Date Of Last Drawn Panchnama Would Be Relevant For Computing Period Of Limitation U/s.158BE Of Income Tax Act- SC

The Supreme Court has upheld the Delhi High Court decision and observed that the date of Panchnama last drawn would be the relevant date for considering the period of limitation of two years under Section 158BE of the Income Tax Act, 1961 (Act).

The Bench of Justice M.R. Shah and Justice C.T. Ravikumar observed that “It cannot be disputed that the block assessment proceedings are initiated on the basis of the entire material collected during the search/s and on the basis of the respective Panchnama/s drawn. Therefore, 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.”

“Thus, the view taken by 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, we are in complete agreement with the view taken by the High Court.” the Bench further observed.

Advocate Rakesh Gupta appeared for the appellant and ASG Balbir Singh appeared for the Revenue.

In this case, the appeals were preferred and the asssessment orders issued were challenged on the ground that the assessment was time barred. The Commissioner of Income Tax (Appeals) dismissed the appeals. However, the Income Tax Appellate Tribunal (ITAT) allowed the appeals. Assailing the order of ITAT, the Revenue had preferred the appeal before the High Court. The Delhi High Court allowed the appeal, and this judgment of High Court was the subject matter of appeal before Apex Court.

It was alleged by the assessees that as per Section 158BE of the Act, limitation of two years was to be computed when Panchnama in respect of the second authorization was executed, i.e., on March 26, 2001 and the assessment order was passed in April 2003 which was time barred.

On the other hand, the counsel for the Revenue submitted that since the last Panchnama through related to search authorization dated March 13, 2001, was executed on April 11, 2001, limitation of two years was to be computed from that date and therefore the assessment was passed was well within the prescribed limitation.

The issue dealt with was-

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.

The Apex Court noted that the Panchnama drawn with respect to first authorisation dated March 13, 2001, was lastly drawn on April 4, 2001. In between there was one another authorization issued with respect to one locker for which the Panchnama was drawn on the same day itself I.e., March 26, 2001.

Further, it said that if the date of the last authorization was to be considered for the purpose of computing the period of limitation of two years, the entire object and purpose of Explanation 2 to Section 158BE would be frustrated.

Therefore, 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 and accordingly, the appeal was dismissed.

Cause Title- Anil Minda and others v. Commissioner of Income Tax 

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