AI Drafter 
TaxTMI 
TaxTMI 
2021 (9) TMI 428
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....ax Authorities. The said jewellery found in his possession was seized in terms of Section 132 of the Income Tax Act, 1961 (hereinafter referred to as "the Act of 1961"). 3. The petitioner No.1 and 2 who are the Proprietor of M/s Daha Dimon and M/s Maha Pragya Jewellers and are brother-in-law have submitted that apart from jewellery two challans were seized which had been issued by M/s Maha Pragya Jewellers and M/s Daha Dimon in relation to jewellery and the entire jewellery was part of stock-in-trade and stock-in-hand with petitioner No.3 who was employer of petitioner No.2. 4. Learned counsel for the petitioners submits that the challan bearing No.1050 in the name of M/s Maha Pragya Jewellers had been issued on 24.02.2020 and it stated that the goods are being sent to Jaipur. 5. A letter was sent by the petitioner No.1 on 26.02.2020 to release the stock attached and explained the stock details, purchase details, sales details, challans issued, stock register, audit reports, income tax return, air ticket bills and certificate from Charted Accountants etc. and justification of goods found from the possession of petitioner No.3 were also explained. Similarly, petitioner No.2....
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....uty Commissioner of Income Tax reported in 2010 (2) TMI 684- Gujarat High Court. 9. It is submitted that the foundation of seizure and continuous seizure is based on surmises and conjectures and the action is arbitrary. 10. Per contra, learned counsel appearing for the respondents submitted that the concerned person who was searched namely petitioner No.3 failed to produce any evidence to prove the source of the seized jewellery while two challans were seized. They did not mention the price and value of the material. It was submitted that the challan mentions of the goods to be sent to Jaipur while the challan has to be issued from Jaipur and the concerned persons were travelling from Mumbai to Jaipur and therefore the same would be concocted and false. It is further submitted that enquiry proceedings were conducted by enquiring from the father of the petitioner No.1 and employee of petitioner No.1 namely Karan Singh who had no claim of the said goods being in the stock and books of accounts of the petitioners. The challan cannot be said to be officially authentic document for transfer of such high valued jewellery and statement of petitioner No.3 was recorded. The delivery c....
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.... [Explanation.-For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.] 132B. Application of seized or requisitioned assets.-(1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely:- (i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment 4 [under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be] (including any penalty le....
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....very of the amount of liabilities aforesaid by any other mode laid down in this Act. (3) Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of subsection (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized. (4) (a) The Central Government shall pay simple interest at the rate of 3 [one-half per cent. for every month or part of a month] on the amount by which the aggregate amount of money seized under section 132 or requisitioned under section 132A, as reduced by the amount of money, if any, released under the first proviso to clause (i) of sub-section (1), and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (i) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A....
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....tioned as stockin- trade of the company, the only variation with regard to the price. It is also not the case that the petitioner No.1 was engaged in tax evasion or that it was not authorized to hold the seized articles or carry on sale of the same. 9. As has been noted above, the petitioner No.2 has placed before the respondents' documents to show that the jewellery seized was part of their stock-intrade. Documents to that effect has also been placed to show that the petitioner No.2 was carrying them for the purpose of sale as well as approval, transaction memos and the boarding pass, insurance policy were relevant for the said purpose. However, a look at the impugned order is quite amazing. 10. In view of Section 132B proviso, the jewellery was liable to be released. In the light of the statement made under Section 132(4) by petitioner No.2 and in view of the documents and statements put forward on behalf of the petitioner No.1, there was no occasion to or reason to believe that the jewellery is part of undisclosed income of the petitioner No.2. The officer has apparently not taken into consideration the cited law as noted above. The judgment of Bombay High ....
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....t to the chart giving details of books of account provisioning for the articles seized. In response thereto, the Respondents have no plausible explanation and with the intent to deny the relief to the Petitioner, they have contended that the purchase invoices of the Petitioner are of bulk goods and cannot be identified with the individual seized items." and observed:- "27. Before parting we may add that the opinion which has to be formed is subjective, and though the jurisdiction of the Court to interfere is very limited, and we are not to act as an Appellate Court and meticulously examine the information in order to decide whether an action under Section 132 is called for, yet at the same time we may emphasize that the power to search a person is a stringent power provided by law and this requires the officers to scrupulously follow the mandate and the rigor of the law prior to authorizing such an action, and unless the conditions to exercise such power are shown to exist, we would have no hesitation in striking down such an action. We are compelled to interfere as there was complete lack of information prior to the action of search, exhibiting gross non application of mi....
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.... "(i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is 25[deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C, may be recovered out of such assets] : Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the Asse....