TaxTMI 
TaxTMI 
2022 (4) TMI 1285
X X X X Extracts X X X X
X X X X Extracts X X X X
....a proprietary concern namely "M/s. Vir Impex". It is the case of the writ applicant that he sold polished diamonds valued at Rs. 92,09,550/- to one company by name "Akash Diamonds Pvt. Ltd." vide the invoice No.112/19/20 dated 2nd July 2019. 4 On 8th August 2019, a search action under Section 132 of the Act was carried out by the department at the business premises of the "Akash Diamonds Pvt. Ltd." It appears that during the search, one of the employees of the writ applicant namely Parin N. Sheth was present and was found to be in possession of polished diamonds of the value referred to above. According to the writ applicant, his employee Parin N. Sheth had visited the premises of the Akash Diamonds Pvt. Ltd. in order to collect the signed invoice No.112/19-20 dated 2nd July 2019 referred to above. The said invoice was also found during the course of the search. 5 The diamonds referred to above were seized from the possession of Parin N. Sheth. 6 For the first time, on 6th September 2019, the writ applicant made a request in writing to release the seized asset (diamonds) in accordance with the provisions of Section 132(1)(i) of the Income Tax, 1961 [for short, "the Act"]. The ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce tax before 15.03.2020, I am ready to pay tax on disclosed income instantly against the release of the diamonds." 7 A second reminder for the release of the diamonds is dated 16th September 2019 (Annexure : C). 8 One affidavit was also filed by Parin N. Sheth stating as under: "16th September 2019 To, Income Tax Officer, Ward - 1(2)(1), Surat. Reg : Shri Ashish Sanghvi, Surat PAN : ACVPS5819E Sub : Request to release the diamonds as per proviso to S. 132B91)(i). Ref: The search proceedings u/s. 132 conducted against assessee's employee Shri Parin N. Sheth on 08.08.2019. Dear Sir, 1. The search was conducted at the premises of Akash Diamonds Pvt. Ltd. at 35 Burtolla Street, Ground Floor, Kolkata-700007 on 08.08.2019 Assessee's employee Shri Parin N. Sheth was present at the time of the search and he was found to be in the possession of polished diamonds which were subsequently valued at Rs. 92,09,550/-. He visited this premises for the purpose of collecting the signed sale bill raised by assessee's proprietary firm M/s. Vir Impex on account of goods sold to this party vide Invoice No. 112/19-20 dated 02.07.2019. The invoice was given to t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. The invoice was also found in the course of the search. 2. That my employee was found to be in the possession of polished diamonds Although he was found in possession of polished diamond of Rs. 92,09,550/-, the ownership of the goods belongs to M/s. Vir Impex in which I am the propriator. 3. That I am assessed to tax at ITO Vard-1(2)(1), Surat having PAN-ACVPS5819E. My employee Shri Parin N. Sheth is assessed to tax at ITO, Ward-(1)(2)(4), Surat vide PAN EEMPS3331Q. 4. That the diamonds were valued at Rs. 92,09,550/- but after deducting the gross profit of about 5% the cost price of the diamonds comes to Rs. 57,50,000/-. Without prejudice to the accounting of the said diamonds in the books of accounts of my proprietory firm M/s. Vir Impex, I am ready to surrender the income of Rs. 87.50 000 as my additional income for AY 2019-20 & AY 2020-21. I undertake to pay tax alongwith interest on declaration of Rs. 87,50,000/-. The above scaled facts and us and correct to the best of my knowledge and belief and know that to make a false affidavit is a criminal offence." 10 A third reminder for the release of the diamonds was given on 6th March 2020 (Annexure : F). 11 The em....
X X X X Extracts X X X X
X X X X Extracts X X X X
....val of the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, to the person from whose custody the assets were seized: Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed;" 15 Mr. Hemani concentrated more on the second proviso to Section 132B of the Act referred to above. As per the first proviso of clause (i) of sub-section (1) of Section 132B of the Act, where an application for release of the asset is made within thirty days from the end of the month in which the asset was seized and the nature as well as source of acquisition of such asset is explained, it is permissible to recover the amount of "existing liability" out of such asset and the remaining portion of such asset could be released with the prior approval of the competent authority. 16 As per the second proviso of clause (i) of sub-section (1) of Section 132B of the Act, the asset referred to in the first pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i Panjvani (supra) wherein this Court has taken the view that the Courts should attach considerable importance to the time frame provided under Sections 132A and 132B resply of the Act when it comes to a question of retention of books of accounts or of seized assets. It is not permissible for the Court to read the time limit provided in the proviso to clause (i) of sub-section (1) of Section 132B of the Act as being merely directory. Any attempt on the part of the Court to read it as directory would substantially dilute the rigors of the statutory provisions and would give an unbridled power to the Assessing Officer to retain the seized assets awaiting the finalization of future possible liability for indefinite period without deciding the application of the person concerned who may be legitimately in a position to explain the source of the asset so seized. 25 In the aforesaid context, we may quote few relevant observations from the judgement in the case of Nadim Dilipbhai Panjvani (supra): "6. As per Section 1 of Section 132B of the Act, thus, the assets seized under Section 132 or requisitioned under Section 132A has to be dealt with in the manner provided in Clauses (i) to (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Further proviso to Clause (i) of sub section (1) of Section 132B of the Act provides that such asset or any portion thereof, as is referred to in the first proviso shall be released within a period of 120 days from the date on which the last of the authorizations for search under Section 132 or for requisition under Section 132A, as the case may be, was executed. This further proviso, therefore, has to be viewed and interpreted in the background of the provisions contained in Clause (i) of sub section (1) of Section 132B of the Act and the first provisio to the said clause. The further proviso, thus, requires that such assets or portion thereof referred to in the first provisio would be released within the prescribed time. Of course when this further proviso refers to any portion of the asset, as is referred to in the first proviso, it necessarily permits the Assessing Officer to apply the assets against the existing liability or even when not satisfied about the source of acquisition of the asset to refuse to release the same till the further liabilities which may arise upon completion of the assessment under Section 153A of the Act or the assessment of the year relevant to the pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....liability or the amount of the liability determined on the completion of the regular assessment or reassessment including any penalty levied or interest payable in connection with such assessment or reassessment is required to be recovered. The first proviso of this Section enables the assessee to make an application within 30 days from the end of the month in which the asset was seized. For release of the assets the assessee is required to explain the nature and source of acquisition of such assets to the satisfaction of the Assessing Officer. On such satisfaction and with prior approval of the Chief Commissioner the Assessing Officer is empowered to release the asset to the person from whose custody the assets were seized. The second proviso to this Section makes it clear that the assets are required to be released within a period of 120 days from the date on which the last of the authorization for search under Section-132 or for requisition under Section- 132A, as the case may be, was executed. 19. Considering the above provisions, the petitioner made an application within the permissible time limit. Despite the fact that the period of 120 days was over, the assets were not r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eized assets beyond the period of 120 days. The orders passed by the respondent authorities beyond such period are of no consequence and they are not tenable at law. 20. In the above view of the matter, all these orders which are challenged in the present group of petitions retaining the assets beyond the period of 120 days are hereby quashed and set aside and the respondent authorities are directed to release the gold ornaments and jewellary seized by them during the course of search and seizure operation forthwith and in any case not latter than two weeks from the date of receipt of the writ of this Court or from that date of receipt of certified copy of this order, whichever is earlier." 10.We may also refer to the decision of Division Bench of this Court in case of Cowasjee Nusserwanji Dinshaw vs. Income Tax Officer reported in 165 ITR page 702, in which, the Court found that the books and documents of the assessee, which were seized during search and seizure operation, were retained beyond a period of 180 days without communicating the reasons recorded by the Assessing Officer for such purpose. The Court held that, continued retention of the books and accounts and seized....