THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 12.08.2008
+ ITA 953/2008
THE COMMISSIONER OF INCOME
TAX DELHI-II ... Appellant
- versus -
DEEPAK AGGARWAL ... Respondent
AND
+ ITA 954/2008
THE COMMISSIONER OF INCOME
TAX DELHI-II … Appellant
– versus –
MANGLA MARBLES & GRANITE PVT. LTD … Respondent
Advocates who appeared in this case:
For the Appellant : Mr R. D. Jolly with Mr Paras Chaudhary For the Respondent : Mr O. S. Bajpai CORAM:- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE RAJIV SHAKDHER
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 Digest ? Yes
BADAR DURREZ AHMED, J (ORAL)
1. These appeals have been filed by the revenue against the
common order passed by the Income Tax Appellate Tribunal on
30.11.2007 in IT (SS) A. No. 1/Del/2004 (in respect of the assessee —
ITA Nos. 953/2008 & 954//2008 Page No.1 of 5
Deepak Aggarwal) and IT (SS) A. No. 204/Del/2004 (in respect of
assessee – Mangla Marbles & Granite Pvt. Ltd). Sh. Deepak Aggarwal
is one of the directors in Mangla Marbles & Granite Pvt. Ltd.
2. The common issue that arises for consideration in these
appeals is with regard to the provisions of Section 158 BE, Explanation
2 read with Section 158 BE (1) (b). A search under Section 132 of the
Income Tax Act, 1961 (hereinafter referred to as the ‗said Act’) was
conducted as per warrant dated 31.10.2000. In view of the provisions
of Section 158BE (1)(b), the block assessment under Section 158 BC
ought to have been completed on or before 31.10.2002. However, it
was completed on 27.12.2002. The assessee’s stand was that this was
beyond the time prescribed under Section 158 BE (1) and, therefore,
the assessment was bad. The stand of the Department, on the other
hand, was that there was another panchnama, which had been drawn on
23.12.2000 and that this was the last panchnama and, therefore, the
two-year period has to be reckoned from the end of the month in which
this panchnama was drawn and executed. In other words, the period of
limitation would begin to run from 31.10.2000 and, consequently, time
was available for completion of the assessment up to 31.12.2002.
Since the assessment was completed on 27.12.2002, according to the
Department, the assessment was in time. It is also relevant to note that
on 31.10.2000 a prohibitory order under Section 132 (3) of the said Act
ITA Nos. 953/2008 & 954//2008 Page No.2 of 5
had also been passed in respect of the inventory of stock as per
Annexure-S to the original panchnama dated 31.10.2000. It is also
pertinent to note that this prohibitory order continued till it was
revoked on 23.12.2000. The revocation order makes interesting
reading and the same is as under:-
―23.12.2000
Revocation Order
The restraint placed u/s 132 (3) of the Income Tax Act,
1961 during the search operation on 31.10.2000 at room
located in Ward No. 1, House No. 6/4, Mehrauli, Delhi is
hereby revoked for the purpose of continuation of search.
The seals placed have been found intact.‖
3. The Tribunal, after considering the arguments advanced on
the part of the Department as well as the assessee and after considering
the decision of this Court in the case of CIT v. Sarb Consulate Marine
Products P. Ltd.: 294 ITR 444, concluded that the revocation order did
not amount to execution of a search as no asset was seized under that
order and what happened was only the revocation of the prohibitory
order passed earlier. The Tribunal found that in this situation, it could
not be said that there was an execution of a search on 23.12.2000 so as
to enable the reckoning of the period of limitation from the end of
December 2000. The assessment could, therefore, not be passed on
any date beyond 31.10.2002. The Tribunal concluded that since the
ITA Nos. 953/2008 & 954//2008 Page No.3 of 5
assessment order was passed on 27.12.2002, it was beyond time and
consequently, the assessee’s appeal was allowed.
4. The decision of this Court in Sarb Consulate (supra) is
applicable to the facts of the present case. In that case a similar
situation had arisen and the question before the Court was whether the
panchnama drawn on 06.11.1996 was the last panchnama or whether it
was the panchnama drawn on 14.09.1998 which was the last for the
purpose of reckoning the commencement of the limitation period. The
Court examined various decisions including Dr. C. Balakrishnan Nair
v. CIT: 237 ITR 70 (Kerala High Court) and CIT v. Mrs. Sandhya P.
Naik: 253 ITR 534 (Bombay High Court) and concluded as under:-
―A general consensus appears to have emerged
among the High Courts to the effect that a search
under Section 132 of the Act should be continuous
and if it is discontinued and thereafter resumed, then
there must be a valid explanation for the gap. Insofar
as the present case is concerned, the facts on record
show that prima facie there was absolutely no
justification for keeping the search pending for more
than one year and ten months without any semblance
of any activity by the Revenue.‖It may be noted that in Dr. C. Balakrishnan Nair (supra) the gap was
only of 14 days. In the present case the gap between the search on
31.10.2000 and the purported last search on 23.12.2000 is
approximately 53 days. There is no explanation whatsoever with
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regard to this period between the two intervening dates. In fact, therevocation order does give an indication that the prohibitory order was
passed merely for continuing the search possibly for the purposes of
extending the limitation. The Tribunal has come to a conclusion of fact
that the second purported search on 23.12.2000 was not a search at all
and all that was required to be searched and seized had been concluded
on 31.10.2000 itself. In fact, there is no explanation forthcoming from
the revenue as to what transpired from 31.10.2000 to 23.12.2000 so as
to enable us to take a different view than what the Tribunal has taken.
In these circumstances we feel that the ratio of this Court in Sarb
Consulate (supra) squarely applies to the facts and circumstances
obtaining in the present case. The Tribunal has followed the said
decision and we find that there is no error in the Tribunal’s order. No
substantial question of law arises for our consideration. These appeals
are dismissed.
BADAR DURREZ AHMED, J
RAJIV SHAKDHER, J
August 12, 2008
SR
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