The statutory provision of Section 132B of the Income Tax Act is mandatory, and the time frame provided under Sections 132A and 132B is crucial in determining the retention and release of seized assets.

ORDER :

J.B.PARDIWALA, J.

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 question;

(c) any other and further relief deemed just and proper be granted in the interest of justice;

(d) to provide for the cost of this petition.”

2. The facts giving rise to this writ application may be summarized as under:

3. The writ applicant is engaged in the business of diamonds. The business is being carried out in the name of a proprietary concern namely “M/s. Vir Impex”. It is the case of the writ applicant that he sold polished diamonds valued at Rs.92,09,550/- to one company by name “Akash Diamonds Pvt. Ltd.” vide the invoice No.112/19/20 dated 2nd July 2019.

4. On 8th August 2019, a search action under Section 132 of the Act was carried out by the department at the business premises of the “Akash Diamonds Pvt. Ltd.” It appears that during the search, one of the employees of the writ applicant namely Parin N. Sheth was present and was found to be in possession of polished diamonds of the value referred to above. According to the writ applicant, his employee Parin N. Sheth had visited the premises of the Akash Diamonds Pvt. Ltd. in order to collect the signed invoice No.112/19-20 dated 2nd July 2019 referred to above. The said invoice was also found during the course of the search.

5. The diamonds referred to above were seized from the possession of Parin N. Sheth.

6. For the first time, on 6th September 2019, the writ applicant made a request in writing to release the seized asset (diamonds) in accordance with the provisions of Section 132(1)(i) of the Income Tax, 1961 [for short, “the Act”]. The application preferred by the writ applicant dated 6th September 2019 reads thus:

“6th September 2019

From

Shri Ashish Sanghvi

Surat.

PAN : ACVPS5819E

To,

Income Tax Officer,

Ward – 1(2)(1),

Surat.

Sub : Request to release the diamonds as per proviso S. 132B(1)(i).

Ref: The search proceedings u/s. 132 conducted against my employees Shri Parin N. Sheth on 08.08.2019.

Dear Sir,

1. The search was conducted at the premises of Akash Diamonds Pvt Ltd at 35 Burtolla Street, Ground Floor, Kolkata-700007 on 08.08. 2019. My employee Shri Parin N. Sheth was present at the time of the search and he was found to be in the possession of polished diamonds which were subsequently valued at Rs.92,09,550/-. He visited this premises for the purpose of collecting the signed 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 Rs. 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 Rs.92,09,550/- but after deducting the gross profit of about 5% the cost price of the diamonds comes to Rs.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 Rs. 87,50,000-as my additional income for AY 2019-20 & AY 2020-21. I undertake to pay tax alongwith interest on declaration of Rs. 87,50,000/-.

4. Your honour is requested to release the diamonds to the as the said diamonds belongs to my proprietory firm Ms. Vir Impex. It is to be noted that although the diamonds were held by my employer as stock in trade on behalf of my firm the diamonds were se