Apex Court considered computation of limitation under section 158BE(2) of IT Act from final search date, as assessee never challenged the same
Civil Appeal No. 2667 of 2007
Bench: Justice A. K. Sikri; Justice Rohinton Fali Nariman
Case Brief: In the facts of the case, the Appellants herein were the assessees and they filed a writ petition in the year 2000 before the High Court where the order made in the year 2000 by the respondent- Income- Tax authority was challenged in which the respondent no. 2 directed a special audit in respect of the appellants under section 142 (2A) of the Income- Tax Act, 1961 also while the said writ petition was pending, the application for amending the same was filed to add the additional ground that the Block Assessment proceedings under section 158 (c) of the said Act were time barred. The appellants found submitting that the given period of two years was completed and as such the said block assessment proceedings were time barred. The High Court quashed the order of 2000 for special audit in respect of appellants. However, the high court decided the question of limitation in favour of authorities as the period between the date on which interim order was passed staying the special audit direction under section 142 (2A) and till the date High Court has passed order setting aside the direction for special audit be excluded in counting limitation for concluding block assessment.
The bench observed that the appellants claiming that only the period during which the assessment proceedings were stayed can be excluded in computing the period of limitation. The bench further pointed that on the literal construction of the explanation annexed to section 158BE(2) of the Act, it is found clear from the reading that the period that is to be excluded while computing the period of limitation for completion of Block Assessments is the period during which the assessment proceedings are stayed by an order of the court and this provision shall not apply if the stay of some other kind, i.e. other than staying the assessment proceedings, is passed. The bench also appeared agreeing with the High Court that the special audit was an integral step towards assessment proceedings. In the proved facts in the matter, the bench further observed that the revenue authorities visited and searched the premises of the appellants for the first time in the year 1998 however, it was ‘temporarily concluded’ as such the search had not been concluded. However, final conclusion of the said search was made in the later months of the said year. It is also pointed that the appellants had not challenged the subsequent search which was finally concluded, and thus the bench decided this issue in favour of respondents. As such the appeal was dismissed.
Read the Judgement: VLS Finacne Ltd. & Anr. Vs. Commissioner of Income Tax & Anr