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TMI Blog1995 (12) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... to the notice of the Competent Authority that the appellant was also having gold jewellery items in his possession which too were believed (for reasons recorded) to have been acquired from tainted sources. Accordingly, a supplementary notice under section 6(1) of the Act, dated February 27, 1989, was issued to cover the gold jewellery, as per description below : " 1,170.500 gms. of jewellery declared before the Superintendent, Central Excise, South Range-II, Madurai, on June 30, 1969, and entered under Record No. 59/30-6-1969. " The appellant filed his reply to the first show-cause notice, dated December 15, 1988, by a letter dated January 2, 1989, giving details of credit entries in his account in the firm, Vasavi and Co., explaining the credits standing in his said account for the period June 28, 1974, to March 31, 1988 (pages 5 and 6 of the Competent Authority's paper book). The source for his investment in Vasavi and Co. was given with the following break-up in the said statement : Date of credit Amount Rs Source. Ps. 13-9-1974 12,393.50 Cheque from R. M. A. Shop from sale of jewellery (xerox copy of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing on November 29, 1994. The impugned order records the fact that although the person affected had been served with this notice, no one turned up nor any further communication received, and hence, the Competent Authority proceeded to conclude the hearing and pass the final order, which is now under appeal before us. In so far as the first item covered by the show-cause notice dated December 15, 1988, is concerned, namely, interest in the firm known as Vasavi and Co., the Competent Authority held that although the issue as to the cash investments as detailed by the affected person in his reply to the show-cause notice as having come from the sale of gold jewellery and silver items, stood settled by virtue of the documentary material placed before him, consisting of copies of purchase vouchers in respect of gold items, bearing the stamp of the concerned Superintendent of Central Excise, as also relating to silver items ; the question that remained for consideration according to the learned Competent Authority was as to whether the jewellery items sold by the person affected were legally acquired. For the reasons recorded, which we propose to examine shortly, the learned Compete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plea is that the jewellery was non-existent and hence there was an error in ordering forfeiture of the same. The appeal has been heard in the presence of Shri V. Ramachandran, senior advocate, assisted by Miss Anita Ramachandran, advocate, and that of Smt. Kalpagam Bhaskaran, Deputy Director, office of the Competent Authority, Madras. Learned counsel for the appellant at the outset pointed out that the initial investment in Vasavi and Co. is duly co-related to the sale of jewellery items as evidenced by purchase vouchers, photocopies of which were duly supplied to the Competent Authority, and that the possession of old family jewellery in the form of ornaments was proved by the certificate from the Superintendent of Central Excise, issued on February 21, 1989, but the declaration had been filed as far back as on June 30, 1969, after the Gold (Control) Act came into force. We have given our careful thought to this part of the order of the learned Competent Authority and we find that there is an apparent error in the conclusion arrived at, for the following reasons. It is to be noted at the outset that the learned Competent Authority had himself, vide paragraph 5 of the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and claimed to be out of the declared family jewellery, was only a created evidence for explaining the different investments made in the firm, Vasavi and Co., as having been from genuine source and accordingly the explanation given in regard to the investment of Rs. 24,028.30 in Vasavi and Co. was not acceptable. In so far as the second item, namely, jewellery weighing 1,170.500 gms., is concerned, as already noted, the learned Competent Authority held that there was no explanation or evidence indicating wherefrom and how the person affected had acquired the jewellery, and that in the background this person had been involved in the seizure of foreign-marked gold on August 24, 1967, and further at the time of assessment for the income for the year 1968-69, in respect of the firm in which the affected person was earlier a partner, namely, Rajagopal and Brothers, Madurai, the income-tax authorities had added an amount of Rs. 48,086, as undisclosed income of the firm, and that with this history of the affected person and his failure to furnish any explanation with regard to the source of possession of gold jewellery ; the obvious conclusion was that the same was acquired through ille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icularly when the payments were made by cheques, was not in doubt and the Competent Authority himself has come to this conclusion, so far as the authenticity of the purchase vouchers or factum of sale, is concerned. The corresponding entries in the account furnished by the appellant, vide his reply dated January 2, 1989, as noticed above, also reveal that the payments had been made to Vasavi and Co., by deposit of these cheques. The first deposit was on September 13, 1974, against the sale voucher of September 9, 1974, and the second deposit was on April 3, 1975, against the sale voucher of April 2, 1975. Consequently, these investments are co-related with the sale of jewellery items sold. Same is the position with respect to the investment of Rs. 5,271.80 on October 6, 1975, because it corresponds to the sale vouchers of the same date, and the corresponding deposit entry, vide serial No. 5 of the account furnished, vide reply dated January 2, 1989. It also contains the names of the jewellers and also the fact of the sale being of silver jewellery. Learned counsel further pointed out that it has to be pertinently noted that although there were two raids by the Central excise auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back as June 30, 1969, the Competent Authority could have for further satisfaction called upon the concerned authorities to supply the form of declaration to see as to what details had been given. No such effort was apparently made. We would like to emphasise that the Competent Authorities should utilise the provisions of, and exercise the powers under sections 15 and 16 of the Act, in case any doubt is entertained in respect to the explanations furnished by the affected person. This is by way of general guidance. But so far as the present case is concerned, we are satisfied that the appellant has discharged the burden by showing the existence of family jewellery in the form of gold ornaments, by means of declaration made to the Central excise authorities on June 30, 1969, as required by the provisions of the Gold (Control) Act, and by establishing the factum of sale of jewellery items, and by showing the co-relation of the investments made, to the said sales. The appellant has also pleaded that since he was not filing any wealth-tax returns, being below the taxable wealth, the question of his declaring these jewellery in the wealth-tax returns did not arise and this factor of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the file of the appellant's wife, being F. P. A. No. 7/ (MDS) of 1994_Smt. Dhanalakshmi v. Competent Authority ; the detention order was passed against the appellant under the COFEPOSA Act, on October 26, 1975. The office of the Competent Authority took almost six years in collecting the information on the basis of which income-tax investigation was carried out on August 24, 1978, September 25, 1979, and January 9, 1981. The office was obviously acting by fits and starts. But even then after the final information came on January 9, 1981, nothing is shown to have been done in between, as the decision to initiate proceedings under the Act was taken only in October/December, 1988, and the show-cause notice was issued for the first time in the case of the appellant on December 15, 1988, that is, after almost eight long years since the collection of information from the Income-tax Department, as the investigations were concluded in January, 1981, whereas the show-cause notice was issued only on December 15, 1988, and even though the declaration regarding possession of gold items of jewellery had been furnished as far back as on June 30, 1969, the second show-cause notice was given o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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