The interpretation of statutory provisions regarding time limitation for block assessment under Section 158BE(1)(b) and Explanation 2 focuses on determining when to commence the limitation period.

JUDGMENT :

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned common judgment and order dated 14.09.2010 passed by the High Court of Delhi at New Delhi in ITA No. 582 of 2009 and other allied appeals, by which the Division Bench of the High Court has allowed the said appeals preferred by the Revenue and set aside the orders passed by the Income Tax Appellate Tribunal, New Delhi (for short, ‘ITAT’) holding that the assessment orders passed in the case of the respective assessees 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 Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) was issued, the respective assessees have preferred the present appeals.

2. For the sake of convenience, the facts arising out of the impugned judgment and order passed by the High Court in ITA No. 582/2009 are narrated, which in nutshell are as under:

2.1 That the two warrants of authorization under section 132(1) of the Act for carrying out the search at bank locker with Canara Bank, Kamla Nagar were issued on 13.03.2001 and 26.03.2001. Warrants which were executed on 13.03.2001 were executed on various dates, which are as under:

2.2 During the execution of the search warrants dated 13.03.2001, the Income Tax authorities got the information about a locker belonging to the assessee in a bank. Therefore on 26.03.2001, second authorization was issued for searching the said locker and the same was executed on 26.03.2001 itself. Therefore, the first authorization came on 13.03.2001 was for search at the office and residence of the assessee and it continued for some time and culminated only on 11.04.2001 and the second search authorization dated 26.03.2001 came to be executed on the same date and the Panchnama was drawn on 26.03.2001.

2.3 Thereafter, notice under Section 158 BC for filing block assessment was issued. The assessee filed his return and the assessment was completed by passing assessment order in April, 2003. Similar assessment orders were passed in case of other assessees. The respondents – assessees filed appeals challenging the assessment orders, inter alia, on the ground that the assessment was time barred. According to the assessees, limitation of two years as prescribed under section 158BE of the Act, which was to be computed when Panchnama in respect of the second authorization was executed, i.e., on 26.03.2001. Since that Panchnama was drawn on 26.03.2001, two years period as prescribed under Section 158BE(b) of the Act came to an end by March, 2003 and the assessment order was passed in April, 2003, which according to the assessee was thus time barred. On the other hand, the plea of the department was that since the last Panchnama through related to search authorization dated 13.03.2001 was executed on 11.04.2001, limitation of two years was to be computed from that date and therefore the assessment was passed was well within the prescribed limitation.

2.4 The CIT(A) dismissed the appeals. However, the ITAT allowed the appeals and held that the respective assessment orders were barred by limitation since the Panchnama with respect to last authorization was drawn on 26.03.2001. Against the order passed by the ITAT setting aside the assessment orders on the ground that the same were beyond the period of two years, the Revenue preferred the present appeals before the High Court. By the impugned common judgment and order, the Division Bench of the High Court has allowed the said appeals and has set aside the order passed by the ITAT by holding that as the last Pan