2015 (11) TMI 283 - HC - Income Tax

Authorization issued u/s 132A - silver ornaments weighing 228.140 KG came to be seized - Held that - It is apparent that the silver ornaments weighing 228.140 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. For the foregoing reasons the petition partly succeeds and is accordingly allowed to the following extent The respondent authorities are directed to forthwith hand over the seized silver ornaments to the petitioner within a period of four weeks from today in accordance with the provisions of section 132A of the Income Tax Act 1961.

Summary

Issues:
1. Seizure of property without authorization under section 132A of the Income Tax Act, 1961.
2. Validity of orders passed by Additional Sessions Judge and Learned JMFC without proper authorization.
3. Authority of income tax authorities to retain seized ornaments after assessment.

Analysis:
1. The petitioner, engaged in the jewelry business, purchased silver ornaments through bills and tax payments. The authorized person was searched by Railway Police, found with additional silver ornaments, and seized under section 124 of the Bombay Police Act. The Income Tax Department claimed the seized ornaments for investigation. The petitioner sought relief to quash the seizure by the respondents.

2. The petitioner's counsel highlighted that no addition was made in the assessment for the seized ornaments by the Assessing Officer at Varanasi. The respondent's counsel requested appropriate orders based on the assessments for the relevant years. The court noted the seizure of 228.140 KG silver ornaments under section 132A in 2011-2012, but as no addition was made in the assessment for the subsequent year, the authorities were no longer authorized to retain the seized ornaments.

3. The court held that due to the assessment orders accepting the return without adding the seized ornaments, the respondent authorities were directed to return the silver ornaments to the petitioner within four weeks as they could no longer continue with the seizure. The petition partly succeeded, and the rule was made absolute with no costs awarded.