2022 (4) TMI 1131 - HC - Income Tax

Seeking release the seized assets (jewellery) - During the search and seizure proceedings, jewellery owned and possessed by the petitioners also have been seized - HELD THAT - We are of the view that the Principal Commissioner, Income Tax-I, Ahmedabad should look into the representation filed by the writ applicants dated 13th February, 2021 and take an appropriate decision in accordance with law. The representation appears to be quite exhaustive. It contains all the necessary particulars to enable the Principal Commissioner to arrive at a particular conclusion. We dispose of this writ application with a direction to the Principal Commissioner of Income Tax, Ahmedabad to look into the representation filed by the writ applicants within a period of 15 days from today. If need be, give an opportunity of personal hearing and pass an appropriate order in accordance with law on or before 31st May, 2022 without fail. If the order is adverse to the writ applicants, it is open for them to question the same before the appropriate forum in accordance with law. It shall also be open for the writ applicants to even question the legality and validity of the seizure itself before the Principal Commissioner, Ahmedabad.

Summary

Issues:
1. Seizure of jewellery during a search action under Section 132 of the Income Tax Act, 1961.
2. Failure of the Principal Commissioner of Income Tax, Ahmedabad to address the representation filed by the writ applicants requesting the release of seized assets.
3. Delay in the decision-making process regarding the seized jewellery.

Analysis:

Issue 1: Seizure of jewellery during a search action
The writ applicants sought relief through a writ application under Article 226 of the Constitution of India to challenge the order of seizure dated 15.06.2013 passed by the Deputy Director of Income Tax under Section 132 of the Income Tax Act, 1961. The search action was conducted at the premises of an individual, resulting in the seizure of cash and jewellery. The applicants claimed that the seized jewellery belonged to them and not the individual under investigation. They supported their claim by referencing the last wealth tax return, indicating that the seized jewellery did not exceed the assets declared in the return. Despite the search taking place in 2013, the applicants only formally requested the release of the seized jewellery in 2021, alleging that the Principal Commissioner of Income Tax failed to address their representation.

Issue 2: Failure of the Principal Commissioner to address the representation
A Coordinate Bench of the High Court acknowledged the petitioners' plea to release the seized assets, emphasizing that the petitioners had provided explanations regarding the ownership and source of the jewellery, supported by relevant financial documents. The court noted that multiple communications and requests were made to return the jewellery, but no response was received from the authorities. The court directed the Principal Commissioner to thoroughly review the representation filed by the applicants and make a decision within 15 days, ensuring compliance with legal procedures.

Issue 3: Delay in decision-making process
The High Court disposed of the writ application with a direction to the Principal Commissioner to examine the representation promptly and issue a decision by a specified date. The court emphasized the need for a comprehensive review of the case, including the option for the applicants to challenge any adverse decision through appropriate legal channels. The applicants were also granted the opportunity to contest the legality and validity of the seizure before the Principal Commissioner, ensuring transparency and accountability in the resolution of the matter.

This detailed analysis of the judgment highlights the legal proceedings, arguments presented by the parties, and the court's directives regarding the seizure of jewellery and the subsequent actions required by the tax authorities.