TaxTMI 
TaxTMI 
2006 (2) TMI 202
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....egal and bad in law. Admittedly, the issue was not raised before the ld. CIT (A) and the same has been raised before us for the first time. 4. The said first cross objection raised by the assessee is purely a question of law which arises from the determined facts. The cross objection is to be treated as an appeal for all practical purposes. The issue raised by the assessee is a legal question and goes to the root of the matter as such, following the ratio laid down by the Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383, the said cross objection of the assessee is admitted. 5. Coming to the facts of the case, a search under section 132 was initiated on 18-6-1998 and as per the assessee it concluded on 29-6-1998, whereas as per the Revenue the same was concluded on 1-8-1998. The block assessment was completed on 28-8-2000 and as per the contention of the assessee the same was beyond time limitation as prescribed under section 158BE i.e. within two years from the end of the month in which the last of the authorization of search under section 132 was executed. The moot question before us is to decide is, as to when the last of authorization for....
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....o conclusion of the search. 12. In the backdrop of the above facts, the main argument of the ld. counsel for the assessee Shri Vijay B. Mehta is that the last authorization was executed on 29-6-1998 i.e., when the back-up data cartridges were seized from 922B, 9th Floor, Dalai Street. He further staled that the Panchnama drawn on 1-8-1998 cannot be considered as execution of the authorization under section 132 since nothing new was done on that date. The shares and debentures were already inventorised at House No. 23, 2nd Floor, Atmaram Building, Francis Xavier Lane, Mumbai on 19-6-1998. On 1-8-1998, another inventory was prepared of the same shares and debentures and those were released. According to him the restrained order was passed on 19-6-1998 with regard to the said shares and debentures which were inventorised on that day itself does not extent the period of limitation for the purpose of section 158BE. For this proposition he relied on the following case law:- (i) CIT v. Sandhya (P.) Naik [2002] 253 ITR 534 (Bom.) (ii) Smt. Neena Wadhwa v. Dy. CIT [2003] 128 Taxman 149 (Delhi - Trib.) (iii) Ananta N. Naik v. Dy. CIT [2000] 112 Taxman 281 (Trib.....
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....t execution of the authorization warrant. 15. The search party visited twice at the residential premises of the assessee at House No. 23, Second Floor, Atmaram Building, Francis Xavier Lane, Mumbai on 19-6-1998 and again on 1-8-1998. On the first visit itself the house was searched and the shares and debentures found were inventoried as per Annexure-I and kept in the steel cupboard in the bed-room and prohibitory order was passed under section 132(3). The authorized officers were aware of the nature and contents of the documents which were kept in the said cupboard, as the inventory of the said documents i.e. shares and debentures was prepared on 19-6-1998 and PO was passed. It was mentioned in the PO order that all the shares and debentures were belonging to the assessee and his family members were kept in the cupboard. Obviously the authorized officers must have come to the conclusion that these shares and debentures are not required to be seized. The PO order passed under section 132(3) does not amount to seizure as per the Explanation to said sub-section. 16. An order passed under section 132(3) prohibits the person in possession of the books or the valuables to deal with....
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....ection 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents; (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business; (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing". 17. The passing of prohibitory order under section 132(3) is an administrative act and it is the domain of the authorized officer to decide during the course of search if any PO is required to be passed or not. However, in order to determine whether the search as come to end or not, what is required to be seen whether the documents or ....
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.... d distinctive numbers were not mentioned whereas in the second inventory the distinctive numbers were mentioned. Merely by mentioning distinctive numbers in the second inventory it cannot be held that the said shares and debentures were not appraised by the Search Party on 19-6-1998. No search proceedings as envisaged under section 132(1) took place on 1-8-1998 only another inventory was prepared and the shares and debentures were release. In the case of Sandhya P. Naik, supra, it is held that simply stating in the Panchnama that the search is temporarily suspended, the authorized officer cannot keep the search proceeding in operation by passing a restraint order under section 132(3). In the case of the assessee, no doubt that the Panchnama prepared at the residence on 19-6-1998, that the search is temporarily concluded but actually no search was made on 1-8-1998, only the shares and debentures were released. The relevant portion of the judgment of Hon'ble Bombay High Court in the case of Sandhya P. Naik is reproduced hereunder:- "Admittedly, only the following officers were authorized to conduct the search. Their names were: 1. Shri K. Ramesh, DDIT (Investig....
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....d sealed cupboard and the seal was placed against. Thus, the Income-tax Appellate Tribunal rightly held that the proceedings, on October 26, 1996, could not be considered as part of the execution of the search proceedings, which concluded on October 20, 1996. Indeed, by simply stating in the panchnama that the search is temporarily suspended, the authorized officer cannot keep the search proceedings in operation by passing a restraint order under section 132(3). Reliance placed by the Department on the judgment of the Allahabad High Court in the case of Sriram Jaiswal v. Union of India [1989] 176 ITR 261, was correct. The restraint order in view of this authority cannot be cancelled and renewed from time to time. Action under section 132(3) of the Income-tax Act can be restored 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 seized the item, if he is of the view that it represented undisclosed income. Power under section 132(3) of the Income-tax Act thus cannot be exercised so as to circumvent the provisions of section 132(3) read with secti....