K.S.JHAVERI,J. - (1.) By way of this appeal, the department has challenged the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal filed by the department while dismissing the Cross Objections filed by the assessee.
(2.) This Court while admitting the appeal on 20.09.2005 framed the following substantial questions of law: "1. Whether the findings of the Tribunal are perverse in holding that for the purpose of limitation under Section 158BE, the period is to be counted from the date on which the direction under Section 142(2A) is served on the assessee and not from the date of issue of direction by the Assessing Officer under Section 142(2A)? 2. Whether the order of the Tribunal is perverse in holding that the block assessment order was barred by limitation despite there being specific provision of Section 158BE Explanation 1 clause (ii) that period for exclusion will commence from the day on which the AO gives a direction under Section 142(2A)?"
(3.) The brief facts of the case are that assessee is a partner of M/s Jai Bharat Fruit Co., Subzi Mandoi, Kota engaged in the business of commission agents and trading of vegetables. The premises of the said firm as well as its partners including the assessee were searched on 24.02.1999 under section 132(1) of the Income Tax Act, during which various valuables and incriminating books of account and many other documents were found and seized from the premises of the firms as well as its partners, including the assessee. During the course of search operation, statements of the assessee, his wife and other concerned persons were recorded under section 132(4) of the Income Tax Act, and consequently, a notice under Section 158BC for the period ending on 24.02.1999, was issued by the DCIT, Circle Kota on 29.10.1999, requiring the assessee to file the return on his total income including undisclosed income within 16 days of service thereof. The assessee vide his letter dated 05.11.1999, requested that in view of delay in providing the photocopies of the seized documents, the time for filing the return of the block period may be extended to 45 days. The assessee, however, filed his return of total income, including undisclosed income in the prescribed Form No.2B on 08.12.1999 vide receipt No.00410. In the said return, the assessee declared total undisclosed income of the block period at Rs. Nil, Notice under Section 142 dated 18.12.2000 along with a query letter was issued and duly served upon the assessee fixing case for hearing on 10.01.2001, subsequently the then AO's, having jurisdiction over this case issued further notices under section 143(2) and 142(1) coupled with query letters, which were duly served upon the assessee pursuant to which the assessee made partial compliance. Having regard to the peculiar nature and complexity involved in the seized books of accounts and documents, and in the background of:-(a) None maintenance of regular or proper books of account with regard to certain business activities; (b) Close inter-connection and inter-linking with business associates and seizure of incriminating documents and duplicate sets of accounts, etc showing substantial tax evasion. (c) Incompleteness of financial or accounting records relating to conduct of several business activities during the block period and in the interest of revenue, the Assessing Officer decided to get the accounts audited by an accountant as defined in the Explanation below sub-section (2) of 288. Therefore, with the previous approval of the Commissioner of Income Tax, Jaipur communicated vide his letter No. CIT/JPR/ITO(R&S)/2000-01/2031 of 09/01/2001, direction under sub-section (2A) of section 142 of I.T. Act, 1961 were issued to the assessee vide letter No. JCIT(OSD)/JPR/2000-01/32 dated 18/01/2001 by the Joint Commissioner of Income Tax (OSD), Jaipur, the then Assessing Officer, to get the accounts audited. It is pertinent to note that said notice was served upon the assessee on 23.01.2001. The assessee had furnished the audit report of the nominated auditor M/s C.M. Birla and Co., Kota as per his letter dated 17/07/2001, in the office of the AO.;