S. 158BE: A panchnama which does not record a search does not extend limitation
The AO issued two authorizations for search, one dated 17.2.2002 and the other 20.12.2002. In respect of the first authorisation, the last panchnama was drawn on 3.1.2003 while in respect of the second authorization, the last panchnama was drawn on 27.2.2002. The s. 158BC assessment order was passed on 31.1.2005 on the basis that the “last panchnama” was drawn on 3.1.2003. The assessee claimed that as the panchnama dated 3.1.2003 was merely for revocation of a s. 132(3) order, it was not a “panchnama of search” and so could be taken into account. The “last panchnama” was the one dated 27.2.2002 according to which the assessment order was barred by limitation u/s 158BE read with Explanation 2 thereof. HELD by the Special Bench upholding the plea:
(i) S. 158BE (1) prescribes the time limit for completion of the block assessment with reference to the end of the month in which the “last of the authorisations for search” was executed. Explanation 2 provides that the authorisation shall be deemed to have been executed “on the conclusion of search as recorded in the last panchnama drawn“. The “panchnama” referred to in Explanation 2 (a) to s.158BE is a panchnama which documents the conclusion of a search. If a panchnama does not reveal that a search was at all carried out on the day to which it relates, it would not be a panchnama relating to a search and consequently would not be relevant to determine the time limit for passing the assessment order (SK Katyal 308 ITR 168 (Del), White & White Minerals 239 CTR 330 (Raj) & C. Ramaiah Reddy 244 CTR (Kar) 126 followed;
(ii) On facts, the panchnama dated 3.1.2003 was drawn as a formality to lift the prohibitory order. There was no conclusion of search. Whatever material was required to be seized or impounded was already seized/impounded by the Department. It was merely a release order and could not extend the period of limitation. Consequently, the s. 158BC assessment order is barred by limitation;
(iii) However, the assessee’s argument that if there were multiple authorisations, only the “last panchnama” (27.02.2002) in respect of the “last authorization” (20.12.2002) could be had regard to for purposes of computing limitation and not a later panchnama (3.1.2003) in respect of an earlier authorisation (17.2.2002) is not acceptable. The result of the deeming provision in Expl 2 to s. 158BE is that even an authorization which may not be the last authorization would become the “last authorization” if a panchnama in respect thereof is drawn last. The point of time of issue of the authorisation is not relevant. The point of time when the last panchnama is drawn (whether in respect of the first or last authorization) is relevant (Anil Minda 328 ITR 320 (Del) followed; C. Ramaiah Reddy 244 CTR (Kar) 126 distinguished).