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TMI Blog2022 (4) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... n unbridled power to the Assessing Officer to retain the seized assets awaiting the finalization of future possible liability for indefinite period without deciding the application of the person concerned who may be legitimately in a position to explain the source of the asset so seized. This writ application succeeds and is hereby allowed. The respondents are directed to hand over the seized asset (diamonds) to the writ applicant within a period of four weeks from the date of receipt of the writ of this order - R/SPECIAL CIVIL APPLICATION NO. 10667 OF 2020 - - - Dated:- 12-4-2022 - HONOURABLE MR. JUSTICE J.B.PARDIWALA AND HONOURABLE MS. JUSTICE NISHA M. THAKORE MR TUSHAR HEMANI, SENIOR COUNSEL WITH MS VAIBHAVI K PARIKH FOR THE PETITIONER MRS KALPANAK RAVAL FOR THE RESPONDENT ORDER PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA 1 By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs: (a) direct the respondent to release the diamonds in question; (b) Pending admission, hearing and final disposal of this petition, direct the respondent to release the diamonds in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sale bill raised by my proprietory firm M/s. Vir Impex on account of goods sold to this party vide Invoice No. 112/19-20 dated 02.07.2019. The invoice was given to this party for the purpose of signature. The invoice was also found in the course of the search 2. That my employee was found to be in the possession of polished diamonds. Although he was found in possession of polished diamond of ₹ 92,09,550/-, the ownership of the goods belongs to M/s. Vir Impex in which I am the proprietor. 3. My employee Shin Parin N. Sheth retracted his declaration made at the time of the search for the value of the alleged polished diamonds. However, the same was disclosed in my hand. The diamonds were valued at ₹ 92,09,550/- but after deducting the gross profit of about 5% the cost price of the diamonds comes to ₹ 87,50,000/-. Without prejudice to the accounting of the said diamonds in the books of accounts of my propriatory firm Ms. Vir Impex, I am ready to surrender the income of ₹ 87,50,000-as my additional income for AY 2019-20 AY 2020-21. I undertake to pay tax alongwith interest on declaration of ₹ 87,50,000/-. 4. Your honour is requested t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... davit in original is enclosed herewith. 4. Your honour is requested to release the diamonds to assessee as the said diamonds belongs to assessee's proprietary firm M/s. Vir Impex. It is to be noted that although the diamonds were held by assessee's employee as stock in trade on behalf of assessee's firm, the diamonds were seized in the course of search Accordingly, it is very urgent to release the diamonds for the purpose of the smooth running of the trade and to avoid any liquidity crunch. 5. Assesseee has already requested your honour to release the diamonds vide letter dated 06.09.2019. 6. In view of the above, your honour is requested to release the diamonds either to assessoe or to his employee Shri Parin N. Sheth who was holding the diamonds on behalf of assessee. 9 One affidavit was also filed by the writ applicant himself. The same reads thus: AFFIDAVIT I, Shri Ashish Sanghvi, aged about 40 years, Hindu by caste, resident of 505, Chandanvan Apartment, Majura Gate, Surat PAN ACVPS5819E do hereby take oath and state on solemn affirmation as under: 1. That the search was conducted at the premises of Akash Diamonds Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel appearing for the writ applicant invited the attention of this Court to Section 132B of the Act. The relevant part of Section 132B with which we are concerned reads thus: [Application of seized or requisitioned assets: 132B. (1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely:- (i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment [under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be] (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is [deemed to be in default, or the amount of liability arising on an application made before the Settlement Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Panjvani vs. Income Tax Officer, Ward No.3 reported in (2016) 383 ITR 375 (Gujarat). 19 In such circumstances referred to above, Mr. Hemani prays that there being merit in his writ application, the same may be allowed and the seized asset (diamonds) may be ordered to be released in favour of the writ applicant. 20 Per contra, this writ application has been vehemently opposed by Ms. Kalpana K. Raval, the learned Senior Standing Counsel appearing for the Revenue. According to Ms. Raval, the asset was seized from one Parin Nareshkumar Sheth and not from the writ applicant. Parin N. Sheth in his statement recorded under Section 132(4) of the Act categorically accepted that the diamonds belong to him. As Parin N. Sheth was not able to submit any documentary evidence during the course of the search or during the post search inquiry, the diamonds are now to be treated as income of Parin N. Sheth and the assessment proceedings in respect of Parin N. Sheth are pending as on date. 21 Ms. Raval also invited the attention of this Court to few relevant averments made in affidavit-in-reply filed on behalf of the respondents. 22 In such circumstances referred to above, Ms. Raval pray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication to the Assessing Officer within thirty days from the end of the month, in which, the asset was seized, for release of the asset and the nature and source of acquisition of any such assets is explained to the satisfaction of the Assessing Officer, the amount of existing liability referred to in the said clause may be recovered out of such asset and the remaining portion, if any, may be released to the person from whose custody the asset was seized, with the prior approval of the officer prescribed under the said proviso. 7. Under Clause (i) of sub-section (1) of Section 132B, any seized assets would be adjusted towards the recoveries not only against existing but also liabilities which may crystallize on completion of the assessment under Section 153A and the assessment of the relevant year to the previous year, in which, the search is initiated or the request is made or in the block assessment proceedings. Such liabilities would not only include the principal tax but also interest and penalties, if any. However, under the first proviso to Clause (i) of sub section (1), if the person concerned makes an application within the prescribed time and also satisfies the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on an application that may have been made by the person concerned is taken by the Assessing Officer. If no decision is taken, necessarily, the option of the Assessing Officer to adjust such seized asset would be confined to the existing liabilities. It is, in this context, in our opinion, the legislature required the Assessing Officer to follow the time limit scrupulously. In other words if the person concerned has made an application for release of the asset within the prescribed time, the authority can refuse such request on the ground of not being satisfied about the source of its acquisition. But if no such decision is taken within the time envisaged in the further proviso, releasing of the asset becomes imminent. 9. Somewhat similar question arose before this Court in case of Mitaben R. Shah vs. Deputy Commissioner of Income tax and anr (supra), in which also, the application for release of the seized assets and books of accounts was decided after expiry of 120 days from the last of the authorizations. Division Bench of this Court held and observed as under: 18. Having heard the learned advocates appearing for the parties and having considered their rival subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice time was sought for to file the reply affidavit. However, this time was utilized for the purpose of passing the order so as to make the earlier petition as infructuous one. In the affidavit-in-reply the respondents have come out with the stand that a detailed note was prepared by the Assistant Director of Investigation whereby the the petitioner's claim for release of the gold ornaments and jewellary was rejected. However, the said note was never communicated to the petitioner. The petitioner is not concerned with the stand taken by the respondent in the affidavit-in-reply. With regard to the change of jurisdiction one has to see the compliance of the provisions of Section-132B(1) (i) of the Act. The first thing is to make an application in time explaining the nature and source of acquisition of the asset which was duly made by the petitioner. No dispute was raised during the permissible time of 120 days. It is only after the expiry of the said period the order was passed raising all sorts of contentions. However, this is not permissible in view of the mandate contained in second proviso to Section-132B(1)(i) of the Act. It clearly says that the assets or any portion there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the account books/documents is wholly illegal and unlawful. We are, therefore, of the opinion that the grievance made by the assessee is well founded. 11. It can thus be seen that the Courts attach considerable importance to the time frame provided under Sections 132A and 132B of the Act when it comes to a question of retention of books of accounts or of seized assets. We cannot read the time limit provided in further proviso to Clause (i) of sub section (1) of Section 132B of the Act as being merely directory. Any such view would substantially water down the rigors of the statutory provisions and would give an unlimited authority to the Assessing Officer to retain the seized assets awaiting finalization of future possible liability for indefinite period without deciding the application of the person concerned who may be perfectly legitimately in a position to explain the source of the asset so seized. 12. Facts, noted above, are rather glaring. The application of the petitioner for the purpose of releasing of the seized asset, which was made on 17.04.2014, came to be decided only on 20.07.2015 i.e. over one year later. In the meantime, the petitioner had sent two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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