S. 158BE: Every search panchnama does not extend Limitation period

A. Rakesh Kumar Jain vs. ACIT (Madras High Court)

A search u/s 132 was conducted on 12.12.2001 and a panchnama was drawn up which stated “search continues“. On 08.2.2002 & 15.2.2002, further panchanamas were drawn evidencing issuing of prohibitory order. The question arose whether for purposes of computing the limitation u/s 158BE for purposes of framing an assessment u/s 158BC, the period of two years has to be reckoned from the date of the first panchnama or from the date of the last panchnama. HELD by the High Court:

S. 158BE prescribes a time limit of two years from the end of the month in which the last of the
authorisations for search u/s 132 was executed. Explanation 2 provides that the authorisation shall be deemed to have been executed on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued. The panchnama referred to in Explanation 2 refers to a search u/s 132. S. 132 refers to authorisation to enter and search. Once a search is conducted and premises are the subject-matter of prohibitory or restraint order, no authorisation is required to enter the premises for the purposes of inspection. So, there can be only one authorisation and a panchanama drawn as regards the conduct of the search. Once when the search is concluded and the party leaves the premises, the authorisation for the search is fully implemented upon and execution completed. There afterwards, if the Department desires to enter the premises again for purposes of search, fresh authorisation is required. If the department desires to enter the premises merely for inspection of the seized materials, fresh authorisation is not required. A panchnama drawn up during such inspection will not extend the search. The result is that merely because more than one panchanama is drawn in the given case on one authorisation, it does not mean that the last of the panchanama is the one referred to in Explanation 2 to s. 158BE. The limitation period begins as soon as the search party draws the panchnama of the search and leaves the premises. The postponement of the seizure of the articles and issuance of prohibitory order does not extend limitation. On facts, the search was completed on 13.12.2001 with drawing of the panchanama and the search party leaving the premises. The fact that the panchanama contained the observation that “search continues” did not mean that the search was kept in suspended animation so as to extend the limitation to the date when the last panchanama was drawn [C. Ramaiah Reddy 339 ITR 210 (Kar) & Anil Minda 328 ITR 320 (Del) followed].