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2015 (12) TMI 630 - HC - Income TaxWithholding of the silver bullion - Held that - It has been an admitted fact that a routine checking has been conducted during the Lok Sabha election in the year 2014 and M.P. Assembly election in the year 2013. Moreover, according to the requisition filed by the assessee petitioner, it clearly indicated from the books of accounts that the goods belonging to Rupam s/o Rajendra Gorecha and all necessary documents were filed before the Income Tax Department and the application under Section 132-A(1)(c) of the Income Tax Act was not at all justified. Considering the facts, we find that neither the police nor the Commissioner, Income Tax had at the stage of proceedings gathered any information on record regarding the ownership of the silver to dispute the version of the assessee company. It was then fallacious on the part of the learned Judge of the lower Court, Badnagar, Ujjain to have entertained the application under Section 132-A of the ITA by the department. At the same time the fact drawn to the notice of this Court that the proceedings under Section 132-A (1)(c) of the ITA regarding assessment of the assessee company is still pending consideration before the Assessment Officer. We find that the learned Judge of the lower Court was right in considering the payment of security on production of silver bullion etc.and hence, there is no infirmity in the impugned order in this regard. The condition was imposed by way of abundant caution. Both the writ petitions are disposed of by holding that the impugned order dated 23/4/2014 is set aside and it is directed that fresh application be moved by the assessee company and liberty is granted to the Income Tax Department to move an application under Section 132-A, if it has come to any fresh information regarding the ownership of the silver bullion etc.
Issues Involved:
1. Legality of the order passed by JMFC, Badnagar, Ujjain. 2. Validity of requisition under Section 132-A of the Income Tax Act. 3. Retention of assets beyond 120 days by the Income Tax Department. 4. Imposition of conditions by the Trial Court for the release of assets. Detailed Analysis: 1. Legality of the Order Passed by JMFC, Badnagar, Ujjain The writ petitions were filed challenging the order dated 23/4/2014 passed by the JMFC, Badnagar, Ujjain. The JMFC had ordered that security be paid for the supurdgi (custody) of the cash and silver bullion to the Income Tax Department. The Income Tax Department contended that the requisitioning of assets under Section 132-A of the Income Tax Act should not be accompanied by any conditions, and such conditions are bad in law. 2. Validity of Requisition Under Section 132-A of the Income Tax Act The requisition was executed under Section 132-A of the Income Tax Act by the Director of Income Tax (Investigation), Bhopal, on 12/3/2014. The respondents argued that the requisition is valid only for 120 days, and since there was no outstanding tax, interest, or penalty, the assets should be returned. The Income Tax Department maintained that the assets were seized due to lack of satisfactory explanation from the respondent regarding the cash and silver found in his possession. 3. Retention of Assets Beyond 120 Days by the Income Tax Department The respondents argued that the Income Tax Department was duty-bound to release the assets within 120 days as per Section 132-B of the Income Tax Act. The Income Tax Department had failed to release the assets despite no outstanding tax liabilities. The Court noted that the proceedings under Section 132-A (1)(c) regarding the assessment of the assessee company were still pending before the Assessment Officer. 4. Imposition of Conditions by the Trial Court for the Release of Assets The Income Tax Department challenged the conditions imposed by the Trial Court, which included the payment of security of Rs. 2.05 crores. The Court found that the Trial Court was right in imposing the condition as a precautionary measure. The Court referenced the case of Payal Selection and Company, where similar issues were addressed, and it was held that the Commissioner of Income Tax did not have sufficient information to conclude that the silver pertained to undisclosed assets of the assessee. Conclusion: The Court concluded that the impugned order dated 23/4/2014 is set aside. It directed that a fresh application be moved by the assessee company, and the Income Tax Department is granted liberty to move an application under Section 132-A if it obtains fresh information regarding the ownership of the silver bullion. The applications should be considered as expediently as possible. No order as to costs was made, and the original order was retained in Writ Petition No.4941/2014 with a copy placed in the record of Writ Petition No.5602/2014.
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