TaxTMI 
TaxTMI 
2020 (7) TMI 647
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....ssessee from 1978-79 onwards. He was residing at No.4/181, Kodambakkam High Road, Chennai - 34 and he was having a clinic at No.87, N.S.C.Bose Road, Chennai along with his father Dr.M.J.Mehta. (ii) The said residential premises, i.e., No.4/181, Kodambakkam High Road, Chennai - 34 seems to be the joint family property, where some family business also is being undertaken by the family members including the petitioner and his brother one Hemant Mehta. (iii) While so, in the year 2001, i.e., in January 2001, on 25.01.2001, the premises of the petitioner was searched for the block period from 01.04.1990 to 31.03.2000 and 01.04.2000 to 24.01.2001 under the warrant / authorisation issued in this regard, by the team of respondents / Revenue and on 25.01.2001, a panchanama were recorded, where according to the petitioner, the search was concluded on 25.01.2001, however, on that day, under Section 132(3) of the Income Tax Act 1961 (herein after referred to as "the Act"), a prohibitory order was issued by the Revenue. (iv) Simultaneously the other premises, i.e., at No.23, Noor Veeraswamy Street, Chennai - 34 also was searched on the same day, i.e., on 25.01.2001. Thereafter pursuant to....
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....ioner has raised the following grounds in order to assail the impugned Block Assessment Order : (a) The Block Assessment Order under Section 158BC r/w Section 158BD is barred by limitation as per Section 158BE (1)(b). (b) The notice under Section 143(2) which is mandatorily to be issued even in respect of 158BC proceedings, had not been issued and assuming if it is issued belatedly, that is also barred by limitation. (c) Under Section 158BG, prior approval was to be obtained to proceed, from JCIT, which was not obtained and the learned counsel also raised the ground that, there has been no opportunity given to the petitioner during the entire proceedings, which ended in the impugned Block Assessment Order, thereby the Revenue violated the principles of natural justice. 4. By raising the aforesaid grounds, the learned counsel tried to assail the impugned Block Assessment Order. In support of his contention, the learned counsel for the petitioner would contend that, totally two premises of the petitioner was searched and documents were seized and according to the Revenue, the said search was conducted in both the premises on 25.01.2001 pursuant to the authorisation given on 25....
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....osed income of block period, the provisions which includes Section 143 of the Act would apply, therefore, a notice under Section 143(2) should have been issued, which has either not been issued or if it is issued, which is beyond the limitation. 8. The learned counsel would further submit that, under Section 158BG, the order of Assessment for the block period shall be passed by an Assessing Officer not below the rank of Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director as the case may be, however such order shall not be passed without the previous approval of the Principal Commissioner or Principal Director or Director in case of search initiated under Section 132. 9. Here in the case in hand, since it is after 1st January 1997, Section 158BG proviso (b) shall apply, under which, the Joint Commissioner or the Joint Director, as the case may be has to give approval. 10. The learned counsel in this context would submit that, no such approval seems to have been obtained by the Revenue and such approval order has not been served or produced to the petitioner. 11. The learned counsel for the petitioner would further submit that, throughout the as....
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....inuation of search starting from 25.01.2001 and ends up on 12.06.2001, the learned standing counsel for Revenue would contend that, during the search, certain electronic devices were found, where lot of documents were uploaded or saved by the assessee / petitioner and when the same was questioned, the petitioner, till the last search, was not co-operating with the Revenue to disclose the password to have access with those documents, therefore for these kind of purposes, the search operation was continued in the premises at No.4/181, Kodambakkam High Road, Chennai - 34 and it ended only on 12.06.2001, where the Revenue was able to access with the software documents stored in the computer and thereafter only the search operation was completed and the Revenue proceeded to further. 16. The learned standing counsel would also submit that, the search at No.23, Noor Veeraswamy Street, Chennai - 34 was commenced at 1 p.m, on 25.01.2001 and concluded at 1.45 p.m, on the same date and therefore in so far as the said search is concerned at that premises, it was concluded on the same day itself. However in so far as the search at No.4/181, Kodambakkam High Road, Chennai - 600 034 is concerned....
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...., there is a statutory alternative efficacious appellate remedy, which admittedly the petitioner has not availed and has approached straight away this Court by invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution and only for the sake of approaching this Court by invoking the writ jurisdiction, the said allegation of violation of principles of natural justice has been made. 21. On the side of the citations referred to by the learned counsel for the petitioner, the learned standing counsel for the Revenue would submit that, the two Judgments, namely Rakesh Kumar Jain as well as Ramaiah Reddy cases (cited supra) cannot be made applicable to the facts of the present case, instead, a Division Bench of this Court order made in Deputy Commissioner of Income-Tax, Central Circle II(1) v. Rakesh Sarin, reported in (2014) 222 Taxman 84 (Madras) : (2014) 362 ITR 619 (Madras) would apply to the facts of the present case, where the earlier two decisions, namely Rakesh Kumar Jain and Ramaiah Reddy cases (cited supra) had been considered. Therefore on the strength of the aforesaid two decisions, the petitioner /assessee cannot make out a case to state that,....
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....al was given by JCIT under Section 158BG, it is the vehement contention on the part of the Revenue that, only pursuant to the approval given by the JCIT, the search in the premises of the assessee / petitioner was made, of course on specific authorisation. Taking into account of these factors, since it is an allegation and the denial and the Revenue has maintained that Section 158BG has been complied with, this Court accept the same. 25. In so far as the allegation that, there was no notice under Section 143(2) served on the petitioner is concerned, the specific averment made in the counter affidavit reads thus : "33. The notice u/s 158BC was issued in this case on 05.10.2001 requiring the petitioner to file a return of his undisclosed income for the block period in Form 2B. In this connection, the allegation that the block period was not specified in the said notice is not correct in so far as in the notice itself it is made known that the "block period" is as mentioned in section 158B(a) of the Income Tax Act. Further, the petitioner filed the requisite return in Form 2B on 23.10.2001. I state that the notice u/s 143(2) of the Income Tax Act was issued on 6.6.2003 and served (....
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....concluded", however on the very same date, the prohibitory order under Section 132(3) of the Act was issued by the Revenue which is unwarranted. Therefore on the strength of the said prohibitory order continuous search was made on various dates till June 2001 and therefore by taking advantage of those subsequent searches, which are unauthorised, the Revenue cannot claim that, the last panchanama was drawn only on 12.06.2001 and therefore the limitation for the purpose of Section 158BE(1)(b) would commence only after the end of the month where the last such panchanama was drawn, i.e., 30.06.2001 and therefore the impugned order, since was passed on 30.06.2003, is within the limitation, cannot be accepted, is concerned, as has been pointed out by the learned standing counsel for the Revenue, the search was conducted on 25.01.2001 in two premises, one is at 23, Noor Veeraswamy Street, Chennai - 34 and another one is at No.4/181, Kodambakkam High Road, Chennai - 34. 29. I have perused the copy of the panchanamas issued in respect of both premises, dated 25.01.2001 and a copy of which also had been filed by the petitioner in the typedset of papers which discloses that, in so far as the....
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....the removal of doubts, it is hereby declared that the authorisation referred to in sub-section (1) shall be deemed to have been executed - (a) in the case of search, on the conclusion of search as recorded in the last panchanama drawn in relation to any person in whose case the warrant of authorisation has been issued; (b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer." 35. For any assessment under Section 158BC, there must be a search under Section 132 and if a search is conducted under Section 132, on the conclusion of such search, as recorded in the last panchanama drawn, it shall be deemed to have been executed as authorisation for the purpose of limitation as contemplated under Section 158BE(1) (a) & (b) and in this case, 158BE(1)(b) would apply since it is a case after 1st January 1997. 36. This provision of Section 158BE with the explanation (2) has been widely discussed and interpreted by the Karnataka High Court in C.Ramaiah Reddy v. Assistant Commissioner of Income Tax, reported in (2011) 339 ITR 210 (Karnataka) : (2011) 244 CTR 126 (Karnataka). In order to apprecia....
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....ch authorisation should be drawn with reference to each place of search. The said authorisations may be issued on different dates in which case, the last of such authorisations is to be looked into for the purpose of limitation. However, it is possible that there may be more than one authorisation on the same day. Then the question is which is the last of such authorisations for the purpose of limitation. When all the authorisations are executed there will be one panchnama in respect of each such authorisation. The authorisations may be executed on different dates also. Then the doubt would arise regarding which authorisation to be looked into for the purpose of limitation as all of them are last authorisation. It is for removal of that doubts that the Explanation is inserted. For the purpose of computing the limitation, it is the one year from the end of the month in which the last of the authorisations was executed. If there are more than one authorisation issued on the same day, then the last panchnama drawn in relation to the warrant of authorisation issued on the same day. As the period commences from the end of the month of the execution of the authorisation, the law has pr....
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....remises again, it could be done by obtaining a fresh authorisation. There is no prohibition in respect of the same premises. 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 authorisation issued the search commences, it comes to an end with the drawing of a panchnama. When the authorised officer enters the premises, normally, the panchnama is written when he comes out of the 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....
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....l act is performed, the warrant of authorisation should not be treated as executed and the mere initiation of the search followed by an interregnum consequent upon restraint order or for any other reason may not be treated as 'execution' of the warrant. But this interpretation would be hypertechnical and it needs detailed discussion as is done in the following paras. The question arises as to whether execution of a warrant of authorisation or requisition refers to the conclusion of the proceedings under section 132 and/or 132A or it refers only to the execution of the warrant even though as a result of such execution the proceedings under section 132 or 132A are yet to he completed. The latter situation will include a case in which a restraint order under section 132(3) is passed. In such a case, it can be said that though the warrant of authorisation has been executed, proceedings under section 132(3) are pending. Since the word 'execute', also means 'to complete', one has to wait for conclusion of the proceedings under section 132(3) for the purpose of computation of limitation under section 158BE(1) and the period of one year has to be computed from the end of the month in w....
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.... CTC 0576 : (2012) 80 DTR 0257 and in order to understand the said decision, the relevant portion of the said Judgment is extracted hereunder : "11. Before going into the merits of the contention, sub-clause (1) of Section158BE reads as under: "Time limit for completion of block assessment 158BE (1). The order under Section 158BC shall be passed-[a) within one year from the end of the month in which the last of the authorisations for search under s. 132 or for requisition under s. 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 after the 30th June 1995, but before the 1st Jan., 1997; (b) within two years from the end of the month in which the last of the authorisations for search under s. 132 or for requisition under s. 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." A reading of the above section shows that it consciously takes note of the cases of more than one authorisation for search issued. In such cases, the Explanation provided fo....
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....for the search is fully implemented upon and execution completed. There afterwards, if the Department has to enter the premises again, as by way of search, certainly, one requires fresh authorisation; however, as stated by the Karnataka High Court, no such authorisation is required to enter the premises to inspect the materials, which are the subject-matter of prohibitory order or restraint order. The said order itself acts as an authorisation to enter the premises and inspect the materials, which are the subject-matter of those orders. However, after entering the premises of such person, he has to confine his actions only for inspection of the subject-matter of prohibitory order or restraint order. He cannot search the premises over again. Any material seized after such inspection would be the undisclosed income for the purpose of the block assessment in pursuance of search under s. 132(1) of the Act. Thus, the Panchanama evidencing such inspection and seizure would be the last Panchanama in respect of the said premises. But for the purpose of limitation under s. 158BE, it would not be the last Panchanama drawn in proof of conclusion of search, as defined in Explanation 2 to S....
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....nderstood either under the provisions of the Criminal Procedure Code or the Act which are made applicable expressly, would lose its meaning." 15. As already seen, merely because, more than one Panchanama is drawn in the given case on one authorisation, one cannot construe that the subsequent and the last of the Panchanama issued as one flowing out of the search as a last of the Panchanama referable to Explanation 2 to Section 158BE. Once the warrant of authorisation has been issued and the premises is searched and the search party leaves the premises, there is the end of the search and what could be postponed is only seizure of the articles and issuance of prohibitory order; however, limitation for the completion of the block assessment begins on the conclusion of the search and issuance of Panchanama and in case of single authorisation, the moment such party leaves the premises by drawing of the Panchanama noting conclusion of the search, the limitation period begins. 16. Going by the facts herein, viz., as to the search completed on 13.12.2001 with drawing of the Panchanama and the search party leaving the premises, the mere fact that the Panchanama contains the observation t....
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....oint of the limitation as that has not been intended in Explanation 2 referred to above. This was exactly held by the aforesaid two decisions. 40. However, Mr.A.P.Srinivas, learned standing counsel appearing for the Revenue has relied upon Deputy Commissioner of Income-Tax, Central Circle II(1) v. Rakesh Sarin, reported in (2014) 222 Taxman 84 (Madras) : (2014) 362 ITR 619 (Madras), which is a decision subsequently made by a Division Bench of this Court after Ramaiah Reddy and Rakesh Kumar Jain cases. In this Judgment, the Division Bench has held as follows : "12... As is evident from the reading of the provision to Section 158BE of the Act, in the case of search conducted after 01.01.1996, it was declared that limitation for passing the order under Section 158BE of the Act is given as 2 years from the end of the month in which last of the authorisation was executed. Explanation 2 clarifies "the authorisation referred to in Sub Section (1) shall be deemed to have been executed (a) in the case of search, on the conclusion of search as recorded in the last panchanama drawn in relation to any person in whose case the warrant of authorisation has been issued." Therefore, for finding....
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....rked out taking the search conducted on 27.03.2003 as the date where the last panchanama was drawn; if the Revenue had any case, whatever be the annexures to the contents of the panchanama in the second search, it is open for the Revenue to make such of the assessment based on the materials covered in the course of second search. In the circumstances, the assessment fails in this case. 16. We do no accept the above said line of submission of learned counsel for the assessee. As already pointed out in the preceding paragraphs, in cases where there is more than one authorisation, the starting point of limitation is to be computed from the last of the authorisation which as per Explanation 2 to Sub Section 2 of Section 158 BE of the Act is deemed to have been executed on the conclusion of the search as recorded in the last panchanama drawn. Thus going by Explanation 2 added by the Finance (No.2) Act, 1998 with retrospective effect from 1.07.1995, the contention of the assessee cannot be accepted. Thus, with every panchanama drawn, the search team leaving the premises, the search conducted on 28.03.2003 came to an end as far as that authorisation was concerned. However the second sea....
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....e premises, i.e., at No.23, Noor Veeraswamy Street, Chennai - 34, the Revenue concluded the search on the very first day itself and this is evident from the panchanama issued in that premises, dated 25.01.2001. Therefore on the said premises, there was no prohibitory order and no further search was made. 45. However in so far as the second premises, i.e., at No.4/181, Kodambakkam High Road, Chennai - 34 is concerned, where also the search was conducted on 25.01.2001 first time, in the panchanama dated 25.01.2001, the Revenue has made it clear that, "the search continues", therefore they issued the prohibitory order. 46. In this context, by relying upon the interpretation given in the two Division Bench Judgments referred to above in Ramaiah Reddy and Rajesh Kumar Jain cases, the learned counsel appearing for the petitioner would insist that, merely because prohibitory order was issued, under that pretext, the time for search cannot be extended under the same authorisation by drawing several panchanamas on several dates and therefore the subsequent search taken place in the second premises of the petitioner without any specific authorisation was unauthorised, therefore, for the p....
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....on that the petitioner did not provide the password in respect of files contained in the computers and also voluminous books of account found during the course of proceedings. The prohibitory order were issued on various occasions in view of the non completion of the search on the respective dates but not for the purpose of harassing the petitioner. As such there is no truth in the allegation that search proceedings were invalid. I state that because more time was required to go through the contents of the computers and the books, in order to verify their contents, it was necessary to place prohibitory orders and to continue the search. There was no intention of harassing the petitioner. All the rooms which were prohibited also contained computer(s) which contained password protected files. The petitioner did not divulge the password throughout the continuation of the search proceedings. This can be seen from the sworn statements recorded from the petitioner. In the absence of the passwords, access to the password protected files were denied and verification work could not be done speedily. They had to be ultimately seized. This utter non-cooperation on the part of the petition....
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....oncluded", subsequent issuance of prohibitory order and on that strength, subsequent searches made till 12.06.2001 was unauthorised. However the fact remains that, in the second premises the search continued and in view of the specific provisions referred to above in Section 132(1)(iib), which, even though came into effect only from 01.06.2002, the continuous search went up to 12.06.2001 can very well said to be authorised and therefore the Revenue cannot be found fault with by compelling them to calculate the limitation within the meaning of Section 158BE(1)(b) from 01.02.2001 by taking into account the panchanama, dated 25.01.2001 as the last panchanama and by not taking the 12.06.2001 panchanama as the last panchanama. 54. Therefore independently, on the basis of Section 132(1)(iib), the Revenue's continuous search operation taken place on various dates from 25.01.2001 till 12.06.2001 can very well be construed as an authorised search operation, therefore the panchanama issued on 12.06.2001 shall be deemed to be the last authorisation within the meaning of Explanation 2 to Section 158BE. 55. If that being the position, the impugned Block Assessment Order, dated 30.06.2003 ....