TaxTMI 
TaxTMI 
2025 (7) TMI 1098
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....ein. ITA No. 3361/Mum/2023, A.Y 2019-20 The assessee has raised the following grounds of appeal: 1. That on the facts and in the circumstances of the case, the Learned Commissioner of Income-tax (Appeals)-47, Mumbai (hereinafter referred to as the "Ld. CIT(A)"] erred in passing the impugned order dated 26.07.2023 in Appeal No. CIT(A)-47, Mumbai/ 10291/2018-19 dismissing the appeal filed by Appellant and confirming the order dated 06.09.2022 passed by the Assistant Commissioner of Income-tax, Central Circle-1(2), Mumbai [hereinafter referred to as the "AO"] under section 153A of the Income-tax Act, 1961 [hereinafter referred to as the "Act"], whereby the total income of the Appellant was assessed at Rs. 42,19,34,450 as against the total income of Rs.12,21,38,550 declared by the Appellant in its return of income. 2. That on the facts and in the circumstances of the case, the Ld.CIT(A) erred in passing the impugned order dated 26.07.2023 in Appeal No. CIT(A)-47, Mumbai/ 10291/2018-19 dismissing the appeal filed by the Appellant and confirming the order dated 06.09.2022 passed by the AO, because the assessment order is barred by limitation and is therefore inval....
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....visions of sections 69C and 115BBE are not applicable in the case. 7. That on the facts and in the circumstances of the case, the Ld.CIT(A) erred in passing the impugned order dated 26.07.2023 in Appeal No. CIT(A)-47, Mumbai/10291/2018-19 dismissing the appeal filed by the Appellant and confirming the addition of Rs. 2,76,85,351 made by the AO under section 68 r.w.s. 115BBE of the Act on account of unexplained cash credits, because the addition has been confirmed based on incorrect assumptions and relying upon the statements of persons who are not independent witnesses and have every motive to harm the Appellant and even when the provisions of sections 68 and 115BBE are not applicable in the case. 8. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in passing the impugned order dated 26.07.2023 in Appeal No. CIT(A)-47, Mumbai/ 10291/2018-19 dismissing the appeal filed by the Appellant and confirming the addition of Rs.2,98,78,540 made by the AO under section 69C r.w.s. 115BBE of the Act on account of unexplained cash payments, because the addition has been confirmed based on incorrect assumptions and relying upon the statements of perso....
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..... AR's Submission I. The submissions on the point of limitation are for A.Y. 2016-2017 to A.Y. 2020-2021 in the case of Index Logistics Pvt Ltd and A.Y. 2011-2012 and A.Y. 2016-2017 to A.Y. 2020-2021 in the case of Ismail Muhammed Khan. The issue of limitation is not raised w.r.to A.Y. 2021-2022. The ground of limitation is raised as Ground No 2 in the Original Grounds of Appeal for AY 2016-17 to 2021-22 in the case of Index Logistics Pvt Ltd. The ground of Appeal No 2 for AY 2016-2017 in the case of Index Logistics Pvt Ltd reads as under: "That on the facts and in the circumstances of the case, the Ld CIT(A) erred in passing the impugned order dated 26/7/2023 in Appeal No. CIT(A)-47, Mumbai/ 10739/2015-16 dismissing the appeal filed by the Appellant and confirming the order dated 06.09.2022 passed by the AO because the assessment order is barred by limitation and is therefore invalid and non est.' The facts relevant for determination of this issue is in the case of Index logistics Private Limited is as as under: 1) In the present case a Search was authorised on the Assessee vide warrant of authorisation dated 23/3/2021. ....
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.... Assessee are as under: A Restraint Order u/s 132(3) does not extend the time limit to complete Assessement. 1. In C. Ramaiah Reddy v ACIT (2011) 339 ITR 210 (Karn)(HC) [Pg 38-69] it is held as under: Para 71 and 72 states that Search has to be continuous. It comes to an end when the Search party leaves the premises carrying with them the seized material. Authorisation for search is fully implemented once the search party leaves the premises. Para 75 states that restraint order u/s 132(3) can be passed when there is practical difficulty in seizing the material liable to be seized. If there is no such practical difficulty then officer has no option but to seize the material if it represents undisclosed income. By passing a restraint order, the time limit available for framing of the Assessment order cannot be extended. Para 76 states that in law officer is entitled to enter the search premises again with the earlier authorisation for the purpose of inspection of the subject matter of restraint order. When he enters again he has no jurisdiction to look into any new material. After inspection he can seize the incriminating material. Merely ....
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....by the authorised officer as necessary. The contention of the learned counsel for the department that it was not practical to seize huge quantity of silver at odd hours, was rightly held to be untenable by the Tribunal, because at the same odd hour, the search party seized and removed from the premises of the assessee 5,729 gms. of gold ornaments, cash of Rs. 1,69,000 and books of account, weighing nearly 500 kgs. Indeed, by simply stating in the panchanama that the search is temporarily Suspended, the authorised officer cannot keep the search proceedings in operation by passing a restraint order under section 132(3). Action under section 132(3) can be resorted to only if there is any practical difficulty in seizing the item which is liable to be seized. When there is no such practical difficulty, the officer is left with no other alternative but to seize the item, if he is of the view that it represented undisclosed income. Power under section 132(3), thus, cannot be exercised so as to circumvent the provisions of section 132(3), read with section 132(5). The position has become much more clear after the insertion of the Explanation to section 132(3) eff....
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....Such an order does not extend the search. 2) In Om Parkash Jindal vs Union of India [1976] 104 ITR 389 (P&H) [Pg 6-13] it is held as under: [Rel Pg 10-11]. Restraint order u/s 132(3) can be passed only when the authorised officer can reasonably believe that the bullion, jewellry etc represented undisclosed property. But if he is not so satisfied or has doubts then he cannot have recourse to Section 132(3). The stand that the restraint order is passed to avoid seizure till the statements u/s 132(4) are verified is untenable. S.132(3) order is to be passed only in case of impracticability of seizure due to nature, location or peculiar circumstance. 3) In Dr C. Balkrishnan Nair v CIT (1999) 237 ITR 70 (Ker)(HC)[Pg 14-19] It is held that Order u/s 132(3) cannot be passed on the ground that scrutiny could not be completed. At Para 11 it is held that Search has to be continuous. 4) In Maa Vaishnavi Sponge Ltd v DGIT (2012) 21 taxmann.com 512(Ori)(HC)[Pg 20-25][Para 9 & 11] it is held as under: Recourse to Section 132(3) can be taken only when the authorised officer believes that particular asset found during Search represent ....
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..... vs. DCIT (2023) 459 ITR 44(Mad)(HC)[Pg 137-144] wherein it is held as under: "23. Insofar as the assessments for the period 2011-12, 2012-13 and 2019-20 are concerned, no writ petitions have been filed by the petitioner at the original instance. Thus, and applying the limitation under section 153B, the date for statutory time limit for assessment would expire on 30-9-2020, though extended upto 30-9-2021 by virtue of the TOLA and subsequent extensions. 24. The question of any period available thereafter to the revenue would not arise seeing as no writ petitions have been filed at the original instance, and hence, the last date for completion of assessments for the period 2011-12, 2012-13 and 2019-20 would be 30-9-2021. The impugned assessments have been framed on 29.01.22, beyond the stipulated time and are hence barred by time. 25. As far as the defence of the revenue based upon clause (xi) to Explanation to section 153B is concerned, that clause relates to exclusion of the period taken for handing over seized material the assessing officer. The clause has been inserted with effect from 1-4-2021 and hence operates prospectively only, being a substantive....
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.... 3. Thereafter Restraint Order u/s 132(3) of the I.T. Act, 1961 in respect of the sealed premises of Prakash Nair Cabin i.e. 2nd Cabin from Ismail M. Khan's cabin 4. Subsequently, in continuance of the proceedings initiated on 24.03.2021 search was undertaken with respect to the premises sealed mentioned hereinabove and pursuant to the action undertaken, last Panchnama was executed/ drawn on 24.05.2021 5. The seized material and books of accounts in this case were received by the DCIT Cent. Cir. 1(4), Mumbai from the DDIT (Inv)-1(2), Mumbai on 20.09.2021. 6. Subsequently, the case was transferred to the charge of DCIT Central Circle1 (2), Mumbai. The assessment orders u/s. 153A for AYs 2016-17, 2017-18, 2018-19, 2019-20, 2020-21, 2021-22 in the case of M/s. Index Logistics Put. Ltd. were passed on 06.09.2022, 06.09.2022, 06.09.2022, 06.09.2022, 08.09.2022, 06.09.2022 respectively. STATUTORY FRAMEWORK: Time limit to complete assessment u/s 153A is provided u/s 153B(1)[(a) of the IT Act, 9161. The third proviso u/s 1538(1)(a) states that in the case where the last of the authorization for search under section 132 or for requisiti....
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....t drawn panchnama for the purpose of considering the limitation period. Assessee has placed reliance on the CBDT Instruction F.No. 286/57/2002-IItnv II) dated 03.07.2022 wherein it has been stated as follow ii. Search and seizure work should be completed as early as possible and restraint order u/s 132(2) should be lifted within one month from the date of passing such order ..... (emphasis supplied) Attention is invited to the decision of Hon'ble SC in the case of Kerala Financial Corporation v CIT (1994) AIR 2416 wherein it held as under: The fact that the circular to which Shri Salve has referred is one which had been issued in exercise of powers conferred by Section 1 19 of the Act has no significance insofar as the point under consideration, namely, whether the circular can override or detract from the provisions of the Act, is concerned, inasmuch as what Section 119 has empowered is to issue orders, instructions or directions for the "proper administration of the Act or for such other purposes specified in sub-section (2) of the section. Such an order, instruction or direction cannot override the provisions of the Act, that would be dest....
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....us, according to the respondents, the search had finally been completed only on 5th August, 1998 and panchnama was duly drawn on the said date as well. The appellants, in the writ petition filed, had nowhere challenged the validity of searches on the subsequent dates raising a plea that the same was illegal in the absence of any fresh and valid authorization. On the contrary, the appellants proceeded on the basis that search was conduced from 22nd June, 1998 and finally concluded on 5th August, 1998. (Para 30) On the aforesaid facts and in the absence of any challenge laid by the appellants to the subsequent searches, we cannot countenance the arguments of the appellants that limitation period is not to be counted from the last date of search when the search operation completed, i.e. 5th August, 1998. Therefore, this issue is also decided in favour of the respondents (Para 31) The Review Petition filed by the assessee in the above case was also dismissed vide citation [2017] 81 taxmann.com 358 (SC) Similarly, in the case of Anil Minda v. CIT [2023] 148 taxmann.com 407 (SC) Hon'ble SC reiterated the ratio laid down in the case of VLS Finance and held a....
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.... law as it existed prior to amendment w.e.f. 1.6.2002. Whereas in the given case restraint orders are issued under the amended law (Para 6) 2. Restraint Order passed by ACIT who was not one of the authorized officers mentioned in the search warrant. However no such fact is brought on record in this case. 3. Department itself admitted that there were many defects in panchnama. Department has not admitted/brought out any such defects in the Panchnama issued. (Para 12) Hence observation of the Hon'ble Bombay High Court in the above mentioned case was in context of the law as it existed prior to amendment w.e.f 1.6.2002 where by using the provision pertaining to approval department could keep extending the time for which restraint order was in force even beyond 60 days. The said ratio will not be applicable in the given case as post 1.6.2002 as statutory limit for which restraint order u/s 132(3) can be in force is restricted to 60 days. Hence assessee's contention that since restraint order u/s 132(3) is not lifted within one month the panchnama issued dated 24.05.2021 lifting the restraint order is invalid in law is not tenable. PR....
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....nths from the end of the financial year in which the last of the authorisation for search u/s 132 or for requisition u/s 132A was executed. And as per section 153(2) the authorisation referred to in Sec. 153(1)(a) Shall be deemed to have been executed on the conclusion of the search as recorded in the last Punchnama drawn in relation to any person, in whose case, the warrant of Authorisation has been issued. 11. As per the assertion of the assessee, the last drawn Punchnama is of 26/03/2021, when the search ended. Therefore, the limitation for passing the assessment order commences on 01/04/2021 and ended on 31/03/2022. And the restraint order u/s 132(3) of the Act dated 26/03/2021 and consequential visit on 24/05/2021, wherein a Punchnama was drawn cannot be taken as a last drawn Punchnama, so as to extend the limitation to pass the Assessment Order. 12. Whereas on the contrary, Ld DR stressed upon the point that as per section 153B(1)(a) of the Act, the time barring date for completion of assessment is to be determined from the date of last authorisation for search u/s 132 of the Act. And in this case, the date of last Punchnama drawn is 24/05/2021 and since the search got ....
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....material if it represents undisclosed income. By passing a restraint order, the time limit available for framing of the Assessment order cannot be extended. Para 76 states that in law officer is entitled to enter the search premises again with the earlier authorisation for the purpose of inspection of the subject matter of restraint order. When he enters again he has no jurisdiction to look into any new material. After inspection he can seize the incriminating material. Merely because one more panchnama is drawn evidencing seizure of any material in the course of such inspection that cannot be construed as a last Panchama. Para 77 states that Section 132 has no reference to entering and searching premises which are subject matter of restraint order. Order u/s 132(3) itself authorises inspection and seizurę. Panchnama drawn after sucg inspection is the last panchnama in respect of said premises But for the purpose of limitation u/s 158BE it would not be the last panchnama. Para 80 states that search commences pursuant to an authorisation and comes to an end with the drawing of panchnama. Panchnama drawn w.r.to visit for the subject matter of restraint....
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....no such practical difficulty, then the officer is left with no other alternative but to seize the item, if he is of the view that it represented undisclosed income. Power under section 132(3), thus, cannot be exercised so as to circumvent the provisions of section 132(3), read with section 132(5). The position has become much more clear after the insertion of the Explanation to section 132(3) effective from 1-7-1995, that a restraint order does not amount to seizure. Therefore, in this way by passing a restraint order, the time-limit available for framing of the order cannot be extended. 20. On this proposition, reliance is also being placed on the decision in the case of CIT Vs. Sandhya P Nair (2002) 124 Taxman, 384(Bombay) wherein it was held as under Para 3 & 4 state that ITAT took up issue of limitation first as it felt that if Assessee succeeded on that then other issues would become academic. Para 10 states there was only one search warrant which was issued on 16-10-1996, and executed between 16-10-1996, and 20-10-1996, and which expired, thus, on 20-10-1996. The warrant was issued on 7-10-1996, and the search was conducted continuously between 16-10-1996....
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....mitation will not be postponed. As in our view, merely visiting the premises on the pretext of concluding the search, but not actually finding anything new for being seized cannot give rise to a second Punchnama and even otherwise such a Punchnama cannot postpone the period of completion of assessment. On this proposition reliance is being placed on the decision of PCIT Vs. PPC Business and Products Private Limited (2017) 84 taxman.com, 10 Delhi, wherein it was held as under: Para 15 & 16 states that a restraint order was passed u/s 132(3) on the first-day of the search. On the second visit there was no fresh material found A formal seizure order was passed. Para 24 states that merely because panchnama drawn after the visit due to restraint order says that Search is finally concluded, the period of limitation will not be postponed. Para 26 states that merely visiting the premises on the pretext of concluding the Search but not actually finding anything new for being seized cannot give rise to a second panchnama. Such panchnama cannot postpone the period of completion of assessment. 22. In this case also, in the visit pursuant to the restraint order, th....
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....orised officer believes that particular asset found during Search represent undisclosed asset. Section 132(3) order cannot be passed to ascertain whether any transaction made in the accounts represent undisclosed income. Also did not accept contention of the department that order u/s 132(3) for the period prescribed u/s 132(8A) is automatic. In the case of CIT v S.K.Katyal (2009) 308 ITR 168(Del)(HC) This case deals with the period of limitation. At Para 15 the concept of panchnama is explained. At Para 16 it is held that Panchanama must reveal that a Search was carried out. At Para 18 it is held that mere inspection does not amount to Search. At Para 19 it is explained that for a Search one has to look for, there has to be quest for something hidden. Merely writing search is temporarily concluded will not extend the Search. At para 21 it is stated that Search has to be continuous and there has to be cogent and plausible reason for splitting of Search. Gap has to be explained. 24. And even in the present case, no reason has been recorded that ingredients of Section 132(3) are satisfied. No reason has been given for the gap in the search fro....
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....over seized material the assessing officer. The clause has been inserted with effect from 1-4-2021 and hence operates prospectively only, being a substantive provision. The benefit of the exclusion under that clause thus, would not be available to the revenue in the present assessments. The impugned orders of assessment passed on 28-1-2022 in respect of AYs 11-12, 12-13 and 19-20 are hence held to be barred by limitation qua these three assessment years and are set aside. The writ petitions challenging those notices, orders of assessment and penalties are allowed." 29. Since the similarity in the facts of the present case, with that of the Agni Estates and Foundation (supra) is demonstrated as under: Agni Estates and Foundations (P)Ltd v DCIT (Supra) Present case. Assessment Year involved is prior to AY 2021-2022 Assessment Year involved is prior to AY 2021-2022. Search had taken place on 5/7/2018 i.e. before 1/4/2021 Search has taken place before 1/4/2021 Last date to pass the Assessment order was 30/9/2021 i.e. after 1/4/2021. Last date to pass the Assessment order is 31/3/2022 i.e. after 1/4/2022. Assessment order dated 28-1-2022 passed w.r.to searc....
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....preme Court in UCO Bank v/s CIT (1999) 237 ITR 889 (SC) w.r.to binding nature of benevolent circulars or circulars which reduce the rigours of law. 35. As a result, in the facts of the present case, the last drawn Panchnama shall be that which was drawn on 26/3/2021 and thus the impugned assessment orders are barred by limitation. 36. Although Ld. DR has placed reliance on Panchnama dated 24.05.2021 to compute the limitation. And in this reagard Ld. DR relied upon the decision in the case of VLS Finance Ltd v CIT (2016) 68 taxmann.com 368 (SC) and Anil Minda v CIT (2023) 148 taxmann.com 407 (SC). 37. In this regard it has been pointed out by Ld. AR that the decision in the case VLS Finance Ltd v CIT (2016) 68 taxmann.com 368(SC) affirming the decision of Delhi High Court in VLS Finance Ltd v CIT (2007) 159 Taxman 102 (Del)(HC) is distinguishable on facts and thus not applicable for the following reasons: (i) In this case there was a Search Warrant dated 19/6/1998 which was executed on 22/6/1998 and thereafter from time to time till 5ª August 1998. The issue was whether Search concluded on 23 June 1998 or 5 August 1998. (ii) The Hon'ble Supreme Co....
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....rive 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 which are to be determined by High Court's in appeals under section 260A of the said Act. It ought to be remembered that the Tribunal was of the view that the search and seizure, in the present case, was completed on 17-11-2000. The Tribunal also held that the panchnama of 3-1-2001 was 'merely a release order. Secondly, in VLS Finance Ltd.'s case (supra), the search and seizure operations commenced on 22-6-1998 and continued till 5-8-1998. As many as 16 panchnamas were drawn upon in respect of the visits made to the assessee's premises. There was a mass of documents which were searched and seized from. time to time. The court found that the search concluded on 5-8-1998 and not on 22-6-1998. The court also found that the search was also not unduly prolonged. The court held :- "Consequently, we are of the opinion that the respo....
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....me Court in Anil Minda v CIT (2023) 148 taxmann.com 407 (SC) is not applicable to the facts of the present case for the following reasons: (i) The contention of the Assessee in that case as recorded in Para 3.2 of the decision was that the date of last authorization i.e. 26-3-2001 should be taken as the starting point of limitation and not the last date of Search i.e. 11-4-2001 pertaining to first authorization dated 13-3-2001. Thus, the findings at Para 7 and Para 8 of the said order clearly state that the relevant date for computing the period of limitation shall be the date of last panchnama and not the date of last authorisation. Hence, the issue before the Hon'ble Supreme Court was different than that involved in the present case. (ii) Further the Supreme Court was not concerned with the impact of restraint order u/s 132(3) on the point of limitation. In-fact Assessee had not challenged the Search which had taken place on 11-4-2001. (iii) Hence, the decision of the Supreme Court is not applicable in the facts of the present case. Further Hon'ble Supreme Court in Commissioner of Income-tax vs. Sun Engineering Works (P.) Ltd. [1992]....
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.... 26/3/2021 and what was asked on 24/5/2021 was only clarification on what was already stated by Ismail Khan on 26/3/2021. Thus, sim cards were already examined on 26/3/2021 itself. Even no addition is made w.r.to items on which prohibitory orders were passed which clearly demonstrats that all purported incriminating materials were seized during search from 23/3/2021 to 26/3/2021. At 3 Para of Para 7 it is stated that "Loose papers found at the premises were examined and having been found unfit for seizure, were not seized." This statement clearly shows that the restraint order u/s 132(3) was a ruse or formality. A bare reading of Section 132(3) and also at Para 72 of the decision of Karnataka High court in C. Ramaiah Reddy v ACIT (2011) 339 ITR 210 (Karn)(HC) it is stated that prohibitory orders are passed against items which are liable to be seized but are impracticable to seize. However, whether the items are liable to be seized was not decided at the time of passing restraint orders. Thus, as stated in C. Ramaiah Reddy (supra), the visit on 24/5/2021 was mere inspection pursuant to restraint order u/s 132(3) and cannot be equated with a Search. Further as held in C Ramaiah Reddy....
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....ghing nearly 500 kgs. (31) Indeed, by simply stating in the panchanams that the search is temporarily suspended, the authorised officer cannot keep the search proceedings in operation by passing a restraint order under section 132(3) (in) Action under section 132(3) can be resorted to only if there is any practical difficulty in seizing the item which is liable to be seized. When there is no such practical difficulty, the officer is left with no other alternative but to seize the item, if he is of the view that it represented undisclosed income. (iv) Power under section 132(3), thus, cannot be exercised so as to circumvent the provisions of section 132(3), read with section 132(5). The position has become much more clear after the insertion of the Explanation to section 132(3) effective from 1-7-1995, that a restraint order does not amount to seizure. Therefore, by passing a restraint order, the time-limit available for framing of the order cannot be extended. 50. Therefore taking into consideration the entire facts and circumstances of the present case and also the principles laid down by different judicial authorities as discussed by us in detail, we....