TaxTMI 
TaxTMI 
2017 (7) TMI 619
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....ayak Industries. These appeals are directed against the common impugned order dated 6th October, 2015 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA Nos. 3158-3162/Del./2011. Questions urged 3. In ITA Nos. 605-608 of 2016, the questions of law that are sought to be urged by the Revenue are as under: (i) Whether the ITAT erred in law and on facts in holding that the assessment framed by the Assessing Officer (AO) under Section 153A is barred by limitation? (ii) Whether the order passed by the ITAT is perverse and not sustainable under law? In ITA No. 609/2016 there is slight change in question (i) above inasmuch as the order of the AO is under Section 143 (3) of the Act. 4. Two of the appeals i.e. ITA Nos. 637 and 638 of 2016 are against the Respondent/Assessee, Sanjay Jain, for AYs 2005-06 and 2007-08 arising out of the common order dated 6th October, 2015 passed by the ITAT in ITA Nos. 5325/Del/2013 and 4753/Del/2011, respectively. The question of law urged in these two appeals by the Revenue are identical to the questions raised in the appeals against Surya Vinayak Industries. 5. There are four appeals viz. ITA Nos. 610, 641, 64....
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....national; M/s JH Business and Products Pvt. Ltd. and Surya Vinayak Industries Group. The Court has been shown two of the authorisations, both dated 20th March, 2007 in regard to the above entities which were to be searched. One authorisation was for the search to be undertaken at Zone H -4/5, Plot No. 53-55, Suvidha Kunj, Pitam Pura, Delhi-110034 (hereinafter referred to as 'Pitam Pura premises') and the other for the premises at I-42, Ashok Vihar, Phase- I, New Delhi (hereinafter referred to as 'Ashok Vihar premises'). The authorisations and panchnamas 10. In the authorizations, both the premises were shown to be in possession of Mr. Sanjay Jain and Mr. Rajiv Jain, both being the directors of the above entities including J.H. Invest Pvt. Ltd. The copies of panchnamas produced before the Court relevant to both the above authorizations show that the search at the Pitam Pura premises commenced on 21st March, 2007 at 8:45 am and were closed on 22nd March, 2007 at 6:00 am as 'temporarily concluded for the day to be commenced subsequently for which purpose seals were placed." The second panchnama in regard to the Authorization for search at Pitam Pura premises is dated 23rd March,....
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.... day to be commenced subsequently for which purposes four seals were placed on locker No. 71..." The second panchnama is dated 15th May, 2007 which shows that the searches commenced at 1:55 pm on that date and were finally concluded at 2:25 pm on the same date. The second panchnama also bears the signatures of Ms. Neena Jain by way of acknowledgment of having received a copy thereof. 14. The Authorization bearing E. No. 0071 was for the search at Locker No. 344 (Key No. 24) with the Oriental Bank of Commerce, Pitam Pura in the name of Ms. Neena Jain, Mr. Rajiv Jain and Mr. Sanjay Jain. Here again, there are two panchnamas - one dated 21st March, 2007 which shows that the search commenced at 4:25 pm and concluded at 5:15 pm on the same date i.e., 21st March, 2007; the second panchnama is dated 15th May, 2007 which shows that the search commenced on that date at 2:45 pm and concluded on the same date at 4:30 pm. The second panchnama again bears the signatures of Ms. Neena Jain. 15. In each of these instances, on the first day of search a restraint order was passed under Section 132 (3) of the Act in respect of the jewellery items of Ms. Neena Jain and Ms. Shail Kumari Jain kept....
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....) or clause (b) of this sub-section or one year from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later: Provided further that in case where the last of the authorisations for search under section 132 or for requisition under section 132A was executed during the financial year commencing on or after the 1st day of April, 2004 but before the Ist day of April, 2010,- (i) The provisions of clause (a) or clause (b) of this sub-section shall have effect as if for the words "two years" the words "twenty-one months" had been substituted; (ii) The period of limitation for making the assessment or reassessment in case of other person referred to in Section 153C, shall be the period of twenty-one months from the end of the financial year in which the last of the authorizations for search under Section 132 or for requisition under Section 132A was executed or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over u....
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....ted to be a memorandum of what happens in the presence of the panchas as seen by them and of what they heard. We have examined the meaning of the word "panchnama" in some detail because it is used in Explanation 2(a) to Section 158BE of the said Act although it has not been defined in the Act. A panchnama, as we have seen is nothing but a document recording what has happened in the presence of the witnesses (panchas). A panchnama may document the search proceedings, with or without any seizure. A panchnama may also document the return of the seized articles or the removal of seals. But, the panchnama that is mentioned in Explanation 2(a) to Section 158BE is a panchnama which documents the conclusion of a search. Clearly, if a panchnama does not, from the facts recorded therein, reveal that a search was at all carried out on the day to which it relates, then it would not be a panchnama relating to a search and, consequently, it would not be a panchnama of the type which finds mention in the said Explanation 2(a) to Section 158 BE." 20.2. In the above case, CIT v. S.K. Katyal (supra), the first of the searches pursuant to the authorization issued on 16th November 2000 und....
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....detailed discussion of the law on the subject including the decisions in G.M. Agadi v. The Commercial Tax Officer, Belgaum [1973] 32 STC 243 (Kar.); C. Balakrishnan Nair (Dr.) v. CIT (1999) 237 ITR 70 (Ker); CIT v. Mrs Sandhya P. Naik (2002) 253 ITR 534 (Bom); CIT v. Sarb Consulate Marine Products P. Ltd. (2007) 294 ITR 444; CIT v. Deepak Aggarwal (2009) 308 ITR 116 (Del.) as well as VLS Finance Ltd v. CIT (2007)289 ITR 286 (Del). The conclusions drawn by the Court in CIT v. S.K. Katyal (supra) were as under: 26. These decisions clearly establish (i) a search is essentially an invasion of the privacy of the person whose property or person is subjected to search; (ii) normally, a search must be continuous; (iii) if it cannot be continuous for some plausible reason, the hiatus in the search must be explained; (iv) if no cogent or plausible reason is shown for the hiatus in the search, the second or resumed search would be illegal; (v) by merely mentioning in the panchnama that a search has been temporarily suspended does not, ipso facto, continue the search. It would have to be seen as a fact as to whether the search continued or had concluded; (vi) merely because a panchnam....
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.... Nos. 1, 2, 3, 4, 5, 8, 11, 13, 15, 16, 18, 19, 20, 25, 26, 31, 32, 34, 36 and 37 seized." In fact, there was no seizure because nothing new was found. All the other items which were already valued on 21st March, 2007 and for which valuation report was already prepared were shown as seized but in fact were not seized. The net result is that on 15th May, 2007 nothing was found which had not already been found by the Department on the first day i.e., 21st March, 2007. 24. The Court is not prepared to accept the plea of the Revenue that merely because a panchnama was drawn up on 15th May, 2007 showing that the search was 'finally concluded' on that date, it postponed the period of limitation in terms of Section 153B (2) (a) of the Act. It had to be the "last panchnama drawn in relation to any person in whose case the warrant of authorization has been issued". The last panchnama, no doubt, is dated 15th May, 2007 but what it records is the seizure of the jewellery items not of any of the persons searched but the wives of one of the directors i.e., of Ms. Neena Jain who was not even a director of any of these entities. Therefore, even assuming that the jewellery of Ms. Neena Jain was....
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..... It is open to the empowered authority to issue authorisation, but when the authorisation is issued once, the authorised officer cannot go on visiting the premises under the guise of search. Therefore, it is clear once in pursuance of an authorization issued the search commences, it comes to an end with the drawing of a Panchnama. When the authorized officer enters the premises, normally, the Panchnama is written when he comes out of premises after completing the job entrusted to him. Even if after such search he visits the premises again for investigation or inspection of the subject-matter of restraint order or prohibitory order, if a Panchnama is written, that would not be the Panchnama which has to be looked into for the purpose of computing the period of limitation. But, such a Panchnama would only record what transpires on a re-visit to the premises and the incriminating material seized would become part of the search conducted in pursuance of the authorisation and would become the subject-matter of block assessment proceedings. But, such a Panchnama would not extend the period of limitation. It is because the limitation is prescribed under the statute. If proceedings are no....
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....ich envisages expeditious disposal of the search cases and it would be reasonable to interpret that execution of warrant is not tantamount to completion of proceedings under Section 132 or 132A. The period during which the proceedings under Section 132 (3) remained pending has to be excluded for the purpose of counting limitation of one or two years under Section 158BE. Otherwise, it may lead to absurd results as it may take several years before restraint under Section 132 (3) is lifted and it may, thus, extend the period of one or two years by all those years during which proceedings under Section 132 (3) remained pending. It may be agreed against this view that S. 132 (8A) takes care that there is no extension of proceedings under Section 132 (3) and that the view cannot be taken without doing violence to the language of the Act. Therefore, the Explanation added to remove a doubt cannot be construed as a provision providing a longer period of limitation than the one prescribed in the main section. When under the scheme of the section there is no indication of a second search on the basis of the same authorisation issued under the said provision, the legislative intention....