TaxTMI 
TaxTMI 
2008 (4) TMI 458
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....been engaged in the business of hire purchase, leasing of assets and intercorporate deposits, etc. Between January 3, 1997 and February 28, 1997 a search was conducted under section 132 of the Act by the Income tax Department in the premises of the assessee. During the said search certain incriminating documents were found which transpired that the assessee-company had not disclosed its true and correct income in its returns for the preceding assessment years. Likewise search in respect of the respondent-assessee in Income-tax Appeal No. 324 of 2001, who is an individual, was conducted on January 8, 1997 and January 10, 1997. During this search also certain incriminating articles arid material documents were found which transpired that the assessee had not disclosed his true and correct income in his returns for the preceding assessment years. Therefore, notices under section 158BC of the Act were issued on January 13, 1997 and July 10, 1997 against the respective assessees requiring them to submit the returns of income disclosing therein their true and correct income for the block assessment period 1991-92 to 1996-97 and 1987-88 to 1996-97 respectively. (b) In response to the s....
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....pondent-assessee in Income-tax Appeal No. 324 of 2001 also filed his Appeal No. IT(SS)A No. 4/Bang/1999 before the Tribunal challenging the above said order of block assessment passed against him. (f) In the said appeals, the Revenue Department had raised a preliminary objection as to the maintainability of the said appeals before the Tribunal. The respective a (appellants therein) contended that the impugned block assessment orders were barred by limitation. The Tribunal, negativing the objections of the Department as to the maintainability of the said appeals and accepting the contention of the assessees, entertained the said appeals and allowed the same holding that both the appeals were maintainable before it and that the said block assessment orders were barred by limitation. It is these orders of the Tribunal which are challenged in these appeals. 3. Though the appellant-Revenue has formulated in each appeal as many as four substantial questions of law, only two of them need be considered by us for our decision in view of the fact that the Tribunal disposed of the appeals holding that it had jurisdiction to entertain the appeals and both the block assessment orders impu....
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....Indra Kumar, M/s. R.B. Krishna and Shankar, the learned counsel and Sri D. L. N. Rao, the learned senior counsel for the respective respondent assessees in these appeals contended that the very contention of the learned senior counsel for the appellant- Revenue that the search in these cases was "initiated" after January 1, 1997 itself is incorrect, on the other hand, it was "initiated" on December 30, 1996, i.e., after June 30, 1995 but before January 1, 1997 and therefore, as provided under section 253(1) (b) of the Act, appeals against the orders of block assessment passed under section 158BC could lie before the Tribunal and hence the finding of the Tribunal in the impugned orders that the said appeals were maintainable before it does not call for interference in these appeals. As to the question of limitation for completion of block assessment they further contended that the Tribunal rightly held in the impugned orders that since search in these cases was initiated before January 1, 1997, by virtue of the provisions of section 158BE(1)(a) of the Act limitation for completion of block assessment was "one year" and as such, the impugned orders of block assessment were barred by ....
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....ting to the block period shall not include the income assessed in any regular assessment as income of such block period; (c) the income assessed in this Chapter shall not be included in the regular assessment of any previous year included in the block period. (3) Where the assessee proves to the satisfaction of the Assessing Officer that any part of income referred to in sub-section (1) relates to an assessment year for which the previous year has not ended or the date of filing the return of income under sub-section (1) of section 139 for any previous year has not expired, and such income or the transactions relating to such income are recorded on or before the date of the search or requisition in the books of account or other documents maintained in the normal course relating to such previous years, the said income shall not be included in the block period. 158BC. Procedure for block assessment. - Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then, - (i) in respect of search initiated or books of account or other documents or any assets requis....
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....ollowing orders may appeal to the Appellate Tribunal against such order - (a) an order passed by a Deputy Commissioner (Appeals) (before the1st day of October, 1998) or, as the case may be, a Commissioner (Appeals) under section 154, section 250, section 271, section 271A or section 272A; or (b) an order passed by an Assessing Officer under clause (c) of section 158BC, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995, but before the 1st day of January, 1997. 246A. Appealable orders before Commissioner of Income-tax (Appeals). - (1) Any assessee aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner of Income-tax (Appeals) against - (k) an order of assessment made by an Assessing Officer under clause (c) of section 158BC, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997;" 9. On a careful reading of the above provisions of the Act it could be seen that as provided u....
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....be, was executed in cases where "search is initiated" or books of account or other documents, etc., are requisitioned after June 30, 1995 but before January 1, 1997. It is further provided under clause (b) of sub-section (1) of section 158BE that such assessment shall be completed and order of assessment be passed "within two years" from the end of the month in which last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where "search is initiated" or books of account or other documents or any assets are requisitioned on or after January 1, 1997. 11. Further, as to the appellate jurisdiction of the Tribunal to entertain appeal against an order of block assessment passed under section 158BC(c), section 253(1)(b) of the Act provides that any assessee aggrieved by an order passed by an Assessing Officer under section 158BC(c) in respect of "search initiated" under section 132 or books of account or other documents or any assets requisitioned under section 132A after June 30, 1995, but before January 1, 1997 may file his appeal to the Tribunal. Further, as to the appellate jurisdiction of the Commissio....
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.... 14. It is the contention of the learned senior counsel for the appellant-Revenue in these appeals that search was initiated after January 1, 1997 and therefore the provisions of clause (b) of sub-section (1) of section 158BE of the Act which provide for limitation of two years, would attract. As against this, the contention of the learned senior counsel and counsel for the respondent-assessees is that search was initiated on December 30, 1996 itself (i.e., before January 1, 1997) the date on which the authorisations in these cases for conducting the search were signed by the Director of Income-tax, Bangalore, but not on January 3, 1997 and January 8, 1997 on which dates the search was commenced by executing the said authorisations and therefore the provisions of section 15SBE(1) (a) of the Act, which provide for limitation of "one year", would attract. 15. It is not disputed that first of the authorisations for conducting search of the premises of the assessee in each of these cases was signed by the Director of Income-tax, Bangalore, on December 30, 1996 and search was commenced in respect of the assessee in Income-tax Appeal No. 296 of 2003 on January 3, 1997 and it came ....
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....and under section 158BD the words "search was made" are used. Therefore, the words "initiated", "conducted" "was made" "has been conducted", must be intended to mean differently which meaning has to be given with reference to the context in which these words are used. None of these words has been defined under any of the provisions of the Act either under this Chapter XIV-B providing for assessment of undisclosed income or under any other Chapter. 18. In support of his arguments that the search in this case should be held to have been initiated before January 1, 1997, so as to attract the relevant provisions pertaining to limitation and appellate jurisdiction, the learned senior counsel and other counsel for the respondent-assessees have placed their reliance on many judgments of various High Courts, Supreme Court and Tribunals of other States. One of such decisions is T. O. Alias v. Asst. CIT reported in [1999] 238 ITR 335 (Ker). The facts in the said case before the hon'ble Kerala High Court were: "In the course of the block assessment a proposal was given to the assessee to fix the cost of construction of building at Rs. 18 lakhs and to tax the proportionate share of the d....
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....rder passed by the Commissioner of Income-tax (Appeals)." 20. On a careful reading of the facts in the above said case before the hon'ble Kerala High Court and the ratio laid down therein it is clear that the fact that the action against the assessee therein was initiated prior to January 1, 1997 was not in dispute. But the same is not in the instant case inasmuch as the very date of initiation of search is in serious dispute. Further, the expression "search initiated" has not been interpreted in that case. There- fore the principles laid down in the above said case by the hon'ble Supreme Court are of no help to the respondent-assessees herein. 21. Another decision relied upon by the learned senior counsel and other counsel for the respondent-assessees is that of the Tribunal of Kolkata in the case of Nirmal Ghosh Bag v. Deputy CIT [2002] (ID4) GJX 0050-TCAL. Though this decision cannot be a binding precedent on this court we may examine the same since strong reliance is placed by the learned senior counsel for the respondent-assessees on it. The facts in the said decision were: "A search under NDPS Act was conducted by the customs authorities on the residence of the asses....
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....s no force. What is material for invoking the special provision is initiation of the search or requisition of books of account or other assets and it would be immaterial whether it was executed action or dropped or not executed for whatever reason. The first action was initiated much before the vulnerable date from which the operation of the new provision comes into play. The first action, in this case, as aforesaid, was on December 4, 1991, and therefore, in our opinion, the provision of the new Chapter would have no application in the present case and the assessments made there under are to be held invalid. We accordingly set aside the same. The Revenue would, however, be at liberty to proceed with the case under the other provisions of the Act in accordance with law." 23. On a careful reading of the above observations of the Tribunal in the said case it could be noticed that if the assessee therein was requisitioned under section 132A of the Act by issuance of an authorisation on December 2, 1991, pursuant to the finding of the cash and FDRs during the search that was held on September 6, 1991 under the NDPS Act and subsequently another warrant of authorisation was issued by ....
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....national Dictionary: 'to begin, or set going; making a beginning of; perform or facilitate the first action; steps or stages of; established as an institution; originate, to mark the beginning.' Words and Phrases, Permanent Edition, 21A 'initiate' means an introductory step or action, a first move, beginning start." 25. In view of the dictionary meaning of the word "initiate" the Rajasthan High Court has observed as under: "Keeping in view the meaning of the word initiate' a close reading of rule 32 reveals that the enquiry under rule 32 is a condition precedent for initiating the proceedings under the Land Acquisition Act. The proceedings under the Land Acquisition Act are initiated by the publication of a notice under sub-section (1) of section 4 of the Act." 26. As could be seen from these observations of the Rajasthan High Court, the enquiry under rule 32 of the Land Acquisition Rules has been held to be a condition precedent for "initiating the proceedings under the Land Acquisition Act" by publication of a notice issued under section 4(1) of the said Act. This being so we have no alternative but to hold that the principles in this case are totally of no assi....
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....mind to the allegations in the petition and decides to direct under section 17 the alleged contemners to show cause why he should not be punished.' 14. In order to appreciate the exact connotation of the expression 'initiate any proceedings for contempt' we may notice several situations or stages which may arise before the court dealing with contempt proceedings. These are: (i) (a) a private party may file or present an application or petition for initiating any proceedings for civil contempt; or (b) the court may receive a motion or reference from the Advocate General or with his consent in writing from any other person or a specified law officer or a court subordinate to High Court, (ii)(a) the court may in routine issue notice to the person sought to be proceeded against; or (b) the court may issue notice to the respondent calling upon him to show cause why the proceedings for contempt be not initiated; (iii) the court may issue notice to the person sought to be proceeded against calling upon him to show cause why he be not punished for con tempt. 15. In the case contemplated by (i) or (ii) above, it cannot be said that any proceedings for contempt have been....
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....pression in any provision of a statute, the context under which the particular expression is used has to be borne in mind. Therefore, bearing in mind the con text in which the expression "search initiated" has been used under various sections of the Income-tax Act including sections 158BA(1),158BC, 158BD, 158BE(1)(a) and (b) and 253A(1)(a) and (b) and also in the light of examining the dictionary meaning of the word "initiate" as extracted by the High Court of Rajasthan at paragraph 34 of its judgment in the case of Rajasthan Udyog v. State of Rajasthan [1978] AIR 1978 Raj 31 and also in the light of the above observations of the hon'ble Supreme Court in the case of Omprakash Jaiswal v. D. K. Mittal, AIR 2000 SC 1136 we may safely assign to the expression "search initiated" the meaning "search taken" or "search commenced" or "making beginning of the search". If this is meant by the expression "search initiated" it cannot be held that the only signing of the authorisations by the Director of Income-tax, Bangalore, on December 30, 1996, to make a search in the premises of the respective assessees would amount to "initiation of search". The "signing of the authorisations" would at bes....
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....apply to cases where 'initial search' was conducted on or after 1st July, 1995" and "where the 'initial search' was conducted prior to this date and only the consequential searches continue beyond June 30, 1995 such cases will be taken up according to the old procedure", clearly indicate that the expression in the said speech in respect of searches initiated on or after the 1st day of July, 1995 would mean that the provisions of new Chapter providing for the new procedure for assessment of search cases would be applicable to the cases where "the initial search commenced and conducted on or after July 1, 1995" and, in respect of the cases where "the initial search was conducted prior to July 1, 1995, and subsequent searches consequential to the initial search were continued beyond that date, old procedure has to be adopted for assessment of search cases. Thus, it is quite clear that the expression "search initiated" has to be interpreted to mean the commencement and conducting of the "initial search", i.e., the first search in the case. Applying this meaning to the facts of the present cases we have to hold that the search was initiated in these cases respectively on January 3, 1997....