Seized primary gold not required for exclusive tax adjustment; recovery from house property and handover under special gold law upheld.

Primary gold seized under the Income-tax Act was held not to be exclusively appropriable towards the tax demand where the gold was liable to action under the Gold (Control) Act, 1968. The Court noted that ownership continued until sale, but the Income-tax Officer was not bound to satisfy the arrears only from the seized gold, and the gold could be made available to the Gold Control authorities for confiscation-related action. The attachment and proposed sale of the taxpayer's house property were also upheld because the revenue authorities remained entitled to pursue other lawful recovery modes under the Income-tax Act. The challenge to the recovery action accordingly failed.

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Issues: (i) Whether primary gold seized and retained under section 132(5) of the Income-tax Act, 1961 could be insisted upon for adjustment towards the petitioner's income-tax demand instead of being made available for action under the Gold (Control) Act, 1968; and (ii) whether the recovery proceedings by attachment and proposed sale of the petitioner's house property were illegal or unauthorised.

Issue (i): Whether primary gold seized and retained under section 132(5) of the Income-tax Act, 1961 could be insisted upon for adjustment towards the petitioner's income-tax demand instead of being made available for action under the Gold (Control) Act, 1968.

Analysis: The seized gold was primary gold, and possession of such gold was restricted under section 8 of the Gold (Control) Act, 1968. The statutory scheme of that Act, including sections 105, 111 and 64(b), empowered Gold Control to require assistance from Income-tax Officers and to call for production of the gold. The Court held that the petitioner's ownership continued until sale, but that did not make the Income-tax Officer bound to appropriate the gold only towards tax recovery. Section 132B(2) of the Income-tax Act, 1961 permitted other modes of recovery notwithstanding section 132B(1), and the gold, being liable to confiscation under the Gold (Control) Act, could be made available to the excise authorities.

Conclusion: The petitioner had no enforceable right to compel adjustment of the seized gold towards the tax demand, and the authorities were entitled to hand over the gold for action under the Gold (Control) Act.

Issue (ii): Whether the recovery proceedings by attachment and proposed sale of the petitioner's house property were illegal or unauthorised.

Analysis: Since the Income-tax Authorities were not bound to satisfy the tax demand exclusively from the seized gold, they were entitled to proceed under the Income-tax Act, 1961 for recovery of outstanding dues through other lawful modes. The attachment and sale proclamation in respect of the house property were therefore supported by the statutory recovery machinery and were not rendered unlawful merely because the gold remained in departmental possession.

Conclusion: The recovery proceedings against the house property were valid and not illegal.

Final Conclusion: The challenge to the tax recovery action failed, the writ petition was dismissed with costs, and the refusal to adjust the seized gold towards the tax demand was upheld.

Ratio Decidendi: Where seized property is liable to action under another special enactment and ownership has not yet passed by sale, the Income-tax Authorities are not compelled to satisfy tax dues exclusively from that property and may pursue other lawful recovery modes while assisting the other statutory authorities.

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