Madras High Court
The Commissioner Of Income Tax vs Shri Subashchand Jain on 31 January, 2022
T.C.A. Nos.478 and 758 of 2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 31.01.2022
CORAM
THE HONOURABLE MR.JUSTICE R.MAHADEVAN
and
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
T.C.A. Nos.478 and 758 of 2010
The Commissioner of Income Tax
Trichy ... Appellant in both T.C.A's
Vs.
Shri Subashchand Jain
16B 10th Cross Thillai Nagar,
Trichy 620 018. ... Respondent in both T.C.A's
COMMON PRAYER : Appeals filed under Section 260A of the Income
Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, "D"
Bench, Chennai, dated 31.05.2007 in I.T(SS)A.Nos.177/Mds/2006 and
158/Mds/2006, respectively.
For Appellant : Mr.M.Swaminathan, Senior standing counsel
& Mrs.V.Pushpa, Junior standing counsel
For Respondent : Mr.P.Senthilkumar for M/s.Philip George
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T.C.A. Nos.478 and 758 of 2010
COMMON JUDGMENT
(Judgment of the Court was delivered by R.MAHADEVAN, J.)
Both the tax case appeals filed at the instance of the Revenue, are
directed against the order dated 31.05.2007 passed by the Income Tax
Appellate Tribunal, 'D' Bench, Chennai, in I.T(SS)A.Nos.177/Mds/2006 and
158/Mds/2006, respectively relating to the block period ending 27.09.2000
and 28.09.2000.
2.The case in brief is as follows:
Based on the information that the assessee / respondent was doing
unaccounted business in jewellery, a search and seizure action under section
132 of the Income Tax Act was conducted in the residential as well as the
business premises of the assessee on 28.09.2000 and the search was
concluded on 01.06.2001 as per the last panchanama drawn, according to
which, the warrant is shown to have been issued in the name of the assessee
and his brother and father, while the premises searched were that of
M/s.Kalyani Thanga Maligai and M/s.Sugali Bankers situated at No.115,
Arcot Road, Virugambakkam, Chennai-600 092. Pursuant to the same, notice
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T.C.A. Nos.478 and 758 of 2010
under section 158 BC of the Act was issued on 25.06.2001, to which, the
assessee filed his return of income disclosing Rs.21,34,144/- as his
undisclosed income acquiescing with the date of warrant with reference to
which M/s.Kalyani Thanga Maligai and M/s.Sugali Brothers were searched.
The assessing officer made various additions and determined the total
undisclosed income of the assessee at Rs.5,28,08,070/- and accordingly,
levied tax and completed the assessment on 30.06.2003. Challenging the
same, the assesseee filed appeal before the CIT(A), who by order dated
05.05.2006, partly allowed the appeal and reduced the addition to the tune of
Rs.7,09,279/-. Aggrieved over the same, both the Revenue and the assessee
filed appeals before the Income Tax Appellate Tribunal. By order dated
31.05.2007, the Tribunal held that the assessment order is barred by
limitation and accordingly, quashed the assessment order. Therefore, the
Revenue is before this court with the present appeals.
3.By separate orders dated 22.06.2010 and 04.06.2013, this court
admitted the aforesaid tax case appeals on the following substantial questions
of law:
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T.C.A. Nos.478 and 758 of 2010
“ (i) Whether on the facts and in the circumstances of
the case, the Income Tax Tribunal is right in law in holding
that the assessment order dated 30.06.2003 was barred by
limitation, especially when the last of Panchanama was dated
01.06.2001?
(ii) Whether on the facts and in the circumstances of
the case, the Income Tax Tribunal is right in quashing the
block assessment as time barred especially when Section
158 BE(1) clearly holds that the limitation for completion of
the assessment and the limitation is to start from the end of
the month in which the last of the panchanama under Section
132 was drawn up and also when explanation 2 to Section
158 BE clearly provides that the last panchanama referred in
Section 132 shall be deemed to have been executed in the
case of search on the conclusion of search as recorded in the
last panchanama?
(iii) Whether on the facts and in the circumstances of
the case, the Income Tax Tribunal is right in law in going
into issue relating to validity of the search conducted under
Section 132 of the Income Tax Act while dealing with block
assessment?
4.When the matters were taken up for consideration, the learned
counsel for the appellant as well as the respondent jointly submitted that the
substantial questions of law involved herein were already decided and
answered in favour of the assessee, in the case of A. Rakesh Kumar Jain v.
Joint Commissioner of Income Tax [(2013) 31 taxmann.com 312
(Madras) / (2012) 254 CTR 576(Madras). The relevant paragraphs of the
said decision are usefully extracted below:
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T.C.A. Nos.478 and 758 of 2010
"13. As reasoned out therein, there could be only one
authorisation and a panchanama drawn as regards the conduct of the
search, i.e., once when the search party concluded the search and leaves
the premises after carrying with them the seized material, the authorisation
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 Section 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 Section 158BE, it would not be the last panchanama
drawn in proof of conclusion of search, as defined in Explanation 2 to
Section 158BE. For the purpose of limitation, there can be only one
search and one panchnama as reasoned out by the Karnataka High Court.
14. Referring to the Kerala High Court decision in the case of
Dr.C.Balakrishnan Nair Vs. CIT reported in (1999) 237 ITR 70 (Ker), the
Karnataka High Court held that there is no provision in the Criminal
Procedure Code or in the Income Tax Act therein, for postponing the
search for such a long period. It is worthwhile to extract the decision of
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T.C.A. Nos.478 and 758 of 2010
the Karnataka High Court, which in clear terms brings out the concept of
search and validity of the authorisation issued for the search.
.............
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 referrable 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 contain the observation
that "search continues" per se would not enable the search party to keep
the search in a suspended animation to carry on the search in future date
to contend that the limitation has to be worked out on the last
panchanama drawn ie. 15.02.2002, thus calculating the limitation from
15.02.2002. We have no hesitation in accepting the case of the assessee
that the limitation ends on 31.12.2003. The contention of the Revenue
that the limitation has to be taken as 29.02.2004 does not go with the
provisions of the Act. In such circumstances, the Tax Case Appeal is
allowed. Accordingly, we set aside the order of the Income Tax Appellate
Tribunal. No costs.”
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T.C.A. Nos.478 and 758 of 2010
5.In the present case, search was conducted on various dates from
28.09.2000 to 01.06.2001 and various panchanamas were issued, the last of
which is dated 01.06.2001. There was no seizure on 18.01.2001, 29.01.2001,
16.03.2001, 14.05.2001 and 01.06.2001. The prohibitory order was lifted on
29.01.2001 and hence, the Tribunal was of the opinion that the subsequent
panchanama from 29.01.2001 are irrelevant and the time shall be reckoned
for the purpose of determining the time limit for the completion of the
assessment under section 158BE from the end of the month of January 2001.
Accordingly, the assessment order should be completed on or before
31.01.2003, whereas the assessing officer completed the assessment only on
30.06.2003, which is absolutely time barred. Thus, the Tribunal set aside the
assessment order. We do not find any infirmity or illegality in the order so
passed by the Tribunal, warranting interference.
6.Be it noted, in the decision referred to above, this court has
categorically held that 'mere fact that the panchanama contains the
observation that 'search continues' per se would not enable the search party
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T.C.A. Nos.478 and 758 of 2010
to keep the search in a suspended animation to carry on the search in future
date to contend that the limitation has to be worked out on the last
panchanama drawn' and the same is squarely applicable to the facts of the
present case. It is also brought to the notice of this court that the appeal filed
by the Revenue by way of Civil Appeal No.5220 of 2013, was dismissed by
the Hon'ble Supreme Court on 21.10.2019.
7.Therefore, we decide the substantial questions of law involved herein
in favour of the assessee and accordingly, dismiss the tax case appeals filed
by the Revenue. No costs.
[R.M.D., J.] [M.S.Q., J.]
31.01.2022
Speaking (or) Non Speaking Order
Index : Yes/ No
mka/smn
To
1. The Commissioner of Income Tax
Trichy.
2. The Income Tax Appellate Tribunal, "D" Bench,
Chennai
https://www.mhc.tn.gov.in/judis
T.C.A. Nos.478 and 758 of 2010
3.The Commissioner of Income Tax (Appeals)
Central Circle -III (4), Chennai.
R.MAHADEVAN, J.
and
MOHAMMED SHAFFIQ, J.
mka/smn
T.C.A. Nos.478 and 758 of 2010
31.01.2022
https://www.mhc.tn.gov.in/judis
