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TMI Blog1991 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... o sell the seized gold and adjust it against the tax liability and the penalty imposed against the petitioner under the Gold (Control) Act, 1968. The petitioner is a director of Singh Engineering Works (P) Ltd., Kanpur. His brothers are also directors of the said company. On July 16, 1981, a raid was conducted by the income-tax authorities at the office premises and residences of the directors of the company including the petitioner. The petitioner's bank lockers in the Punjab and Sind Bank, Defence Colony, New Delhi, were also opened on the following day, i.e., July 17, 1981. From these lockers, three gold bullion bars, each weighing 250 tolas were seized. From the residence and office premises, of course, some articles, cash and other documents were seized. This raid, it is unnecessary to specify, was conducted under the, provisions of section 132 of the Income-tax Act. On October 13, 1981, an order under sub-section (5) of section 132 of the Income-tax Act (summary assessment order) was made by the Income-tax Officer, Central Circle 111, Kanpur, whereunder the petitioner was found liable to pay tax at an amount exceeding rupees fifteen lakhs. It was also directed that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry gold under the Gold (Control) Act. If that be so, prima facie, the petitioner would be deemed to have contravened the provisions of the Gold (Control) Act and the Gold Control Authorities could take action against him. However, as the primary gold has not been seized by the authorities under the Gold (Control) Act, the question that further arises for consideration is whether they could ask the income-tax authorities not to sell the gold for satisfaction of the income-tax demand and produce the same before them. In this connection, the provisions of section 111 of the Gold (Control) Act may be looked into. It provides that the provisions of the Act or any rule or order made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment. Section 105 of the Gold (Control) Act provides as follows : 'Officers required to assist Gold Control Officer.-All officers of police and all officers of Government engaged in the collection, or prevention of evasion, of revenue are hereby required and empowered to assist the Gold Control Officers in the execution of the provisions of this Act or of any rule or order made thereunder.' The income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry gold but was for purposes of assessing his tax liability. Sections 132 and 132B of the Act confer power on the income-tax authorities for realising the income-tax dues from the seized assets. However, if the seized asset is the subject-matter of any case and liable to confiscation, the income-tax authorities cannot be forced to appropriate the tax demand from the sale of the seized primary gold. The income-tax authorities are bound to assist the Gold Control authorities and are also liable to produce the gold before the Gold Control authorities. The steps taken by the Income-tax Officer, to recover the tax from the petitioner by attachment and sale of the house property cannot, therefore, be illegal or unauthorised." (at page 768). Accordingly, the writ petition was dismissed. The decision is reported in Harinder Singh v. ITO [1987] 166 ITR 763 (All). It is stated by counsel for both the parties before us that an application to grant leave to appeal against the said judgment has also been rejected by the Supreme Court. At this stage, we think it relevant to refer to the proceedings taken under the Gold (Control) Act. The Superintendent, Gold Control, New Delhi, summoned the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the officers under the Gold (Control) Act were within their jurisdiction to have called upon the Income-tax Officer not to dispose of the gold but to produce the same before him for taking action under the Gold (Control) Act. Yet another observation made was that prima facie the petitioner must be deemed to have contravened the provisions of the Gold (Control) Act and the Gold Control authorities could take action against him in that behalf. The court went further and observed that the Income-tax Officer cannot be prevented from handing over the seized articles to the excise authorities and that if the seized assets are subject-matter of any case and are liable to confiscation, the income-tax authorities cannot be forced to appropriate the same towards the tax due. In other words, it was held that the income-tax authorities cannot be compelled to sell or adjust the value of the seized primary gold towards their tax arrears. It was accordingly held that the action taken by the income-tax authorities to recover the tax by attachment and sale of his house property cannot be characterised as illegal or unauthorised. We are of the opinion that the said decision covers all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Central Excise authorities were not adhering to the said directions. (v) On June 1, 1988, the Commissioner of Income-tax (Central), Kanpur, again wrote a letter to the Collector, Central Excise, Kanpur, asking for permission to sell the gold. (vi) On July 13, 1988, the Central Excise Collector, Kanpur, wrote to the Commissioner of Income-tax (Central), Kanpur, to the following effect: "It is to inform you that you may dispose of the seized gold/gold ornaments after realization of the amount of Rs. 7.5 lakhs imposed as penalty for violation of the Gold (Control) Act/Rules from the sale of the confiscated gold and remit the same to us. " Evidently, the expression "confiscated gold" is a mistake for seized gold ; admittedly, no order of confiscation has yet been passed in respect of the said gold under the provisions of the Gold (Control) Act. (vii) On September 13, 1990, the income-tax authorities wrote to the Central Excise authorities, setting out the decision of the Revenue Secretary taken in a joint meeting of the Income-tax and Central Excise Officers held on September 25, 1987, and May 2, 1989, and contending that the Central Excise Department has no jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before it can be confiscated. Since the gold in question has not so far been seized by the Gold Control Authorities, it cannot be seized nor can any proceeding be taken now in view of the fact that the said Act has since been repealed with effect from June 6, 1990. The mere fact that the said gold was handed over by the Income-tax Department to the Gold Control Authorities (Central Excise Authorities) on November 27, 1990, (that is, after the repeal of the Gold (Control) Act) cannot clothe the Central Excise authorities with the power to initiate proceedings under the said Act with respect to the gold in question. (iii) A show-cause notice under section 79 of the Gold (Control) Act can be issued only within six months of the seizure. It cannot be issued thereafter. Since no seizure has been effected so far, no show-cause notice can be issued now or hereafter in view of the repeal of the Gold (Control) Act. (iv) The effect of the order deferring the confiscation proceedings (the reference is to the order of the Collector, Central Excise, dated June 10, 1986, referred to hereinbefore) is to drop the proceedings for confiscation altogether, In other words, it must be deemed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the CEGAT by its order dated February 19, 1990. We do not think it advisable or appropriate to forestall all the decisions of the authorities under the Gold (Control) Act. Indeed, under the order dated June 10, 1986, the Collector, Central Excise, has already expressed the opinion that the said primary gold is also liable to be confiscated but has merely put off the actual order of confiscation awaiting receipt of the said gold from the income-tax authorities. It is not for us to say whether the said finding is warranted or not. We are only referring to the same to point out that this contention ought not to be considered by us in these writ petitions. (iii) The third contention is also one which ought to be raised in proceedings already taken under the Gold (Control) Act or which may be taken hereafter. This contention is actually based upon the language of sections 79 and 71 of the Gold (Control) Act which correspond to subsection (2) of section 110 and section 124 of the Customs Act. In a case arising under the said provisions of the Customs Act, a Bench of this court has decided that failure to issue a show-cause notice within six months has only one result, viz., that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sold first or its value be adjusted against the tax arrears and he has been obtaining stay of recovery proceedings taken against his other properties from time to time including in W.P. No. 909 of 1990. As a matter of fact, in W.P. No. 1362 of 1990, the petitioner has also obtained an order directing the income-tax authorities not to hand over the seized gold to the Gold Control Authorities. In such a situation, we are unable to appreciate the argument based upon delay. This contention is accordingly rejected. (vii) Regarding the seventh contention urged by learned counsel for the petitioner, we are of the opinion that the decision of the Revenue Secretary to the Government of India is not statutory, nor can it be related to section 109 of the Gold (Control) Act. The main reliance of learned counsel is upon the decision of the Revenue Secretary dated May 25, 1987. It is relevant to note that this decision of the Revenue Secretary is really contrary to the decision of this court in (see [1987] 166 ITR 763), a decision rendered in a writ petition filed by the petitioner himself, relating to this very controversy. Moreover, the said decision of the Revenue Secretary was, admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the petitioner, in this writ petition is that the said order of confiscation has been passed without a prior show cause notice and without giving an opportunity to the petitioner to show cause against the confiscation. Since we are inclined to accept this contention, we shall state the facts relevant thereto. On July 16, 1981, a search was conducted in the premises bearing No. 7/25, Tilak Nagar, Kanpur, said to be the residential premises of the petitioner, Smt. Mohinder Kaur and her husband, Sardar Inder Singh, who was then alive. Two gold bricks, apart from certain gold jewellery, were seized. Certain gold ornaments were also seized from bank lockers. The searches and seizures took place on July 16, 1981, as stated above as well as on August 4, 1981, and August 21, 1981. Thereafter, a show cause notice was issued by the Collector, Central Excise, Kanpur, on January 20, 1983. It is necessary to notice the contents of this show-cause notice. In the first instance, it refers to search and seizure of primary gold and gold jewellery and then to the unco-operative attitude of the petitioner. Paragraph 7 of the show cause notice then alleges, "from the above it is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be confiscated under section 71 of the Cold (Control) Act, 1968." In other words, the show-cause notice, in so far as it proposed confiscation, is confined to gold ornaments weighing 145.900 gms. valued at Rs. 15,270. The petitioner was not called upon to show cause against the confiscation of primary gold. Of course, so far as penalty was concerned, the penalty was sought to be levied for unauthorised possession of not only the aforesaid gold ornaments (weighing 145.900 gms.) but also the gold seized from her residence as well as from her bank lockers. In pursuance of the aforesaid show cause notice, proceedings were taken and an order was passed on June 21, 1980, by the Collector, Central Excise, Kanpur. In this order, the Collector opined that the gold jewellery as well as the gold bricks were liable to confiscation under section 71 of the Gold (Control) Act, but when it came to passing final orders, he confiscated only the gold ornaments weighing 145.900 gms. under section 71 of the Act. So far as the primary gold and gold guineas were concerned, he deferred his orders inasmuch as they were in the custody of the Income-tax Department on that day and had not been rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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