difference and search should be treated as completed on 30th Nov., 2000. The learned Counsel for the assessee relied upon decision of jurisdictional High Court in the case of B.K. Nowlakha v. Union of India . The aforesaid decision was followed by Calcutta High Court in the case of Mahesh Kumar Agarwal v. Dy. Director of IT (Inv.) (Call Their Lordships of Bombay High Court in the case of CIT v. Mrs. Sandhya P. Naik (Bom) also laid down similar proposition and held that restraint order not amounting to seizure cannot be taken into account for calculating period of limitation for framing an assessment. The learned Counsel also relied upon several decisions of Tribunal Benches, noted in the impugned order.
3. The learned Departmental Representative opposed above submissions by placing reliance on the impugned order.
4. We have given careful thought to the rival submissions of the parties. The arguments taken by the learned Counsel for the assessee are sound, supported by facts on record and are required to be accepted. Search and seizure operation, in our view, was completed on 17th Nov., 2000 and , therefore, assessment order was required to be passed on or before 30th Nov., 2002. Assessment made vide order dt. 30th Jan., 2003 is hopelessly barred by time. The alleged restraint order dt. 3rd Jan., 2001 could not extend period of limitation as it is merely a release order. Jewellery put under restraint was released vide order dt. 3rd Jan., 2001.
We further found that learned CIT(A) rejected contention of assessee without any valid reasons. This is quite clear from para 3.2 of the impugned order wherein he has observed as under:
3.2 A copy of the additional ground was forwarded to the AO calling for his comments. The AO vide his letter dt. 16th Feb., 2004 has submitted that at no time during the course of assessment the appellant had objected the proceedings on the basis of limitation being expired on 30th Nov., 2002 and, therefore, the additional ground taken by the appellant may not be considered. According to the AO in this case the last Panchnama was drawn on 3rd Jan., 2001 and that the assessment order was passed well within the time allowed under Section 158BE(1)(b). In view of the above, it cannot be said that no proceedings had taken place on 3rd Jan., 2001 and therefore, the additional ground of the appellant is dismissed.
5. Objection of the AO that additional ground should not be considered as point of limitation was not raised during the course of assessment was required to be stated to be rejected. Cause of action relating to limitation arose to the assessee when assessment order was passed out of time. Objection relating to limitation, therefore, could not be taken during the course of assessment proceedings. The alleged Panchnama dt. 3rd Jan., 2001 was merely release order and could not extend period of limitation. Thus objections taken by the assessee before the learned CIT(A) were rejected without any legal justification. We accept objection raised on behalf of the assessee and hold that assessment made by the AO was out of time as prescribed under Section 158BE(1)(b). It is hereby cancelled.