TaxTMI 
TaxTMI 
2001 (1) TMI 385
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....d. They also found some documents stated to be incriminating. In the course of their investigation they recorded statements of Mohan Shet, Uday Ravankar and Naresh Thakkar who worked for him in his flat; Sujatha Shet, Kamalesh Bakashi Sharma, an accountant who maintains the accounts of Dhanalaxmi Jewellers. The Commissioner has cited in his order in support of his finding seven statements of Mohan Shet, and the statements of Ravankar and Thakkar. In his first statement recorded on 31-5-1997 Mohan Shet said that this money of Rs. 75 lakhs was the sale proceeds of gold. The gold was supplied to him by Abdullah, whom he met at Kumta, his home town around three months earlier. Abdullah said that he could arrange supply of gold brought by 'NRI passengers', evidently a reference to passengers residing abroad who are permitted to import gold, if they satisfy the conditions specified in the Import Policy; Shet claimed that he told Abdullah that having suffered preventive detention earlier, he was only interested in buying gold that was legitimately imported. There being no objection from Abdullah he agreed to purchase 135 bars (of 10 tolas each) of the gold. He did this four days prior to ....
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.... He gave further details of this purported agreement. Uday Ravankar and Naresh Thakkar as we have seen who were the employees of Mohan Shet, each of them in their statement has said that they accepted whatever was given to them by persons coming to the firm, according to the instructions of Mohan Shet. 3. Sujatha Shet said that she could not explain the currency. Kamalesh Bakashi Sharma, the accountant said that he was looking after the accounts of Dhanalaxmi Jewellers by a part time. He took the account book from them on 28-10-1997 to finalise them. His telephone number was not known to the jewellers. Mohan Shet gave him a copy of Mohammed Ibrahim's passport with duty receipt on 25-6-1997. 4. It is on the basis of these statements that the Commissioner has concluded that the currency was sale proceeds of smuggled goods, confiscated and imposed penalty on Mohan Shet and on his wife for dealing with smuggled gold. 5. The contention of the common counsel for these two appellants is this : The show cause notice wrongly invoked Section 123 of the Act. That section could only apply where there was a seizure of any goods and would not apply to cases of seizure of ....
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.... smuggled. He also points to the failure of Mohan Shet to produce relevant documents in support. 8. The Commissioner has summed up the evidence upon which he relies in the eight paragraph of his order. He relies upon the statement of Mohan Shet, the fact that no account was produced for the money and what he finds to be a subsequent attempt to regularise by making entries in the account book and the statement of Ravankar and Thakkar. 9. The presence of a large amount of money by itself is no evidence that it was obtained as a result of sale of smuggled goods. The Tribunal in its decision has analysed the provisions of Section 121 and found therein following ingredients which must be satisfied. (1) There must be a sale; (2) The sale must be of smuggled goods; and (3) The sale must be by a person having knowledge or reason to believe that the goods was smuggled; and (4) The seller and purchaser and the quantity of gold must be established. 10. A reading of the section makes clear the existence of the first three ingredients. There is, however, nothing in it which stipulates that the identity of the seller and purchaser and the quantity of goods sold must be es....
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.... smuggled, the burden of proving that it is not smuggled would be upon the person from whom it is seized. 13. However, for that section to apply it is that commodity so specified which would have to be seized. There was no seizure of gold in the case before us. What was seized was currency. The provisions of Section 123 will not apply to the facts before us. The show cause notice in fact sought to invoke this section and the Commissioner has rightly not relied upon it. The burden thus, would be upon the department to prove that the gold was smuggled. The Commissioner seeks to discharge that burden by relying upon the statements of Mohan Shet, Revankar and Tiwari, his employees. The statements of the last two are of not any help. They only say that they accepted large amounts of money on instructions of Mohan Shet and could not say for what consideration this money was given. From this alone it is not possible to conclude even that there was sale of any goods at all. The money might be the proceeds of the crime or could equally be the proceeds of legal transactions. 14. That leaves us with the statement of Mohan Shet. The Commissioner says that he has in his statemen....