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TMI Blog2025 (4) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... r operates showrooms at the following locations: (i) No. 4, Lee Road, Sumangal Apartment, Kolkata-700020, (ii) City Centre Mall, Shop No. C002, Block DC, Sector-1, Salt Lake, Kolkata-700064 and (iii) Sukhsagar Building, Shop No. 11, Ground Floor, N.S. Patkar Marg, Hughes Road, Mumbai-400007. The petitioner frequently participates in jewellery shows, exhibitions and displays across various cities in India, including Ranchi, Guwahati, Delhi and Lucknow as these exhibitions serve dual purposes of showcasing crafted jewellery and taking orders for custom-made jewellery. 4. Similar jewellery shows were held in 2021 and 2022 include venues such as Saket Nagar in Ranchi, Apsara Banquet Hall in Guwahati, Hotel Ambassador-IHCL in Delhi and Taj Hotel in Lucknow, detailed of which including schedules of these exhibitions, dates of goods movement and exhibition timings, were maintained by the petitioner for records and verification. 5. The petitioner has been consistent in filing income tax returns and has been assessed regularly under the said Act by Respondent No. 2. For financial years from 2016-17 to 2021-22, the petitioner reported turnovers ranging from Rs. 6.85 crores to Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a notice on February 2, 2023, seeking additional details about the petitioner's Mumbai showroom. The petitioner responded in good faith on February 11, 2023. 12. On February 27, 2023, the petitioner informed Respondent No. 2 of the unlawful seizure and requested the release of the jewellery and copies of interrogation statements and other relevant documents were also sought for clarity and records. 13. In the interrogations, Mrs. Kirti Bazaz and Mr. Abhijit Pal provided detailed explanations regarding the purpose of their visit, stock records and the legitimacy of the jewellery. Despite their cooperation, the respondents refused to provide copies of their statements. The incident was widely publicized in a local newspaper, "Dainik Bhaskar," including photographs of the seized jewellery, causing reputational damage to the petitioner. 14. The seized jewellery remains in the respondents' possession without any lawful justification. The petitioner has provided all necessary documents to establish the legitimacy of the jewellery as stock-in-trade for its business operations. Thus, being aggrieved by the act of the respondent authorities, the present petition has been preferred. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional Director of Income Tax (Investigation), Ranchi, received information from one Suman Kumar Jha, Post Commander, RPF, S.E. Railways, Ranchi, herein the respondent no.6 that two railway passengers were detained by RPF, Ranchi, for carrying a substantial quantity of gold ornaments and other valuable jewellery. 24. The detained individuals stated in their recorded statements under Section 131 (1A) of the said Act, that the jewellery belonged to Dia Gold Jewels Pvt. Ltd., the petitioner herein and they were employees of the company. They claimed that the items were being transported to Ranchi for a private exhibition at Dhanuka House, Saket Nagar, Kanke Road. However, they could only produce a letter dated November 12, 2022 issued by the company accountant and five transfer invoices, which were insufficient to substantiate their claim. 25. The detained individuals, one Kirti Bajaj and one Abhijit Pal, failed to provide stock registers, books of accounts or any written communication with Ms. Devika Dhanuka regarding the exhibition. They also admitted to not carrying a bill book or any mechanism to generate cash memos for the private exhibition. 26. The absence of a bill book o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the respondents' belief that the jewellery was unexplained at the time of seizure. 35. The respondents relied on the judgment of the Hon'ble Supreme Court in CIT v. Laljibhai Kanjibhai Mandalia reported in (2022) 16 SCC 139 to support their case wherein the Court has emphasised the Wednesbury's principle stating: "4. Wednesbury's principle-A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. (Associated Provincial Pictures House Ltd. v. Wednesbury Corpn., per Lord Greene, M.R)" 36. Further, the petitioner's audit report for the relevant assessment year (2023-24) disclosed 22,309 grams of gold as of March 31, 2023, but the reconciliation and verification of the intercepted jewellery remained unresolved. Therefore, owing to the lack of supporting documentation, discrepancies in weight and statements, and failure to establish that the seized jewellery was accounted for in the company's books, the jewellery remains unexplaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al documents, including a late email submission, only added to the justification for the seizure. The irregularities in the petitioner's documentation warranted the respondent authorities' continued possession of the jewellery. 40. The investigation was transferred to the appropriate jurisdiction as authorized under the said Act and the respondent authorities acted within their legal rights in continuing the investigation. The petitioner's failure to satisfactorily reconcile the seized jewellery with its books of accounts, along with the substantial discrepancies in the weight of the gold, justified the ongoing investigation. Consequently, the seizure of the jewellery remains valid as part of an investigation into potential non-compliance under the said Act. 41. For the foregoing reasons, given the petitioner's failure to substantiate the legitimacy of the jewellery, the discrepancies in documentation and weight and the reasonable belief of the respondent authorities in potential wrongdoing, the seizure of the jewellery is found to be valid and in compliance with the provisions of said Act. The actions of the respondent authorities were undertaken within their jurisdictional powe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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