Tribunal finds no justification for using a later panchnama to extend limitation; holds Section 153A assessment invalid
Meetu Kumari | Jul 3, 2025 |
ITAT: Second Panchnama Can’t Extend Limitation, Assessment Time-Barred
A search and seizure was conducted on the premises of the assessee company under Section 132 of the Income Tax Act by the DDIT (Investigation) based on a warrant dated 23.03.2021. The search began on 24.03.2021 and was temporarily wrapped up on 26.03.2021, as noted in the panchnama. On the same day, a restraint order was issued under Section 132(3) for certain digital and physical materials found in the assessee’s cabin.
Later, on 24.05.2021, the department revisited the premises, citing the earlier authorization, and seized SIM cards and data backups. A second panchnama was prepared, stating that the search was “finally concluded.”
The Assessing Officer passed assessment orders under Section 153A on 06.09.2022 for multiple assessment years. The assessee challenged these orders before the CIT(A), mainly on the ground that the assessments were time-barred. The CIT(A) upheld the AO’s orders, prompting the assessee to file appeals before the ITAT.
Issue Raised: Whether the second panchnama dated 24.05.2021 could extend the time limit for completing assessment, or whether the limitation should be computed from the panchnama dated 26.03.2021.
ITAT’s Decision: The ITAT agreed with the assessee’s position. It held that the second panchnama dated 24.05.2021 could not be considered for extending the limitation period under Section 153B of the Income Tax Act. The Tribunal noted that this panchnama did not arise from a fresh warrant or renewed search operation. Instead, it was merely an administrative follow-up to give effect to a restraint order issued under Section 132(3) on 26.03.2021 concerning certain items in the cabin of one of the assessees.
The Tribunal emphasized that the search had effectively concluded on 26.03.2021, and the panchnama drawn on that date, which recorded the seizure of all relevant material, was the last valid panchnama for computing limitation. Accordingly, since the limitation expired on 31.03.2022, the Tribunal held that the assessment order dated 06.09.2022 was barred by limitation and therefore invalid in law.
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