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2018 Supreme(Raj) 468
IN THE HIGH COURT OF RAJASTHAN AT JAIPUR
Sanjeev Prakash Sharma, J.
Amore Jewels Private Limited - Appellant
Vs.
Principal Commissioner of Income Tax - Respondent
C.W.P. No. 17508 of 2017
Decided On : 27-04-2018
Advocate Appeared:
Anuroop Singhi, N Ramachandran, Saurabh Jain, Vijay Choudhary
The authority's decision not to release the seized jewelry was not justified because the petitioners had provided sufficient evidence to show that the jewelry was part of their stock-in-trade and that the employee was duly authorized to carry it for sale and approval, and there was no evidence to suggest that the petitioners were engaged in tax evasion or that the jewelry was part of undisclosed income.
Headnote:
INCOME TAX ACT, 1961 - SECTION 132B - SEIZURE OF JEWELRY - RELEASE OF SEIZED GOODS - CONDITIONS - INTERPRETATION OF SECTION 132B - SCOPE OF JUDICIAL REVIEW.
Fact of the Case:
The petitioners, a jewelry company and its employee, challenged the order of the Assistant Commissioner of Income Tax under Section 132B of the Income Tax Act, 1961, refusing to release 583 pieces of jewelry seized during a search and seizure operation at the airport. The petitioners claimed that the jewelry was part of their stock-in-trade and that the employee was authorized to carry it for sale and approval.
Finding of the Court:
The court held that the authority's decision not to release the seized jewelry was not justified. The court found that the petitioners had provided sufficient evidence to show that the jewelry was part of their stock-in-trade and that the employee was duly authorized to carry it for sale and approval. The court also found that there was no evidence to suggest that the petitioners were engaged in tax evasion or that the jewelry was part of undisclosed income.
Issues: 1. Whether the authority's decision not to release the seized jewelry was justified. 2. Whether the petitioners had provided sufficient evidence to show that the jewelry was part of their stock-in-trade and that the employee was duly authorized to carry it for sale and approval. 3. Whether there was evidence to suggest that the petitioners were engaged in tax evasion or that the jewelry was part of undisclosed income.
Ratio Decidendi: The court relied on the following legal principles in reaching its decision: * The authority must have information in its possession on the basis of which a reasonable belief can be founded that the person concerned has omitted or failed to produce books of account or other documents for production of which summons or notice had been issued or such person will not produce such books of account or other documents even if summons or notice issued to him or (b) such person is in possession of any money, bullion, jewellery or other valuable article which represents either wholly or partly income or property which has not been or would not be disclosed. * Such information must be in possession of the authorised official before the opinion is formed. * There must be application of mind to the material and the formation of opinion must be honest and bona fide. Consideration of any extraneous or irrelevant material will vitiate the belief/satisfaction. * Though Rule 112(2) of the Income Tax Rules which specifically prescribed the necessity of recording of reasons before issuing a warrant of authorisation had been repealed on and from 1-10-1975 the reasons for the belief found should be recorded. * The reasons, however, need not be communicated to the person against whom the warrant is issued at that stage. * Such reasons, however, may have to be placed before the Court in the event of a challenge to formation of the belief of the authorised official in which event the court (exercising jurisdiction under Article 226) would be entitled to examine the relevance of the reasons for the formation of the belief though not the sufficiency or adequacy thereof. The court found that the authority had not taken into consideration the cited law and had not applied the correct legal principles in reaching its decision.
Final Decision: The court allowed the writ petition, quashed and set aside the order of the Assistant Commissioner of Income Tax, and directed the respondents to release the seized jewelry to the petitioners within two weeks.
Sanjeev Prakash Sharma, J.
The petitioners by way of this writ petition seeks quashing and setting aside the order dated 19.07.2017 passed by the Assistant Commissioner (Income Tax) Circle-1, Jaipur under Section 132-B of the Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961') and further pray to direct the respondents to release 583 pieces of jewelry seized by them.
2. The brief facts need to be noted are that the petitioner No.2- Anuj Ajmera (hereinafter referred to as 'AA') alongwith two other sales executive of petitioner No.1-Company, allegedly undertook a business tour from New Delhi to Agra for marketing and sale of jewellery products on 17.11.2016 and carried with them 643 items/pieces of jewelry. A search and seizure action was carried out at the Indira Gandhi International Airport on 24.11.2016 whereby AA, the petitioner No.2 was intercepted at the New Delhi Airport by the Assistant Director of Income Tax (Inv.) Air Intelligence Unit, New Delhi. He was found to be in possession of jewelry weighing around 3 KG gold. He was examined under Section 131(1)A of the Act of 1961 with a view to establish genuineness and source of ownership of gold jewelry i.e Bracelets, ear rings, rings, pendants, cufflinks, bangles, etc. In his statement, AA stated that he is an employee of petitioner No.1- company and the said jewelry is stock-in-trade of the company. In order to verify his statement, the authorities of the Income Tax Department tried to contact the Managing Director of the company but his mobile remained unanswered and as AA could not produce any books of accounts or documentation to explain that it was stock-in-trade of the petitioner No.1, the provisions under Section 132 of the Act of 1961 were invoked and the jewelry was seized.
3. It is stated that chartered accountant acting on directions of petitioner No.2 i.e. AA, submitted detailed representation for releasing seized goods and an application under Section 132B of the Act of 1961 on 06.02.2017 alongwith enclosures and documentation to prove that the jewellery which was seized belonged to the petitioner company and the petitioner No.2 i.e. AA was carrying them and the same were part of stock-in-trade of the petitioner No.1. As the goods were not released, the writ petition being No.6359/2017 was preferred before this Court wherein this Court directed the respondents to hear and decide the application filed by both the petitioners within a period of two months from the date of passing of the order i.e. 11.05.2017. Another application is stated to have been preferred by the petitioners with request to release 583 items of jewelry seized by it. The respondent No.4 vide his order dated 19.07.2017 has rejected the applications and has treated the jewelry as not liable to be released. As against the same the present writ petition has been filed.
4. Learned counsel for the petitioners submits that once the petitioners have submitted before the authorities that concerned jewelry seized was part of stock-in-trade. The petitioner No.1- company which is a manufacturer of jewelry goods and the petitioner No.2 is the employee/marketing executive of it and was authorized to carry in his possession the goods in question for sale while travelling on a tour within India for marketing and sale of its products and an affidavit in this regard has been filed by the Authorised Officer of the employer company. There was no occasion for the respondents to have withheld the seized goods. It is submitted that the 583 items contains serial numbers and several copies of tax invoice were also filed. The transaction memos carrying petitioner No.1 Company's name duly corroborating business transacted by petitioner No.2 during the visit, were also placed. The boarding pass of Jet Airways for petitioner No.2 having travelled from Jaipur to New Delhi was also filed. The Block Insurance Policy covering risk attached with the regular transfer of goods was also filed. In the circu
