2006 (5) TMI 112 - AT - Income Tax

Assessment Order Barred by Limitation, Appeal Partly Allowed

The Tribunal found that the order passed by the Assessing Officer was barred by limitation as the last valid panchnama was dated 19-2-1996, and the ... Block Assessment in search case Issues Involved:1. General ground of appeal.2. Whether the order passed by the Assessing Officer is barred by limitation.Issue-wise Detailed Analysis:1. General Ground of Appeal:The first ground of appeal is general and will stand disposed of in view of the findings to be recorded against other grounds of appeal.2. Limitation of the Order Passed by the Assessing Officer:The second ground of appeal concerns whether the order passed by the Assessing Officer is barred by limitation. The warrant of authorization was executed on 6-2-1996, and hence the assessment was to be completed on or before 28-2-1997 as per section 158BE of the Income-tax Act.The learned Authorised Representative argued that the search was concluded on 19-2-1996 as per the panchnama dated 19-2-1996. The panchnama dated 25-4-1996, where nothing was found or seized, was considered a mere formality and not a valid panchnama. The learned Authorised Representative cited several cases, including M/s. Madhuvana House Building Cooperative Society and the Allahabad High Court's decision in Sriram Jaiswal v. Union of India, to support the argument that the search was concluded on 19-2-1996.The learned Sr. counsel for revenue contended that the search continued up to 23-4-1996, as indicated by the statement of Shri DTS Rao recorded on that date. He also argued that the last panchnama dated 25-4-1996 should be considered, and any procedural errors in the panchnamas are covered under section 292B of the Income-tax Act. The learned Sr. counsel further stated that the prohibitory order under section 132(3) was valid until 6-4-1996, and hence the assessment order was within the limitation period.The Tribunal examined the relevant provisions and case laws. It noted that the time limit for completion of block assessment is provided under section 158BE(1) of the Income-tax Act, which requires the assessment to be completed within one year from the end of the month in which the last of the authorization under section 132 is executed. Explanation 2 to section 158BE, introduced by Finance (No.2) Act, 1998 w.r.e.f. 1-7-1995, clarified that the authorization is deemed to have been executed on the conclusion of the search as recorded in the last panchnama.The Tribunal found that the panchnama dated 25-4-1996 was not valid as it did not involve any search or seizure, and the prohibitory order was not valid on that date. The last valid panchnama was dated 19-2-1996, and hence the assessment order should have been passed on or before 28-2-1997. The Tribunal also noted that the statement recorded on 23-4-1996 could not be considered as part of the search proceedings as it was not recorded by an authorized officer, and the limitation period should be reckoned from the date of the last panchnama.In conclusion, the Tribunal held that the order passed by the Assessing Officer was barred by limitation as the last valid panchnama was dated 19-2-1996, and the assessment order should have been completed on or before 28-2-1997. The appeal was partly allowed.