2005 (9) TMI 64 - HC - Income Tax

Tribunal Upheld on Search Validity & Timeliness of Assessment Order under Section 158BC

MB Lal Versus Commissioner of Income-Tax.

The High Court upheld the Tribunal's decision regarding the validity of search proceedings and timeliness of the block assessment order under section ... Block assessment order made under section 158BC – limitation - Tribunal has recorded a finding to the effect that there was no delay in executing the search inasmuch as various lockers and steel almirah and cupboard were required to be searched. There was, therefore, no artificial extension of the search proceedings as argued by the appellants. If that be so, the search would end only upon revocation of the order passed under section 132(3) which, in the instant case, was revoked only on June 29, 2000. The period of limitation for making an assessment order under section 158BC read with section 158BE of the Act would, therefore, have to be reckoned from June 30, 2000 (being the end of the month in which the last panchnama was drawn) and would end on June 30, 2002. The assessment order, in the instant case, was however made on June 27, 2002, which was well within the outer limit of two years prescribed by law. The Tribunal was, in that view, justified in repelling the contention of the assessee that the order of assessment was beyond the period of limitation prescribed for the same. Issues:1. Validity of search proceedings in appeal before Tribunal2. Timeliness of block assessment order under section 158BCValidity of search proceedings in appeal before Tribunal:The case involved appeals arising from a common order by the Income-tax Appellate Tribunal, New Delhi, regarding the block assessment order against the appellant. The appellant challenged the legality of the search proceedings and the assessment under Chapter XIV-B. A writ petition was filed but dismissed due to delay. The Commissioner of Income-tax partially allowed the appeal, reducing the undisclosed income amount. The Tribunal upheld the block assessment order's validity and timeliness. The High Court considered two main legal questions: whether the Tribunal could review the search proceedings' validity and whether the block assessment order was timely. The High Court agreed with the Tribunal that the search proceedings' validity could not be challenged in the appeal before it. The court emphasized that the search proceedings' validity was concluded by a prior judgment. The Tribunal's decision on this issue was upheld.Timeliness of block assessment order under section 158BC:The appellant argued that the assessment order should have been made within two years from the search's conclusion. The appellant contended that the assessment order was passed beyond the stipulated period. However, the Tribunal found that there was no delay in executing the search, and the search proceedings were not artificially prolonged. The High Court analyzed the relevant provisions under section 158BE and Explanation 2, which clarified the time limit for making an order under section 158BC. The court noted that the assessment order was made within the prescribed two-year limit from the conclusion of the search, as per the last panchnama drawn. Therefore, the High Court upheld the Tribunal's decision that the assessment order was within the statutory time limit. Consequently, the appeals were dismissed without costs.---