Period of limitation for block assessment u/s 158BC/158BE commences from the date of last Panchnama, not the date of last authorization – SC
ABCAUS Neutral Case Law Citation:
ABCAUS 3692 (2023) (03) SC
Important Case Laws relied upon by parties:
C. Ramaiah Reddy v. Assistant Commissioner of Income Tax, (2011)244 CTR 126 (Karn.)
VLS Finance Limited & Another vs. Commissioner of Income Tax & Another (2016) 12 SCC 32
In this case, the assessee had filed appeal against the order passed by the High Court setting aside the orders passed by the ITAT holding that the assessment orders passed u/s of 158BC/158BE the Income Tax Act, 1961 (the Act) were time barred as the assessments were not completed within two years from the end of the month in which the last authorisation for search under Section 132 of the Act was issued.
The case of the assessee was that the date of last search authorization was the relevant date as per Explanation 2 to Section 158BE of the Act and the last authorization would be the starting point of limitation.
It was submitted that even if the first authorization was executed on a later date that would be of no consequence and for the purpose of reckoning the limitation period, the first authorization is irrelevant and it is the “last of the authorization” which has to be kept in mind.
It was submitted that in the instant case, the last authorization was executed on the same date and therefore the period of two years is to be counted from that date.
The question of law posed before the Hon’ble Supreme Court 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 Hon’ble Supreme Court observed that previously it had held that the relevant date would be the date on which the Panchnama is drawn and not the date on which the authorization/sis/are issued.
The Hon’ble Supreme Court said 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 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.
The Hon’ble Supreme Court opined that if the submission on behalf of the respective assessees that the date of the last authorization is to be considered for the purpose of starting point of limitation of two years, the entire object and purpose of Explanation 2 to Section 158BE would be frustrated.
The Hon’ble Supreme Court pointed out that if the said submission is accepted, the question would arise as to what would happen to those material collected during the search after the last Panchnama?
As a result, the Hon’ble Supreme Court held that 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 is correct.
Accordingly, the appeal was dismissed.
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