O.P. CHANANA vs. ACIT, CIRCLE-1(1),,

ITSSA 65/DEL/2005Status: DisposedITAT Delhi07 January 202616 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order dated 26.03.2002 passed under Section 158BC was barred by limitation under Section 158BE(1) of the Income Tax Act, 1961. The Tribunal noted that the first and last authorization for search was executed on 17.12.1999. Based on this, the block assessment should have been completed by 31.12.2001. Even considering the operation of the locker on 27.03.2000, or the order under Section 132(3) passed on 17.12.1999 which has a maximum validity of 60 days (expiring on 17.02.2000) unless extended, the two-year period for assessment would fall in February 2002. Since there was no indication of extension for the Section 132(3) order, the assessment order dated 26.03.2002 was found to be beyond the prescribed limitation period and thus void ab initio. Consequently, the Tribunal set aside the order of the lower authorities and quashed the impugned assessment order. All other grounds of appeal concerning the merits of the additions became academic. The appeal of the Revenue was dismissed as infructuous.

What were the facts?

These appeals by the assessee and the revenue are against an order dated 29.12.2004 by the CIT(A), which arose from an assessment order dated 26.03.2002 passed under Section 158BC of the Income Tax Act, 1961. The assessment years involved are from 01.04.1989 to 17.12.1999. The Assessing Officer (AO) made various additions as undisclosed investment and expenditure. The CIT(A) deleted a significant portion of these additions. The Revenue's appeal challenges these deletions, while the assessee's appeal challenges the additions sustained by the CIT(A). The core of the dispute revolves around the validity of the assessment order itself, specifically its timeliness.

What were the issues?

1. Whether the assessment order dated 26.03.2002 passed under Section 158BC is barred by limitation as per Section 158BE(1) of the Income Tax Act, 1961? Assessee's Contention: The assessee argues that the assessment order is time-barred. The last authorization for search was executed on 17.12.1999. As per Section 158BE(1), the block assessment should have been completed by 31.12.2001. The assessment order dated 26.03.2002 is therefore beyond the prescribed period. Even if the operation of a locker on 27.03.2000 is considered, and the order under Section 132(3) on 17.12.1999 is considered, which has a maximum validity of 60 days unless extended, the limitation period would fall in February 2002, making the assessment order still time-barred. Revenue's Contention: The Revenue contended that the search was ongoing until the last operation of the locker on 27.03.2000, thus extending the limitation period. They also argued that the remarks in the 'punchnama' of the search being 'finally concluded' on 17.12.1999 might not be conclusive. The Revenue also relied on various provisions related to the exclusion of periods for computing limitation.

Which sections of the Income-tax Act were involved?

Section 158BC,Section 158BE(1),Section 132(3),Section 132(8A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, ‘F’: NEW DELHI

Before: MS. MADHUMITA ROY

For Appellant: Dr. Rakesh Gupta, Adv, Shri Somil Agarwal, Adv. and Shri Saksham Agarwal, Adv
For Respondent: Shri Srikant Namdeo, CIT-DR
Hearing: 05.01.2026Pronounced: 07.01.2026

PER AMITABH SHUKLA, AM,

These captioned appeals have been preferred by the assessee as well as by the Revenue against order dated 29.12.2004 of learned Commissioner of IT(SS)A No.124 & 65/Del/2005

Income Tax (Appeals)-IV, New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment order dated 26.03.2002 passed u/s 158BC of the

The order continues below.

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