A.V.S.Sivaraj v. The Commissioner of Income Tax Central II Chennai 34

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 22.08.2012Coram The Honourable Mrs.Justice CHITRA VENKATARAMANandThe Honourable Mr.Justice K.RAVICHANDRABAABUTax Case (Appeal) No.127 of 2006A.V.S.Sivaraj ... Appellant -Vs-The Commissioner of Income TaxCentral IIChennai 34. ... Respondent Prayer: Appeal filed under Section 260-A of the Income Tax Act,1961 against the order of the Income Tax Appellate Tribunal "A"Bench, dated 29.7.2005 in IT(SS) A No.340/Mds/1997 preferredagainst the order of the Commissioner of Income Tax(Central) CircleII(4) Chennai - 34 dated 22.9.97 made in GIR.No.24707-S for the blockassessment period 1986-87 to 1996-97 (upto 20.1.1996).For appellant : Mr.C.V.RajanFor respondent : Mr.M.Swaminathan Standing Counsel for Income TaxJUDGMENT(Judgment of the Court was made by CHITRA VENKATARAMAN,J.)The following is the question of law raised in the tax caseappeal preferred by the assessee as against the order of theTribunal in respect of the block assessment for the period 1986-87to 1996-97 (upto 20.1.1996):-"Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal is right in law in rejectingthe contentions of the appellant that the blockassessment made on the appellant under Section158BC and not under Section 158BD of the IncomeTax Act, 1961 and the block assessment was notbarred by limitation ?"2. It is a matter of record that consequent on the search inthe premises of one A.N.Dyaneswaran on 19.1.1996 the assessee'sresidence was also subjected to search on the very same date under https://hcservices.ecourts.gov.in/hcservices/ Section 132 of the Income Tax Act and certain materials were statedto have been seized. Based on the materials thus seized the blockassessment was completed raising the demand therein. Aggrieved bythe assessment, the assessee went on appeal before the Income TaxAppellate Tribunal contending that the assessment was barred bylimitation as provided for under Section 158BE. The assessee pointedout that since the assessment was made under Chapter XIV-B theresult of the search conducted in the case of the assessee wouldfall under Section 158BC and that therefore Section 158BE would applyfor the purpose of limitation which provides the time limit forcompletion of block assessment as one year from the end of the monthin which the last of the authorisations for search under Section 132was executed. Per contra, the Revenue took the plea that the case ofthe assessee fell under Section 158BD. Hence, the time limit forcompletion of the assessment would be two years as per Section158BE (2)(b). In considering the rival claims, the Tribunalaccepted the view of the Revenue that the copy of the noting sheetdated 20.9.1996 clearly proved that the action against the assesseewas initiated under Section 158BD and in such an event, as perSection 158BE, the time limit for completing the assessment would betwo years. Thus, the assessee's appeal was rejected. Aggrieved bythe same, the present appeal has been filed before this Court. 3. It is a matter of record that the assessee was subjected tosearch proceedings by issuance of notice under Section 132. It isseen from para 2 of the assessment order that on 19.1.1996 there wasa search conducted in the case of one A.N.Dyaneswaran and inconnection with this search, the residence of the assessee was alsosearched on the same date. Taking the date of search as19.1.1996, wherein the Revenue seized certain incriminatingmaterials, the correct provision which cover the case herein wouldbe Section 158BC. Section 158BD would have relevance only in such ofthose cases where based on the search conducted in the premises ofone person, any other person is sought to be assessed underChapter XIVB and Section 158BD would assume significance. In otherwords, Section 158BD will have relevance only in such of those caseswhere the Assessing Officer is satisfied that the undisclosedincome belongs to a person other than the person in respect of whomsearch was made under Section 132 or whose books of account or otherdocuments or any assets were requisitioned under Section 132A. Insuch an event, the proceedings shall be taken under Section 158BD.Thus, Section 158BD is an enabling provision, whereby evenpersons who are not subjected to search are brought to theprocedural exercise. 4. A reading of Section 158BE shows the limitation prescribedfor passing assessment as regards cases falling under Section 158BCand 158BD. Sub-section (1) of Section 158BE specifies the time limitfor completion of the assessment in cases falling under Section158BC as one year from the end of the month in which the last of the https://hcservices.ecourts.gov.in/hcservices/ authorisations for search under Section 132 or the requisition underSection 132A was executed in cases where the search is initiated orbooks of account or other documents / assets requisitioned after30.6.1995 but before 1.1.1997 and (ii) in case of search initiatedor books of account requisitioned or any documents or assetsrequisitioned on or after 1.1.1997, time limit would be 2 yearsfrom the end of the month in which the last of the authorisation forthe search under Section 132 or for requisition under Section 132Aexecuted. 5. Sub-section (2) of Section 158BE specifies the time limitin cases falling under Section 158BD. In the case of searchinitiated or books of account or other documents or assetsrequisitioned after 30.6.1995 but before 1.1.1997, the period oflimitation is one year from the end of the month in which the noticewas served on such other person and two years in respect of casesof search falling on or after 1.1.1997. 6. Going by the admitted facts herein, as noticed in theassessment order that the assessee was also subjected to search on19.1.1996 and the case of the assessee falling under Section158BC, the relevant provision for limitation would be only as perSection 158BE(1)(a). That being the case, the file noting has nosignificance for the purpose of working out the limitation. Thus,on the search conducted on 19.1.1996 the notice of assessment wasissued on 20.9.1996. However the assessment was made only on22.9.1997. When the limitation for completion of the assessmentunder Section 158BC is one year from the end of the month in whichthe last of the authorisation for search was executed and ithaving already expired, we have no hesitation in setting aside theorder of the Tribunal thereby allowing the tax case appeal.Accordingly , the tax case appeal is allowed and the order of theTribunal is set aside. No costs. Sd/Asst.Registrar/true copy/Sub Asst.Registrarkrr/To1. The Income Tax Appellate Tribunal 'A' Bench, Madras 2. The Assistant Commissioner of Income -Tax, Central Circle II(4) Chennai 34. https://hcservices.ecourts.gov.in/hcservices/

3. The Assistant Registrar, Income Tax Appellate Tribunal, Chennai.4. The Commissioner of Income Tax, Central II, Chennai - 34.1 cc To Mr.M.Swaminathan, Advocate, SR.504601 cc To Mr.C.V.Rajan, Advocate, SR.50871 T.C.(A) No.127 of 2006MSM (CO)SRA(09/11/2012)