TaxTMI 
TaxTMI 
1999 (6) TMI 65
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....ot complied with. (4) That the approving authority reduced the function of approval to less than a formality. (5) That the assessment extends to income disclosed in regular proceedings before AO. (6) That the assessment is barred by limitation, the last date of completion being 31st Oct., 1997. First we take up the last issue i.e. the impugned assessment order is barred by limitation because if the assessee succeeds on this vital issue the other issues will become only academic in nature. 3. As per the assessee, the search started on 16th Oct., 1996 and the same concluded on 20th Oct., 1996. The assessment ought to have been completed within one year i.e., on or before 31st Oct., 1997, but the same was completed on 31st Dec, 1997, and as such, the assessment is barred by limitation. 4. Shri D.E. Robinson, the learned counsel for the assessee submitted that by the terms of s. 158BE the block assessment is required to be completed within one year from the date of execution of last of the authorisation of search. By an amendment made by the Finance Act, 1998, it has been clarified that the last day of execution of the search would be reckoned from the date of the las....
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....execution of search warrant and as such the assessment framed was within the statutory time. He submitted that the search commenced on 16th Oct., 1996, and concluded on 13th Dec, 1996, when the last Panchnama was drawn. According to the learned Departmental Representative in between there was lull because 26th and 27th Oct., 1996, were holidays on account of Saturday and Sunday and then on 10th November it was Diwali and the Department did not want to disturb the peace of the assessee during the days of festivity near and around Diwali day. He referred to second proviso to s. 132(1) and submitted that on 20th/21st Oct., 1996, (at 2.30 a.m.) it was not possible to remove from the residence of the assessee 45 kgs of silverwares. All the silverwares were put in an almirah and a prohibitory order was placed as per the proviso 2 to s. 132(1) i.e. the assessee was directed not to remove, part with the contents of the almirah. Later on, in deference to the representation/wish of the assessee that some of the items placed under prohibitory order were of religious nature to be used in pooja, etc. 6 kgs. of silver articles were released to the assessee on 26th Oct., 1996, by Shri M.L. Karmar....
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....de." Further, relying upon the judgment of the Hon'ble Madhya Pradesh High Court in the case of Naraindas vs. CIT & Ors. (1983) 35 CTR (MP) 310 : (1998) 148 ITR 567 (MP), the learned Departmental Representative submitted that irregularities in the course of search and seizure do not vitiate the action. The learned Departmental Representative further submitted that drawing of a Panchnama is not necessary and even if no Panchnama is drawn, it will not vitiate the search. In support of this, he drew our attention to sub-s. (13) of s. 132 which states that the provisions of the Cr. PC 1973 relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-s. (1) or sub-s. (1A). In this connection, he relied upon the following observations of B.B. Mitra's Code of Criminal Procedure Vol. 1: "12. Irregular search.- A search is irregular if it is conducted in violation of the police rules relating thereto, such as the omission to make at the time a note of the articles found and where found, the permitting of unauthorised persons to go in and out of the place searched, the omission to send up the articles found as soon as possible to the Magistrate, or ....
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.... 362. See also Bana Mali (1939) Cal 210]. What would otherwise be relevant does not become irrelevant because it was discovered in the course of a search in which provisions of the Code were disregarded. [Barindra, 37 Cal 467 (500)]. The presence of witnesses at a search is always desirable and their absence will weaken and may sometimes destroy the acceptance of the evidence as to the finding of the articles, but the attendance at the search is not always essential in order to enable evidence as to the search to be given [Malak Khan, AIR 1946 PC 16 (19)]." 6. Replying to the contention of the learned counsel, the learned Departmental Representative submitted it was not practicable for the authorised officers to have affected the seizure earlier than 13th Dec, 1996, when the seizure had been actually made. The learned Departmental Representative relying on the Madras High Court's judgment in the case of Punamchand R. Shah vs. ITO (1975) 101 ITR 373 (Mad) argued that it is the authorised officer who has to take a decision at the material time taking various things into consideration, whether or not it was practicable to make seizure and that in such matters, the Court shoul....
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....as not an authorised officer arrived at the premises, did not show any warrant of search, and he (Mr. Ashish Abrol) did not state that he had come for a search or seizure and that he had come to the premises to release the silver vessels from the almirah. On 12th Dec, 1996, the authorised officer Mr. Karmarkar in the presence of Mr. Pandurang A. Naik had handed over the key of the said almirah to Mr. Ashish Abrol at Belgaum and had asked him to release the silver vessels from the said almirah on this day, sworn statement of said Mr. Pandurang A. Naik was also recorded at Belgaum by Mr. Karmarkar. The learned counsel further submitted that said Mr. Pandurang A. Naik, one of the assessees in the appeals (22 to 28 before the Tribunal) was present at the residence of the assessee on 13th Dec, 1996. Mr. Ashish Abrol had arrived in the premises searched as stated earlier, only to release the silver vessels. Mr. Abrol required two witnesses one of whom Mrs. Karangate was a neighbour and other a female employee of the assessee Miss Bhimi Naik who was an illterate. The release order was made which was witnessed by both the aforesaid witnesses, said Miss Bhimi Naik having affixed her thumb i....
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.... facts on record that the restraint order was made without any grounds whatsoever. Since there was no other order in force after 26th Oct., 1996, it is also clear that the search was concluded latest by 26th Oct., 1996. 8. Coming to the cases relied upon by the learned Departmental Representative, the learned counsel for the assessee submitted that in these cases involve crime committed under the Penal Code, Customs Act, Opium Act and Conservation of Forest Acts and reliance on all these cases was primarily placed on decisions involving interpretation of Cr. PC. These cases would not be regular for the case before the Tribunal for the reason that the IT Act and Rules clearly prescribe the procedure for the search and seizure. 9. As regards reliance placed by the learned Departmental Representative on the decision of the Supreme Court in the case of Seth Bros., the learned counsel submitted that whatever is seriously being questioned by the assessee are facts of what happened on 13th Dec, 1996, and that, in relation to time-limit imposed by the Act. The provisions of limitation are liable to be interpreted strictly. It is not merely a case of irregular Panchnama, and according....
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....132(3) imposed on 20th Oct., 1996, was lifted and a fresh one imposed by me on 26th Oct., 1996, in respect of the balance of the silver articles. (8) Subsequently on 13th Dec, 1996, the said silver articles were placed under deemed seizure under the second proviso to s. 132(1). This was done after conducting due inquiries with the assessee. Statements were recorded on various dates after 26th Oct., 1996, and only after the assessee could not explain the source of these assets (during the statement on 12th Dec, 1996) were the silver articles seized. Sec 132(8A) gives the Addl. Director of Income-tax (Inv), 60 days within which to lift a particular order under s. 132(3). In the present case, this has been done within the 60 days time-limit. (9) I say that what is stated in the foregoing paras 1 to 8 are true to my knowledge. Solemnly affirmed at Pune on 8th day of March, 1999. Sd/- (M.L. KARMAKAR) Jt. Commr. of IT, Audit -II, Pune" On 5th April, 1999 Shri M.L. Karmakar appeared before us. He confirmed the contents of his affidavit and also produced before us the original Panchnama drawn on 13th Dec, 1996. He also filed two photocopies of the same for our record. ....
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....rregularity during the proceedings carried out by me on 13th Dec, 1996. What is stated above is true and correct to the best of my knowledge and belief, so I have signed hereunder: Place: Pune in person. Date: 4th May, 1999. Sd/- Affiant Shri Ashish Abrol, Dy. CIT Cir. I" On the same clay, Shri Ashish Abrol appeared before us and confirmed the contents of his affidavit. He submitted that on 13th Dec, 1996, he was the only officer available in Goa (other officers were on leave) and he was directed to go to the assessee's house and lift the prohibitory order and then put deemed seizure. This was a limited role and he did the same. Thereafter, he had no role to play. We may state that both Shri M.L. Karmarkar and Shri Ashish Abrol were examined by us in the presence of the learned counsel for the assessee and the learned Departmental Representative. 11. Commencing upon para 8 of the affidavit filed by the authorised officer Mr. Karmarkar, the learned counsel for the assessee submitted that it is averred that it was only from the enquiry conducted after 20th Oct., 1996, that it was noted that the assessee could not explain the source of the assets (silver art....
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....d below it put the signature and date as 16th Oct., 1996. It is further noted that on 20th Oct., 1996, at about 2.30 a.m. the authorised officer seized and removed while leaving the premises 5,729 gms. of gold ornaments, cash of Rs. 1,69,000 and books of accounts weighing nearly 500 kgs. Further, on the same day i.e., 20th Oct., 1996, after completion of search, an order was passed under s. 132(3) covering one cupboard in which all the silver articles found (45.67 kgs) were placed and sealed. On 26th Oct., 1996, 6 kgs of silver vessels from this cupboard were released and a further order passed under s. 132(3) of the Act, in respect of remaining silver articles and the cupboard sealed again. On the same day, the Panchnama was also drawn indicating in the Panchnama the fact that the cupboard containing silver articles had been sealed and an order under s. 132(3) passed in relation thereto. On 13th Dec, 1997, the Asstt. CIT Mr. Ashish Abrol whose name does not appear in the search warrant removed the seal and made a further order under s. 132(3) releasing all the said silver vessels and articles. 13. A warrant of authorisation for search can only be issued where the authority empo....
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....the seal was placed again. The proceedings on 26th Oct., 1996, cannot be considered as part of execution of the search proceedings which concluded on 20th Oct., 1996. By stating in the Panchnama that the search is temporarily suspended, the authorised officer cannot keep the search proceedings in operation continuously by passing restraint orders under s. 132(3). After 20th Oct., 1996, the authorised officer had nothing to search or seize and could not have lawfully conducted any search. Even a fresh warrant under s. 132(1) could not have been issued thereafter, since the basic requirements for issue of such a warrant ceased to exist after 20th Oct., 1996. Without such a warrant, any ingress into the search premises itself is unlawful. The life terms of the search warrant issued on 7th Oct., 1996, executed between 16th Oct., 1996, and 20th Oct., 1996, expired on 20th Oct., 1996. The final revocation of the order under s. 132(3) on 13th Dec, 1996, is wholly irrelevant for purposes of determining the limitation under s. 158BE. All that was done on this day was removal of the seal on the cupboard containing silver articles and revocation of 132(3) order, by Shri Ashish Abrol. The Asst....
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....om the point of view of the Department is vital document, has not been got signed by the assessee or any of his representative. Such a document cannot be called as a Panchnama purporting to be deemed seizure under second proviso to s. 132(1). At best, it can be called yet another restraint, order under s. 132(3) of the Act and restraint order under s. 132(3) does not amount to seizure in view of Expln. (2) to s. 132(3) which was brought on the statute book w.e.f. 1st July, 1995, and which is reproduced as under: "Explanation: For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under cl. (iii) of sub-s. (1)." By terms of r. 112(7) of the IT Rules, a Panchnama is required to be drawn only in case of seizure of any material and that by the authorised officer only. In the circumstances, the order under s. 132(3) is not a Panchnama as referred to in s. 158BE. The last of the valid Panchnama therefore, in execution of the search warrant was made on 20th Oct., 1996, and the assessment barre....
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....ion of India 1976 CTR (P&H) 316 : (1976) 104 ITR 389 (P&H) Though the word 'practicable' has a number of significances, yet its meaning depends largely on the context. Ordinarily, it means that which may be practised or performed, capable of being put into practice done or accomplished. The word 'practicable' when read in that context, would relate to those ornaments, etc. found on a search, which can be reasonably believed to be undisclosed property. So, it is only when the nature or the location of the particular ornaments, etc. found on a search, which are reasonably believed to be undisclosed property, does not allow, or the circumstances of a given case do not permit the immediate seizure of the same, that the provisions of sub-s. (3) may be resorted to. But when the authorised officer is not satisfied or he has doubts as to whether the particular ornaments found on search are undisclosed property, he cannot have recourse to provisions of s. 132(3)." The Hon'ble Allahabad High Court in the case of Sriram Jaiswal vs. Union of India (1988) 75 CTR (All) 41 : (1989) 176 ITR 261 (All): 42 Taxman S3, had considered the provisions of s. 132(3) and 132.(5) of the Act. In this ca....
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....erence to the materials covered by the restraint order does not in anyway lead to the conclusion that the search continued. It is also clear from these decisions that the restraint order is passed when there is some practical difficulty to seize the items and not on items that are capable of being seized. Now the position has become crystal clear after the insertion of Explanation to s. 132(3) effective from 1st July, 1995, that restraint order does not amount to seizure and therefore, by passing a restraint order the time-limit available for framing of the order cannot be extended. Therefore, these decisions fortify our conclusion reached earlier that the search came to close on 20th Oct., 1996. 16. During the course of his arguments, the learned Departmental Representative Mr. Hari Krishan had argued that a defective Panchnama would not invalidate the search or seizure nor would a defective procedure render the search invalid. In support of this contention, several cases involving crime committed under the Penal Code, Customs Act, Opium Act and Conservation of Forests Act were cited as mentioned in para 5 supra. Reliance on all these cases was primarily placed on decisions inv....