2015 (10) TMI 1280 - HC - Income Tax

Authorization issued under section 132A - return of seizure of the ornaments seeked - Held that - Silver ornaments weighing 219.841 KG came to be seized by the respondent authorities in exercise of powers under section 132A of the Income Tax Act, 1961 in the financial year 2011- 2012. Thereafter, the assessment came to be framed by the Assessing Officer of the petitioner at Varanasi for assessment year 2012-13, whereby after taking note of such seizure made by the authorities at Surat, the return as filed by the petitioner came to be accepted without making any addition on account of such seizure. In the aforesaid premises, the respondent authorities are no longer authorized to continue with such seizure made by them under section 132A of the Act. Under the circumstances, without entering into the merits of the validity of the authorization issued under section 132A of the Act, this court is of the opinion that in view of the assessment orders made in the case of the petitioner, the respondent authorities can no longer continue with the seizure of the ornaments in question and the same are required to forthwith be returned to the petitioner. - Decided in favour of assessee.

Summary

Issues:
Seizure of property without authorization under section 132A of the Income Tax Act, 1961, validity of impugned orders passed by Additional Sessions Judge and JMFC, authority to retain seized ornaments, relief sought by the petitioner.

Analysis:
The petitioner, engaged in the jewelry business, purchased silver ornaments through bills and tax payments. The authorized person was searched by Railway Police while carrying purchased silver ornaments, leading to the seizure of 219.841 kg silver ornaments worth Rs. 48,79,923. The Income Tax Department claimed the seized ornaments for investigation under the Income Tax Act, 1961, after being informed by Railway Police. The petitioner sought relief to quash the seizure and impugned orders, emphasizing the lack of authorization under section 132A.

The petitioner's counsel highlighted that the assessment for the relevant year did not include any addition related to the seized ornaments, indicating that the authorities had no basis to retain the ornaments. On the other hand, the respondent's counsel suggested that appropriate orders be passed concerning the assessments for the relevant years. The court noted the seizure of 219.841 kg silver ornaments by the authorities under section 132A but emphasized that the assessment for the subsequent year did not include any addition related to the seizure. Consequently, the court held that the authorities no longer had the authorization to retain the seized ornaments.

Ultimately, the court partially allowed the petition, directing the respondent authorities to return the seized silver ornaments to the petitioner within four weeks, in accordance with the provisions of section 132A of the Income Tax Act, 1961. The rule was made absolute to this extent with no order as to costs.