2006 (11) TMI 252 - AT - Income Tax

Tribunal cancels time-barred assessment, ruling in favor of assessee

SK. Katyal Through L/h Mrs. Ranjana Katyal. Versus Deputy Commissioner Of Income-Tax.

The Tribunal ruled in favor of the assessee, canceling the assessment made by the AO as it was deemed time-barred due to the completion of the search and ... Block Assessment Issues involved:The main issue in this case is the assessment of income from undisclosed sources u/s 158BC of the IT Act for the block assessment period from 1st April, 1990 to 17th Nov., 2000. The key contention raised is regarding the completion of the search and seizure operation on 17th Nov., 2000, and the subsequent passing of the assessment order on 30th Jan., 2003, which was beyond the prescribed time limit.Details of the Judgment:The assessee objected to the addition of Rs. 13,79,000 as income from undisclosed sources, emphasizing that the search concluded on 17th Nov., 2000, and the assessment order should have been passed by 30th Nov., 2002. The contention was that no seizure was made on 3rd Jan., 2001, and the Panchnama issued on that date was a release order, not a seizure. The limitation period for assessment could not be counted from the document dated 3rd Jan., 2001. The AO's letters dated 8th Nov., 2002, acknowledged that the assessment was getting time-barred by 30th Nov., 2002, supporting the assessee's claim.The assessee cited relevant court decisions and High Court judgments to support their argument that a restraint order not amounting to seizure cannot be considered for calculating the period of limitation for assessment. The Tribunal found merit in the assessee's arguments, stating that the search and seizure operation was completed on 17th Nov., 2000, requiring the assessment order to be passed by 30th Nov., 2002. The assessment made on 30th Jan., 2003, was deemed time-barred. The alleged restraint order dated 3rd Jan., 2001, was considered a release order, and the jewellery under restraint was released on that date.The CIT(A) rejected the assessee's contentions without valid reasons, as observed in para 3.2 of the impugned order. The AO's objection that the additional ground of limitation should not be considered since it was not raised during the assessment proceedings was dismissed. The Tribunal held that the objection regarding limitation could not have been raised during the assessment proceedings, and the assessment made by the AO was deemed out of time as prescribed under s. 158BE(1)(b), thus canceling the assessment.In conclusion, the Tribunal accepted the objections raised by the assessee regarding the time-barred assessment order and ruled in favor of the assessee, canceling the assessment made by the AO.