IMPORTANT POINT
In the absence of any material to show that the appellants had knowledge of the gold hidden in the ornamental top of the cupboard in the bedroom, the contravention of the provisions of the Gold (Control) Act, 1968 is not established against the appellants and consequently the orders of confiscation and penalty are not sustainable.

JUDGMENT

Kapadia, J.-This appeal by special leave is directed against the judgment and order of the Division Bench of the Bombay High Court dated 5.1.1994 passed in Appeal No. 19 of 1992, by which the Division Bench allowed the appeal preferred by the respondents, thereby setting aside the judgment and order passed by the learned Single Judge dated 11.9.1990 in Writ Petition No. 2406 of 1982 and consequently confirming the orders of the Adjudicating Authorities confiscating the primary gold, weighing 37,398.300 gms. and valued at Rs. 18.70 lacs, under section 71(1) of the Gold (Control) Act, 1968 (hereinafter referred to for the sake of brevity as "the 1968 Act") with imposition of penalties on each of the appellants herein under section 74 of the said Act.

2. The undisputed facts are as follows:-

The appellants are the son and widow respectively of one Udhavdas Ahuja. Udhavdas had married twice - first to the mother of appellant No.1 who died on 19.2.1950 and next to appellant No.2 on 1.7.1950. Appellant No.1 was born on 16.2.1950. Udhav s grandmother Bhojibai died on 4.7.1951. On August 28, 1974, the Income Tax Commissioner issued an authorization under section 132 of the Income Tax Act, 1961 authorizing search and seizure at Gopi Kunj, situate at Shivaji Park, Bombay, being the residential premises of appellant No.1 Pursuant to the authorization, R.D. Mahadeshwar, Asstt. Director of Inspection, Income-tax department conducted the search and recovered primary gold and other gold items, more particularly described in the panchnama (at page 95 of Volume-II). At the time of search, appellant No.1 was present. The primary gold and the gold items collectively weighed 37,398.300 gms. valued at Rs. 18.70 lacs as on August 30, 1974. Thereafter, the Income Tax Authorities intimated the Gold Control Officer appointed under section 4 of the 1968 Act. On August 30, 1974, the said officer attended the Income Tax Office and in the presence of appellant No.1, who was the Karta of Kewal Ram Ahuja, Hindu Undivided Family, took over the custody of the said gold from the Income-tax department. The Gold Control Officer also prepared the above panchnama. On 20.9.1974, the Gold Control Officer, Bombay served a show-cause notice on the appellants calling upon them to explain why the said primary gold should not be confiscated under section 71(1) of the 1968 Act and also why penalty should not be imposed on each of the appellants under section 74 of that Act. The show-cause notice inter alia alleged contravention of section 8(1) read with section 8(6) and section 16(1) read with section 16(5) inasmuch as the appellants had in their possession primary gold which they failed to dispose of within six months from 1.3.1967 as provided for in rule 126H(1)(B) of the Defence of India Rules. By the said show-cause notice, it was further alleged that the appellants had failed to file the declaration in respect of gold articles, other than the gold bars which constituted contravention of section 16(1) read with section 16(5) of the said Act. The appellants claimed during the investigation that the seizure was illegal; that taking over of the gold from Income Tax Authorities did not amount to seizure in fact or in law. They contended that there was no contravention of the provisions of the Act as they were not in conscious possession of the said gold recovered from their residence. The appellants claimed that entire gold was recovered from a secret cavity/vault inside the dome of one cupboard in the eastern bedroom and that they were not aware of the secret cavity or the contents thereof. The appellants also claimed that they were not in possession of the keys of the secret vault. In the meantime, on 18.10.1975, Voluntary Disclosure of Income and Wealth Ordinance, 1975 was promulgated. It was replaced by Act No. VIII in 1976. On 27.12.1975, appellant No.1 as Karta filed a declaration under the said Voluntary Disclosure Scheme. To complete the chronology of the ev