Rajendra Agarwal vs. DCIT (ITAT Mumbai)

(i) The search u/s 132 of the Act was conducted on 17.12.1999 pursuant to warrant of authorisation dated 16.12.1999. Simultaneous search was also carried out on the company M/S Macleods Pharmaceuticals Ltd in pursuance of separate warrant of authorisation in which the assessee was a director. During the course of search on the assessee nothing was seized by the search party but the authorised officers Shri K.J. Singh and Shri R.K. Vishwakarma inventorised the jewellery found at the residence of the assessee which was valued by the Deptt valuer at Rs. 4,23,354/- and was put in the cupboard at the residence of the assessee which was sealed by a prohibitory order u/s 132(3) of the Act. Similarly the key of Bank locker of the assessee with State Bank of India found during the search was sealed on 23.12.1999 in terms of warrant of authorisation dated 21.12.1999 and prohibitory order u/s 132(3) was passed. Thereafter the said bank locker was opened on 14.02.2000 and the jewellery found therein was got valued at Rs. 45,100/- from the Deptt valuer by the Shri M.V Patil and the orders u/s 132(3) of the Act dated 17.12.1999 and 23.12.1999 were vacated. As a result jewellery found at the residence of the assessee worth Rs. 4,23,354 and found in the bank locker worth Rs. 45,100/- aggregating to Rs. 4,68,954/- was handed over to the wife of the assessee in term of punchnama dated 14.02.2000. Thus it is apparent from the above that nothing was found and seized on 14.02.2000 in terms of punchnama dated 14.02.2000.

(ii) Now the legal issue qua the search is whether the block assessment as made by the AO was barred by limitation u/s 158BE(1)(b) of the Act. According to the provisions of section 158BE (1)(b) of the Act order in the block assessment has to be passed by the AO within two years from the end of the month in which the search was conducted and concluded. Now the issue to be adjudicated is whether the search concluded in 17.12.1999/23.12.1999 or 14.02.2000.

(iii) From the facts discussed and narrated above it is clear that no seizure was made on 14.02.2000 but only the bank locker was opened at the strength of order dated 14.2.2000 and the prohibitory order u/s 132(3) of the Act were vacated. In view of the said fact it clear that the date of conclusion of search can not be taken as 14.02.2000 and has to be either 17.12.1999 or 23.12.1999 especially when nothing was found and seized on 14.2.2000. Moreover it is also clearly mentioned in the punchnama dated 17.12.1999 and dated 23.12.1999 that the search was finally concluded and not on 14.2.2000.

(iv) The case of the assessee also find support from the decision in the case of Sandhya P. Naik (supra) that limitation shall not extend to the date of passing order u/s 132(3) of the Act. The time limit for making assessment can not extend to the date of passing a restraint order. In CIT V/s Mrs. Sandhya B. Naik & Others 253 ITR 534 the search was conducted and concluded on 16.10.1996 and assessment was completed on 31.12.1997. The assessee challenged the assessment being time barred by limitation on the ground that the same should have been made within one year from the conclusion of the search i.e the assessment should have been completed on or before 31.10.1997 as the search was completed on 20.10.1996. In this case also an order u/s 132(3) was passed on seizing all articles found in a cupboard and was sealed accordingly. Thereafter some silver items were released and the remaining were again sealed by further order passed u/s 132(3) of the Act on 31.12.1997. The revenue claimed that the search was commenced on 16.10.1996 and was completed on 13.12.1996 when last punchnama was drawn as there was a deemed seizure on 13.12.1996 as per the second proviso to section 132(1) of the Act. In second appeal, the Tribunal quashed the order being barred by limitation. In third appeal, the Hon’ble High Court has dismissed the appeal of the revenue in limine meaning thereby upholding the decision of the tribunal that the assessment was time barred and also invalid. Thus assessment annulled by Tribunal was approved. . The facts of the assessee’s case are squarely covered by the decision of Mrs.Sandhya B. Nayak & Others (supra). The decisions relied by the revenue in its support are distinguishable on facts and therefore the ratio decendi of same is not applicable to the facts of the present case. In view of the above facts and the ratio laid down in the case of Sandha P. Naik (supra) we set aside the order of AO and hold the block assessment as barred by limitation as discussed above. Since we have decided assessee’s appeal on preliminary technical issue, so the issue raised on merit becomes academic and the same may be agitated as and when situation arises.

Cases referred:

(i) VLS Finance Ltd Vs Commissioner of Income Tax (2016) 68 Taxman.com 368(SC) (ii) Navin Kumar Aggarwal Vs CIT ITA No 11 of 2005 dated 12.05.2015 and (iii)CIT Vs Mukund ray Shah.