* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 24th February, 2010
Judgment delivered on: 9th April, 2010
+ ITA No.1652/2006
COMMISSIONER OF INCOME TAX ..... Appellant
- versus -
D.D. AXLES PVT. LTD ..... Respondent
Advocates who appeared in this case:
For the Appellant : Ms Prem Lata Bansal For the Respondent : Mr Manu Monga CORAM: HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE SIDDHARTH MRIDUL
1. Whether reporters of local papers may be allowed
to see the judgment? Yes.
2. To be referred to the Reporter or not? Yes.
3. Whether the judgment should be reported in the
Digest? Yes.
SIDDHARTH MRIDUL, J
1. This appeal under Section 260A of the Income Tax Act, 1961
(hereinafter referred to as „the Act‟) is directed against the order dated
28th April, 2006, passed by the Income Tax Appellate Tribunal in IT(SS)
No.313/D/1997 pertaining to the block period 1st April, 1986 to 29th
August, 1996. The appellant/Revenue is aggrieved by the fact that the
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Tribunal held the block assessment order to be barred by limitation and,
therefore, quashed the same.
2. The facts of the case are that search under Section 132(1) of the
Act was conducted on the 29th August, 1996 which concluded on 30th
August, 1996. A panchnama was drawn on the 29th August, 1996 when
books of accounts and other documents were seized. On that date a
restraint order was passed. By another order passed on 28 th October,
1996 the restraint order was extended till 18th November, 1996. On the
18th November, 1996 a panchnama was drawn and nothing further was
seized from the premises of the assessee. By the order dated
18th November, 1996 the restraint placed vide order under Section 132(3)
of the Act dated the 18th October, 1996 on a steel almirah was vacated.
3. The case of the Revenue is that since the last panchnama was
drawn on the 18th November, 1996, the search was concluded on that
date. The assessee had submitted that the search having been conducted
on the 29th August, 1996/30th August, 1996, the assessment made on 28th
November, 1997, was barred by limitation in view of the provisions
contained in Section 158BE(1)(a) of the Act. In other words, the
assessment order has been passed beyond the period of one year from the
end of the month in which the last authorization for search under Section
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132 of the Act had been executed and, therefore, the assessment made
under Section 158BC, deserves to be vacated.
4. The Tribunal noticed that the search must be considered to have
been completed on the date of the last panchnama drawn when certain
seizure was affected. The Tribunal further noted that the restraint order
issued under Section 132(3) of the Act does not amount to seizure. In
order to search the premises again, in accordance with the provisions of
Section 132(1) of the Act, the authority to initiate the search must have
firm belief that some income remained undisclosed, that was represented
by books of accounts, money, bullion etc. and issue an authorization for
search. This was not done. Further, the officials who visited the
premises on various dates, after gaps and after repeated action of lifting
and re-imposing the restraint order, did not feel any necessity for seizing
any files. The Tribunal observed that, therefore, the last authorization
was executed on the date when the search party left the premises of the
assessee, after seizing those items considered to be related to the
undisclosed income of the assessee. The assessment was to be completed
within one year from the end of the month of that date. The Tribunal
found that in the instant case the search was completed on the 30 th
August, 1996 and the panchnama was drawn on 29th August, 1996 when
books of accounts were seized. The restraint order placed on an alimrah
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was passed on the 30th August, 1996 which was extended further till 18th
November, 1996 by an order passed on 18th October, 1996. The Tribunal
found that on the 18th November, 1996 another panchnama was drawn
when nothing was seized and the restraint order was vacated. The
Tribunal held that in the circumstances, for all practical purposes, the
search concluded on the 29th August, 1996/30th August, 1996 when the
panchnama was drawn in execution of the warrant to search under
Section 132(1) of the Act and the necessary seizure was made. The
Tribunal also held that after that the Revenue has not done anything
tangible on the 18th October, 1996 and the 18th November, 1996 to
demonstrate that the search was still in progress. Hence, the Tribunal
came to the conclusion that the last authorization was executed on the 29th
August, 1996 and the one year time limit for framing the block
assessment started from the end of the month i.e. 31 st August, 1996 and
ended on the 31st August, 1997. Accordingly, the Tribunal held that the
block period assessment framed on the 28th November, 1997 was barred
by limitation and was, therefore, bad in the eyes of law. The Tribunal
accordingly quashed the same.
5. In Commissioner of Income Tax vs. S.K. Katiyal: 308 ITR 168
(Delhi), a Division Bench of this Court observed as under:-
“17. This discussion leads us to the question – Was the
panchnama of January 3, 2001, of the type mentioned in theITA No.1652/2006 Page 4 of 6
said Explanation 2(a)? From the facts narrated above, it is clear
that the panchnama of January 3, 2001, itself reveals that
nothing was seized on that date. Nor was anything “found” on
that date. In fact, no search was conducted. The jewellery that
was put in the cash box of the almirah had already been
searched, found, inventorised and valued by the DVO on
November 17, 2000, itself. Nothing remained to be searched
thereafter. And, in fact, no further search was conducted after
November 17, 2000. Obviously, nothing else could be found.
All that was done on January 3, 2001, in the presence of the
witnesses (panchas), was that the seals were removed from the
cash box and the almirah and the keys were handed back to the
assessee. Essentially, the revocation of the restraint order was
given effect to. This is exactly what the Tribunal found as a fact
and meant when it concluded that the panchnama dated
January 3, 2001, was merely a release order and could not
extend the period of limitation.”
6. In the present case, it is obvious that the search started on the 29 th
August, 1996 and continued till 30th August, 1996, during which period
various articles and documents were seized. On the 30 th August, 1996 a
restraint order was passed with regard to an almirah that had been sealed.
Nothing remained to be searched thereafter. The restraint order passed on
30th August, 1996 was extended on the 18th October, 1996 till the 18th
November, 1996, when the last panchnama was drawn up. On the 18th
November, 1996 restraint order was vacated. Therefore, essentially from
the 30th August, 1996 when the panchnama was drawn and restraint order
passed, till the 18th November, 1996 when the last panchnama was drawn
and the restraint order vacated, nothing else was found and in fact no
further search was conducted. Therefore, the last panchnama dated the
ITA No.1652/2006 Page 5 of 6
18th November, 1996 was merely a release order and could not extend the
period of limitation, as found by the Tribunal.
7. In view of the foregoing discussion, we agree with the learned
counsel for the respondent/assessee that the impugned order does not call
for any interference on our part and that no substantial question of law
arises for our consideration.
8. The appeal is dismissed.
SIDDHARTH MRIDUL, J
BADAR DURREZ AHMED, J
APRIL 09, 2010
dn
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