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TMI Blog1987 (9) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant firm, in whose presence the search and seizure were conducted, admitted the shortage of the above new gold ornaments in their stock on the spot and stated, inter alia, that the shortage had occurred since they were unable to physically verify the stock-in-trade in their shop for quite some time. It appears that in a letter dated 14-11-1983 one of the partners of the appellant firm Shri Vishwa Nath Khanna came out with the defence that the firm had 2 Almirahs and 1 Iron Safe in the premises; that one Almirah was in the process of painting and was emptied of its contents absolutely; that its contents had been transferred to the other Almirah in the iron safe which was not checked by the Gold Control Officers that the gold ornaments therein remained unaccounted for; that further the gold ornaments lying with workmen for remaking were also not accounted for as the Register of manufacture of Dealer was not checked by the Gold Control Officers and it was lying in the drawer; and that he was fully occupied due to the death of one of his friend. After the usual adjudication proceeding the Adjudicating Authority called upon the appellants to show cause as to why the personal penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then contended that the Collector had adjudicated the case without a proper hearing. He submitted that on the date of personal hearing, that is to say, on 10-2-1984 Shri Rajesh Khanna, partner of the appellant firm appeared before the Collector only for the purpose of getting adjournment on the ground that his father and brother were unable to attend the hearing. We are afraid this contention of the learned counsel for the appellants appears to be a cooked-up one. From the impugned order we find that personal hearing was fixed for 10-2-1984 and Shri Rajesh Khanna, partner of the appellant firm not only appeared before the Adjudicating Authority but also submitted the defence which is recorded by the Adjudicating Authority in the impugned order (page 3) as follows :- The case was fixed for personal hearing before me on 10-2-1984 when Shri Rajesh Khanna, partner, M/s. Mukha Mal Ram Narain, Gold Dealers, New Delhi appeared before me for personal hearing. He submitted that the shop was primarily looked after by his father and brothers; that at the time of visit of the Gold Control Officers, his father was not there in the shop due to some prior occupation that is why they could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reading of Section 58 would reveal that this section does not speak of a search warrant and provides that any authorised Gold Officer or any officer of Government who is authorised by the Gold Control Officer may, if he has reason to suspect that any provision of this Act has been, or is being or is about to be contravened, enter and search the business premises of a licensed dealer. It is significant to note that it is not the case of the appellants that the authorities concerned who entered and conducted the search in the instant case were not authorised under Section 58 of the Gold Control Act. The other argument of the learned Counsel for the appellants that since the Panchanama does not mention hours of the search and the specified place where search was conducted the same (Panchanama) could not be relied upon since-it offends Section 100 of the Criminal Procedure Code has also no force. Section 100 of the Criminal Procedure Code, 1973 makes the provision that persons incharge of closed place to allow search . The provisions of Section 100 are not made applicable to the search and seizure conducted under the Gold (Control) Act as is evident from Section 69 of the Gold (Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their shop for quite some time. In the instant case the shortage detected was not of a minor quantity. The jewellery found short was of both 22 cts. and 24 cts. The value of the gold ornaments found short was to the tune of Rs. 6,45,330/- approximately. In the instant case 392 pieces of jewellery said to have been kept in another Almirah were found short. The detection of the shortage of this magnitude of the gold ornaments should have immediately shocked the two partners present on the spot if it was a fact. It is amazing to note that at no stage either of the partners present on the spot refer that their father or Shri Vishwa Nath Khanna had gone in the cremation of his friend or that he would explain the discrepancy. It is further interesting to note that the Panchanama which was prepared on the spot does not indicate that any renovation or painting job was going on in the shop as alleged by the appellants. No evidence was ever led before the Adjudicating Authority in support of the defense. Even no effort was made to cross-examine any of the Panch witnesses to the Panchanama or the Seizing Officer or Officers by the defence. Thus, the evidence led by the Department remain uncha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced to enable it to cross-examine them. While negativing this contention their Lordships held that in their opinion, the principle of natural justice do not require that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs authorities. 8. The learned Counsel for the appellants further contended that inview of the observations made by their Lordships in the case of Manik Chand Paul v. Union of India, 1984 (18) E.L.T. 185 (S.C.) = 1985 ECR 514, no action should be taken against the appellants. In that case it was contended by the appellant of that case that the old Forms Nos. GS-11 and GS-12 required to be maintained under Section 55 of the Act were better than the new Forms because the new Forms lack in providing adequate or proper columns with the result that by filling these, a true and complete account of gold owned, or possessed or held or controlled etc. by the dealer could hot be reflected, inasmuch as, amended Forms No. 11, column No. 11 requires a dealer to record the weight in terms of pure gold which requirement cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the same section provides that every licence dealer shall, as and when he sells, delivers, transfers or otherwise disposes of any gold enter in the accounts referred to in sub-section (1), the prescribed particulars of such gold. Rule 13 of the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968, inter alia provides that every licenced dealer while selling, delivering, transferring or disposing of gold, shall at the time of such transaction, issue a voucher in relation to such gold. In the instant case gold ornaments found short were found to be entered into the statutory records as required under sub-section (1) of Section 55. But no entry regarding the disposal of the gold ornaments found short was made in the statutory record and no voucher was issued as required under sub-section (2) of Section 55 and Rule 13, ibid respectively. Thus, it stands proved that the appellant firm removed the gold ornaments found short unauthorisedly, without making any entry in the statutory record and without issuance of proper voucher/vouchers. Thus, it stands proved that the appellants by their act and omission made the gold ornaments found short liable to confiscation and the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant to note that a Division Bench of the Allahabad High Court in the case of Sharma Co. v. The Income Tax Commissioner, AIR 1965 Allahabad, 376 also relied upon the said judgment of the Supreme Court rendered in the case of the Commissioner of Income Tax v. A.W. Figgis Co., supra and held otherwise, that is to say, the Division Bench held that a firm can be charged as a distinct assessable entity under the Income-tax Act. While holding so the Division Bench relied upon the following observations of the Supreme Court made in the case of The Commissioner of Income Tax v. A.W. Figgis Co., supra. It is true that under the law of partnership a firm has no legal existence apart from its partners and it is merely a compendious name to describe its partners....But under the Income-tax Act the position is somewhat different. A firm can be charged as a distinct assessable entity as distinct from its partners who can also be assessed individually. Section 3 which is the charging section is in these terms... The partners of the firm are distinct assessable entities, while the firm as such is a separate and distinct unit for purposes of assessment. 12. The Full Bench of the P H H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person capable of holding a licence. In that case it was contended by the Government that a firm does not have a juristic personality and that when a licence is granted in the name of a firm, it is really a licence granted to all the partners of the firm jointly. Repelling the contention their Lordships held as follows :- 6. we are unable to accept the contention urged on behalf of the department. A perusal of the Gold (Control) Act clearly shows that a licence under the Act is to be granted to a dealer . Dealer is defined in Section 2(h), as including a Hindu Undivided Family, a local authority, company, society registered under the Societies Registration Act, a co-operative society, a club, firm or other association of persons. It is, therefore, clear that, whether a firm can be treated as a legal person or not in general law, for the purposes of Gold (Control) Act a firm is a legal entity. In fact it is common ground that licences are applied for by the firms and are granted to firms. Indeed in the case of M/s. Talwar Jewellers licence has been granted in the name of the firm itself. If the present objection had not been raised, the petitioner firm would have also been gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm and the partners thereof cannot both be adjudged guilty of contravention or be subjected to a penalty under the provisions of the Act. It is possible to find, as in this case, the firm guilty of an act or omission which renders the goods liable to confiscation, and at the same time to find the partners thereof guilty of abetment in the doing or omission of such act. It seems possible again, to find the legal entity of a partnership liable for the act or contravention, and at the same time to hold the human agency through which it acts, also responsible for the same. [Emphasis supplied] However, the matter does not rest here. The question as to whether the penalty can be imposed on a partnership firm is no longer res integra. A penalty can be imposed upon a partnership firm appears to have been concluded by the recent judgment of the Hon ble Supreme Court rendered in the case of Raj Bahadur v. Director of Enforcement - 1987 (12) B.C.R. 423. In that case a penalty of certain amount was imposed upon the partnership firm for contravening the provisions of Section 12(2) of the Foreign Exchange Regulation Act, 1947. In that case it was contended that penalty cannot be imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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