Holding

The limitation period for block assessment under Section 158BC/158BE starts from the date the last panchnama is drawn.

Summary

The assessees were searched under two authorisations issued on 13‑03‑2001 and 26‑03‑2001, resulting in panchnamas drawn on 11‑04‑2001 and 26‑03‑2001 respectively. Block assessment notices were issued and assessment orders were passed in April 2003, which the assessees challenged as time‑barred under Section 158BE of the Income Tax Act. The central issue was whether the two‑year limitation period for completing a block assessment begins from the date of the last authorisation or from the date the last panchnama was drawn. The Supreme Court examined Section 158BE, its Explanation 2, and the precedent set in VLS Finance Ltd., concluding that the relevant date is the drawing of the last panchnama, not the authorisation date. Consequently, the limitation period started on 11‑04‑2001, making the assessment orders timely. The Court dismissed the appeals, upholding the High Court’s decision.

Issues considered

Does the two‑year limitation period for block assessment under Section 158BC/158BE commence from the date of the last authorisation for search or from the date the last panchnama is drawn?

Legislation cited

Income Tax Act, 1961s. 132, s. 158, s. 158BC, s. 158BE

Subjects

Income TaxBlock assessmentLimitation periodSection 158BEPanchnamaSearch authorisationVLS Finance

Judgment

1150 [2023]
SUPREME COURT 3 S.C.R. 1150
REPORTS [2023] 3 S.C.R.

A ANIL MINDA AND OTHERS
v.
COMMISSIONER OF INCOME TAX
(Civil Appeal Nos. 345-350 of 2012)
B MARCH 24, 2023
[M. R. SHAH AND C. T. RAVIKUMAR, JJ.]
Income Tax Act, 1961 – ss. 132, 158, 158BC, 158BE(b) –
Period of Limitation – Commencement of – Whether the period of
limitation of two years for the block assessment under Section
C
158BC/158BE would commence from the date of the Panchnama
last drawn or the date of the last authorization – Held: Supreme
Court in the case of VLS Finance Limited held that the relevant date
would be the date on which the Panchnama is drawn and not the
date on which the authorization/s is/are are issued – It cannot be
D disputed that the block assessment proceedings are initiated on the
basis of the entire material collected during the search/s and on the
basis of the respective Panchnama/s drawn – Therefore, the date of
the Panchnama last drawn can be said to be the relevant date and
can be said to be the starting point of limitation of two years for
completing the block assessment proceedings – Appeal allowed.
E
VLS Finance Limited & Another v. Commissioner of
Income Tax & Another, (2016) 12 SCC 32 : [2016] 3
SCR 390 – relied on.
C.Ramaiah Reddy v. Assistant Commissioner of Income
F Tax, (2011) 244 CTR 126 – referred to.
Case Law Reference
[2016] 3 SCR 390 relied on Para 4.1, 7
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.345-
G 350 of 2012.
From the Judgment and Order dated 14.09.2010 of the High Court
of Delhi at New Delhi in ITA Nos.582, 527, 593, 605, 618 and 772 of
2009.
Dr. Rakesh Gupta, Ambhoj Kumar Sinha, Somil Aggarwal, Advs.
H for the Appellants.
1150
ANIL MINDA AND OTHERS v. COMMISSIONER OF INCOME 1151
TAX

Balbir Singh, ASG, Arijit Prasad, Sr. Adv., Rupesh Kumar, Prahlad A
Singh, Mrs. Gargi Khanna, Prashant Singh, Shradha Deshmukh, Raj
Bahadur Yadav, Advs. for the Respondent.
The Judgment of the Court was delivered by
M. R. SHAH, J.
B
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 C
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 D
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) E
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:
F

G

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 H
1152 SUPREME COURT REPORTS [2023] 3 S.C.R.

A 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.
B 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
C 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,
D 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.
E 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
F 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
Panchnama though related to search authorization dated 13.03.2001 was
executed on 11.04.2001, limitation of two years was to be computed
G from 11.04.2001. The impugned common judgment and order passed by
the High Court is the subject matter of present appeals.
3. Dr. Rakesh Gupta, learned counsel has appeared on behalf of
the appellants – assessees and Shri Balbir Singh, learned ASG has
appeared on behalf of the Revenue.
H
ANIL MINDA AND OTHERS v. COMMISSIONER OF INCOME 1153
TAX [M. R. SHAH, J.]

3.1 Learned counsel appearing on behalf of the respective A
assessees has vehemently submitted that in the facts and circumstances
of the case, the High Court has erred in holding that the respective
assessment orders were within the period of two years and therefore
not barred by limitation.
3.2 It is submitted that in the present case the last authorization B
was on 26.03.2001 and therefore as per Explanation 2 to Section 158BE
of the Act the last authorization would be the starting point of limitation.
It is submitted that therefore even if the first authorization dated
13.03.2001 was executed on a later date i.e., on 11.04.2001, that would
be of no consequence and for the purpose of reckoning the limitation
period, the first authorization is irrelevant and it is the “last of the C
authorization” which has to be kept in mind. It is submitted that in the
present case, the last authorization is dated 26.03.2001 which was
executed on the same date and therefore the period of two years is to be
counted from that date.
3.3 Learned counsel appearing on behalf of the respective D
assessees has relied upon the decision of the Karnataka High Court in
the case of C.Ramaiah Reddy v. Assistant Commissioner of Income
Tax, (2011) 244 CTR 126 (Karn.) (para 47) in support of his
submission.
4. Shri Balbir Singh, learned ASG appearing on behalf of the
E
Revenue has vehemently submitted that as per Explanation 2 of Section
158BE of the Act, when it is a case of search, period of limitation is to be
counted from the date on which the last Panchnama was drawn. It is
submitted that in the present case, the last Panchnama on conclusion of
the search was drawn on 11.04.2001 and therefore the limitation period
of two years would start from 11.04.2001. It is submitted that if the F
submission on behalf of the assessees is accepted, in that case, the
Explanation 2 to Section 158BE would become nugatory and redundant.
4.1 It is further submitted by the learned ASG appearing on behalf
of the Revenue that Explanation 2 to Section 158BE has been specifically
inserted with a view to give last of the Panchnama as the starting point G
of limitation. It is submitted that the time for completion of the block
assessment under Section 158BC/158BE is the conclusion of search/
drawing of last Panchnama which will be relevant and not the dates of
issuance of various authorizations. It is submitted that in a given case
where number of authorizations are issued and relevant material/s is/are
collected during the search on different dates on the basis of the different H
1154 SUPREME COURT REPORTS [2023] 3 S.C.R.

A authorizations, ultimately the assessment proceedings would be on the
basis of the entire material collected during the search and on the basis
of the Panchnama drawn. It is submitted that therefore the date on
which the last Panchnama was drawn is the relevant date for the purpose
of block assessment. In support of his submission, Shri Balbir Singh,
learned ASG has heavily relied upon the decision of this Court in the
B case of VLS Finance Limited & Another v. Commissioner of Income
Tax & Another, (2016) 12 SCC 32 (paragraphs 26 to 28).
5. Having heard learned counsel for the respective parties, the
short question which is posed for the consideration of this Court is, whether
the period of limitation of two years for the block assessment under
C Section 158BC/158BE would commence from the date of the Panchnama
last drawn or the date of the last authorization?
6. While considering the aforesaid issue, Section 158BE which
provides for time limitation for commencement of block assessment is
required to be referred to, which is as under:
“Section 158BE
D
Time Limit for Completion of Block Assessment
(1) The order under Section 158-BC shall be passed—
(a) within one year from the end of the month in which the last of
the authorisations for search under Section 132 or for requisition
under Section 132-A, as the case may be, was executed in cases
E where a search is initiated or books of account or other documents
or any assets are requisitioned after the 30th day of June, 1995
but before the 1st day of January, 1997;
(b) within two years from the end of the month in which the last
of the authorisations for search under Section 132 or for requisition
F under Section 132-A, as the case may be, was executed in cases
where a search is initiated or books of account or other documents
or any assets are requisitioned on or after the 1st day of January,
1997.
(2) The period of limitation for completion of block assessment in
the case of the other person referred to in Section 158-BD shall
G be—
(a) one year from the end of the month in which the notice under
this Chapter was served on such other person in respect of search
initiated or books of account or other documents or any assets
requisitioned after the 30th day of June, 1995 but before the 1st
H day of January, 1997; and
ANIL MINDA AND OTHERS v. COMMISSIONER OF INCOME 1155
TAX [M. R. SHAH, J.]

(b) two years from the end of the month in which the notice A
under this Chapter was served on such other person in respect of
search initiated or books of account or other documents or any
assets are requisitioned on or after the 1st day of January, 1997.
[Explanation 1.—In computing the period of limitation for the
purposes of this section,— B
(i) the period during which the assessment proceeding is stayed
by an order or injunction of any court; or
(ii) the period commencing from the day on which the Assessing
Officer directs the assessee to get his accounts audited under
sub-section (2-A) of Section 142 and ending on the day on which C
the assessee is required to furnish a report of such audit under
that sub-section; or
(iii) the time taken in reopening the whole or any part of the
proceeding or giving an opportunity to the assessee to be re-heard
under the proviso to Section 129; or
D
(iv) in a case where an application made before the Settlement
Commission under Section 245-C is rejected by it or is not allowed
to be proceeded with by it, the period commencing on the date on
which such application is made and ending with the date on which
the order under sub-section (1) of Section 245-D is received by
the [Principal Commissioner or Commissioner] under sub-section E
(2) of that section,shall be excluded:
Provided that where immediately after the exclusion of the
aforesaid period, the period of limitation referred to in sub-section
(1) or sub-section (2) available to the Assessing Officer for making
an order under clause (c) of Section 158-BC is less than sixty F
days, such remaining period shall be extended to sixty days and
the aforesaid period of limitation shall be deemed to be extended
accordingly.]
[Explanation 2.—For the removal of doubts, it is hereby declared
that the authorisation referred to in sub-section (1) shall be deemed
to have been executed,— G
(a) in the case of search, 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;

H
1156 SUPREME COURT REPORTS [2023] 3 S.C.R.

A (b) in the case of requisition under Section 132-A, on the actual
receipt of the books of account or other documents or assets by
the Authorised Officer.]”
7. In the present case, the first authorization was issued on
13.03.2001 which ultimately and finally concluded and/or culminated into
B Panchnama on 11.04.2001. However, in between there was one another
authorization dated 26.03.2001 with respect to one locker and the same
was executed on 26.03.2001 itself and Panchnama for the same was
drawn on 26.03.2001. However, Panchnama drawn with respect to
authorization dated 13.03.2001 was lastly drawn on 11.04.2001. As
observed and held by this Court in the case of VLS Finance Limited
C (supra), the relevant date would be the date on which the Panchnama is
drawn and not the date on which the authorization/s is/are are issued. It
cannot be disputed that the block assessment proceedings are initiated
on the basis of the entire material collected during the search/s and on
the basis of the respective Panchnama/s drawn. Therefore, the date of
D the Panchnama last drawn can be said to be the relevant date and can
be said to be the starting point of limitation of two years for completing
the block assessment proceedings.
8. If the submission on behalf of the respective assessees that the
date of the last authorization is to be considered for the purpose of starting
point of limitation of two years, in that case, the entire object and purpose
E of Explanation 2 to Section 158BE would be frustrated. If the said
submission is accepted, in that case, the question which is required to be
considered is what would happen to those material collected during the
search after the last Panchnama. It cannot be disputed that there may
be number of searches. Thus, the view taken by the High Court that the
F date of the Panchnama last drawn would be the relevant date for
considering the period of limitation of two years and not the last date of
authorization, we are in complete agreement with the view taken by the
High Court.
9. In view of the above and for the reasons stated above, all these
appeals fail and the same deserve to be dismissed and are accordingly
G
dismissed. However, in the facts and circumstances of the case, there
shall be no order as to costs.

Ankit Gyan Appeals dismissed.
(Assisted by : Abhishek Pratap Singh and Mahendra Yadav, LCRAs)
H