Asstt. Commissioner of Income Tax Vs Shree Ram Lime Products Ltd (ITAT Jodhpur Special Bench)
Reckoning point to compute the time limit will be drawing of last panchnama in respect of any authorization issued in a particular case. However, it has already been held that the “last panchnama” as relevant for Explanation 2 to section 158BE will be the panchnama which show the conclusion of the search. Panchnama dated 3rd January, 2003 in the present case has not recorded the conclusion of search, but, it was a mere formality to revoke prohibitory order passed on 21st December, 2002. Therefore, the limitation was to be reckoned from 21st December, 2002.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
The appeal in the present case is filed by the revenue and the Cross Objections by the assessee and they are directed against order dated 15th December, 2005 passed by CIT (A)-II, Jodhpur. The impugned assessment is framed vide order dated 31st January, 2005 passed u/s 158BC/143(3) of the IT Act, 1961. The grounds of appeal filed by the revenue read as under:-
“ The Ld. CIT (A) has erred in reducing the addition made on account of payment of salaries from Rs.5,03,867/- to Rs.1,19,333/- and thereby allowing a relief of Rs.3,84,534/-.
2. The Ld. CIT (A) has erred in deleting the addition of Rs.29,87,374/- made by the A.O. on account of mfg., salary and wages without any basis as the addition was made on the basis of loose papers and books of accounts found during the course of search.
3. The Ld. CIT (A) has erred in deleting the addition of Rs.3,00,000/- made by the A.O. on account of rejection of books of accounts without any basis when the provisions of section 145(3) were applicable.”
1.1 The grounds of Cross Objections filed by the assessee read as under:-
“1. That on the facts and in the circumstances of the case, the block assessment order for the block period i.e., asst. yrs 1997-98 to 2003-04 (upto the date of search), is bad in law and, therefore, the respondent-company appeals for its cancellation.
2. That without any prejudice to the first ground of cross-objection, the respondent-company appeals that the block assessment order in question was completed after expiry of the time limit provided in the Chapter XIV-B (Special procedure for assessment of search cases) of the IT Act, 1961. Therefore, the respondent-company appeals for the cancellation of the block assessment order.
3. That without any prejudice to the aforesaid grounds of cross-objections and on the facts and in the circumstances of the case, regarding the sustenance of disallowance of salary expenses to the extent of Rs.1,19,333/- by the learned CIT (Appeals), Jodhpur, the respondent –company appeals that as the disallowance was not made in accordance with the provisions of the Chapter XIV-B of IT Act, 1961, the learned CIT (Appeals) did not justify in sustaining the same.
4. That without any prejudice to the aforesaid grounds of cross-objections, even in view of the facts and circumstances of the case, the learned CIT (Appeals), Jodhpur did not justify in sustaining the disallowance of salary expenses to the extent of Rs.1,19,333/- and, therefore, the respondent-company appeals for allowing these expenses.
5. That without any prejudice to the aforesaid grounds of cross-objections and on the facts and in the circumstances of the case, regarding the sustenance of trading addition to the extent of Rs.1,86,090/- by the learned CIT (Appeals), Jodhpur, the respondent-company appeals that as the addition was not made in accordance with the provisions of the Chapter XIV-B of IT Act, 1961, the learned CIT (Appeals) did not justify in sustaining the same.
6. That without any prejudice to the aforesaid grounds of cross-objections even in view of the facts and circumstances of the case, the learned CIT (Appeals), Jodhpur did not justify in sustaining the trading addition to the extent of Rs.1,86,090/-and, therefore, the respondent-company appeals for deleting the same.
7. That the appellant appeals for consequential relief from the interest charged u/s 158BFA(1).
8. That the appellant craves opportunity for furnishing any other ground/s of appeal on or before the date of appeal hearing.”
2. At the outset, it may be mentioned here that a reference u/s 255(3) was made by the Division Bench vide its order dated 25th July, 2007 to Hon’ble President for constitution of Special Bench. Following question was proposed to be referred.
“Whether on the facts and in the circumstances of the case, the period of limitation for completion of the block assessment as per Sec.158BE read with Explanation 2 is be reckoned from the end of the month in which last panchnama on the conclusion o f search is drawn on the assessee or last Panchnama of the last authorization even when it is not last Panchnama drawn on the assessee and one or more valid Panchnama are drawn on the assessee thereafter in execution of any former authorization.”
3. The Hon’ble President vide order dated 14th November, 2007 has constituted the Special Bench to decide the aforementioned question which inter alia, include the hearing of entire appeal. Later on constitution of Special Bench was revised vide order dated 23rd August, 2010.
4. In ground No.2 of the cross objection, the assessee has challenged the validity of impugned assessment on the ground that it is time barred. Therefore, it was considered proper to hear both the parties on this issue as if it is found that assessment itself is invalid on account of its being time barred then there will be no need to go into other issues. Both the parties have argued on this issue and their detailed contentions were heard on 4.05.2012.
5. To consider the above aspect, the following facts will be relevant. Two authorizations for search were issued. The first authorization is dated 17th December, 2002 and the second authorization is dated 20th December, 2002. The proceedings of these two authorizations are described in the following chart submitted by ld. Counsel at page 15 of the paper book and such course of events was not disputed by Ld. DR:-
“Shree Ram Lime Products Ltd.
Statement showing details regarding the dates of authorization, places of execution, dates of Panchnamas, durations of proceedings & authorized officers as per panchnamas.
