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2016 (5) TMI 579 - HC - Income TaxSeizure of the stock of gold and cash challenged - release of seized goods seeked - Held that - The premises of the petitioners was raided on 11.07.2005 nearly 11 years ago. 6 Kilograms of gold bars and currency was seized therefrom. Till date, there is no justification forthcoming for either the conduct of the raid or for seizure of the said articles. There is nothing on record to show that any proceedings for assessment/re-assessment were initiated till date against the petitioners in respect of the articles seized in 2005. We find no justification for any further retention of the seized gold bars as well as the currency amounting to ₹ 1,49,000/-. The respondents are accordingly directed to forthwith release the 6 Kilograms gold bars as also the Indian currency amounting to ₹ 1,49,000/- in favour of M/s J.P. Goel and Sons Private Limited through its Director, Sh. Gauri Shankar Goel.
Issues:
1. Validity of warrant of authorization under Section 132 (A) of the Income Tax Act, 1961. 2. Seizure and release of gold bars and Indian currency under the Foreign Exchange Management Act, 1999. 3. Jurisdiction and actions of the Enforcement Directorate and Income Tax Department. 4. Interpretation of Section 37 of the FEMA for seizure of Indian currency. Issue 1: Validity of Warrant of Authorization under Section 132 (A) of the Income Tax Act, 1961: The judgment involved a writ petition challenging the warrant of authorization dated 17.07.2009 under Section 132 (A) of the Income Tax Act. The petitioners contended that the Income Tax Department was not justified in invoking the powers under Section 132 (A) to seize gold bars and Indian currency. The single judge held that there was no legal justification for the seizure of gold and cash, directing the immediate release of the seized assets. The Income Tax Department's delay in releasing the assets was questioned, and the court ordered the release of the gold bars and currency to the petitioners. The court dismissed LPA No. 250/2011 filed by the Directorate of Income Tax. Issue 2: Seizure and Release of Gold Bars and Indian Currency under the Foreign Exchange Management Act, 1999: The Enforcement Directorate conducted a search and seizure operation in 2005, seizing 6 Kilograms of gold bars and Indian currency. The petitioners challenged the seizure, leading to a writ petition. The single judge found no legal justification for the seizure by the Enforcement Directorate and ordered the immediate release of the seized assets. The court directed the release of the gold bars and Indian currency to M/s J.P. Goel and Sons Private Limited through its Director. The Enforcement Directorate's appeal, LPA No. 511/2011, was dismissed, leaving the interpretation of Section 37 of the FEMA open for future proceedings. Issue 3: Jurisdiction and Actions of the Enforcement Directorate and Income Tax Department: The Enforcement Directorate seized the gold bars and currency, which were later handed over to the Income Tax Department. The Income Tax Department issued a warrant of authorization under Section 132 (A) and retained the assets. The court found no justification for the continued retention of the seized articles, emphasizing the lack of assessment or reassessment proceedings against the petitioners. The court directed the immediate release of the gold bars and currency to M/s J.P. Goel and Sons Private Limited through its Director. Issue 4: Interpretation of Section 37 of the FEMA for Seizure of Indian Currency: The Enforcement Directorate and Income Tax Department disputed the interpretation of Section 37 of the FEMA regarding the seizure of Indian currency. The single judge found the seizure unjustified and ordered the release of the assets. The court dismissed the appeals related to this issue, leaving the question of law open for future clarification. The judgment highlighted the lack of legal basis for the seizure and detention of the gold bars and currency, emphasizing the immediate release of the assets. This detailed analysis of the judgment addresses the key issues raised in the case, covering the validity of warrants, seizure and release of assets, jurisdiction of authorities, and interpretation of relevant legal provisions.
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