Kolkatta High Court held in Navin Kumar Agarwal Vs CIT(A) that for the conclusion of search, date of last panchnama was to be seen provided keys had been handed over to the assessee. If the keys were still with the department it meant that department could resume the search any time if necessary irrespective of the fact that only restraint order was vacated on the latter date. The return of the keys manisfested the intention to concluded the search. So the panchnama which was recorded on the date of return of keys would be considered to be the date of last panchnama and also the date of conclusion of return. So period of limitation of 2 years for completion of assessment was to be taken from the above concluded date i.e the date when keys were returned to the assessee.
Facts of the case:
Search was conducted by department on 8th Dec, 1999 and also on 31st Jan,2000 and department passed an assessment order on 31st dec, 2002 i.e 2 years from the date of conclusion of search. The panchnama was also written on both the above dates. The keys were still with the department after 8th Dec,1999 and were handed over to the assesse on 31st jan,2000.
Contention of the assesse:
Assesse was of the view that search was concluded on 8th Dec ,1999 not on 31st Jan,2000 because on 31st Jan,2000 only restrain order was vacated noting was searched noting was seized etc. So period of 2 years for passing of assessment order should be counted from the end of month of 8th Dec,1999 i.e 2 years from 31st Dec,1999 which came to 31st Dec,2001.As the assessment order passed by the department was dt: 31st Dec 2002 so it was time barred. Assessee relied on the decision given in CIT –Vs- S. K. Katyal reported in (2009) 308 ITR 168 (Delhi) that as nothing was searched on the latter date, just seals were inspected and they were removed and keys were handed over to the assessee So last date for conclusion of search would be the 8th Dec,1999.
Contention of the revenue:
Revenue relied on the decision given in M. B. Lal –Vs- CIT reported in (2005) 279 ITR 298 (Delhi) in which search continued for long period of time i.e from 2nd feb,2000 and concluded on 29th june,2000 and the conclusion date considered was 29th june,2000.So in the above case also search concluded date should be 31st jan,2000 instead of 8th dec, 1999 because finally search was completed on 31st jan when keys were handed over to the assessee.
Held by High Court:
Hon’be High Court held that period of limitation had to be taken from the date of conclusion of search not from the date of conclusion of investigation. Investigation would have been completed on 8th dec,1999 but the search was completed on 31st jan,2000 when the keys were handed over to the assessee. The assessee requested through letter dt 28th jan,2002 that he would not be able to appear before the court to deposit his deposition. If assessee considered that last date of assessment was 31st December,2001 then he would have raised such point regarding the time barred assessment but assesse failed to do so. Assessee had also demanded the extended time to deposit the deposition but failed to do so. So the date of conclusion of search would be treated as 31st Jan,2000 not 8th dec,1999.
Appeal of the assessee was dismissed.