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TMI Blog2024 (12) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner company. The respondents, therefore, were wholly unauthorized to withhold the stock in trade after the same was already demanded. Additionally, keeping in view the provisions of Section 132B (1) (i) and the proviso thereto, the respondents were obliged to pass orders for releasing the jewellery. In this case, no orders were passed, therefore, the petitioner company was entitled to release of the assets of the company which had been seized. We agree with the counsel for the respondents of the stock in trade of different value as on 17.05.2023 in comparison to the stock in trade as on 31.03.2023. However, the same would have no relevance keeping in view the statement of the concerned director, who admits that the stock in trade may be more apart from the gold seized from the premises as well as the gold and jewellery lying in the locker. Such excuse could not be a ground to withhold the stock in trade, which has been seized from the locker as there was no such power available with the respondents in terms of the proviso to Section 132 - WP allowed. - HON BLE MR. JUSTICE SANJEEV PRAKASH SHARMA AND HON BLE MR. JUSTICE SANJAY VASHISTH Present : For the Petitioner: Ms. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the lockers were handed over to the authorized officer during the course of search. It was also informed that the main director Chitwn D. Malhotra was to leave for London from 06.07.2023 to 19.07.2023 to attend the summer camp of her two daughters. 5. It is stated that the respondents did not allow the petitioner to operate and open the lockers where the stock in trade of the company was lying and the denial on part of the Income Tax Authorities resulted in hampering of business and the petitioner company suffered irreparable loss. On 11.07.2023, the Directors were issued summons under Section 131 (1) (A) of the Act and were asked to remain present on 13.07.2023 to which a reply was filed and inability to appear was expressed as one of the directors was abroad. Whereafter the directors were asked to be present on 17.07.2023. The Managing Director Mr. Chitwn Malhotra returned from London, who again persuaded the department vide her letter dated 20.07.2023 to allow operating the lockers in which the stock in trade of the company was lying. Another letter was written on 25.07.2023. 6. The Directors were informed by the bank that the Income Tax Authorities had operated and opened t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra and Deep Malhotra, were directors of the company. Restrains were placed on two bank lockers one of which was in the name of the company, locker no. 161 and the other was in the name of Dimpy Malhotra and Chitwn D. Malhora, who were the directors of the company. As it could not be ascertained whether items held in the bank lockers are part of stock in trade or held by the directors in personal capacity, PO was imposed on 20.05.2023 and period of sixty days was expiring on 19.07.2023. The respondents asked the investigating team, issued summons to Dimply Malhotra and Chitwn D. Malhotra to appear in person or through authorized representative but both could not appear being out of station and out of country. Another opportunity was given to them to appear on 14.07.2023 but they did not appear and, therefore, finally as the time period was expiring on 19.07.2023, the bank lockers were operated on 17.07.2023. The panchnama was prepared. The lockers contained gold coins, jewellery and bullion. Loose papers were found in the lockers which reflected that the gold seized was held in personal capacity of the directors and relatives. 10. It is stated that several opportunities were given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner [or Deputy Commissioner] or Income-tax Officer) the officer so authorised in all cases being hereinafter referred to as the authorised officer) to-] (i) xxx xxx (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business;] (iv) xxx xxx xxx Thus, there is a bar to seize the stock in trade, which is found as a result of search, and the only authority available with the officer is to make a note and inventory of such stoke in trade of the business. Further as per the second proviso where it is not possibly practical to take physical possession and remove to another place, the authorized officer would issue an order to the person in whose possession the things may be lying not to remove or part of it and such order shall be treated as if the concerned articles deemed to have been seized. However, it is further provided that nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.05.2023 when the search was being conducted, would have no relevance for the purpose of the jewellery which was lying in the locker belonging to the company. There was no occasion for the respondents to have seized the said jewellery and diamonds which were recovered from the concerned locker and upon the demand letter, the same should have been released to the company which is engaged in the business of jewellery. Entire provisions contained in the Finance Act are for furtherance of the taxpayers and the action being taken under the said Act, ought not be detrimental to a regular business which is being conducted by the concerned company. 17. We find that the adamancy being shown for not releasing the jewellery was wholly unwarranted. An inventory could always be taken, which has already been done and the revenue could have proceeded to do the necessary assessments Physical withholding of gold jewellery, which is part of stock in trade is, found to be wholly warranted. 18. Learned counsel for the petitioner has also argued with regard to non-compliance of proviso contained to Section 132B of the Act, which states as under:- Application of seized or requisitioned assets. 132B. (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act that bullion, jewellery or other valuable article or things being stock-in-trade of business found as a result of search shall not be seized, contention of Mr. Mohapatra that the authorized officer is fully empowered to seize stock-in-trade if he comes to the conclusion in course of seizure that said stock-in-trade represents wholly or partly undisclosed income or property of the assessee is not tenable in law. 20. In Mitaben R. Shah vs Deputy Commissioner of Income Tax and another (2010) 42 DTR 124, the High Court of Gujarat held that once the period under Section 132B (1) (i) of the Act is over, the respondents would have no authority to retain the jewellery. 21. The Rajasthan High Court in S.B. Civil Writ Petition No. 8900 of 2014 Shri Kamal Mohan Gupta and another vs Additional Director Income Tax and others, decided on 23.02.2017, while relying judgment of High Court of Gujarat in Mitaben R. Shah s case (supra), held as under:- In Mitaben R. Shah, supra , the High Court of Gujarat was dealing with the case where the petitioner made application within permissible time limit for release of the gold ornaments explaining the nature of source of acquisition ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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