1991 (9) TMI 9 - HC - Income Tax

Issues Involved:
1. Restraint on income-tax authorities from handing over seized goods to Central Excise Department.
2. Restraint on Central Excise authorities from compelling income-tax authorities to part with seized primary gold.
3. Restraint on Tax Recovery Officer from realizing income-tax dues by selling petitioner's assets until seized assets are sold.
4. Direction to income-tax authorities to sell seized gold and adjust it against tax liability and penalty.
5. Validity of proceedings under the Gold (Control) Act for the confiscation and penalty related to seized gold.
6. Application of res judicata principles to the present writ petitions.
7. Compliance with procedural requirements under the Gold (Control) Act.

Detailed Analysis:

1. Restraint on Income-tax Authorities from Handing Over Seized Goods to Central Excise Department:
The petitioner sought a writ to restrain income-tax authorities from handing over seized goods to the Central Excise Department. The court noted that the income-tax authorities are empowered to assist Gold Control Officers under Section 105 of the Gold (Control) Act. The court held that the income-tax authorities could not be prevented from handing over the seized gold to the excise authorities, especially since the petitioner remains the owner of the gold until its sale.

2. Restraint on Central Excise Authorities from Compelling Income-tax Authorities to Part with Seized Primary Gold:
The petitioner also sought to restrain Central Excise authorities from compelling income-tax authorities to part with the seized primary gold. The court reiterated that under Section 64(b) of the Gold (Control) Act, the Gold Control authorities are empowered to call upon any person, including the Income-tax Officer, to produce the seized primary gold. The court held that the excise authorities were within their jurisdiction to request the income-tax authorities to produce the gold for action under the Gold (Control) Act.

3. Restraint on Tax Recovery Officer from Realizing Income-tax Dues by Selling Petitioner's Assets Until Seized Assets are Sold:
The petitioner sought to restrain the Tax Recovery Officer from realizing income-tax dues by selling his assets until the seized assets were sold. The court observed that under Section 132B(2) of the Income-tax Act, the Income-tax Officer may follow other modes for recovering the outstanding demand. The court held that the steps taken by the Income-tax Officer to recover tax from the petitioner by attachment and sale of his house property were neither illegal nor unauthorized.

4. Direction to Income-tax Authorities to Sell Seized Gold and Adjust It Against Tax Liability and Penalty:
The petitioner requested a direction to income-tax authorities to sell the seized gold and adjust it against his tax liability and penalty. The court referred to its earlier decision in Harinder Singh v. ITO [1987] 166 ITR 763, which held that the income-tax authorities cannot be compelled to sell or adjust the value of the seized primary gold towards tax arrears if the seized assets are subject to confiscation under the Gold (Control) Act.

5. Validity of Proceedings Under the Gold (Control) Act for the Confiscation and Penalty Related to Seized Gold:
The court examined the validity of the proceedings under the Gold (Control) Act. The court noted that the petitioner had been summoned and his statement recorded by the Superintendent, Gold Control. A show-cause notice was issued, and a penalty was levied under Section 74 of the Gold (Control) Act, though the confiscation of the gold was deferred pending receipt from the Income-tax Department. The court held that the proceedings under the Gold (Control) Act were valid and within the jurisdiction of the authorities.

6. Application of Res Judicata Principles to the Present Writ Petitions:
The court dismissed the writ petitions on the ground of res judicata, noting that the reliefs sought were practically the same as those urged and negatived in the earlier decision (Harinder Singh v. ITO [1987] 166 ITR 763). The court held that the said decision had become final as the Supreme Court had declined to grant leave to appeal against it. The principles of res judicata applied, barring the petitioner from re-litigating the same issues.

7. Compliance with Procedural Requirements Under the Gold (Control) Act:
In Writ Petition No. 50 of 1991, the petitioner, Smt. Mohinder Kaur, argued that the order of confiscation was passed without a prior show-cause notice and without giving her an opportunity to show cause against the confiscation. The court found that the show-cause notice issued on January 20, 1983, did not call upon the petitioner to show cause against the confiscation of primary gold. The court held that the procedural requirements under Section 79 of the Gold (Control) Act were not complied with, leading to the quashing of the confiscation order dated December 31, 1990.

Conclusion:
The court dismissed the writ petitions filed by the petitioner on the grounds of res judicata and upheld the validity of the proceedings under the Gold (Control) Act. However, in Writ Petition No. 50 of 1991, the court quashed the order of confiscation due to non-compliance with procedural requirements under the Gold (Control) Act. The court directed that there shall be no order as to costs.

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