(Judgment of the Court was delivered by C.SARAVANAN, J.)
These Tax Case Appeals filed under Section 260A of the Income Tax
Act, 1961 are directed against the Impugned Order dated 08.07.2011 passed
by the Income Tax Appellate Tribunal (hereinafter referred to as “Appellate
Tribunal”) in Appeal No.I.T.(SS) A.No.182/Mds/2004 and
2. At the time of admission of these appeals, the following substantial
3. By the Impugned Order dated 08.07.2011, the Appellate Tribunal
has dismissed the Appellant Income Tax Department's appeal and allowed the
Respondent-Assessee's Cross-Objection, against the Order dated 15.04.2004
of the Commissioner of Income Tax (Appeals) in Appeal
4. Earlier, Block Assessment was completed by the Assessing Officer
vide Order dated 28.03.2002 for the block period ending on 08.12.1999 [i.e.,
the period between 1990-1991 to 1999-2000 and part of the Assessment Year
2000-2001] under Section 143(3) read with Section 158BC of the Income Tax
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5. The brief facts of the case are that a search was conducted at the
premises of the respondent assessee on 08.12.1999. On the date of the search
on 08.12.1999, about 108 files were seized from the custody of the
Respondent-Assessee. However, the search was not completed on 08.12.1999.
6. Therefore, a Prohibitory Order was passed under Section 132(3) of
the Income Tax Act, 1961 on 09.12.1999 which prohibited the Respondent-
Assessee from removing or otherwise dealing with the books of accounts or
other documents etc., (i) in the record room and (ii) almirah of GM(F&A),
without prior permission of the search team of the Appellant Income Tax
Department. Seals were placed at the door of the record room at M/s.Statelite
Industry (India) Ltd, Tuticorin and on the almirah of GM(F&A).
7. The Annexure to the aforesaid Prohibitory Order dated 09.12.1999,
enjoined the Respondent-Assessee, not to remove the following:-
(ii)A Seal placed in the record room's door.
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8. Subsequently, the search was continued on 21.01.2000. About 14
items were seized. The search was however inconclusive on 21.01.2000. An
inventory was drawn in the Panchnama on 21.01.2000. Once again another
Prohibitory Order was also passed on the same day i.e., on 21.01.2000 by
the Respondent-Assessee in respect of documents in almirah in the room of
the GM (F&A).
9. After Prohibitory Orders dated 09.12.1999 and 21.01.2000 were
passed, the search was continued on 02.03.2000. The search was ultimately
concluded on 02.03.2000. Thus, on 02.03.2000, the Prohibitory Order
dated 21.01.2000 was lifted. No fresh material was recovered during the
search conducted on 02.03.2000.
10. In this background, a Notice dated 08.06.2000 was issued under
Section 158BC of the Income Tax Act, 1961 in response to which the
Respondent-Assessee filed a Return of Income on 24.07.2000. The
aforesaid proceedings thus culminated in the aforesaid Block Assessment
Order dated 28.03.2002 under Section 143(3) read with Section 158BC of
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the Income Tax Act, 1961 as it stood then. A sum of Rs.44,56,14,656/- was
added to the income of the Respondent-Assessee as “undisclosed income” as
tabulated below:-
Sl. Computation of undisclosed income Amount
No. (Rs.)
1. Disallowance of Depreciation at 34,39,37,070
Tuticorin on the amount of steel
consumption for the Copper Smelter and
Sulphuric Acid Plant
(as discussed in para 2)
2. Disallowance of depreciation in case of 60,21,808
steel consumption at other plants
(as discussed in para 3)
3. Depreciation on proportionate exchange 3,70,27,309
fluctuation on indigenous capital
expenditure
(as discussed in para 4)
4. Cash Expenses 13,21,591
(as discussed in para 5)
5. Travel Expenses of family members 19,00,000
(as discussed in para 6)
6. Cash Salary 7,20,000
(as discussed in para 7)
7. INDAL takeover Expenses 3,81,36,878
(as discussed in para 8)
8. Estimate value of painting 5,00,000
(as discussed in para 9)
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Sl. Computation of undisclosed income Amount
No. (Rs.)
9. Unexplained payment – Silvassa 6,90,000
(as discussed in para 10)
10. Cash payment 1,48,60,000
(as discussed in para 11)
11. Paymento to Adivasi Vikas Sanghtan 5,00,000
(as discussed in para 12)
Total 44,56,14,656
11. The Respondent-Assessee thus filed Appeal
No.CIT(A)XXXIII/Rg-2(3)/IT/13-S/02-03 before the Appellate
Commissioner under Section 246A of the Income Tax Act, 1961. The
Appellate Commissioner vide Order dated 15.04.2004, partly allowed the
appeal under Section 250 of the Income Tax Act, 1961.
12. Amongst various grounds canvassed by the Respondent-Assessee,
one of the ground pertained to limitation under Section 158BE(1)(b) of the
Income Tax Act, 1961 which stipulated that Order under Section 158BC of
the Income Tax Act, 1961 shall be passed within two years from the end of
the month in which the last of the authorizations for search under Section 132
or for requisition under Section 132A, as the case may be, was executed in
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cases where a search is initiated or books of accounts or other documents or
any assets are requisitioned on or after the 1st day of January, 1997.
13. In Paragraph 4.3 of the Appellate Order dated 15.04.2004, the
Appellate Commissioner observed as under:-
“4.3. ...... The search at Tuticorin was then concluded on
02.03.2000 on which occasion also certain further
records were seized. It is, thus, clear that the
continuation of the search was not a mere formality for
the purpose of extending the period of the search.
Thus, the last panchanama in this case which came to
be made on 02.03.2000 truly represents the conclusion
of the process of search and seizure and consequently,
the passing of the Block Assessment Order on
28.03.2002 is clearly, within the period of limitation
prescribed in the Income-tax Act, 1961.”
14. In Paragraph 4.5 of the Appellate Order dated 15.04.2004, the
Appellate Commissioner ultimately concluded as under:-
“4.5. I have considered these decisions but found that in these
cases, there was a question mark as to the validity of the
continuation of the search and the ground that it was
really unnecessary to issue Prohibitory Orders and that
the search could, in fact, have been concluded earlier.
In the case of the search of the Appellant's premises at
Tuticorin, no such case has been made out by the
Appellant. It is unable to demonstrate that it was, in
fact, possible for the Department to have seized all the
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records lying the record room and thereby conclude the
search. Thus, it is apparent that in the present case,
facts are entirely different from the facts of the cases
relied on by the assessee. There is, therefore, no case to
hold that the continuation of the search was illegal or
ineffective. As a corollary, it must be held that the
search was, in fact, concluded on 02.03.2000 and that
the Assessment Order has been passed within the
prescribed period of limitation of two years from the
end of the month in which the search is concluded. I,
therefore, reject these Grounds of Appeal, namely,
Grounds 1 to 4.”
15. The Appellate Commissioner also dealt with the merits and thus
partly allowed the appeal of the Respondent-Assessee vide Appellate Order
dated 15.04.2004 which was impugned by the Respondent-Assessee before
the Appellate Tribunal in I.T.(SS) A.No.182/Mds/2004.
16. The Appellate Tribunal vide its Impugned Order dated
08.07.2011, has allowed the appeal of the Respondent-Assessee and thereby
accepted the submission of the Respondent-Assessee on the ground of
limitation under Section 158BE(1)(b) of the Income Tax Act, 1961. Relevant
portion of the Impugned Order dated 08.07.2011 reads as under:-
“22. ..... The warrant of authorization dated 08-12-1999
issued by the Joint Commissioner of Income Tax,
Tirunelveli resulted in the conversion of a survey into a
search at the factory premises of the assessee dated
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08-12-1999. Thus, these are two separate search
proceedings. Only one assessment order has been
passed. If the assessment order passed on 28-03-2002 is
treated as a consequence of the search conducted on the
assessee on 08-12-1999 as a consequence of the warrant
of authorization issued by the Joint Commissioner of
Income Tax, Tirunelveli, then as we have held before, the
assessment order ought to have been passed by
31-12-2001 and the assessment order barred by
limitation. If the assessment order is deemed to have
been passed as a consequence of the warrant of
authorization issued by the Deputy Director of
Income-tax (Inv.), Mumbai on 02-12-1999, which
resulted into a search at the Mumbai premises of the
assessee on 08-12-1999, as it is noticed that the
Prohibitory Orders have been placed on the cabin of
Shri Anil Agarwal and Navil Agarwal and in the cabin of
Shri Tarun Jain and the computer server room and as it
is noticed that there is no impracticability in regard to
the seizure which has resulted in the issuance of a
Prohibitory Order under Section 132(3) of the Act, the
search would have to be deemed to have been completed
on 08-12-1999 in which case also the limitation for
completing the assessment is on 31-12-2001 and
consequently the assessment order passed on 28-03-2002
is barred by limitation.
23. .....
24. .....
25. .....
26. Coming to the submission of the learned senior counsel
that the assessment has not been completed on the basis
of the provisions of Section 158BB(1) insofar as year-
wise computation of undisclosed income has not been
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done for the purpose of aggregation of the undisclosed
income, we are of the view that it is only an irregularity
in regard to the computation of the undisclosed income
which is curable in view of the decision of the Hon'ble
Supreme Court in the case of M/s.Deepak Agro Foods,
referred to supra. In the circumstances, the grounds
No.I(1 & 2) and II (1 & 2) stand allowed and ground
No.III (1 & 2) stands dismissed.
27. In the circumstances, the cross objection filed by the
assessee on the technical grounds stands allowed insofar
as (i) what has been found in the course of survey cannot
be included in the block assessment and (ii) the
assessment order dated 28-03-2002 is barred by
limitation. As we have quashed the assessment order as
barred by limitation, we are not going into the merits of
each of the additions. As we have quashed the
assessment as barred by limitation, the appeal filed by
the Revenue in respect of the additions which have been
deleted by the learned CIT(A) is not being disposed of on
merits and the appeal is dismissed.”
17. Before the Appellate Tribunal, Letter dated 07.11.2011 of
Mr.P.Selvaganesh, the Additional Commissioner of Income Tax, TDS
Range – 1, Chennai – 34 addressed to the Senior Department's
Representative, Office of the Commissioner of Income Tax, Appellate
Tribunal, regarding the events surrounding the search between December
1999 and March 2000 under Section 132 of the Income Tax Act, 1961, was
referred to when he acted as the Deputy Director of Income Tax
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(Investigation), Tirunelveli during the search operations.
18. The Appellate Tribunal has questioned as to how a search team that
left for Tuticorin on the early morning on 08.12.1999 recorded statements,
verifying documents and vouchers, contacted the Deputy Director of Income
Tax, Mumbai and obtained a Warrant of Authorization from the Joint
Commissioner of Income Tax, Tirunelveli and was able to initiate the
proceedings at Tuticorin on the same premises at 08.30 a.m.
19. The Appellate Tribunal has further observed that two Warrants of
Authorization were issued on 02.12.1999 which resulted in simultaneous
search at Mumbai on 08.12.1999 which was temporarily concluded on the
same day at about 11.30 p.m. and another on the basis of a Warrant of
Authorization dated 08.12.1999 issued by the Joint Commissioner of Income
Tax, Tirunelveli was implausible.
20. The Appellate Tribunal has observed that the Warrant of
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Authorization dated 08.12.1999 was issued by the Joint Commissioner of
Income Tax, Tirunelveli which resulted in conversion of a “Survey” into a
“Search” at the factory premises of the Respondent-Assessee on the same
day.
21. Thus, the Appellate Tribunal has ultimately concluded that the
Assessment Order dated 28.03.2002 that was passed pursuant to the Warrant
of Authorization dated 08.12.1999 was time-barred as the limitation under
Section 158BE of the Income Tax Act, 1961 was to be reckoned from the
date of search on 08.12.1999 and not from 02.03.2000 being the date of
conclusion of the search. Therefore, the Assessment Order ought to have
been passed on or before 31.12.2001 i.e., two years from the end of the month
of the search.
22. If the search and seizure is deemed to have been completed and
concluded on 08.12.1999 as was held by the Appellate Tribunal, the
limitation for completing the assessment was 31.12.2001 in terms of Section
158BE of the Income Tax Act, 1961, in which case, these appeals have to be
dismissed.
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23. On the other hand, if the limitation was to be computed from
02.03.2000 being the date of conclusion of the search, the limitation for
completing the assessment would get barred on 31.03.2002 as the limitation
under Section 158BE of the Income Tax Act, 1961 has to be reckoned two
years from the end of March 2000.
24. Since, the Assessment Order was passed on 28.03.2002, it is the
contention of the Appellant Income Tax Department that it was within the
period of limitation as the last date for passing the Block Assessment
Order was 31.03.2002, since the search was not completed till 02.03.2000. It
is therefore submitted that since the Block Assessment Order was passed on
28.03.2002, it cannot be said to be time-barred.
25. As far as the issue on merits are concerned, there are no discussion
on the same, as the Appellant Income Tax Department's Appeal in I.T.(SS)
A.No.182/Mds/2004 was dismissed by the Appellate Tribunal. The Cross-
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objection of the Respondent-Assessee in C.O.No.336/Mds/2005 was allowed
on the ground of limitation. Operative portion of the Impugned Order dated
08.07.2011 of the Appellate Tribunal reads as under:-
“28. In the result, the appeal filed by the Revenue is
dismissed and the cross objection filed by the assessee is
allowed.”
26. Thus, the only point for consideration before us is whether the
search can be said to have been completed on 08.12.1999 as was the
contention of the Respondent-Assessee or on 21.01.2000 or on 02.03.2000 as
is the contention of the Appellant Income Tax Department i.e., the dates on
which search was further conducted by the Department pursuant to the
Warrant of Authorization dated 02.12.1999.
27. In support of the plea that the limitation under Section 158BE(1)(b)
for passing the Block Assessment Order under Section 143(3) read with
Section 158BC of the Income Tax Act, 1961, the learned Junior Standing
Counsel for the Appellant Income Tax Department has relied on the decision
of the Hon'ble Supreme Court in “Anil Minda and others Vs.
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Commissioner of Income Tax”, 2023 331 CTR (SC) 705 / [2023] 453 ITR1
(SC) which upheld the view of the Delhi High Court in “The Commissioner
of Income Tax Vs. Anil Minda”, (2010) 235 CTR (Del) 1.
28. The learned Junior Standing Counsel for the Appellant would also
refer to a decision of the Hon'ble Supreme Court in “VLS Finance Limited
and others Vs. Commissioner of Income Tax and Others”, (2016) 384 ITR
1 (SC). It is submitted that in the aforesaid case, Panchnama was recorded
and the search was temporarily concluded which meant a search had not been
concluded on the date of Panchnama. Apart from the above, the learned
Junior Standing Counsel for the Appellant drew attention to the following
decisions:-
“(i)The Commissioner of Income Tax Vs. Anil Minda
(2010) 235 CTR (Del)1;
(ii)Deputy Commissioner of Income Tax and Ors. Vs.
Rakesh Sarin [2014] 362 ITR 619(Mad);
(iii)Navin Kumar Agarwal Vs. Commissioner of
Income Tax-XII [2015] 375 ITR 541(Cal);
(iv)Bharat Mehta and Ors. Vs. Deputy Commissioner
of Income Tax and Ors [2020] 423 ITR 568(Mad);
(v)Trilok Singh Dhillon Vs. Commissioner of Income
Tax [2011] 332 ITR 185 (Chattisgarh)
(vi)CIT Jaipur Vs. Smt.Umlesh Goel D.B. Income Tax
Appeal No.153/2003;
(vii)Commissioner of Income Tax Vs. Vatika
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Township Private Limited [2014] 3 ITR 466 (SC);
(viii)K.V.Padmanabhan Vs. Assistant Commissioner
of Income Tax [2019] 412 ITR 55 (ker);
(ix)Principal Director of Income Tax (Investigation)
and Ors. Vs. Laljibhai Kanjibhai Mandalia [2022] 446 ITR
18 (SC);
(x)Commissioner of Income Tax, Chennai Vs. S.Ajit
Kumar [2018] 404 ITR 526 (SC);
(xi)Commissioner of Income Tax (Central – I) Vs.
Golden Refineries P.Ltd. MANU/TN/4982/2022.”
29. Defending the Impugned Order dated 08.07.2011 of the Appellate
Tribunal, the learned Senior Counsel for the Respondent-Assessee would
submit that the search was completed on 08.12.1999 and therefore, the Block
Assessment Order dated 28.03.2002 was time-barred. It is submitted that
no additional material was recovered after 08.12.1999. It is therefore
submitted that for the purpose of computation of limitation under Section
158BE(1)(b), the limitation would have expired on 31.03.2001, whereas, the
Block Assessment Order was passed on 28.03.2002 long after the expiry of
limitation prescribed for passing such order under Section 158BC of the
Income Tax Act, 1961. It is submitted that it would have been different if
based on the search that was conducted on 21.01.2000 and 02.03.2000, new
and tangible materials were seized and recovered from the Respondent-
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Assessee.
30. It is submitted that however no additional tangible materials were
recovered in further search conducted on these two days on 21.01.2000 and
02.03.2000 and since the assessment was based on the items identified on the
date of Panchnama dated 09.12.1999 pursuant to search on 08.12.1999 at the
Respondent-Assessee's premises on Tuticorin, the Block Assessment Order
dated 28.03.2002 was correctly interfered with by the Appellate Tribunal.
31. That apart, it is submitted that the same Officer who was part of the
search on the respective dates i.e., on 08.12.1999, 21.01.2000 and 02.03.2000
has confirmed that the Deputy Director of Income Tax was going to come and
conclude the search. However, on account of tight schedule and enquiry at
Mumbai, they could not come in time and therefore, deputed officers from
Mumbai who arrived on 01.03.2000.
32. It is submitted that in the letter that was filed before the Appellate
Tribunal by the Department on 07.01.2011, the concerned Officer has further
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confirmed that arriving on 02.03.2000, a search was conducted and it was
further confirmed that during the course of time, they had examined the
record rooms, seized documents from the Almirah of DGM (F&A) where
certain materials and loose sheets were kept and on arrival of the team from
Mumbai, the search was finally concluded. It is submitted that no additional
material was found on these two days.
33. We have considered the arguments advanced by the learned Junior
Standing Counsel for the Appellant Income Tax Department and the learned
Senior Counsel for the Respondent-Assessee. We have perused the
Assessment Order passed by the Assessing Officer on 28.03.2002 under
Section 143(3) read with Section 158BC of the Income Tax Act, 1961, order
of the Appellate Commissioner dated 15.04.2004 and the Impugned Order
dated 08.07.2011 of the Appellate Tribunal.
34. We have also perused the decisions cited by the learned Junior
Standing Counsel for the Appellant Income Tax Department. We have also
perused the copies of the Panchnama inventorizing the documents or
materials seized and the Prohibitory Orders dated 09.12.1999 and
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21.01.2000 passed under Section 132(3) of the Income Tax Act, 1961
pursuant to searches conducted at the premises of the Respondent-Assessee
on 08.12.1999, 21.01.2000 and 02.03.2000.
35. As per Section 132(1) of the Income Tax Act, 1961, the other
named Officers therein namely, the Chief Commissioner or Commissioner or
Joint Director of Joint Commissioner, as the case may be, may authorize any
Joint Director, Joint Commissioner, Assistant Director or Deputy Director or
Assistant Commissioner or Deputy Commissioner or Income-tax Officer or
Assistant Director or Deputy Director, Assistant Commissioner or Deputy
Commissioner or Income-tax Officer to:-
i. enter and search any [building, place, vessel, vehicle
or aircraft] where he has reason to suspect that such
books of account, other documents, money, bullion,
jewellery or other valuable article or thing are kept;
ii. break open the lock of any door, box, locker, safe,
almirah or other receptacle for exercising the powers
conferred by clause (i) where the keys thereof are not
available;
iia. Search any person who has got out of, or is about to
get into, or is in, the building, place, vessel, vehicle or
aircraft, if the authorised officer has reason to suspect
that such person has secreted about his person any
such books of account, other documents, money,
bullion, jewellery or other valuable article or thing;
iii. seize any such books of account, other documents,
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money, bullion, jewellery or other valuable article
or thing found as a result of such search;
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.
36. Section 132(1) of the Income Tax Act, 1961 as it stood at the time
of search is reproduced below:-
“132. Search and Seizure:
(1) Where the Director General or Director or the Chief
Commissioner or Commissioner or any such Joint Director of
Joint Commissioner as may be empowered in this behalf by the
Board, in consequence of information in his possession, has
reason to believe that,-
(a) any person to whom a summons under sub-section (1) of
Section 37 of the Indian Income-tax Act, 1922 (11 of
1922), or under sub-section (1) of Section 131 of this
Act, or a notice under sub-section (4) of Section 22 of
the Indian Income-tax Act, 1922, or under sub-section
(1) of Section 142 of this Act was issued to produce, or
cause to be produced, any books of account or other
documents has omitted or failed to produce, or cause to
be produced, such books of account or other documents
as required by such summons or notice, or
(b) any person to whom a summons or notice as aforesaid
has been or might be issued will not, or would not,
produce or cause to be produced, any books of account
or other documents which will be useful for, or relevant
to, any proceeding under the Indian Income-tax Act,
1922 (11 of 1922), or under this Act, or
(c) any person is in possession of any money, bullion,
jewellery or other valuable article or thing and such
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money, bullion, jewellery or other valuable article or
thing represents either wholly or partly income or
property [which has not been, or would not be,
disclosed] for the purposes of the Indian Income-tax Act,
1922 (11 of 1922), or this Act (hereinafter in this Section
referred to as the undisclosed income or property),
then,-
A) the Director General or Director or the Chief
Commissioner or Commissioner, as the case may be,
may authorise any Joint Director, Joint
Commissioner, Assistant Director or Deputy
Director, Assistant Commissioner or Deputy
Commissioner or Income-tax Officer, or
B) such Joint Director or Joint Commissioner, as the
case may be, may authorise any Assistant Director of
Deputy Director, Assistant Commissioner or Deputy
Commissioner or Income-tax Officer,
(the officer so authorised in all case being hereinafter
referred to as the authorised officer) to-]
i. enter and search any [building, place, vessel, vehicle or
aircraft] where he has reason to suspect that such books
of account, other documents, money, bullion, jewellery
or other valuable article or thing are kept;
ii. break open the lock of any door, box, locker, safe,
almirah or other receptacle for exercising the powers
conferred by clause (i) where the keys thereof are not
available;
iia. Search any person who has got out of, or is about to get
into, or is in, the building, place, vessel, vehicle or
aircraft, if the authorised officer has reason to suspect
that such person has secreted about his person any such
books of account, other documents, money, bullion,
jewellery or other valuable article or thing;
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;
iv. place marks of identification on any books of account or
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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:
Provided that where any building, place, vessel, vehicle
or aircraft referred to in clause (i) is within the area of
jurisdiction of any [Chief Commissioner or
Commissioner], but such [Chief Commissioner or
Commissioner] has not jurisdiction over the person
referred to in clause (a) or clause (b) or clause (c), then,
notwithstanding anything contained in Section [120], it
shall be competent for him to exercise the powers under
this sub-section in all cases where he has reason to
believe that any delay in getting the authorisation from
the [Chief Commissioner or Commissioner] having
jurisdiction over such person may be prejudicial to the
interests of the revenue:
Provided further that where it is not possible or
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).”
37. As per the second Proviso to Section 132 of the Income Tax Act,
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1961 where it is not possible or practicable to take physical possession of any
valuable article or thing and remove it to a safe place due to its:-
i. volume, weight; or
ii. other physical characteristics or;
iii. due to its being of a dangerous nature,
the Authorized 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. Such action of the authorised officer shall be deemed to be
“seizure” of such valuable article or thing under clause (iii).
38. Second Proviso to Section 132 of the Income Tax Act, 1961 reads
as under:-
“Provided further that where it is not possible or
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)”.
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39. There is a difference between “deemed seizure” that is
contemplated under second Proviso to Section 132(1) of the Income Tax Act,
1961 and the Restraint Order or Prohibitory Order that is contemplated
under Section 132(3) of the Income Tax Act, 1961. A Restraint Order or
Prohibitory Order under Section 132(3) of the Income Tax Act, 1961 is not
be confused with the seizure under Section 132 of the Income Tax Act, 1961.
40. Sub-Section 3 to Section 132 reads as under:-
“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, 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.”
41. Restraint Order or Prohibitory Order under Section 132(3) has
been explained in Volume-I of the Search and Seizure Manual, 2007, as
under:-
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“3.115 The Authorised Officer has the power to
issue an order under section 132(3) where it is not
practicable to seize any books of accounts, other
documents, money, bullion, jewellery or other
valuable article or thing found in the course of
search. This power can be invoked for the reasons
other than those mentioned in the second proviso to
section 132(1). This is not deemed to be a seizure.
Contravention of an order under section 132(3)
entails prosecution under section 275A.
3.116 An order under section 132(3) can be
issued only in respect of such books of accounts, other
documents, money bullion, jewellery or other valuable
articles or things as fall within the ambit of section
132(1). It, therefore, follows that an asset, which does
not represent any undisclosed income or property of a
person, can neither be seized nor subjected to an
order under section 132(3).
3.117 With effect from 01.06.2002, an order
issued under section 132(3) by an Authorised Officer
will remain in force for a maximum period of sixty
days from the date of issue. The Board has issued
instruction to the effect that search and seizure work
should be completed as early as possible and restraint
order under section 132(3) should be lifted within one
month from the date of passing such order(s).
3.118. Some situations in which an order under
section 132(3) can be issued are as under:
(1) Where a warrant of authorisation for search
of a bank locker has been obtained following its
detection during a search, but it is not possible to
search the locker immediately. In such a situation, an
order under section 132(3) should be issued and
served on the Bank Manager and the hirer of the bank
locker and the locker itself should be sealed. The
Board have issued administrative instructions that
search of such a locker should be completed within
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seven days.
(2) Where a search remained inconclusive on the day
of its initiation and its further continuation is required
to be postponed for a subsequent day on account of
some valid reason.
(3) Where verification and valuation of stock could
not be completed and is required to be postponed for
a subsequent day on account of some valid reason.
(4) Where it is not practicable to seize any books of
account or other documents or assets because some
special arrangements are required to be made for
carrying or storing it.
(5) Where any Fixed Deposit Receipt or a Term
deposit Receipt or any other valuable article or a
thing of a similar nature is found and seized, it is also
advisable to issue an order under section 132 (3) and
serve the same on the assessee/person in whose
possession and control, the FDRs were found and the
Manager of the branch of the bank, or as the case
may be the body or the person that issued the FDR or
receipt of a similar nature to guard against any
possibility of the issuance of duplicate receipts. While
doing so, the point made at S.No.(6) below may also
be kept in view. However, since with effect from
01.06.2002, an order issued under section 132(3) by
an Authorised Officer remains in force for a maximum
period of sixty days from the date of issue, it is
advisable that if the retention continues after the
expiry of the said period, the Manager/person-in-
charge of the Bank or the body or institution that
issued the FDR, Term Deposit Receipt, etc. is
informed that the retention of the seized FDR is
continuing in accordance with the law.
(6) The question whether an order under
section 132(3) can be served on a bank prohibiting it
from removing, parting with or otherwise dealing with
the money in an account standing in the name of an
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assessee, whose premises has been searched, has
been considered in the Board's Instruction No.1108
dated 06.10.1977. As stated in this letter, the
Authorised Officer should, wherever an order under
section 132(3) is warranted, serve the order on the
bank concerned, and endorse a copy to the assessee.
He should simultaneously also serve an order under
section 132(3) on the assessee, endorsing a copy to
the bank. Such a course will preclude avoidable
controversies about "ownership", "control", etc. of the
assets, which are sought to be covered by the
prohibitory order. Wherever the facts of the case
justify, the powers available under section 281B may
also be resorted to, without prejudice to the action
taken under Section 132(3).”
42. The power under Section 132(3) of the Income Tax Act, 1961 is
exercised where it is not practicable to seize any books of accounts, other
documents, money, bullion, jewellery or other valuable article or thing found
in the course of search. This power can be invoked for the reason other than
those mentioned in the second Proviso to Section 132(1) of the Income Tax
Act, 1961. This is not deemed to be a seizure.
43. A Restraint Order or Prohibitory Order under Section 132(3)
can be issued only in respect of such books of accounts, other documents,
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money bullion, jewellery or other valuable articles or things as fall within the
ambit of Section 132(1) of the Income Tax Act, 1961.
44. Therefore, the expression “such action of the authorised officer
shall be deemed to be seizure of such valuable article or thing under
clause (iii)” in the second Proviso to Section 132(1) of the Income Tax Act,
1961, cannot be equated with a Restraint Order or Prohibitory Order of
the Authorized Officer, restraining the owner or the person in immediate
control thereof not to remove or part with or otherwise deal with it except
with the previous permission of such Authorized Officer.
45. Even as per the Search and Seizure Manual, 2007 (Volume-I)
which was subsequently published on 30.05.2007 by the Central Board of
Direct Taxes (CBDT) also it has been clarified that as far as possible search
of premises, once started should continue till it is concluded.
46. In Paragraph 3.142 of the Search and Seizure Manual, 2007
(Volume-I), it has been clarified by the Central Board of Direct Taxes
(CBDT) It has been further clarified that, where because of any unavoidable
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and compelling reason, it is not possible to do so and it is considered
necessary, in consultation with the Control Room, to temporarily conclude the
search for the day and continue the same on a subsequent day, the Authorised
Officer should take the following steps:-
(1) The premises should be properly sealed in the presence of
atleast two witnesses and placed under armed police guards
along with some responsible persons of the Income Tax
Department. In a case where only a part of the premises
could not be searched, the decision whether to seal the
entire premises or only that portion which is yet to be
searched should be taken after a careful consideration of all
the relevant factors, if possible in consultation with the
Control Room. As far as possible only that portion of the
premises should be sealed, which is yet to be searched so
that minimum inconvenience is caused to its occupants.
(2) The Authorised Officer should issue an order under
Section 132(3) and serve the same on the person-in-charge
of the premises or, as the case may be, of that part of the
premises which has been sealed. Where the premises
sealed are one where search could not commence because
it was found to be locked, without any occupant, the
procedure explained at paragraphs (3.12) and (3.13) above
may be followed.
(3) A panchnama should be prepared even if the search is
temporarily concluded. This should clearly indicate that
the search was temporarily concluded and not finally
concluded. If search has been concluded in respect of a
part of the premises, this fact should also be clearly
recorded in the panchnama.
(4) It is not necessary that seizure of books of account,
documents, bullion, other valuable articles or things, etc.,
should be made only on conclusion of the search. Seizure
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can also be made even if the search has been suspended
and is to continue on a subsequent day. Where search of a
part of the premises has been concluded, inventors of the
books of account, documents, bullion, jewellery, other
valuable articles or things, etc., found as a result of the
search and seizures made should be prepared in the usual
manner.
(5) On the subsequent day when the search is to be resumed,
the seals should be opened in the presence of witnesses.
As far as possible the same persons who witnessed the
search on the day it was suspended should be called upon
to witness its continuation. However, if they are not
available, the authorised officer should select two or more
other respectable inhabitants of the locality in which the
building or place to be searched is situate to attend and
witness the search. The Authorised Officer should issue an
order in writing to the persons selected to attend and
witness continuation of the search, even if they are the
same person who witnessed the search on the day it was
suspended.
(6) Where on continuation of the search earlier suspended, any
seal is found to be broken or tampered with, the matter
should be immediately reported to the Control Room. A
complaint to the police should also be lodged immediately.
Contravention of an order under Section 132(3) also entails
prosecution under Section 275A.
(7) The search may resume after the aforesaid actions have
been taken.
47. As far as the conclusion of search is concerned, it has been clarified
as under:-
“Conclusion of search:
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3.148 Some main steps that should be taken before
concluding the search or temporarily concluding the same for
being carried on a subsequent day are, in brief, as under:
(1) A copy of the panchnama along with all its annexures
should be provided to the person in whose case the
search was conducted or, as the case may be, the person
in-charge of the building, place, vessel, vehicle or
aircraft searched, where such person is different from
the former and acknowledgement for the same obtained
on the original copy of the panchnama.
(2) In case, personal search of any person has been taken
under section 132(1)(ii)(a) of the Act, a copy of the
inventory or the list of all the things taken possession
of, should be given to such person and
acknowledgement thereof obtained on the original copy
of the inventory/list. A copy of this list is also required
to be forwarded to the concerned Chief Commissioner
of Income Tax or the Commissioner of Income Tax or
where the authorisation is issued by any officer other
than the Chief Commissioner or Commissioner, also to
that officer.
(3) The members of the search team should offer
themselves for search by the person whose premises, is
being searched or, as the case may be, the person in-
charge of or in occupation of premises. This should be
done in the presence of the witnesses. Search of lady
members of the search team should be allowed to be
made only by a lady present in, or occupying, the
premises with a strict regard to decency. The fact that
personal search of the members of the search team was
offered both before the commencement of the search
and on its temporary conclusion or, as the case may be,
conclusion should be recorded in the panchnama, along
with the fact whether such personal search was taken or
declined.
(4) The leader of the search team should ensure that none
of the things brought by the team and required to be
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taken back by it, like kit bags, stationery, forms, brass
seal and mobile phones is left behind.
(5) No search should be suspended or concluded without
getting a clearance for doing so from the Control
Room. The officer manning the Control Room should
obtain instructions in the matter from the concerned
Additional/Joint Director and communicate the same to
the search team.
48. Thus, it is evident that seizure of the documents will coincide with
the conclusion of the search. Restraint Order or Prohibitory Order under
Section 132(3) of the Income Tax Act, 1961 will not tantamount to “deemed
seizure”. In this case, search was concluded on 02.03.2000 while the
Prohibitory Order dated 21.01.2000 was lifted.
49. The law has been settled otherwise by the Hon'ble Supreme Court
in “VLS Finance Limited and others Vs. Commissioner of Income Tax
and others”, (2016) 384 ITR 1 (SC).
50. In Paragraphs 27, 28, 29, 30 and 31, the Hon'ble Supreme Court
observed as under:-
“27. We may point out that the appellants never
challenged subsequent visits and searches of their
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premises by the respondents on the ground that in the
absence of a fresh authorisation those searches were
illegal, null and void. Notwithstanding the same, it was
argued that at least for the purpose of limitation the
subsequent searches could not be taken into
consideration, as according to the learned counsel, the
legal position was that the authorisation dated 19th June,
1998, was executed on 22nd June, 1998 and the search
came to an end with that when the search party left the
premises on 23rd June, 1998 after making seizure of
certain documents etc and issuing restraint order under
Section 132(3) of the Act in respect of certain items
which they allegedly could not seize due to
impracticability on that day. Some judgments of various
High Courts are relied upon to support this proposition.
It was also argued that there was no concept of
'revalidation of authorisation' provided under the Act,
which has been applied by the High Court in the
impugned judgment, which according to the learned
counsel for the appellants, amounts to legislating a new
concept which is contrary to law.
28. The learned Additional Solicitor General,
refuting the aforesaid contention, submitted that as per
explanation (2) to Section 158BE, when it is a case of
search, period of limitation is to be counted 'on the
conclusion of search as recorded in the last panchnama
drawn.....' It was argued that last panchnama was
admittedly drawn on 5th August, 1998 and, therefore,
period of limitation is to be counted from that date.
29. After considering the respective submissions,
we are of the opinion that on the facts of this case, the
issue also has to be answered in favour of the Revenue
without going into the legal niceties.
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30. As noticed above, the revenue authorities
visited and searched the premises of the appellants for
the first time on 22nd June, 1998. In the panchnama
drawn on that date, it was remarked 'temporarily
concluded', meaning thereby, according to the revenue
authorities, search had not been concluded. For this
reason, the respondent authorities visited many times on
subsequent occasions and every time panchnama was
drawn with the same remarks, i.e. 'temporarily
concluded'. It is only on 5th August, 1998 when the
premises were searched last, the panchnama drawn on
that date recorded the remarks that the search was
'finally concluded'. Thus, 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 no
where 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 authorisation. On
the contrary, the appellants proceeded on the basis that
search was conduced from 22nd June, 1998 and finally
concluded on 5th August, 1998.
31. 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.”
51. In the present case, a Notice was issued on 08.06.2000 to the
Respondent-Assessee. A Return of Income was thereafter filed by the
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Respondent-Assessee on 24.07.2000 in terms of Section 158BC(a)(ii) of the
Income Tax Act, 1961. In this background, a Block Assessment Order dated
28.03.2002 was passed within the period prescribed under Section
158BE(1)(b) of the Income Tax Act, 1961.
52. The initiation of search and conclusion of the search and seizure
need not necessarily be concluded on the same day. In these cases, the
factory premises of the Respondent-Assessee where search was conducted is
disclosed to be approximately 30,000 sq.ft.
53. Therefore, it may not have been possible for the search team of the
Department to conclude the search on the same day itself. It is in this
background, the Panchnama that was drawn on 09.12.1999 was also
followed by a Prohibitory Orders dated 09.12.1999, 21.01.2000 and
02.03.2000 in respect of the three items mentioned above after the search
proceedings were held on 08.12.1999, 21.01.2000 and on 02.03.2000.
54. Thus, it cannot be expected that the search could be completed
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either on 08.12.1999 or on 21.01.2000. The search was continued and
completed only on 02.03.2000 when the Prohibitory Order dated
21.01.2000 that was passed after search on 21.01.2000 was lifted.
55. Explanation to Section 132(3) of the Income Tax Act, 1961 itself
also makes it clear for the removal of doubts, it is hereby declared that serving
of an order as aforesaid under the said sub-section shall not be deemed to be
seizure of such books of account, other documents, money, bullion, jewellery
or other valuable article or thing under clause (iii) of sub-section (1).
Explanation to Sub-Section 3 to Section 132 is reproduced below:-
“Explanation – For the removal of doubts, it is hereby declared
that serving of an order as aforesaid under this sub-section shall
not be deemed to be seizure of such books of account, other
documents, money, bullion, jewellery or other valuable article or
thing under Clause (iii) of sub-section (1)”.
56. All that is mandated under Section 132(8) of the Income Tax Act,
1961, is that the books of account or other documents seized under sub-
section (1) or sub-section (1A) to Section 132 of the Income Tax Act, 1961
shall not be retained by the authorised officer for a period exceeding 180 days
from the date of the order of seizure unless the reasons for retaining the same
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are recorded by him in writing and the approval of the Chief Commissioner,
Commissioner, Director General or Director for such retention is obtained.
57. In terms of sub-section (8A) to Section 132 of the Income Tax Act,
1961 with effect from 01.06.2002, an Order passed under Section 132(3) by
an Authorized Officer shall not remain in force for the exceeding period of 60
days from the date of order.
58. For the sake of clarity, Section 132(8) and Section 132(8A) of the
Income Tax Act, 1961 are reproduced below:-
Section 132(8) Section 132(8A)
(8) The books of account or other (8A) An order under sub-section
documents seized under sub- (3) shall not be in force for a
section (1) or sub-section (1A) period exceeding sixty days from
shall not be retained by the the date of the order, except where
authorised officer for a period the authorised officer, for reasons
exceeding one hundred and eighty to be recorded by him in writing,
days from the date of the seizure extends the period of operation of
unless the reasons for retaining the the order beyond sixty days, after
same are recorded by him in obtaining the approval of the
writing and the approval of the Director or, as the case may be,
Chief Commissioner, Commissioner for such extension.
Commissioner, Director General
or Director for such retention is
obtained.
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59. The Central Board of Direct Taxes (CBDT) has also issued
instruction to the effect that search and seizure work should be completed as
early as possible and Restraint Order or Prohibitory Order under Section
132(3) should be lifted within the aforesaid period from the date of passing
such orders.
60. Section 132(5) of the Income Tax Act, 1961 that prevailed till
01.06.2006, contemplated order to be passed within 120 days of the seizure
with the previous approval of the Joint Commissioner, estimating the
undisclosed income (including the income from the undisclosed property) in a
summary manner to the best of his Judgment on the basis of such materials as
are available with him.
61. However, Section 132(5) of the Income Tax Act, 1961 pertained to
seizure made as a result of a search initiated or requisition made before the 1st
day of July, 1995 by the Income-Tax Officer. Section 132(5) of the Income
Tax Act, 1961 was deleted with effect from 01.06.2002 vide Finance Act,
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2002. It is therefore no relevant for these appeals. Section 132(5) of the
Income Tax Act, 1961 as it prevailed till 01.06.2006 reads as under:-
“132. Search and Seizure:
(1) .....
(2) .....
(3) .....
(4) .....
(5) Where any money, bullion, jewellery or other
valuable article or thing (hereafter in this Section
and in Sections 132A and 132B referred to as the
assets) is seized under sub-section (1) or sub-
section (1A), as a result of a search initiated or
requisition made before the 1st day of July, 1995,
the Income-tax Officer, after affording a reasonable
opportunity to the person concerned of being heard
and making such enquiry as may be prescribed,
shall, within one hundred and twenty days of the
seizure, make an order, with the previous approval
of the Joint Commissioner,-
i. estimating the undisclosed income (including
the income from the undisclosed property) in
a summary manner to the best of his
judgment on the basis of such materials as
are available with him;
ii. calculating the amount of tax on the income
so estimated in accordance with the
provisions of the Indian Income-tax Act,
1922 (11 of 1922), or this Act;
iia. determining the amount of interest payable
and the amount of penalty imposable in
accordance with the provisions of the Indian
Income-tax Act, 1922 (11 of 1922), or this
Act, as if the order had been the order of
regular assessment;
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iii. specifying the amount that will be required
to satisfy any existing liability under this Act
and any one or more of the Acts specified in
clause (a) of sub-section (1) of Section 230A
in respect of which such person is in default
or is deemed to be in default,
and retain in his custody such assets / or part
thereof as are in his opinion sufficient to satisfy
the aggregate of the amounts referred to in
clauses (ii), (iia) and (iii) and forthwith release the
remaining portion, if any, of the assets to the
person from whose custody they were seized:
Provided that if, after taking into account the
materials available with him, the Income-tax
Officer is of the view that it is not possible to
ascertain to which particular previous year or
years such income or any part thereof relates, he
may calculate the tax on such income or part, as
the case may be, as if such income or part were
the total income chargeable to tax at the rates in
force in the financial year in which the assets were
seized and may also determine the interest or
penalty, if any, payable or imposable accordingly:
Provided further that where a person has paid or
made satisfactory arrangements for payment of all
the amounts referred to in clauses (ii), (iia) and
(iii) or any part thereof, the Income-tax Officer
may, with the previous approval of the Chief
Commissioner or Commissioner, release the assets
or such part thereof as he may deem fit in the
circumstances of the case.”
62. Therefore, as long as the investigation is incomplete, it cannot be
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said that the search was completed for the purpose of limitation under Section
158BE of the Income Tax Act, 1961. Therefore, seizure of all documents
cannot be said to have been made on 08.12.1999 for the purpose of
computation of limitation.
63. It is clear that the search had remained inconclusive on the day of
its initiation on 08.12.1999 and further continuation was required and was
therefore postponed to a subsequent day on account of some valid reason.
64. It cannot be said that the search was completed on 08.12.1999
merely because the Restraint Order or Prohibitory Order was passed on
09.12.1999 in respect of certain items mentioned above while search was
continued on 21.01.2000 and on 02.03.2000.
65. Seizure of the documents will be complete only after Restraint
Orders or Prohibitory Orders passed are vacated after the search is
complete. Therefore, for the purpose of computation of limitation, the date of
initial search is not relevant in this case. It is the actual date of completion of
the search by the Officers of the Department under Section 132 of the Income
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Tax Act, 1961 that is relevant.
66. Under Section 158BC(a)(ii) of the Income Tax Act, 1961, a Notice
has to be issued calling upon an Assessee to file Return of Income within 15
to 45 days of such Notice who has been either searched under Section 132 of
the Income Tax Act, 1961 or where books of account, other documents or
assets were requisitioned under Section 132A of the Income Tax Act, 1961.
Once service of such Notice is effected, no further Notice is required to be
issued under Section 148 of the Income Tax Act, 1961. This is evident from a
reading of the first Proviso to sub-clause (a) to Section 158BC of the Income
Tax Act, 1961.
67. Thereafter, the Assessing Officer has to proceed to determine the
undisclosed income of the Block Period in the manner laid down in Section
158BB and the provisions of Section 142, sub-section (2) and sub-section (3)
of Section 143 and Section 144, shall as far as may apply.
68. Section 158BC of the Income Tax Act, 1961 reads as under:-
“158BC. Procedure for block assessment.
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Where any search has been conducted under Section
132 or books of account, other documents or assets are
requisitioned under Section 132A, in the case of any person,
then,-
(a) the Assessing Officer shall-
i. in respect of search initiated or books of account
or other documents or any assets requisitioned
after the 30th day of June, 1995, but before the 1st
day of January, 1997, serve a notice to such
person requiring him to furnish within such time
not being less than fifteen days;
ii. in respect of search initiated or books of
account or other documents or any assets
requisitioned on or after the 1st day of
January, 1997, serve a notice to such person
requiring him to furnish within such time not
being less than fifteen days but not more than
forty-five days.
as may be specified in the notice a return in the prescribed
form and verified in the same manner as a return under
clause (i) of sub-section (1) of Section 142, setting forth
his total income including the undisclosed income for the
block period:
Provided that no notice under Section 148 is required to
be issued for the purpose of proceeding under this
Chapter:
Provided further that a person who has furnished a
return under this clause shall not be entitled to file a
revised return;
(b) the Assessing Officer shall proceed to determine the
undisclosed income of the block period in the manner
laid down in Section 158BB and the provisions of
Section 142, sub-sections (2) and (3) of Section 143 and
Section 144 shall, so far as may be, apply;
(c) the Assessing Officer, on determination of the
undisclosed income of the block period in accordance
with this Chapter, shall pass an order of assessment and
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determine the tax payable by him on the basis of such
assessment;
(d) the assets seized under Section 132 of requisitioned
under Section 132A shall be retained to the extent
necessary and the provisions of Section 132B shall
apply subject to such modifications as may be
necessary and the references to “regular assessment” or
“reassessment” in Section 132B shall be construed as
references to “block assessment”.
69. Sub-Section (1) and (2) to Section 158BE of the Income Tax Act,
1961, prescribes the limitation for the situation covered under Section 158BC
and Section 158BD of the Income Tax Act, 1961 namely “the searched
person” and the “other person.”
70. As far as the petitioner is concerned, the limitation is to be
reckoned in terms of Clause (b) to Sub-Section (1) to Section 158BE of the
Income Tax Act, 1961. Section 158BE of the Income Tax Act, 1961 reads as
under:-
Section 158BE of the Income Tax Act, 1961
Sub-Section (1) to Section 158BE Sub-Section (2) to Section 158BE
(1)The order under Section 158BC (2)The period of limitation for
shall be passed- completion of block assessment in
the case of the other person referred
to in section 158-BD shall be-
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Section 158BE of the Income Tax Act, 1961
(a)within one year from the end of (a)one year from the end of the
the month in which the last of the month in which the notice under this
authorisations for search under Chapter was served on such other
section 132 or for requisition under person in respect of search initiated
section 132Awithin one year from or books of account or other
the end of the month in which the last documents or any assets
of the authorisations for search under requisitioned after the 30th day of
section 132 or for requisition under June, 1995, but before the 1st day of
section 132-A, as the case may be, January, 1997; and
was executed in cases where a search
is initiated or books of account or
other documents or any assets are
requisitioned after the 30th day of
June, 1995, but before the 1st day of
January, 1997;
(b)within two years from the end of
the month in which the last of the
authorisations for search under (b)two years from the end of the
section 132 or for requisition under month in which the notice under
section 132-A, as the case may be, this Chapter was served on such
was executed in cases where a search other person in respect of search
is initiated or books of account or initiated or books of account or
other documents or any assets are other documents or any assets are
requisitioned on or after the 1st day requisitioned on or after the 1st
of January, 1997. day of January, 1997.
71. As per the Explanation No.1 to Section 158BE of the Income Tax
Act, 1961, in computing the period of limitation for the purposes of the said
Section, the period-
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i. during which the assessment proceeding is stayed by an
order or injunction of any Court, or
ii. commencing from the day on which the Assessing
Officer directs the assessee to get his accounts audited
under sub-section (2A) of Section 142 and ending on
the day on which the assessee is required to furnish a
report of such audit under that sub-section, shall be
excluded.
72. As per the Explanation No.2 to Section 158BE of the Income Tax
Act, 1961, for the removal of doubts, it has 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.
73. Section 158BE(1)(b) has to be read harmoniously with
Sub-Section 132(3) which has been extracted above. This view is also
fortified by the Hon'ble Supreme Court in “VLS Finance Limited and
others Vs. Commissioner of Income Tax and others” (2016) 384 ITR 1
(SC), (referred to supra) wherein, the Court rejected the argument, that
subsequent searches could not be taken into consideration, for computation of
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limitation.
74. During subsequent search held on 21.01.2000, only 14 items from
the record rooms were seized. The search was thus incomplete and later
continued on 02.03.2000. The documents from the almirah placed in the
room of the DGM (F&A) which were kept in the custody of the Respondent-
Assessee were not seized.
75. Therefore, it has to be held that the Block Assessment Order dated
28.03.2002 passed under Section 143(3) read with Section 158BC of the
Income Tax Act, 1961 was in time.
76. Since the issue relating to merits has not been touched by the
Appellate Tribunal in Appellant Income Tax Department's appeal in Appeal
No.I.T.(SS) A.No.182/MDS/2004, the Impugned Order dated 08.07.2011 is
liable to be set aside and the cases are therefore remitted back to the Appellate
Tribunal by restoring the appeal of the Appellant Income Tax Department in
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I.T.(SS) A.No.182/Mds/2004 along with Cross-Objection of the
Respondent-Assessee in C.O.No.336/Mds/2005 for deciding the case on
merits.
77. Since the dispute pertains to the Block Period [i.e., the period
between 1990-1991 to 1999-2000 and part of the Assessment Year 2000-
2001] and more than two decades have lapsed due to the pendency of the
litigation, the Appellate Tribunal is expected to dispose the above appeal of
the Appellant Income Tax Department and the Cross-Objection of the
Respondent-Assessee, as expeditiously as possible as its calendar will permit.
78. These Tax Case Appeals, are thus, allowed by answering the
substantial questions of law in favour of the Appellant Income Tax
Department and against the Respondent-Assessee with the above direction.
No costs.
[R.S.K., J.] [C.S.N., J.]
09.05.2025
Neutral Citation : Yes / No
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jas / arb
To:
1.The Commissioner of Income Tax,
Mumbai.
2.The Income Tax Appellate Tribunal,
Madras “C” Bench, Chennai.
R.SURESH KUMAR, J.
and
C.SARAVANAN, J.
jas / arb
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T.C.A.Nos.263 & 264 of 2015
Pre-delivery Common Judgment in
T.C.A.Nos.263 and 264 of 2015
and
09.05.2025
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