TaxTMI 
TaxTMI 
2006 (3) TMI 110
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....irect release of gold but permitted the appellant to make application for release before the Assessing Officer with a direction to the Assessing Officer to examine the matter and if the appellant satisfies him about the source of acquisition of the gold, to release the, same forthwith. The exercise was to be completed within a period of 15 days from receipt of a copy of the order. The appellant was directed to cooperate with the respondent authorities. Pursuant to the said order, the appellant filed an application under section 132B of the Act for release of the gold before the Assistant Commissioner of Income-tax, Central Circle-12, Mumbai. Mter hearing and on consideration of the facts and materials the Assistant Commissioner found that the appellant was not the actual owner of the bullion, he was acting as a carrier and name lender (entry giver) or a front man for some-body else and the gold which was the subject-matter was not his stockin-trade, and accordingly rejected the application for release, vide order dated May 18, 2005. At this stage, on May 24, 2005, the appellant filed this special appeal against the said order of the learned single judge dated April 19, 2005. ....
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....article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922) or this Act (hereinafter in this section referred to as the undisclosed income or property), to authorize any Assistant Director or Assistant Commissioner or Income-tax Officer, among other things, to- "(iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorized officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing. (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorized officer shall make a note or inventory of such stock-in-trade of the bus....
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.... submission reliance was placed on Ajit Jain v. UOI [2000] 242 ITR 302 (Delhi), Naresh Kumar Kohli v. CIT [2004] 266 ITR 553 (P & H) and CIT v. Mukundray Kumar Shah [2005] 278 ITR 425 (Cal). Dealing with the preliminary objection on behalf of the Department it was submitted that the learned single judge erred in directing the appellant to approach the authority without deciding the question of validity or otherwise of the search and seizure of the goods. In justification of filing of appeal, reliance was placed on Commissioner of Trade Tax v. Kajaria Ceramics Ltd. [2005] 5 RC 204 ; [2005] 11 SCC 149. It was submitted that taking recourse to section 132B of the Act does not bar invoking the extraordinary jurisdiction under article 226 of the Constitution and it was open to the appellant to seek both the remedies simultaneously. Whereas section 132B of the Act deals with adjustment, the writ petition was filed for quashing of search and seizure. Learned counsel for the Department while controverting the submissions made on behalf of the appellant referred to various documents. He submitted that from the inquiries conducted by the authorities, it transpired that no stock of gold....
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....Mali. 161 tickets of Indian Airlines and Jet Airways for the months of December, 2004, January and February 2005 in the name of the appellant and others were found during the course of searches. The seized diary showed approximately 11.5 metric tons of gold was transported by M/s. Rajguru Bullion from Jaipur to Mumbai during August to December 8, 2004. The appellant claimed to have a branch office at Coimbatore, but no air tickets for Coimbatore were bought so that the carriers could take the gold there. The office at Coimbatore was acquired in the month of October, 2004, but not a single penny of transaction of purchase and sale of bullion was made there. No stock whatsoever was found there. The person in charge, Shri Kailash stated on oath that no business activity of M/s. Rajguru Bullion had ever taken place there. The respondents have stated that from reliable sources the Department had come to know that some persons were illegally transporting gold and silver bullion from Jaipur and Ahmedabad to Mumbai by hiring carriers having bank accounts at Mumbai, Jaipur and Ahmedabad. These carriers had no means to conduct business of this size of their own. Cheques to the tune of Rs.....
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....SCC 149 in this regard is totally misplaced. The point at issue in that case related to recovery of tax and on behalf of the assessee a submission was made that the Department having accepted the judgment of the High Court of its own even before the Supreme Court refused to stay the judgment, it cannot recover the tax. The Supreme Court noted that the Departmental appeals had been filed before taking any action pursuant to the decision of the High Court. Leave to appeal was granted on August 11, 2000, and stay was refused on contest on January 4, 2001. In the absence of any stay by the Supreme Court, the Department was bound to comply with the decision of the High Court. Such compliance by itself, the Supreme Court held, cannot destroy the Department's rights to press the appeals and recover the tax. It was submitted on behalf of the appellant that the learned single judge did not decide the question of validity of search and seizure which was the main issue involved in the writ petition. The argument at the first instance sounds impressive but cannot be accepted especially in view of the findings arrived at by the Assistant Commissioner of Income-tax on application under sectio....
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....32B of the Act envisages recovery of liability of the assessee as determined on completion of assessment from out of the seized assets and release of the rest after discharge of such liability. Section 132B lays down the manner in which the assets seized under section 132(1), requisition under section 132A may be dealt with. In terms of clause (i) of sub-section (1), the seized assets may be utilized for recovering the existing liability of the assessee under the Income-tax Act or the Wealth-tax Act or the Expenditure-tax Act or the Gift-tax Act or the Interest-tax Act. The proviso to clause (i) lays down that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the assets were seized for release of the asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in clause (i) may be recovered out of such asset and the remaining portion, if any, of the asset may be released to the person from whose existing asset was seized. Thus the seized asset can be released only where "source and acquisit....