Pr. Commissioner of Income-tax Central-3 v. PPC Business and Products Pvt. Ltd
[Citation -2017-LL-0717-3]

Citation 2017-LL-0717-3
Appellant Name Pr. Commissioner of Income-tax Central-3
Respondent Name PPC Business and Products Pvt. Ltd.
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 17/07/2017
Judgment View Judgment
Keyword Tags warrant of authorization • incriminating material • substantive provision • legislative intention • barred by limitation • period of limitation • search and seizure • search proceedings • limitation period • additional ground • prohibitory order • valuation report • books of account • block assessment • seized articles • panchnama
Bot Summary: The decision in S. K. Katyal s case 20.1 In the context of the search leading to a block AY under Section 158BE of the Act, this Court in CIT v. S.K. Katyal 308 ITR 168 made the following observations: These provisions demonstrate that a search and seizure under the said Act has to be carried out in the presence of at least two respectable inhabitants of the locality where the search and seizure is conducted. Clearly, if a panchnama does not, from the facts recorded therein, reveal that a search was at all carried out on the day to which it relates, then it would not be a panchnama relating to a search and it would not be a panchnama of the type which finds mention in the said Explanation 2(a) to Section 158 BE. 20.2. These decisions clearly establish a search is essentially an invasion of the privacy of the person whose property or person is subjected to search; normally, a search must be continuous; if it cannot be continuous for some plausible reason, the hiatus in the search must be explained; if no cogent or plausible reason is shown for the hiatus in the search, the second or resumed search would be illegal; by merely mentioning in the panchnama that a search has been temporarily suspended does not, ipso facto, continue the search. The only question is whether because of Authorization E. No. 0068 where a second visit was made to the Ashok Vihar premises on 15th May, 2007 and only on that date was it noted in the panchnama that the search was finally concluded , the period of limitation for completing the assessment would begin to commence from the last date of the financial year in which the search concluded. Thereafter, at his convenience and discretion, he can visit the premises again and continue the search in respect of ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 850/2016 Page 17 of 23 the subject matter of the restraint order and prohibitory order and he can also make a fresh search. Every visit made by the authorized officer for inspection is a search under the Act and such a search comes to an end only when the panchnama is written and in the panchnama it is expressly stated that it is finally concluded. One authorisation is to be issued in respect of one premises in pursuance of which there can be only one search and such a search is concluded, when the searching party comes out of the premises, which is evidenced by drawing up a panchnama.


IN HIGH COURT OF DELHI AT NEW DELHI Judgment reserved on: 4th July, 2017 Pronounced on: 17th July 2017 ITA 290/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 .....Appellant Versus PPC BUSINESS AND PRODUCTS PVT. LTD. ..... Respondent ITA 605/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus SURYA VINAYAK INDUSTIRES LTD. ..... Respondent ITA 606/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus SURYA VINAYAK INDUSTRIES LTD. ..... Respondent ITA 607/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus SURYA VINAYAK INDUSTRIES LTD. ..... Respondent ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 1 of 23 ITA 608/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus SURYA VINAYAK INDUSTRIAL LTD. ..... Respondent ITA 609/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus SURYA VINAYAK INDUSTRIES LTD. ..... Respondent ITA 610/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus J.H. BUSINESS INDIA PVT. LTD. ..... Respondent ITA 637/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus SANJAY JAIN ..... Respondent ITA 638/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus SANJAY JAIN ..... Respondent ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 2 of 23 ITA 639/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus J.H. BUSINESS INDIA PVT. LTD. ..... Respondent + ITA 640/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus J.H. BUSINESS INDIA PVT. LTD. ..... Respondent + ITA 641/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus J.H. BUSINESS INDIA PVT. LTD. ..... Respondent + ITA 850/2016 PR. COMMISSIONER OF INCOME TAX CENTRAL-3 ..... Appellant Versus J.H. BUSINESS INDIA PVT. LTD. ..... Respondent Through: Mr.Rahul Chaudhary, Sr.Standing Counsel with Ms.Lakshmi Gurung, Advocate for Appellants. Mr. Shashwat Bajpai and Mr. Sharad Agarwal, Advocates for Respondent. ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 3 of 23 CORAM: JUSTICE S.MURALIDHAR JUSTICE PRATIBHA SINGH JUDGMENT % 17.07.2017 Dr. S. Muralidhar 1.These appeals by Revenue under Section 260A of Income Tax Act, 1961 ( Act ) arise out of similar set of facts involving similar questions of law and are accordingly disposed of by this common judgment. 2. In five of these appeals i.e., ITA Nos. 605, 606, 607, 608 and 609 of 2016 for Assessment Years ( AYs ) 2001-02, 2002-03, 2004-05, 2006-07 and 2007-08, respectively, Respondent/Assessee is Surya Vinayak Industries. These appeals are directed against common impugned order dated 6th October, 2015 passed by Income Tax Appellate Tribunal ( ITAT ) in ITA Nos. 3158-3162/Del./2011. Questions urged 3. In ITA Nos. 605-608 of 2016, questions of law that are sought to be urged by Revenue are as under: (i) Whether ITAT erred in law and on facts in holding that assessment framed by Assessing Officer (AO) under Section 153A is barred by limitation? (ii) Whether order passed by ITAT is perverse and not sustainable under law? In ITA No. 609/2016 there is slight change in question (i) above inasmuch as order of AO is under Section 143 (3) of Act. ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 4 of 23 4. Two of appeals i.e. ITA Nos. 637 and 638 of 2016 are against Respondent/Assessee, Sanjay Jain, for AYs 2005-06 and 2007-08 arising out of common order dated 6th October, 2015 passed by ITAT in ITA Nos. 5325/Del/2013 and 4753/Del/2011, respectively. question of law urged in these two appeals by Revenue are identical to questions raised in appeals against Surya Vinayak Industries. 5. There are four appeals viz. ITA Nos. 610, 641, 640 and 639 of 2016 for AYs 2001-02, 2004-05, 2005-06 and 2006-07, respectively, involving Respondent/J.H. Business India Pvt. Ltd. These appeals are also directed against common order dated 6th October, 2015 passed by ITAT in ITA Nos. 3173-3176/Del/2011. 6. There is fifth appeal filed by Revenue (ITA 850/2016) against same common order passed by ITAT in ITA No. 3177/Del/2011 for AY 2007-08. However, that appeal is stated to be still lying in defect and has not been listed before Court. 7. common questions of law urged by Revenue in these four appeals involving J.H. Business India Pvt. Ltd. read as under: (iii) Whether ITAT erred in law and on facts in holding that assessment framed by AO under Section 153C read with Section 143(3) is barred by limitation as per Section 153B of Act? (iv) Whether order passed by ITAT is perverse and not sustainable under law? 8. ITA No. 290/2016 filed by Revenue against Assessee, PPC ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 5 of 23 Business and Products Pvt. Ltd., is directed against order dated 14th August, 2015 passed by ITAT in ITA No. 226/Del/2012 for AY 2006- 07. questions of law urged by Revenue in these appeals read as under: (v) Whether learned ITAT erred in allowing additional ground as raised by Assessee in regard to limitation of Assessment made under Section 153C ignoring fact that same has not been raised before Appellate Authority? (vi) Whether ITAT erred in allowing additional ground raised by Assessee in regard to limitation of assessment made under Section 153C of Act by following its own finding case of ACIT v. J.H. Invest P. Ltd. being ITA No. 1297-1297/Del/2011 by wrongly applying Section 153B (1) for assessment under Section 153B (1) for assessment under section 153A ignoring fact that present case is related to Section 153C and time limit for completion of Assessment is 31st December, 2009 which is within time limit for assessment order dated 24th December, 2009. Background facts 9. background facts in these appeals are that on basis of Authorization dated 20th March, 2007 issued under Section 132(1) of Act, search was commenced on 21st March, 2007 in office premises of Rim Zim Valley Products Pvt. Ltd., J.H. Invest Pvt. Ltd., Aakriti International; M/s JH Business and Products Pvt. Ltd. and Surya Vinayak Industries Group. Court has been shown two of authorisations, both dated 20th March, 2007 in regard to above entities which were to be searched. One authorisation was for search to be undertaken at Zone H - 4/5, Plot No. 53-55, Suvidha Kunj, Pitam Pura, Delhi-110034 (hereinafter referred to as Pitam Pura premises ) and other for premises at I-42, Ashok Vihar, Phase- I, New Delhi (hereinafter referred to as Ashok Vihar ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 6 of 23 premises ). authorisations and panchnamas 10. In authorizations, both premises were shown to be in possession of Mr. Sanjay Jain and Mr. Rajiv Jain, both being directors of above entities including J.H. Invest Pvt. Ltd. copies of panchnamas produced before Court relevant to both above authorizations show that search at Pitam Pura premises commenced on 21st March, 2007 at 8:45 am and were closed on 22nd March, 2007 at 6:00 am as temporarily concluded for day to be commenced subsequently for which purpose seals were placed. second panchnama in regard to Authorization for search at Pitam Pura premises is dated 23rd March, 2007. It states that search commenced on 23rd March, 2007 at 2:15 pm in Pitam Pura premises and were finally concluded on same day at 5:55 pm. Authorization for search for Pitam Pura premises bears E. No. 0069. 11. What is also important to note is that both panchnamas relevant to this authorization state that warrant was in case of above entities i.e., Rim Zim Valley Products Pvt. Ltd., J.H. Invest Pvt. Ltd., Aakiriti International, J.H. Business and Products Pvt. Ltd., Surya Vinayak Industries Group, Mr. Sanjay Jain and Mr. Rajiv Jain. 12. Turning now to Authorization for search of Ashok Vihar premises, which bears E. No. 0068, first panchnama is dated 22nd March, 2007 and notes that warrant was in case of Sanjay Jain and Rajiv Jain. In para 8 of this panchnama, it is stated that search commenced on 21st March, 2007 at 8:33 pm and closed on 22nd March, 2007 ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 7 of 23 at 5:30 pm as temporarily concluded . It is stated that 4 + 2 seals were placed on wooden cupboard in bedroom of Mrs Shail Kumari Jain. second panchnama in relation to Authorization E. No. 0068 relating to Ashok Vihar premises notes in para 8 that search commenced on 15th May, 2007 at ....... pm and closed on 15th May, 2007 at 6:45 pm as finally concluded . second panchnama notes that warrants having been issued in case of all above entities. There is acknowledgment by Ms. Neena Jain of having received second panchnama with annexures bearing date of 15th May, 2007. She has also signed on this date. warrant of authorization bears E. No. 0068. It appears that jewellery belonging to Ms. Neena Jain at Ashok Vihar Premises was valued on 21st March, 2007 itself. copy of valuation report is placed on record. 13. Court has also been shown two other authorizations bearing E. Nos. 0070 and 0071 both dated 21st March, 2007. authorization having E. No. 0070 pertains to search of Locker No. 71 (Key No. 40) with Federal Bank at Pitam Pura in name of Ms. Neena Jain. This has two panchnamas first one dated 21st March, 2007 shows that warrant was in case of Sanjay Jain, Rajiv Jain and Neena Jain and that raids commenced on 21st March, 2007 at 3:30 pm and concluded at 3:50 pm on same date as temporarily concluded for day to be commenced subsequently for which purposes four seals were placed on locker No. 71... second panchnama is dated 15th May, 2007 which shows that searches commenced at 1:55 pm on that date and were finally concluded at 2:25 pm on same date. second panchnama also bears signatures ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 8 of 23 of Ms. Neena Jain by way of acknowledgment of having received copy thereof. 14. Authorization bearing E. No. 0071 was for search at Locker No. 344 (Key No. 24) with Oriental Bank of Commerce, Pitam Pura in name of Ms. Neena Jain, Mr. Rajiv Jain and Mr. Sanjay Jain. Here again, there are two panchnamas one dated 21st March, 2007 which shows that search commenced at 4:25 pm and concluded at 5:15 pm on same date i.e., 21st March, 2007; second panchnama is dated 15th May, 2007 which shows that search commenced on that date at 2:45 pm and concluded on same date at 4:30 pm. second panchnama again bears signatures of Ms. Neena Jain. 15. In each of these instances, on first day of search restraint order was passed under Section 132 (3) of Act in respect of jewellery items of Ms. Neena Jain and Ms. Shail Kumari Jain kept in some wooden cupboard in premises. There were also restraint order communicated to managers of some of banks in respect of lockers and bank accounts of Respondents herein. At time of second visit, aforementioned restrain order was lifted. 16. careful perusal of panchnamas in respect of authorization bearing E. No. 0068 and 0069 shows that no fresh material as such was found during second visit on 15th May, 2007. formal seizure of jewellery of Ms. Neena Jain was recorded in second panchnama which also notes that there was already valuation report dated 21st March, 2007 in respect of those very jewellery items. No de facto seizure actually took place ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 9 of 23 on that date i.e., 15th May, 2007. For all practical purposes, therefore, search concluded on 22nd March, 2007 at 6:00 am as far as Authorization E. No. 0069 is concerned and 22nd March, 2007 at 5:30 am as far as Authorization E. No. 0068 is concerned. Section 153B 17. assessment in each of these cases pursuant to searches was concluded on 31st December, 2009. Clause (ii) of second proviso to Section 153B (1) which provides for time limit for completion of assessment under Section 153A. relevant portions prior to amendment of Section 153B read thus: 153B. Time limit for completion of assessment under section 153A. (1) Notwithstanding anything contained in section 153, Assessing Officer shall make order of assessment or reassessment, (a) in respect of each assessment year falling within six assessment years referred to in clause (b) of sub-section (1) of section 153A, within period of two years from end of financial year in which last of authorisations for search under section 132 or for requisition under section 132A was executed; (b) in respect of assessment year relevant to previous year in which search is conducted under section 132 or requisition is made under section 132A, within period of two years from end of financial year in which last of authorisations for search under section 132 or for requisition under section 132A was executed: Provided that in case of other person referred to in section 153C, period of limitation for making assessment or reassessment shall be period as referred to in clause (a) or clause (b) of this sub- section or one year from end of financial year in which books ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 10 of 23 of account or documents or assets seized or requisitioned are handed over under section 153C to Assessing Officer having jurisdiction over such other person, whichever is later: Provided further that in case where last of authorisations for search under section 132 or for requisition under section 132A was executed during financial year commencing on or after 1st day of April, 2004 but before Ist day of April, 2010,- (i) provisions of clause (a) or clause (b) of this sub-section shall have effect as if for words "two years" words "twenty-one months" had been substituted; (ii) period of limitation for making assessment or reassessment in case of other person referred to in Section 153C, shall be period of twenty-one months from end of financial year in which last of authorizations for search under Section 132 or for requisition under Section 132A was executed or nine months from end of financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to Assessing Officer having jurisdiction over such other person, whichever is later: ... 18. above provisions require Assessing Officer ( AO ) to frame assessment within 21 months from date from end of financial year in which last of authorizations was executed as per Section 132 of Act. authorization mentioned in Section 153B is deemed to have been executed when last panchnama is drawn in relation to any person in whose case warrant of authorization has been issued. This is in terms of Section 153B (2) (a) of Act. ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 11 of 23 19. word panchnama is not defined in Act. Even Code of Criminal Procedure, 1973, provisions of which relating to search and seizure have been made applicable to searches and seizures under Section 132 of Act, does not define said word. It, however, prescribes format in which panchnama is required to be drawn up. decision in S. K. Katyal s case 20.1 In context of search leading to block AY under Section 158BE of Act, this Court in CIT v. S.K. Katyal (2009) 308 ITR 168 (Del) made following observations: These provisions demonstrate that search and seizure under said Act has to be carried out in presence of at least two respectable inhabitants of locality where search and seizure is conducted. These respectable inhabitants are witnesses to search and seizure and are known as panchas. documentation of what they witness is known as panchnama. word panchnama, refers to written document. Its type is usually determined by word which is combined with it as suffix. Examples being, nikah-nama (the written muslim marriage contract), hiba-nama (gift deed, word hiba meaning - gift), wasiyat-nama (written will) and so on. So panchnama is written record of what panch has witnessed. In Mohan Lal v. Emperor: AIR 1941 Bombay 149, it was observed that panchnama is merely record of what panch sees... Similarly, Gujarat High Court in case of Valibhai Omarji v. State AIR 1963 Guj 145 noted that (a) panchnama is essentially document recording certain things which occur in presence of Panchas and which are seen and heard by them. Again, in State of Maharashtra v. Kacharadas D. Bhalgar (1978) 80 Bom LR 396, panchnama was stated to be memorandum of what happens in presence of panchas as seen by them and of what they heard. We have examined meaning of word panchnama in some detail because it is used in Explanation 2(a) to Section 158BE of ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 12 of 23 said Act although it has not been defined in Act. panchnama, as we have seen is nothing but document recording what has happened in presence of witnesses (panchas). panchnama may document search proceedings, with or without any seizure. panchnama may also document return of seized articles or removal of seals. But, panchnama that is mentioned in Explanation 2(a) to Section 158BE is panchnama which documents conclusion of search. Clearly, if panchnama does not, from facts recorded therein, reveal that search was at all carried out on day to which it relates, then it would not be panchnama relating to search and, consequently, it would not be panchnama of type which finds mention in said Explanation 2(a) to Section 158 BE. 20.2. In above case, CIT v. S.K. Katyal (supra), first of searches pursuant to authorization issued on 16th November 2000 under Section 132 of Act, commenced on 17th November, 2000 at 8:00 am was temporarily concluded at 7:00 pm on same date. Seven seals were placed on cash box in one of rooms of Assessee. It was admitted position that contents of sealed cash box were nothing but jewellery listed and valued as per Annexure- 5 to panchnama . restraint order was passed on that date in respect of sealed cash box. Subsequently, on 3rd January, 2001, restraint order was revoked and keys of almirah and safe (cash box) were returned to Assessee. Another panchnama was drawn up on that date. 20.3 Under heading following were found but were not seized in printed format panchnama, it was written in hand: Jewellery worth Rs. 6,05,731/- as per page 1 of Annexure-5 of Panchnama dated November 17 2000. 20.4 In this regard, Court in CIT v. S.K. Katyal (supra) observed as ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 13 of 23 under: This makes it evident that nothing was found on 03.01.2001, because jewellery shown to be found on 03.01.2001 had already been found on 17.11.2000 and had even been valued as per Annexure-5 to panchnama of 17.11.2000. 20.5 Court in para 16 then observed as under: This discussion leads us to question - was panchnama of 03.01.2001 of type mentioned in said Explanation 2(a)? From facts narrated above, it is clear that panchnama of 03.01.2001 itself reveals that nothing was seized on that date. Nor was anything found on that date. In fact, no search was conducted. jewellery that was put in cash box of almirah had already been searched, found, inventorised and valued by DVO on 17.11.2000 itself. Nothing remained to be searched thereafter. And, in fact, no further search was conducted after 17.11.2000. Obviously, nothing else could be found. All that was done on 03.01.2001, in presence of witnesses (panchas), was that seals were removed from cash box and almirah and keys were handed back to assessee. Essentially, revocation of restraint order was given effect to. This is exactly what Tribunal found as fact and meant when it concluded that panchnama dated 03.01.2001 was merely release order and could not extend period of limitation. 20.6 Court in CIT v. S.K. Katyal (supra) then undertook detailed discussion of law on subject including decisions in G.M. Agadi v. Commercial Tax Officer, Belgaum [1973] 32 STC 243 (Kar.); C. Balakrishnan Nair (Dr.) v. CIT (1999) 237 ITR 70 (Ker); CIT v. Mrs Sandhya P. Naik (2002) 253 ITR 534 (Bom); CIT v. Sarb Consulate Marine Products P. Ltd. (2007) 294 ITR 444; CIT v. Deepak Aggarwal (2009) 308 ITR 116 (Del.) as well as VLS Finance Ltd v. CIT (2007)289 ITR 286 (Del). conclusions drawn by Court in CIT v. S.K. Katyal (supra) were as under: ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 14 of 23 26. These decisions clearly establish (i) search is essentially invasion of privacy of person whose property or person is subjected to search; (ii) normally, search must be continuous; (iii) if it cannot be continuous for some plausible reason, hiatus in search must be explained; (iv) if no cogent or plausible reason is shown for hiatus in search, second or resumed search would be illegal; (v) by merely mentioning in panchnama that search has been temporarily suspended does not, ipso facto, continue search. It would have to be seen as fact as to whether search continued or had concluded; (vi) merely because panchnama is drawn up on particular date, it does not mean that search was conducted and/or concluded on that date; (vii) panchnama must be record of search or seizure for it to qualify as panchnama mentioned in Explanation 2(a) to section 158BE of said Act. 21. Incidentally, Explanation 2(a) to Section 158 is in pari materia with clause 2(a) of Section 153B. Analysis and reasons 22. In light of above decision, if facts of present case are examined, it is seen that as far as Authorization E. No. 0069 is concerned, search concluded on 22nd March, 2007 itself. only question is whether because of Authorization E. No. 0068 where second visit was made to Ashok Vihar premises on 15th May, 2007 and only on that date was it noted in panchnama that search was finally concluded , period of limitation for completing assessment would begin to commence from last date of financial year in which search concluded. If this case of Revenue were to be accepted, then limitation period for completing assessment stood extended up to 31st December, 2009. Factually, in present case, assessments were completed on 24th December/31st December, 2009 whereas if Assessee s ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 15 of 23 case that search concluded on 22nd March, 2007 is correct, then assessment had to be completed by 31st December, 2008. 23. What happened on 15th May, 2007 is apparent from second panchnama relating to search authorization E. No. 0068. In paragraph 5(b) of panchnama, title is following were found but not seized . Under Sub-clause (ii) thereunder, it is stated Item Nos. 1 to 13 of Ms. Preeti Jain (wife of Rajiv Jain) as per valuation report in jewellery items dated 21st March, 2007 and S. Nos. 6, 7,9, 10,12,14,17, 21, 22, 23, 24 right up to 30, 33, 35 and on person items were released . Therefore, all that happened on 15th May, 2007 was that factum of valuation reports having been prepared already on previous date i.e., 21st March, 2007 was noted and jewellery items were released. Under paragraph 5(a) under title following were found and seized , under sub-clause (iv) it is stated that jewellery, ornaments etc. which have been inventoried separately for each place from where recovered as per Annexure-J (4 sheets vide valuation report dated 21st March, 2007 Item Nos. 1, 2, 3, 4, 5, 8, 11, 13, 15, 16, 18, 19, 20, 25, 26, 31, 32, 34, 36 and 37 seized. In fact, there was no seizure because nothing new was found. All other items which were already valued on 21st March, 2007 and for which valuation report was already prepared were shown as seized but in fact were not seized. net result is that on 15th May, 2007 nothing was found which had not already been found by Department on first day i.e., 21st March, 2007. 24. Court is not prepared to accept plea of Revenue that merely because panchnama was drawn up on 15th May, 2007 showing that ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 16 of 23 search was finally concluded on that date, it postponed period of limitation in terms of Section 153B (2) (a) of Act. It had to be last panchnama drawn in relation to any person in whose case warrant of authorization has been issued . last panchnama, no doubt, is dated 15th May, 2007 but what it records is seizure of jewellery items not of any of persons searched but wives of one of directors i.e., of Ms. Neena Jain who was not even director of any of these entities. Therefore, even assuming that jewellery of Ms. Neena Jain was seized under panchnama of 15th May, 2007, as far as searched entities are concerned, Revenue cannot take advantage of Section 153B (2) (a) to contend that period of limitation in respect of them stands extended for completing of assessment up to 31st December, 2009. decision in C Ramaiah Reddy 25.1 In this context, Court would like to refer to decision of Karnataka High Court in C. Ramaiah Reddy v. Assistant Commissioner of Income Tax (2011) 339 ITR 201 (Kar.) where these very provisions were examined in extenso. There Court took note of decision of this Court in CIT v. S.K. Katyal (supra) and observed as under: next question for consideration is, when once authorized officer in pursuance of authorization enters premises and starts searching, when exactly said search comes to end. It is contended on behalf of Revenue that discretion is vested with such authorized officer to complete search, draw panchnama stating that search is completed on day he begins search or if for any reason it is not possible to complete such search, he can pass restraint order, prohibitory order and when fix another date for continuing such search. Thereafter, at his convenience and discretion, he can visit premises again and continue search in respect of ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 17 of 23 subject matter of restraint order and prohibitory order and he can also make fresh search. Every visit made by authorized officer for inspection is search under Act and such search comes to end only when panchnama is written and in panchnama it is expressly stated that it is finally concluded. It is in light of said contentions it is necessary to consider when search begins and when search ends in law. This aspect has drawn attention of various courts in this country and law point is well settled. 25.2 Court in C. Ramaiah Reddy v. Assistant Commissioner of Income Tax (supra) then proceeded to discuss case law and held as under: law does not contemplate authorised officer to set out in any of Panchnamas that he has finally concluded search. If for any reason authorised officer wants to search premises again, it could be done by obtaining fresh authorisation. There is no prohibition in respect of same premises. It is open to empowered authority to issue authorisation, but when authorisation is issued once, authorised officer cannot go on visiting premises under guise of search. Therefore, it is clear once in pursuance of authorization issued search commences, it comes to end with drawing of Panchnama. When authorized officer enters premises, normally, Panchnama is written when he comes out of premises after completing job entrusted to him. Even if after such search he visits premises again for investigation or inspection of subject-matter of restraint order or prohibitory order, if Panchnama is written, that would not be Panchnama which has to be looked into for purpose of computing period of limitation. But, such Panchnama would only record what transpires on re-visit to premises and incriminating material seized would become part of search conducted in pursuance of authorisation and would become subject-matter of block assessment proceedings. But, such Panchnama would not extend period of limitation. It is because limitation is prescribed under statute. If proceedings are not initiated within time prescribed, remedy is lost. assessee would acquire valuable right. Such right cannot be at mercy of officials, ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 18 of 23 who do not discharge their duties In accordance with law. procedure prescribed under Section 132 of Act is elaborate and exhaustive. said substantive provision expressly provides for search and seizure. In entire provision, there is no indication of that search once commenced can be postponed. What can be postponed is only seizure of articles. Therefore, once search commences it has to come to end with search party leaving premises whether any seizure is made or not. limitation for completion of block assessment is expressly provided under section 158BE which clearly declares that it is execution of last of authorisations which is to be taken into consideration. word "seizure" is conspicuously missing in said section. same cannot be read into section for purpose of limitation. Then, it amounts to rewriting section by Court, which is impermissible in law. 25.3 Karnataka High Court in C. Ramaiah Reddy (supra) also took note of Circular No.772 dated 23rd December, 1998 in relation to definition of word execute and then observed as under: question arises as to whether execution of warrant of authorisation or requisition refers to conclusion of proceedings under Section 132 and/or s. 132A or it refers only to execution of warrant even though as result of such execution proceedings under Section 132 or 132A are yet to be completed. latter situation will include case in which restraint order under Section 132 (3) is passed. In such case it can be said that though warrant of authorisation has been executed, proceedings under Section 132 (3) are pending. Since word, "execute", also means "to complete" one has to wait for conclusion of proceedings under Section 132 (3) for purpose of computation of limitation under Section 158BE (1) and period of one year has to be computed from end of month in which proceedings under Section 132 (3) are concluded. If there is more than one warrant, limitation will be counted from execution of last one. contrary view is as much possible if one were to consider spirit of scheme which envisages expeditious disposal of search ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 19 of 23 cases and it would be reasonable to interpret that execution of warrant is not tantamount to completion of proceedings under Section 132 or 132A. period during which proceedings under Section 132 (3) remained pending has to be excluded for purpose of counting limitation of one or two years under Section 158BE. Otherwise, it may lead to absurd results as it may take several years before restraint under Section 132 (3) is lifted and it may, thus, extend period of one or two years by all those years during which proceedings under Section 132 (3) remained pending. It may be agreed against this view that S. 132 (8A) takes care that there is no extension of proceedings under Section 132 (3) and that view cannot be taken without doing violence to language of Act. Therefore, Explanation added to remove doubt cannot be construed as provision providing longer period of limitation than one prescribed in main section. When under scheme of section there is no indication of second search on basis of same authorisation issued under said provision, legislative intention is clear and plain and interpretation to be placed by courts should be in harmony with such intention. Therefore, one authorisation is to be issued in respect of one premises in pursuance of which there can be only one search and such search is concluded, when searching party comes out of premises, which is evidenced by drawing up panchnama. When there are multiple places to search and when multiple authorisations are issued, on different dates or on same date or in respect of same premises more than one authorisation is issued on different dates, last panchnama drawn in proof of conclusion of search in respect of authorisation is to be taken into consideration for purpose of limitation for block assessment. 26. In considered view of Court, above decision in C. Ramaiah Reddy (supra) puts it beyond pale of doubt that merely visiting premises on pretext of concluding search but not actually finding anything new for being seized cannot give rise to second panchnama. In such event, there would be no occasion to draw up panchnama at all. In ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 20 of 23 present case, Court is satisfied that second visit by search party to Ashok Vihar premises on 15th May, 2007 did not result in anything new being found that belonged to any of searched parties. second visit and panchnama drawn up on that date cannot lead to postponement of period for completion of assessment with reference to Section 153B (2) (a) of Act. decision in JH Finvest 27. Mr. Shashwat Bajpai, learned counsel appearing for Assessees, pointed out that this Court by order dated 30th November, 2015 in batch of ITA 27/2015 (CIT v. J.H. Finvest Pvt. Ltd.) which involved identical set of authorizations in relation to same searches which had commenced on 21st March, 2007 in respect of three of three entities, namely, J.H. Finvest Pvt. Ltd., Texefx Marble Industries (formerly known as J.H. Business & Products Pvt. Ltd.) and SVIL Mines Ltd., dismissed appeal of Revenue. He, accordingly, submitted that above order should automatically result in dismissal of present appeals as well. However, above order of this Court was sought to be distinguished by Mr. Chaudhary appearing for Revenue by pointing out that said decision did not take note of fact that there were two authorizations for two premises: at Ashok Vihar and at Pitam Pura and that second panchnama dated 15th May, 2007 was in fact in relation to Ashok Vihar premises. As already discussed hereinbefore, above distinction is to no avail as far as case of Revenue is concerned. 28. Finally, it was contended by Mr Chaudhary that decision in VLS ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 21 of 23 Finance Ltd. v CIT (supra) supports case of Revenue and, therefore, period of limitation for passing assessment order should be calculated from 15th May, 2007. In its order in case of CIT v. JH Invest Pvt. Ltd. (supra), this Court took note of above decision. In any event, Court has again examined it in detail. Court notes that there were as many as 16 searches conducted in VLS Finance within span of two months. search and seizure operations commenced on 22 nd June, 1998 and continued till 5th August, 1998. Sixteen panchnamas were drawn up in respect of visits made. There was no occasion when panchnama did not record seizure. Therefore, said decision being distinguishable on facts is of no assistance to Revenue. Conclusions 29. For aforementioned reasons, Court finds that decision of ITAT in appeals involving Surya Vinayak Group companies does not suffer from any legal infirmity. Since ITAT has only applied earlier decisions of this Court, no substantial question of law arises from impugned order of ITAT. 30. As regards appeals involving J.H. Business India Pvt. Ltd., where proceedings were sought to be initiated under Section 153C of Act, it is plain that in view of above conclusion in Surya Vinayak cases, assessment framed by AO under Section 153C read with Section 143(3) is barred by limitation. search stood concluded qua J.H. Business India Pvt. Ltd. on 22nd March, 2007 itself. This, also, therefore, has to lead to dismissal of Revenue s Appeal even as regards PPC Business Pvt. Ltd. ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 22 of 23 where Section 153C of Act was involved. 31. All appeals are, accordingly, dismissed but in circumstances, with no orders as to costs. S.MURALIDHAR, J. PRATIBHA SINGH, J. JULY 17, 2017 rd ITA Nos.290/2016, 605 610 /2016, 637 641 /2016 & 850/2016 Page 23 of 23 Pr. Commissioner of Income-tax Central-3 v. PPC Business and Products Pvt. Ltd
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