IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19.10.2011 CORAM THE HON'BLE MR.JUSTICE P.JYOTHIMANI AND THE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA T.C.(A).No.998 of 2004 C.Sampathkumar .. Appellant Vs. The Deputy Commissioner of Income Tax Central Circle II(4), Chennai – 34. .. Respondent Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Chennai 'A' Bench dated 28.1.2004 made in IT (S&S) A No.6/Mds/2001 for the block period from 1986-1987 to 1996-1997. (GIR NO.24704S, dated 12.2.2001, on the file the Deputy Commissioner of Income Tax, Central Circle (II) 4, Chennai-34. For Appellant : Mr.J.Balachander for M/s.Sridhar For Respondent : Mr.T.Ravikumar Senior Standing Counsel J U D G M E N T (Delivered by P.JYOTHIMANI, J.) This appeal under Section 260A of the Income Tax Act, 1961 (for short, "the Act") is at the instance of the assessee and is directed against the order dated 28.1.2004 passed by the Appellate Tribunal in IT (S&S) A No.6/Mds/2001 for the block period from 1986-1987 to 1996- 1997. The appeal was admitted on the following questions of law: "1. Whether the Tribunal is correct in upholding the order of the block assessment both on the assumption of jurisdiction and on the point of limitation as envisaged in Chapter XIV-B of the Act? 2. Whether the Tribunal is correct in rejecting the grounds challenging the validity of the assessment under consideration on the point of limitation prescribed in Section 158BE of the Act? https://hcservices.ecourts.gov.in/hcservices/ 3. Whether the Tribunal is correct in confirming the jurisdiction to frame the block assessment in spite of definition of undisclosed income prescribed in the said chapter and further in spite of the fact that the additions were not linked to the result of the search especially with reference to seized materials/documents if any?" 2. By the order under challenge, the Tribunal has remanded the matter to the Assessing Authority for fresh consideration. However, the learned counsel on either side are not in a position to inform this Court as to whether any order has been passed by the Assessing Authority pursuant to the remand. 3. The learned counsel appearing for the appellant has restricted the appeal only in respect of the period of limitation. 4. The issue relates to the block assessment against the assessee for the period from 1986-1987 to 1996-1997 made under Section 144 read with Sections 158BC and 158BD of the Act. On 19.1.1996, when a search was conducted on one A.N.Dyaneswaran, who was holding the post of Chairman-cum-Managing Director of Tamil Nadu Minerals Limited, the assessee, who happens to be his close friend and a non-practicing Chartered Accountant, arrived at the scene. It was at that time the Department has effected search on the assessee, which resulted in seizure of cash of ` 2.16 Lakhs and US$ 5014, and various other documents which indicated that the assessee had been helping the said A.N.Dyaneswaran in certain activities relating to the Trust created by Dr.Dharmambal, mother of A.N.Dyaneswaran. 5. The contention raised by the learned counsel for the assessee is that when search was conducted on the assessee, which is well within the power of the authority as per Section 132(1)(B)(iia) of the Act which enables such search even on any third person, the assessment order was passed on 12.2.2001 and that is beyond the period of limitation prescribed under the Act. In this regard, it is relevant to extract Section 132(1)(B)(iia) of the Act, which is as follows: "Section 132. Search and seizure. (1) ... (B) ... (iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing" https://hcservices.ecourts.gov.in/hcservices/ 6. It is seen from the order of the Tribunal that the assessment has been effected under Section 158BD of the Act, which is as follows: "Section 158BD. Undisclosed Income of any other person: Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132 or whose books of account or other documents or any assets were requisitioned under Section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall under Section 158BC against such other person and the provisions of this Chapter shall apply accordingly." The period of limitation for such assessment contemplated under Section 158BE(2)(a) of the Act, which is as follows, is one year from the end of the month in which the notice under the Chapter was served. "Section 158BE. Time limit for completion of block assessment. (1) ... (2) ... (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 day of January, 1997" 7. Even though it is the contention of the learned counsel for the assessee that the date of search, namely 19.1.1996, should be taken into consideration for the purpose of reckoning the period of limitation, in which event the assessment order will be beyond the period of limitation, it is seen and not in dispute that the notice was issued to the petitioner on 28.11.1996, as elicited by the Tribunal in the impugned order. If 28.11.1996 is taken into consideration for reckoning the period of limitation, the assessment is made within time. 8. It is relevant to point out that in the writ petition filed by the assessee himself against the action taken under the Foreign Exchange Regulation Act, this Court granted interim stay on 19.11.1997, which came to be vacated on 12.1.2001. It was admittedly after vacating the stay order, the assessment order came to be passed, which is on 12.2.2001, which is well within the period of limitation as per the provision extracted above. In fact, the Tribunal has considered this aspect and held categorically that the https://hcservices.ecourts.gov.in/hcservices/ order of assessment passed is well within the period of limitation. The relevant portion of the order of the Tribunal is as follows: "24. Coming to the objection that the assessee's case does not fall within the ambit of Section 158BC read with Section 158BD, it is submitted that the steps were taken to bring under Section 158BD rightly. Coming to the objection of the assessee with regard to the lapse of time, it is the submission of the revenue that in the case of the assessee, the date of service was 28.11.1996 and the assessment was to be completed on or before 30.11.1997. The date of the order of the Hon'ble High Court for stay was 19.11.1997 and the stay was vacated on 12.1.2001. Therefore, the stay period works out to 1536 days whereas the total available period including the stay is 1536 days and hence the assessment order since passed within 1535 days, it is in order and in time. Even otherwise, the Hon'ble High Court's order vacating the stay was received in the Commissioner's office on 1.2.2001. The limitation for passing the block assessment expires on 12.2.2001. Hence, the assessment was completed on that date." 9. No other point has been urged by the assessee except the above point. For the foregoing reasons, we answer the substantial questions of law against the assessee. The appeal stands dismissed. No costs. Sd/ Asst. Registrar /true copy/ Sub Asst.Registrar sasi To: The Assistant Registrar, Income Tax Appellate Tribunal Chennai Bench "A", Chennai. 2.The Deputy Commissioner of Income Tax Central Circle II(4), Chennai – 34. 1 cc To M/s.J.Balachander, Advocate, SR.64446 T.C.(A).No.998 of 2004 MP(CO) RH (9.11.11) https://hcservices.ecourts.gov.in/hcservices/