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TMI Blog2021 (9) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... the related books of account and necessary proof of articles which may include sale details, purchase details, stock register, audit reports, income tax returns etc, the Income Tax Authorities ought to take a decision at this stage and ought not to be allowed to seize the goods for years together to await for the assessment order to be passed in relation to concerned employee. As the claim of the goods in terms of Section 132(1)(iii) of the Act of 1961 has been made by the petitioner Nos.1 and 2 as the jewellery seized in stock-in-trade and required material has already been placed before the Income Tax Authorities. The same was required to be released as the seizure itself is found to be unjustified and illegal. Non mentioning of price of the goods in the challan would not construe that the goods are not part of stock-in-trade. This Court holds that the seizure itself was wholly illegal and all consequential actions based on such seizure are illegal and contrary to the provision of Section 132(1)(iii) - Hence, the petitioners were entitled to receive back the goods from the respondents as more than one year and six months have lapsed. The petitioners would also be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Bank statements from January 2020 to March 2020 of M/s Maha Pragya Jewellers were also submitted. It was also informed that some stock of the petitioner/s was left with his brother-in-law Siddharth Baid at Mumbai who was engaged in the same business while travelling from Jaipur to Kolkata and Kolkata to Mumbai. The challan relating to the stock for the said period was also produced. 6. Learned counsel for the petitioners submitted that statement of petitioner No.3 was recorded under Section 132(4) of the Act of 1961, who has stated that the goods are stock-in-trade of both the firms and the challan approval memos were also submitted to the authorities. 7. Learned counsel for the petitioners submits that the Department valuer, who conducts the valuation sheet, has valued the stock on a very higher side. It is stated that the goods mentioned from serial No.1 to 24 belonged to M/s Maha Pragya Jewellers while goods mentioned from serial No.25 to 49 were stocks belonging to M/s Daha Dimon. The petitioners also appeared before the investigation wing of the Income Tax Department and produced all the relevant papers and the jewellery had been purchased through proper banking channe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Jaipur for delivering the same to Harshvardhan Chhajed, Proprietor M/s Maha Pragya Jewellers. It is further submitted that notices have been issued under Section 153A of the Act of 1961 to petitioner No.3 for the assessment year 2014-15 and therefore the seized goods are required for framing the assessment. So far as petitioner No.3 is concerned, the assessment in his case is yet to be finalised. 12. Learned counsel for the respondents has relied on Section 132B of the Act of 1961 to submit that not only the existing liabilities of the Income Tax Act, Welfare Tax Act, Expenditure Tax Act, Gift Tax Act and Interest Tax Act are applicable but even the amount of liability determined on completion of assessment under Section 153A of the Act of 1961 and the assessment of relevant previous years may be recovered and thus the interest of the revenue and public exchequer shall be protected. 13. It is further submitted in written submissions that even if it is found inappropriate to release the goods seized under Section 132 of the Act of 1961, the petitioners be directed to furnish appropriate security of equivalent amount. 14. I have considered the submissions. 15. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 245C, may be recovered out of such assets]: [Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained] to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the 7 [Principal Chief Commissioner or Chief Commissioner] or 8 [Principal Commissioner or Commissioner], to the person from whose custody the assets were seized: Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed: (ii) if the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation for search or requisition shall have the same meaning as assigned to it in Explanation 2 to section 158BE.] [Explanation 2.-For the removal of doubts, it is hereby declared that the ― existing liability does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII.] 16. In case of Amore Jewels (supra) this Court was examining a similar case where jewellery was seized at the Jaipur Airport which was claimed to be stock-in-trade of the employer company. After considering the judgment passed in case of Director General of Income Tax (Investigation) Pune Ors. Vs. M/s Spacewood Furnishers Pvt. Ltd. Ors. reported in (2015) 12 SCC 179, this Court reached to the conclusion as under:- From above, it is apparent that the issue involved before the Apex Court was in relation to the satisfaction of the authorities while carrying out seizure. However, in the present case after the High Court had earlier remanded the matter to the respondents for taking a decision relating to release of the goods, it was incumbent upon the respondents to have examined the question only with regard to release and a subjective satisfaction was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the writ petition is allowed. The order dated 19.07.2017 is quashed and set-aside. The respondents are now directed to release the seized jewellery to the petitioner No.1 within a period of two weeks hereinafter from the date of receipt of a certified copy of this order. 12. No costs. 17. In Khem Chand Mukim (supra), the Division Bench of Delhi High Court has held as under:- 17. One of the questions that arises for our consideration is whether in the present case, the provisions of Section 132(1)(c) the Act were satisfied, or not, before authorizing the search. On a perusal of the satisfaction note as well as the counter affidavit on behalf of Respondent Nos. 3 and 4, it is evident that the sole ground for the action of search and seizure is that the Investigation Wing of the Income Tax department was in possession of credible information that Petitioner was in possession of jewellery which represents his undisclosed income or property. Apart from mere reproduction of the said words, no cogent basis for arriving at this conclusion is discernible from the satisfaction note. There is plethora of case law holding that the term reason to believe cannot be interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Respondents have merely acted on the basis of surmises and conjectures, and without due authorization. Their actions are in contravention of law, making the action of search and seizure bad in law. 18. In case of Sri Puspa Ranjan Sahoo Vs. Assistant Director Income Tax (Investigation), Bhubaneshwar reported in 2012 (9) TMI 432, the Division Bench of Orissa High Court has held as under:- 27. In view of the above, we are of the view that the seizure of jewellery being stock-in-trade by the authorized officer is wholly without authority of law and contrary to the statutory provision contained in proviso to Section 132 (1) (iii) and third proviso to Section 132 (1) (v). Therefore, the opposite parties- Income Tax Department are directed to return the jewellery (gold and silver ornaments) seized by the Authorized Officer in course of search on 9.9.2011 forthwith to the petitioner-assessee after complying with the requirement provided, i.e., making a note or inventory. 19. In case of Director General of Income Tax Anr. Vs. Diamondstar Exports Ltd. Ors. reported in 2006 (3) TMI 140, the Supreme Court has observed as under:- 5. Without going into the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assets were seized: Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed; 21. From the perusal of the aforesaid judgments and law laid down, it is apparent that the seizure has to be conducted after due care and caution. Merely on account of reasons to suspect, seizure of goods ought not to be undertaken as held in Khem Chand Mukim (supra). In fact the investigation wing has to show reason to believe that a person is carrying undisclosed asset. 22. However, if the concerned person has shown documents in order to explain the goods which he is carrying and also gives a statement like in the present case that the articles were belonging to a firm and were part of stock-in-trade. Before seizure is conducted explanation ought to be taken from the concerned firms and if they are able to produce the related books of account and necessary proof of articles which may include sale details, purchase details, stock ..... X X X X Extracts X X X X X X X X Extracts X X X X
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