2017 (10) TMI 374 - HC - Income Tax

Return of the gold articles seized - prosecution proceedings u.s 276 & 2377 against the petitioners were dismissed by the lower court - Held that - Considering the proceedings before the Court of Magistrate in connection with discharge on one hand and disallowing the claim for return of the gold articles confirmed by the Court of Sessions in the revision, this Court is of the view that gold ornaments seized under the procedure initiated under the Act, particularly covered under the provisions relating to search and seizure in the facts of this case cannot be treated as muddamal articles. Hence, both the Courts have rightly declined to entertain the claim of the applicant for return of the gold ornaments. Considering that the applicant has been litigating for return of gold ornaments which are seized under the procedure of the Act and which was in active consideration initially before the Court of the Magistrate and thereafter before the Sessions Court, and lastly before this Court, it would be open for the applicant to prefer an application before the Department for return of the gold ornaments under the relevant provisions of the Act. The Department shall consider such an application, as per the provisions of I.T. Act, if preferred, within a period of one month hereof. If such an application is preferred, the Department is directed to consider the same, though such an application may be beyond the period of limitation prescribed

Summary

Issues:
1. Return of 1318 grams of gold ornaments seized during income tax proceedings.
2. Entitlement of the applicant to receive the seized gold ornaments.
3. Nature of the seized ornaments in relation to criminal prosecution under Sections 276(1) and 277 of the Income Tax Act.
4. Interpretation of relevant provisions under Part C of the Income Tax Act regarding seized articles.
5. Dismissal of the complaint against the applicant by the Magistrate Court.
6. Disallowance of the claim for return of gold ornaments by the Courts.
7. Determination of seized gold ornaments as muddamal articles.
8. Possibility for the applicant to prefer an application before the Department for return of the gold ornaments.

Analysis:
The applicant filed a petition seeking the return of 1318 grams of gold ornaments seized during income tax proceedings. The applicant's advocate argued that since the income tax procedure concluded with the applicant's discharge, he is entitled to the return of the gold ornaments. On the other hand, the Department's advocate contended that criminal prosecution was initiated against the applicant under Sections 276(1) and 277 of the Income Tax Act, which prevented the seized ornaments from being considered as muddamal articles. The Department emphasized the provisions under Part C of the Act, particularly Section 132, which outlines the procedure for receiving back seized articles like jewellery. The Magistrate Court dismissed the complaint against the applicant, but the claim for return of the gold ornaments was not entertained. The applicant's appeal to the Sessions Court was also unsuccessful, leading to the current application before the High Court.

The High Court noted that the lower courts correctly denied the applicant's claim for the return of the gold ornaments, considering the nature of the seizure under the Income Tax Act's search and seizure provisions. The Court held that the seized gold ornaments cannot be treated as muddamal articles in this case. Therefore, the application was dismissed based on the concurrent findings of the lower courts. However, the Court acknowledged the applicant's efforts in pursuing the return of the ornaments through the legal system and granted the applicant the opportunity to submit an application to the Department for the return of the gold ornaments under the relevant provisions of the Income Tax Act. The Department was directed to consider such an application, even if it is beyond the prescribed limitation period, and to apply relevant provisions for condonation of delay, if necessary.

In conclusion, the High Court dismissed the application but allowed the applicant to seek the return of the gold ornaments through the Department, providing specific directions for the Department to consider the application within a specified timeframe and to address any delay issues in accordance with the law.