Order rejecting release of jewellery u/s132A quashed for lack of jurisdiction; fresh decision directed

HC held that the order rejecting the assessee's application for release of jewellery requisitioned under s.132A was without jurisdiction and contrary to directions of the MP HC. The application had been transferred to a particular Assessing Officer with a mandate that it be decided by the officer holding jurisdiction over the assessee. However, the impugned order was passed by an officer who did not hold such charge at the relevant time. On this ground of propriety alone, without entering into the merits of ownership or source of jewellery, HC quashed the impugned order and directed the current jurisdictional Assessing Officer to decide the application afresh after granting hearing and seeking additional evidence if required.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the order rejecting the application for release of seized jewellery was invalid as having been passed by an officer who was not the jurisdictional Assessing Officer over the applicant, in contravention of directions issued by another High Court.

1.2 Whether, in the circumstances, the Court should examine the merits of the applicant's claim to ownership of the seized jewellery and entitlement to release under the Income-tax Act, 1961.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Validity of the rejection order passed by a non-jurisdictional officer

Legal framework (as discussed)

2.1 The Court noted that the jewellery was requisitioned under Section 132A of the Income-tax Act, 1961 and that the application for release was made under Section 132B. The first proviso to sub-clause (i) of Section 132B(1) was referred to in argument to contend that the application must be made to, and considered by, the Assessing Officer dealing with and in possession of the seized assets.

2.2 The Court relied upon the orders of another High Court directing that the applicant's release application be decided on merits, with liberty to transfer the matter to the "concerned Jurisdictional Assessing Officer holding charge over the Petitioner" within the extended time granted.

Interpretation and reasoning

2.3 It was undisputed that: (i) the Department had stated before the other High Court that the application would be decided on its own merits, with liberty to transfer the case to the jurisdictional Assessing Officer holding charge over the petitioner; (ii) pursuant thereto, the Investigation Wing at Jabalpur transferred the pending application to the stated "Jurisdictional Assessing Officer", namely the Deputy Commissioner of Income Tax, Central 2(4), Pune (Respondent No. 4); and (iii) Respondent No. 4 thereafter passed the impugned rejection order.

2.4 On a plain reading of the impugned order, the Court found that Respondent No. 4 herself recorded that jurisdiction over the petitioner did not lie with her office. The Court held that, in view of the clear direction of the other High Court that the application be decided by the concerned Jurisdictional Assessing Officer holding charge over the petitioner, the decision by an officer who did not, by her own admission, hold such charge was contrary to those directions.

2.5 The Court rejected the contention that the impugned order should be sustained merely because Respondent No. 4 had analysed the facts in detail or because she was dealing with the seized assets. The determinative factor for propriety and compliance with the prior High Court's directions was that the application had to be decided by the Assessing Officer having jurisdiction over the petitioner.

2.6 The Court emphasised that the findings and reasoning in the impugned order did not reflect the position advanced in argument that Respondent No. 4 was the competent authority under Section 132B(1) proviso; instead, the order itself disclosed absence of jurisdiction over the petitioner.

Conclusions

2.7 On the "sole ground of propriety" and for contravention of the directions of the other High Court, the Court held that the impugned order dated 20 May 2024 was vitiated and liable to be quashed and set aside.

2.8 The Court directed that the application dated 6 December 2023 be decided afresh by the Deputy Commissioner of Income Tax, Central Circle 5(3), Mumbai, who was stated to be presently holding jurisdiction over the petitioner and the employee from whose possession the jewellery was seized.

2.9 The jurisdictional Assessing Officer was directed to decide the application on its own merits, without being influenced by any observations in the present order, with liberty to call for necessary or additional documents and after granting the petitioner an opportunity of hearing, and to complete the process within twelve weeks.

Issue 2 - Whether to examine the merits of the claim to ownership and release of jewellery

Interpretation and reasoning

2.10 Although rival submissions were advanced on the petitioner's ownership of the jewellery, the adequacy of documentation, and applicability of Section 132B, the Court expressly declined to enter into those merits.

2.11 In view of the subsequent centralisation of the petitioner's case and the identification of the current jurisdictional Assessing Officer (Deputy Commissioner of Income Tax, Central Circle 5(3), Mumbai), the Court considered that the proper course was to remit the matter to that officer rather than adjudicate on the substantive claim to ownership and release.

Conclusions

2.12 The Court recorded that it had "not examined the merits of the matter" and confined its decision strictly to setting aside the impugned order on grounds of propriety and non-compliance with the directions of the other High Court, leaving all questions on ownership of the jewellery and entitlement to release to be decided afresh by the competent jurisdictional Assessing Officer.

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