The division judge bench of Hon’ble Mr. Justice M.R. Shah and Hon’ble Mr. Justice C.T. Ravikumar of the Apex court in the case of Anil Minda and Others Vs Commissioner of Income Tax held that the date of the Panchnama last drawn can be said to be the relevant date and can be said to be the starting point of limitation of two years for completing the block assessment proceedings.
Brief facts:
The factual matrix of the case is that two warrants were issued under Section 132(1) of the Income Tax Act, 1961 for carrying out the search at a bank locker with Canara Bank, Kamla Nagar. During the execution of the search warrants, the income tax authorities on 13.03.2001 received information that a locker belongs to an assessee in a bank. After the first authorization, the second authorization was executed on 26.03.2001 and the Panchnama was drawn on 26.03.2001. Furthermore, the notice was issued for filing block assessment under Section 158 BC. The assessee filed his return and the assessment was completed by passing the assessment order in April 2003. Thereafter, the appeal was filed by the assesses challenging the assessment order on the ground that the assessment was time-barred.
The assessment ruling was issued in April 2003, and the assessee claims that because the two-year limitation period under Section 158BE of the Act expired in March 2003 and that Panchnama was prepared on March 26, 2001, the assessment order was therefore time-barred. On the other hand, the department argued that since the most recent Panchnama through pertaining to a search authorization dated 13.03.2001 was executed on 11.04.2001, a two-year limitation was to be computed from that date, and as a result, the assessment that was passed was well within the prescribed time.
The appeal was dismissed by CIT(A). however, the appeal was allowed by the ITAT and held that the respective assessment orders were barred by limitation since the Panchnama with respect to the last authorization was drawn on 26.03.2001. Against this, the appeal was preferred by the revenue before the High Court and the High Court set aside the order passed by the ITAT.
Contentions of the Appellant:
The learned counsel appearing on behalf of the Appellants contended that the High Court has committed a grave error in considering that the assessment orders are not barred by limitation. It was also contended that the last authorization was on 26.03.2001 and therefore as per Explanation 2 to Section 158BE of the Act the last authorization would be the starting point of limitation. In the present case, the last authorization date was 26.03.2001 and the two years are to be counted from this date only.
The learned counsel relied upon the judgment titled C.Ramaiah Reddy v. Assistant Commissioner of Income Tax, (2011).
Contentions of the Respondent:
The learned counsel appearing on behalf of the Respondent contended that the period of limitation is to be counted from the date on which the last Panchnama was drawn i.e. 11.04.2001. It was furthermore submitted that the assessment proceedings would ultimately be based on the entire material collected during the search and on the basis of the Panchnama drawn in the case where multiple authorizations are issued and relevant material is/are collected during the search on various dates in accordance with the various authorizations. So, it is said, the date of the last Panchnama should be considered as the pertinent date for block assessment.
The learned counsel relied upon the judgment titled VLS Finance Limited & Another v. Commissioner of Income Tax & Another.
The issue before the court:
“Whether the period of limitation of two years for the block assessment under Section 158BC/158BE would commence from the date of the Panchnama last drawn or the date of the last authorization?”
Observations of the court:
The Hon’ble court observed that the date on which the Panchnama is drawn, not the day the authorization(s) is/are issued, would be the relevant date. It is undeniable that the block assessment proceedings are initiated based on the whole information gathered during the search(s) on the basis of the relevant Panchnama(s) drawn. As a result, the date the Panchnama was last prepared can be considered the pertinent date and the beginning of the two-year time limit for concluding the block assessment proceedings.
It was noted that if the submission is made by the respective assesses the date of the last authorization is to be considered as the starting point of limitation of 2 years. If it is to be accepted then, the entire object and purpose of Explanation 2 to Section 158BE would be frustrated.
Based on these considerations, the Hon’ble Court was in complete agreement with the High Court that the date of the Panchnama last drawn would be the relevant date for considering the period of limitation of two years and not the last date of authorization.
The decision of the Court:
With the above direction, the Hon’ble Top Court dismissed the appeals.
Case Title: Anil Minda and Others Vs Commissioner of Income Tax
Coram: Hon’ble Mr. Justice M.R. Shah and Hon’ble Mr. Justice C.T. Ravikumar
Case No.: Civil Appeal Nos. 345-350 of 2012
Citation: 2023 Latest Caselaw 257 SC
Advocate for the Appellant: Dr. Rakesh Gupta, learned counsel
Advocate for the Respondent: Shri Balbir Singh, ASG.
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