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Anil Minda and Others vs. Commissioner of Income Tax

Civil Appeal · 2023 INSC 287Decided 24 Mar 2023
Civil Appeal Nos. 345-350 of 2012
M.R. Shah · C.T. Ravikumar

Background

The Income Tax Department carried out a search on the appellants under Section 132 of the Income Tax Act, issuing a first search warrant on 13 March 2001 (finally executed via a Panchnama on 11 April 2001) and a second, separate warrant on 26 March 2001 (executed the same day). The tax assessment orders were passed in April 2003. The assessees argued this was time-barred, since the two-year limitation period should be counted from the date of the last authorisation (26 March 2001), which would mean the limitation expired by March 2003. The Income Tax Appellate Tribunal agreed with the assessees, but the Delhi High Court reversed this and held the assessments were within time, counting from 11 April 2001 (the date of the last Panchnama, not the last authorisation).

Decision Breakdown

The Supreme Court examined Section 158BE and its Explanation 2, which says an authorisation "shall be deemed to have been executed" on the date the search concludes, "as recorded in the last panchnama drawn." Relying on its earlier ruling in VLS Finance Ltd. v. CIT, the Court held that the relevant date for starting the limitation clock is the date the last Panchnama (search-conclusion document) was drawn, not the date the authorisation itself was issued, because assessment proceedings are based on all material gathered up to the actual conclusion of the search. Since the last Panchnama relating to the first authorisation was drawn on 11 April 2001, the assessment order passed in April 2003 was within the two-year limit. The appeals were dismissed, upholding the High Court's ruling, with no order as to costs.

Lesson Learnt

When multiple search warrants and raids happen in sequence during a tax investigation, the two-year clock for completing a block assessment starts from when the last search actually concludes and its final Panchnama is signed, not from when the paperwork authorising the search was issued.

Official source (sci.gov.in)View Judgment (PDF)

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