Source: https://www.lawweb.in/2017/04/leading-judgment-on-basic-concept-of.html
Timestamp: 2019-04-24 09:57:23+00:00

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These provisions demonstrate that a search and seizure under the said Act has to be carried out in the presence of at least two respectable inhabitants of the locality where the search and seizure is conducted. These respectable inhabitants are witnesses to the search and seizure and are known as "panchas". The documentation of what they witness is known as the panchnama. The word 'nama', refers to a written document. Its type is usually determined by the word which is combined with it as a suffix. Examples being, nikah-nama (the written muslim marriage contract), hiba-nama (gift deed, the word hiba meaning - gift), wasiyat-nama (written will) and so on. So a panchnama is a written record of what the panch has witnessed. In Mohan Lal v. Emperor MANU/MH/0124/1940 : AIR 1941 Bom 149, it was observed that "[the panchnama is merely a record of what a panch sees...." Similarly, the Gujarat High Court in the case of Valibhai Omarji v. The State MANU/GJ/0067/1963 : AIR1963Guj145 noted that "[a] Panchanama is essentially a document recording certain things which occur in the presence of Panchas and which are seen and heard by them." Again in The State of Maharashtra v. Kacharadas D. Bhalgar MANU/MH/0222/1978 : (1978)80BOMLR396 , a panchnama was stated to be "a memorandum of what happens in the presence of the panchas as seen by them and of what they hear".
• Search and seizure - Prohibitory order under Section 132(3) When amount to seizure--Where seizure of a thing is not practicable owing to the volume, weight or other physical characterstics or due to its being of dangerous nature, the authorised officer may issue a restraint order to the owner or possessor of thing and in such a case, as per proviso to Section 132(1), the order would operate as seizure. Where, however, a restraint order is issued under Section 132(3) for reasons other than those mentioned above, the order, as clarified by the Explanation to Section 132(3), would not operate as seizure. Therefore, the restraint order with regard to cash box in almirah found in the premises of the assessee where jewellery was placed was one which was passed under Section 132(3), it follows that the restraint order did not amount to seizure of jewellery or the cash box or the almirah.
Search and seizure - Block assessment Limitation under Section 158BE--Search and seizure action conducted on 17-11-2000 and on the same day Panchnama was drawn. Cash box of almirah was sealed and restraint order under Section 132(3) was passed. No further seizure was made from the searched premises placed under restraint order. On 3-1-2001, the restraint order was revoked and another panchnama was drawn on this date which seemed to be in pursuant to the same earlier authorization dated 16-11-2000 which was used for the search conducted on 17-11-2000. Since no search, in fact, had been conducted on 3-1-2001, the assessee contended that search could not have been said to be conducted on 3-1-2001 and period of limitation could not be extended to 31-1-2003. Hence, as per assessee the assessment order passed on 30-1-2003 was beyond the time limit. Held: Nothing was searched for after 17-11-2000 and hence, search was concluded on that date. Mere mention in the panchnama that search had been temporarily concluded for that day to be subsequently resumed, would not make any difference. Therefore, the Pancnama dated 17-11-2000, which was relatable to conclusion of search, was only the real panchnama as mentioned in Explanation 2(A) to Section 158BE and not the panchnama dated 3-1-2001 which was merely a release order. However, the panchnama dated 3-1-2001 was not legal document on account of unexplained gap of about a month and half, i.e., from 17-11-2000 to 3-1-2001. In that situation, date 3-1-2001 could not be regarded as the date on which the warrant of authorization was executed. As the search and seizure was completed on 17-11-2000, the assessment order was, therefore, required to be passed on or before 30-11-2002 i.e. being the two years from the end of month in which search was conducted. Therefore, assessment made on 30-1-2003 was beyond the period of limitation.
Search and seizure - Block assessment Meaning of 'Panchnama'--The 'Panchnama', that is mentioned in Explanation 2(a) to Section 158BE, is a panchnama which documents the conclusion of search. If panchnama does not from the facts recorded therein, reveal that a search was at all carried out on the day to which it relates, then it would not be a Panchnama relating to a search and, consequently, it would not be the Panchnama of the type which finds mentioned in the Explanation 2(a) to Section 158BE. The date mentioned in the last panchnama drawn is deemed to be the date of conclusion of search.
1. This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act') is directed against the order dated 14.11.2006 passed by the Income Tax Appellate Tribunal in IT (SS) A No. 302/Del/04 pertaining to the block period 01.04.1990 to 17.11.2000. The appellant/revenue is aggrieved by the fact that the Tribunal held the block assessment order to be beyond the time specified under Section 158BE(1)(b) of the said Act.
3. These paragraphs of the panchnama of 17.11.2000 reveal that the cash box of the almirah was sealed and a restraint order under Section 132(3) of the said Act was passed in respect of the contents thereof. It is an admitted position that the contents of the sealed cash box were nothing but the jewellery listed and valued as per Annexure-5 to the panchnama. The revenue also contended that the panchnama also made it clear that the search had not finally concluded on 17.11.2000 but, had only "temporarily concluded for the day to be commenced subsequently". This, however, is a bone of contention in as much as the assessee's case is that the search, in fact, concluded on 17.11.2000 and no further search was conducted thereafter. We shall examine these contentions later. For now, we need to complete the narration of the sequence of events.
7. The notice under Section 158BC was issued on 12.04.2002 and served upon the assessee on 22.04.2002. The block assessment order was passed on 30.01.2003. Before the Commissioner of Income Tax (Appeals) [hereinafter referred to as 'the CIT(A)'], the assessee, inter alia, contended that the search had, in fact, concluded on 17.11.2000 as there was no search at all on 03.01.2001. The consequence of this would be that the period of limitation for passing the assessment order would end on 30.11.2002, being two years from the end of the month in which the search was concluded. The assessee contended that since no search had, in fact, been carried out on 03.01.2001, that date could not be regarded as the date on which the search had concluded and, therefore, the period of limitation could not be extended to 31.01.2003. This plea was rejected by the CIT(A) on the ground that since the "last" panchnama was drawn on 03.01.2001, the assessment order, which was passed on 30.01.2003, was within the time allowed under Section 158BE(1)(b) of the said Act.
8. Allowing the appeal filed by the assessee, the Tribunal was of the view that the search and seizure was completed on 17.11.2000 and that, therefore, the assessment order was required to be passed on or before 30.11.2002. The Tribunal held that since the assessment was made on 30.01.2003, it was beyond the prescribed time limit. The Tribunal also held that the restraint order and its subsequent revocation on 03.01.2001 could not extend the period of limitation and that the panchnama of 03.01.2001 was "merely a release order".
9. The revenue is in appeal before us against the impugned order passed by the Tribunal. Mrs Bansal, appearing for the appellant/revenue argued that several substantial questions of law arose for our consideration. She submitted that since the "last" panchnama was drawn up on 03.01.2001, in view of the provisions of Section 158BE(1)(b) and Explanation 2(a) to Section 158BE, this would have to be deemed to be the date on which the last of the authorizations for search was executed. She placed reliance on (1) M.B. Lal v. CIT MANU/DE/1381/2005 : 279ITR298(Delhi) ; and (2) VLS Finance Ltd. v. CIT MANU/DE/9752/2006 : 289ITR286(Delhi) . On the other hand, the learned Counsel for the respondent/assessee contended that the impugned order did not call for interference. He submitted that no substantial questions of law arose for the consideration of this court inasmuch as the issues sought to raised by the revenue in this appeal, already stand settled by various decisions including (1) C. Balakrishnan Nair (Dr.) v. CIT MANU/KE/0664/1999 : 237ITR70(Ker) ; (2) CIT v. Mrs Sandhya P. Naik MANU/MH/0592/2001 : 253ITR534(Bom) ; (3) CIT v. Sarb Consulate Marine Products P. Ltd. MANU/DE/1342/2007 : 294 ITR 444; and (4) CIT v. Deepak Aggarwal ITA 953/2008 decided by this Court on 12.08.2008.
Explanation. - For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this Sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under Clause (iii) of Sub-section (1).
15. These provisions demonstrate that a search and seizure under the said Act has to be carried out in the presence of at least two respectable inhabitants of the locality where the search and seizure is conducted. These respectable inhabitants are witnesses to the search and seizure and are known as "panchas". The documentation of what they witness is known as the panchnama. The word 'nama', refers to a written document. Its type is usually determined by the word which is combined with it as a suffix. Examples being, nikah-nama (the written muslim marriage contract), hiba-nama (gift deed, the word hiba meaning - gift), wasiyat-nama (written will) and so on. So a panchnama is a written record of what the panch has witnessed. In Mohan Lal v. Emperor MANU/MH/0124/1940 : AIR 1941 Bom 149, it was observed that "[the panchnama is merely a record of what a panch sees...." Similarly, the Gujarat High Court in the case of Valibhai Omarji v. The State MANU/GJ/0067/1963 : AIR1963Guj145 noted that "[a] Panchanama is essentially a document recording certain things which occur in the presence of Panchas and which are seen and heard by them." Again in The State of Maharashtra v. Kacharadas D. Bhalgar MANU/MH/0222/1978 : (1978)80BOMLR396 , a panchnama was stated to be "a memorandum of what happens in the presence of the panchas as seen by them and of what they hear".
17. This discussion leads us to the question - was the panchnama of 03.01.2001 of the type mentioned in the said Explanation 2(a)? From the facts narrated above, it is clear that the panchnama of 03.01.2001 itself reveals that nothing was seized on that date. Nor was anything "found" on that date. In fact, no search was conducted. The jewellery that was put in the cash box of the almirah had already been searched, found, inventorised and valued by the DVO on 17.11.2000 itself. Nothing remained to be searched thereafter. And, in fact, no further search was conducted after 17.11.2000. Obviously, nothing else could be found. All that was done on 03.01.2001, in the presence of the witnesses (panchas), was that the seals were removed from the cash box and the almirah and the keys were handed back to the assessee. Essentially, the revocation of the restraint order was given effect to. This is exactly what the Tribunal found as a fact and meant when it concluded that the panchnama dated 03.01.2001 was merely a release order and could not extend the period of limitation.
The term 'search' as applied to searches and seizures, is an examination of a man's house or other buildings or premises, or of his person, with a view to the discovery of contraband or illicit or stolen property, or some evidence of guilt to be used in the prosecution of a criminal action for some crime or offence with which he is charged. As used in this connection, the term implies some exploratory investigation, or an invasion and quest, a looking for or seeking out. The quest may be secret, intrusive, or accomplished by force, and it has been held that a search implies some sort of force, either actual or constructive, much or little. A search implies a prying into hidden places for that which is concealed and that the object searched for has been hidden or intentionally put out of the way. While it has been said that ordinarily searching is a function of sight, it is generally held that mere looking at that which is open to view is not a 'search'.
All searches are inspections, but all inspections are not searches. A search is a thorough inspection of a man's house, building or premises or of his person, with the object of discovering some material which would furnish evidence of guilt for some offence with which he is charged. It implies a prying into hidden places for that which is concealed. If the object sought for is always in plain sight, then there is no search.
22. In Sandhya Naik's case (supra), the Bombay High Court observed that "by simply stating in the panchanama that the search is temporarily suspended, the authorised officer cannot keep the search proceedings in operation by passing a restraint order under Section 132(3)" and that "by passing a restraint order, the time limit available for framing of the order cannot be extended".
This being the position, it cannot be said that the last panchnama drawn up in respect of the search and seizure operation pertaining to the assessee, in terms of Explanation 2 to Section 158BE of the Act, was drawn up on September 14, 1998 - it was actually drawn on November 6, 1996 - and the period of limitation must, therefore, run from that date onwards.
26. These decisions clearly establish (i) a search is essentially an invasion of the privacy of the person whose property or person is subjected to search; (ii) normally, a search must be continuous; (iii) if it cannot be continuous for some plausible reason, the hiatus in the search must be explained; (iv) if no cogent or plausible reason is shown for the hiatus in the search, the second or "resumed" search would be illegal; (v) by merely mentioning in the panchnama that a search has been temporarily suspended does not, ipso facto, continue the search. It would have to be seen as a fact as to whether the search continued or had concluded; (vi) merely because a panchnama is drawn up on a particular date, it does not mean that a search was conducted and/or concluded on that date; (vii) the panchnama must be a record of a search or seizure for it to qualify as the panchnama mentioned in Explanation 2(a) to Section 158BE of the said Act.
29. It is obvious that the search started on 02.02.2000 and continued till 29.06.2000, during which period various articles and documents were seized. So, there was no unexplained break in the search. A finding was also recorded to the effect that there was no delay in executing the search. And that, there was no artificial extension of the search proceedings. It is in these circumstances that the court observed- "If that be so, the search would end only upon revocation of the order passed under Section 132(3) which, in the instant case, was revoked only on June 29, 2000". The facts in the present appeal are entirely different and would not warrant such a deduction. In any event, there is nothing in M.B. Lal (supra) which takes away anything from what has been said in the decisions cited on behalf of the respondent.

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