TaxTMI 
TaxTMI 
2019 (2) TMI 415
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....al premises of the assessee was also issued with a restraint order under Section 132(3) of the Act. Later, there was a further search conducted of the documents and the articles kept in the almirah and seven documents were seized by a panchnama on the search conducted on 04.04.2000. The question urged before this Court is on the setting in of limitation by the time, the assessment order was passed on 24.04.2002. The limitation commences from the last day of the month in which the last panchnama was recorded. 2. The contention of the assessee-appellant as argued before us by the learned Counsel, Sri.Anil D Nair is that there was no authorisation for the officer who had conducted the search and seizure on 04.04.2000. Immediately we have to notice that such a contention was never raised by the assessee before any of the fact finding authorities. The learned Senior Counsel, Government of India (Taxes), Sri Ravindranatha Menon would specifically refer to the decision of the Hon'ble Supreme Court in 2016 (384) ITR 1 (SC) [VLS Finance Ltd., v. Commissioner of Income Tax] to contend that the validity of the authorisation having not been challenged in the course of search and assessmen....
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....conducted after about 15 days. There were also grounds of mala fides alleged against the authorised officer who had conducted the search and it was also asserted that the officer had taken away documents which were not recorded as seized in the panchnama. We need not go into the factual adjudication on the allegation of mala fides raised which were negatived by the Division Bench. The learned Single Judge had found that the subsequent search carried out without a separate authorisation was not proper. The Division Bench set aside that finding and held that there could be a subsequent search carried out, insofar as the documents which were restrained under Section 132(3) without a further authorisation. We extract paragraph 20 of the aforesaid judgment which spoke on the procedure under Section 132 of the Act with specific reference to the facts of a second search within a period of two weeks. "Section 132 of the Income-tax Act empowers search and seizure to be carried out by the departmental officers and to take away whatever valuable documents, records, etc., during the period of search which are found to be necessary. Search may be sudden and unexpected. Search team would not b....
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.... and documents found in the premises, the balance of which by the restraint order, on the first day of search was kept in an almirah and sealed under Section 132(3). This does not amount to a seizure as provided under Section 132. Only if the records are kept in the custody of the assessee on the grounds found in the second proviso to Section 132(1), could there be a deemed seizure though not particularly seized on the day of search. 6. Now the question arises as to which of the two is the last panchnama as spoken of in Section 158BE(1)(b) of the Act. Section 158 BE(1)b) and Explanation 2(a) are relevant and are extracted here under: "Section 158BE: Time limit for completion of block assessment (1)(b):Within two years from the end of the month in which the 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 a search is initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. Explanation 2(a):In the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose cas....
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....ing vessels/trawlers. The restraint order was extended twice and on 16.12.1997 there was a notice issued under Section 158BC. The return was filed by the assessee within time and later a further search was conducted in the fishing vessels/trawlers on 14.09.1998; but without any seizure having been effected. All the same a panchnama was drawn up. The contention of limitation as raised by the assessee was met on the ground that the last panchnama as provided for under the Explanation 2 to Section 158BE is that prepared on 14.09.1998. The Division Bench found that after the first search and seizure on 06.11.1996, there was absolutely no proceedings taken and the search was merely stated to have been completed on 14.09.1998, in a letter of the Assistant Director of Income Tax (Investigation). The Court found that the same was a dummy search initiated as a mere formality so as to extend the period of limitation. Proceedings were held to be barred by limitation finding the last panchnama drawn to be, on 06.11.1996 and not on 14.09.1998 when a dummy search was carried out for the purpose of extending the period of limitation. 10. (2009) 221 CTR 385 (Kar) [Commissioner of Income Tax v. T.....
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.... decisions apply to the facts of the present case, since, here, the facts are quite distinct insofar as the second panchnama prepared on 04.04.2000 specifically effected seizure of seven documents, from the documents and articles that were kept sealed in the almirah against which a restraint order was issued under Section 132(3). The intention of the legislature in providing for a limitation period is to ensure certainty and finality to legal proceedings and avoid unnecessary delay exposing the assessee to proceedings for indefinite periods; but also enabling the Department to look into the incriminating materials seized on search. The delay should not prejudice the assesssee but the Department should also be given adequate time to settle and conclude the proceedings without prejudice to the revenue. The legislature hence devised a measure by which the period for completion statutorily commences from the last date in which such incriminating materials are seized; which has to be evidenced by a panchnama. Reliance cannot be, to panchnamas prepared for release of goods or resort to some other device of a dummy search being carried out, merely for the purpose of extending the period o....
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....ur dissent to that proposition based on an artificial distinction created between a panchnama on completion of search and of the premises, which is not statutorily recognised. Reliance, for that proposition, was placed on (2011) 339 ITR 210 (Kar) [C.Ramaiah Reddy v. Assistant Commissioner of Income Tax (IMV)]. (2010) 328 ITR 320 (Delhi) [Commissioner of Income Tax v. Anil Minda] is also seen relied on. 15. In Anil Minda, there was an authorisation issued to search the premises of the assessee on 13.03.2001. The search was commenced on 19.03.2001 and continued on 20th, 26th, 27th and 28th of that month. On 26.03.2001, it was noticed that there was a locker maintained by the assessee in a Bank for which a second authsorisation was issued on 26.03.2001. The locker was searched and that second authorisation executed on 26.03.2001 itself. However, on the first authorisation, search was continued on 27th and 28th of March and then on 11th of April, 2001. The Department contended that since the search with respect to the first authorisation concluded on 11.04.2001, limitation has to be computed from 30.04.2001. The assessee argued that under Section 158BE, the limitation starts from the ....
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.... We notice from the above extracted provision that the limitation commences on the execution of the last of the authorisations in the event of a search initiated or for requisition made of books of accounts, other documents or any assets. The Explanation further clarifies that in cases of search the authorisation is deemed to have been executed on the conclusion of the search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued. As for requisition, the Explanation clarifies that it shall be on the actual receipt of the books of accounts, other documents or assets. The thrust is on the seizure of incriminating materials and the requirement to enable the Department to look into such materials and adjudicate upon it, for which a reasonable period of two years is provided from the last day of the month, in which the authorisation is executed; evidenced by the drawing up of a panchnama of seizure of materials or documents. Even if the search operations continue for a number of days or are conducted on days not continuous or consequent, that would not be relevant in so far as computing limitation which has to be from....
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....t for a second authorisation, if the search is confined to the materials against which a restraint order has been issued under Section 132(3). But, we are unable to agree with the finding in C.Ramaiah Reddy that a seizure made of the documents which have been issued with a restraint order under Section 132(3) cannot be said to be the last panchnama. 20. There could be many cases when search is not concluded on the very day in which it is commenced. There could also be seizure made of incriminating documents as revealed on a continuous search on consecutive days on the same authorisation or on a subsequent search on a further authorisation or a seizure effected from the material or documents which were issued with a restraint order. In all such cases, the last panchnama drawn up of an effective seizure made under Section 132, not being covered by the second proviso, would be the starting point of the period of limitation. It is in the circumstance of the search and seizure being not concluded in a particular day, that there is a provision under sub-Section (3) of Section 132 to make a restraint order, so as to continue the proceedings on the very same authorisation issued. 21. We ....
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.... case, ought not the Tribunal have found the second search conducted on 4.4.2000, under the warrant of authorization dated 8.3.2000, done by a different party was bad in law?" Immediately we notice that this is not to say that the second search was not by an authorised officer and inbuilt is the admission that it was by one authorised, but a different Officer. The learned counsel for the assessee would take us to Form No.45, the warrant of authorisation under Section 132 which speaks of authorisation of specific officers, which document is not communicated to the assessee. Pertinent is the fact that one single authorisation could specify more than one officer. It is also pointed out that Rule 112(7) of the Income Tax Rules specifically speaks of the list of all things seized in the course of search (panchanama) to be prepared by the authorised officer and signed by such witnesses. It is the contention that there is no authorisation issued in favour of the officer who conducted the second search and seizure. 24. As pointed out by the Revenue, there is absolutely no ground taken before any of the fact finding authorities on this particular aspect. If it was taken, definitely the s....