Court rules seizure of gold bullion illegal, orders return to petitioners.

The court ruled in favor of the petitioners, finding the seizure of gold bullion during a search operation to be illegal as it constituted stock-in-trade duly recorded in their books of accounts. Despite the respondents' allegations of non-cooperation and incriminating findings, the court emphasized the statutory obligation to consider the petitioners' representation for the release of seized assets. The court held that under relevant legal provisions, stock-in-trade should not be seized but inventoried, directing the return of the gold bullion to the petitioners and allowing the writ petition due to the respondents' failure to act in accordance with the law.

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Issues Involved:
1. Legality of the seizure of gold bullion and other articles.
2. Non-cooperation allegations against the petitioners.
3. Consideration of the petitioners' representation for the release of seized assets.
4. The applicability of Section 132 and 132B of the Income Tax Act, 1961, and Section 37 of the FEMA.

Summary of Judgment:

Issue 1: Legality of the Seizure
The petitioners argued that the gold bullion seized during the search operation on 15.02.2020/16.02.2020 was stock-in-trade and duly recorded in their books of accounts. They contended that under the law, such stock-in-trade cannot be seized. The respondents, however, claimed that the seizure was conducted lawfully based on inputs about smuggled gold transactions and that various incriminating documents and unaccounted assets were found.

Issue 2: Non-cooperation Allegations
The respondents alleged that the petitioners were not cooperating with the ongoing investigation despite multiple summons issued under FEMA. The petitioners did not challenge the issuance of summons but focused on the non-consideration of their representation for the release of the seized gold.

Issue 3: Consideration of Representation
The petitioners submitted a representation on 19.02.2020, explaining that the seized gold bullion was stock-in-trade and requested its release. Despite the statutory obligation under Section 132B of the Income Tax Act, 1961, to decide on such representations within 120 days, the respondents failed to act on it. The court noted that the respondents' inaction led to a miscarriage of justice.

Issue 4: Applicability of Relevant Legal Provisions
The court highlighted that under Section 132 and 132B of the Income Tax Act, 1961, and Section 37 of the FEMA, stock-in-trade found during a search should not be seized but inventoried. The court cited various judgments reinforcing that the seizure of stock-in-trade is illegal and that the authorities are mandated to release such assets if satisfactorily explained by the petitioners.

Conclusion:
The court found the respondents' failure to consider the petitioners' representation and release the seized gold bullion as contrary to the law. The court directed the respondents to return the 3773.52 gm. of gold bullion to the petitioners after making a note of the inventory, thus allowing the writ petition.

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