TaxTMI 
TaxTMI 
2008 (11) TMI 46
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.....2000, in the course of the search certain documents, cash and key no.765 of locker No. 725-B with Bank Of India, Nehru Place, New Delhi belonging to the assessee were purportedly seized. In the course of the said search conducted on 17.11.2000, amongst other things, jewellery was also found. The jewellery was inventorised and valued as per Annexure-5 to the panchnama. Paragraphs 8 and 9 of the panchnama are relevant and they are as follows:- '8. The search commenced on 17.11.2000 at 8 a.m./p.m. The proceedings were closed on 17.11.2000 at 7 a.m./p.m. as finally concluded/ as temporarily concluded for the day to be commenced subsequently for which purpose seals were placed on the entire place/ on Cash Box of the right hand side Almirah on the ground floor bed room of Sh. S.K. Katyal at E-147, Kalkajee, N. Delhi, seven seals in our presence. 9. An order under section 132(3) of the I.T. Act, 1961 in respect of the sealed premises/ lockers/ bank A/c any other (specify) As above was served on Shri/Smt S.K. Katyal by the said authorized officer.' 3. These paragraphs of the panchnama of 17.11.2000 reveal that the cash box of the almirah was sealed and a restraint order under section 1....
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....he I.T. Act, 1961 in respect of the sealed premises/ lockers/ bank A/c any other (specify) was served on Shri/Smt by the said authorized officer.' 7. The notice under section 158BC was issued on 12.04.2002 and served upon the assessee on 22.04.2002. The block assessment order was passed on 30.01.2003. Before the Commissioner of Income Tax (Appeals) [hereinafter referred to as 'the CIT(A)'], the assessee, inter alia, contended that the search had, in fact, concluded on 17.11.2000 as there was no search at all on 03.01.2001. The consequence of this would be that the period of limitation for passing the assessment order would end on 30.11.2002, being two years from the end of the month in which the search was concluded. The assessee contended that since no search had, in fact, been carried out on 03.01.2001, that date could not be regarded as the date on which the search had concluded and, therefore, the period of limitation could not be extended to 31.01.2003. This plea was rejected by the CIT(A) on the ground that since the 'last' panchnama was drawn on 03.01.2001, the assessment order, which was passed on 30.01.2003, was within the time allowed under section 158BE(1)(b) of t....
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.... 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. xxxx xxxx xxxx xxxx Explanation 2.--For 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 panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued ; (b) xxxx xxxx xxxx xxxx' 11. The time limit for making a block assessment order has reference to the date of execution of the last of the authorizations for search under section 132. This is deemed to be the date of the conclusion of search as recorded in the last panchnama drawn. Section 132 deals with search and seizure and, so much as is relevant, reads as under:- '132. Search and seizure.--(1) Where the Director General or Director or the Chief Commissioner or any such Joint Director or Joint Commissioner as may be empowered in this behalf by the Board, in consequence of information in his possession, has reason to beliee that' (a) any person to whom a summons under s....
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....r practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii). xxxx xxxx xxxx xxxx (3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to sub-section (1), serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. Explanation.—For the removal o....
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....or only a period of 60 days, in the first instance. We also note that by virtue of sub-section (13), the provisions of the Code of Criminal Procedure, 1973, relating to searches and seizure have been made applicable, so far as may be, to searches and seizure under 132(1) of the said Act. 13. This takes us to the consideration of section 100 of the Code of Criminal Procedure. The relevant provisions are as under:- '100. Persons in charge of closed place to allow search.' xxxx xxxx xxxx xxxx xxxx (4) Before making a search under this Chapter, the officer or other person about to make it shall call upon two or more independent and respectable inhabitants of the locality in which the place to be searched is situate or of any other locality if no such inhabitant of the said locality is available or is willing to be a witness to the search, to attend and witness the search and may issue an order in writing to them or any of them so to do. (5) The search shall be made in their presence, and a list of all things seized in the course of such search and of the places in which they are respectively found shall be prepared by such officer or other person and signed by such witnesses; but ....
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....ndian Income-tax Act, 1922 (11 of 1922), or the Act unless specially summoned. (8) The occupant of the building, place, vessel, vehicle or aircraft searched, including the person in charge of such vessel, vehicle or aircraft, or some person on his behalf, shall be permitted to attend during the search and a copy of the list prepared under sub-rule (7) shall be delivered to such occupant or person. A copy thereof shall be forwarded to the Chief Commissioner or Commissioner and, where the authorisation has been issued by any officer other than the Chief Commissioner or Commissioner, also to that officer. xxxx xxxx xxxx xxxx' (emphasis supplied) 15. These provisions demonstrate that a search and seizure under the said Act has to be carried out in the presence of at least two respectable inhabitants of the locality where the search and seizure is conducted. These respectable inhabitants are witnesses to the search and seizure and are known as 'panchas'. The documentation of what they witness is known as the panchnama. The word 'nama', refers to a written document. Its type is usually determined by the word which is combined with it as a suffix. Examples being, nikah-nama (the....
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....e presence of the witnesses (panchas), was that the seals were removed from the cash box and the almirah and the keys were handed back to the assessee. Essentially, the revocation of the restraint order was given effect to. This is exactly what the Tribunal found as a fact and meant when it concluded that the panchnama dated 03.01.2001 was merely a release order and could not extend the period of limitation. 18. In G.M. Agadi v. The Commercial Tax Officer, Belgaum: [1973] 32 STC 243 (Kar), the meaning of the word 'search' in contrast to a mere inspection was considered. The Karnataka High court noted that the Corpus Juris Secundum (79 CJS 775) gives a neat definition of the word 'search' in the following words:-'The term 'search' as applied to searches and seizures, is an examination of a man's house or other buildings or premises, or of his person, with a view to the discovery of contraband or illicit or stolen property, or some evidence of guilt to be used in the prosecution of a criminal action for some crime or offence with which he is charged. As used in this connection, the term implies some exploratory investigation, or an invasion and quest, a looking for or seeking out. T....
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....es was held to be unreasonable by the Kerala High court and, consequently, the second search was considered to be illegal. The relevant portion of the said decision is extracted below:- 'The second undisputed fact is that the search was discontinued on October 27, 1995, and resumed only on November 10, 1995. The reasons stated for the gap of 14 days is hardly convincing. There is no provision in the Criminal Procedure Code or in the Income-tax Act or the rules for postponing the search for such a long period. N. Subramanian in his book Search and Seizure stated at page 108 that when once the search starts it can go on continuously day or night, rain or shine. To keep the affected parties in a suspended animation about the probable continuation of search would be agonising. In this case considering the nature of the allegations and the materials seized there is no reason why it could not be closed on October 27, 1995, and even if it is provisionally concluded why it could not be continued immediately. There is no bar for the operation to continue on holidays. The absence of the petitioners in the house is nothing but a lame excuse. If the respondents wanted the operation to be cont....
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....2(3) was passed in respect of some fishing vessels/trawlers belonging to the assessee. The restraint order was extended upto 30.09.1997. No further orders were passed in respect of the restraint order. A further 'search' was conducted on the fishing vessels/trawlers on 14.09.1998, though no seizure was made. However, a panchnama was drawn up. The block assessment order was passed on 30.09.1998. The question for consideration was whether the panchnama of 06.11.1996 or the panchnama of 14.09.1998 was the 'last' panchnama for the purposes of Explanation 2(a) to section 158BE' The Court came to the conclusion that the search and seizure operation had come to an end on 06.11.1996 and that on 14.09.1998 there was no restraint order and, therefore, the 'search' and the panchnama drawn on 14.09.1998 were not in accordance with law. It was argued before us, by the learned counsel for the appellant/revenue, that the absence of the restraint order on the date of the second search distinguishes the decision in Sarb Consulate (supra) from the present appeal. It was submitted that had the restraint order not continued till the date (03.01.2001) of the second 'search', it would have b....
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....n indicated above ' In M.B. Lal (supra), a Division Bench of this court observed:- 'From a plain reading of Explanation 2(a), it is evident that an authorisation referred to in sub-section (1) is deemed to have been executed on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued. What is noteworthy is that the time-limit for the making of an order under section 158BC read with section 158BE(1) will start from the last of the panchnamas.' On the strength of this, it was argued on behalf of the revenue that the panchnama of 03.01.2001 being the last panchnama, the starting point of limitation would have to be reckoned from the end of the month on which it was drawn up, that is from 31.01.2001. It is true that the starting point of limitation has to have reference to the last panchnama but, that panchnama must be one which, in fact and not just in form, records the conclusion of search. Great emphasis was laid on the following sentence in the said decision:-'If that be so, the search would end only upon revocation of the order passed under section 132(3) which, in the instant case....
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....the search proceedings. It is in these circumstances that the court observed ' 'If that be so, the search would end only upon revocation of the order passed under section 132(3) which, in the instant case, was revoked only on June 29, 2000'. The facts in the present appeal are entirely different and would not warrant such a deduction. In any event, there is nothing in M.B. Lal (supra) which takes away anything from what has been said in the decisions cited on behalf of the respondent. 30. The decision in VLS Finance (supra) also rests on a factual basis which is different from that of the present appeal. First of all, VLS Finance (supra) is a decision rendered in a writ petition under article 226 of the Constitution of India. In exercise of its writ jurisdiction a High Court decides cases on the basis of affidavits. It is open to the High Court to arrive at conclusions of fact (as well as of law) based upon the affidavits. The present case is an appeal from the order of the Tribunal, which is the final fact finding authority under the Income Tax regime. The facts, as determined by the Tribunal, unless they are held to be perverse, form the basis of the substantial questions of law....