IMPORTANT POINT
The main legal point established in the judgment is the requirement to establish prima facie evidence that seized goods are part of the stock-in-trade, as per Section 132(1)(iii) of the Income Tax Act, and the significance of supporting documents such as bills or invoices in proving the status of seized goods.

JUDGMENT :

Goutam Bhaduri. J.

Heard.

1. (i) The present appeal is against the judgment dated 29.02.2024 passed by the learned Single Bench, wherein the writ petition challenging the seizure of jewellery which was said to be stock-in-trade by the petitioner was refused to be handed over from seizure. The premises of the case would emerge from the facts that on 19.10.2023, a search and seizure action under Section 132 of the Income Tax Act, 1961 was conducted at the residence-cum-business premises of appellant M/s Paras Jewelers at Jagdalpur. On the same date, the preliminary statement of Paras Chand Jain was recorded under Section 131 (1A) of the Act of 1961.

(ii) Subsequent to it, the Government Approved Valuer prepared a valuation report for the gold ornaments and silver ornaments found in the residence of Shri Inder Chand Jain. On 20.10.2023 and 21.10.2023, statement of Paras Chand Jain was recorded under Section 132 (4) of Act of 1961, subsequent thereto Government Approved Valuer prepared a valuation report of the gold ornaments and the silver ornaments found in the showroom of the appellant firm. The application was submitted by the petitioner submitting that on 22.10.2023, the search team concluded their investigation and departed from the residential-cum-business premises, marking the termination of the investigation proceeding at the said location.

(iii) The appellant states that he has paid an advance tax of Rs. 75,00,000/- (Rupees seventy five lakhs) on 15.12.2023. Subsequently, on 29.12.2023, the firm lodged a representation seeking release of the jewelry discovered within the bedroom of Inder Chand Jain on the ground that it was a stock-in-trade of the jewelry shop and asked for release of the same. On 16.01.2024, the appellant firm voluntarily submitted a letter of disclosure depicting additional business income out of unaccounted business transactions for a total amount of Rs. 8,76,96,000/- (Rupees eight crores seventy six lakhs ninety six thousand). It was contended that the stock-in-trade could not have been seized and the business could not have been closed. The said application was rejected by the Revenue on 25.01.2024, the subsequent representation was also stand rejected.

(iv) Eventually, the writ petition bearing No. W.P. (T) No. 27 of 2024 was filed wherein jewellery which was seized for the reason that said jewellery is part of stock-in-trade was sought to be released. The learned Single Bench dismissed the petition on the ground that the appellant may avail the remedy under Section 132B (i) of Income Tax Act, 1961 and apply before the Principal Commissioner Central Circle for release of the gold & other ornaments.

2. Learned counsel for the appellant would submit that as per Section 132 (1) (iii) if the goods which are seized form part of stock-in-trade, then they could not be seized at all. He would submit that learned Single Bench completely ignored this provision and went upon Section 132-B (i) to say that the appellant can apply for release of the goods on payment of tax. He would further submit that direction ipso facto would lead to admission of the fact that they were unaccounted, but the law as provided under Section 132 (1) (iii), is that the stock-in-trade could not be seized at all. The Department of Revenue can only prepare the inventory. He further submits that when the things moved are in the stock-in-trade whether it will be accounted for or not, it would not affect the status.

3. Ex adverso, learned counsel for the respondents would submit that the order to affirm certain goods were under stock-in-trade, it has to be prima facie established. He would refer to the statement made on oath under Section 132 (4) of the Act of 1961 to submit that the appellant admitted the fact that they do not have any record or invoices for such goods which were found in the residence to show that it was stock-in- trade. Therefore, in order to avail the benefit of Section 131 (iii) this fact is required to be establ