AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 377
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....perations by the respondents, 3773.52 gm. Gold bullion which is stock in trade was seized along-with other articles. It is further stated that the petitioners requested the respondents that all the seized goods are duly recorded in the accounts of books of the petitioner firm and also are in stock in trade, which as per the law cannot be seized but the respondents did not pay any heed to their request and at the time of seizure, the persons of the Raid Party misbehaved, mishandled and physically assaulted the petitioner No.2 and the employees of the petitioner firm. It has been further stated that a representation was submitted to the respondents on 19.02.2020 but the respondents did not care to consider and pass any order on the same. The petitioners by way of present writ petition have prayed that the gold bullion which was seized from the petitioners during the search operation which is stock in trade, may be ordered to be released by the respondents to them. 3. The respondents in the reply to the writ petition raised a preliminary issue that Section 16 of the Foreign Exchange Management Act, 1999 (for short 'the FEMA') provides for adjudication of disputes by the Adjudicatin....
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....on was stock in trade, the same has not been released so far, even after passing of three and half years and the concerned authorities have also not considered and decided their representation. It has also been submitted that in view of specific provisions under the FEMA and the Act of 1961, the respondents were under an obligation to release the seized gold bullion which is stock-in-trade and other valuable belongings seized during the search. 5. Learned ASG apart from the preliminary objections, as stated in the foregoing paras, has submitted that the petitioners are gold smugglers and they are not cooperating in the on-going investigation even after repeated summons. He further submitted that the petitioners have raised an issue of Section 132B of the Act of 1961 in the rejoinder to the writ petition which is a new pleading and the petitioners cannot create a new pleading in the rejoinder. He also stated that since the petitioners have approached this Court by filing the present writ petition on 01.09.2021 but the respondent authorities could not decide their representation as required to be decided under Section 132B of the Act of 1961 because the matter was sub-judice befor....
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....gh they were under an obligation to decide the said representation and return the seized gold bullion within 120 days from the date of such representation. 9. Learned ASG also relied para 21 of the judgment delivered by the Madras High Court in the case of T.T.V. Dinakaran Vs. Enforcement Officer, Enforcement Directorate, reported in 1995 SCC OnLine Mad 893, wherein it has been observed as under:- "21. Section 40 of the Foreign Exchange Regulation Act simply says that if any Gazetted Officer of Enforcement considers necessary either to give evidence or to produce document during the [sic] courts of investigation, he has power to summon any person. So far as the documents called for in this case, as already pointed out, are only the documents relating to the petitioner. In the case in hand, there is no vagueness in respect of the documents called for. The Documents have been specifically stated. In view of the above discussion, I am of the view that all the three judgments cited by the learned senior counsel for the petitioner are of no help to him. The petitioner has challenged the summons in this writ petition. As pointed out already the summons is issued only enabling....
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....es including the issue of violation of principle of natural justice or delay can all be agitated by the petitioner before the Appellate Forum. This is beyond comprehension of this Court that when an appeal is provided, before the Appellate Authority, then litigant cannot raise the issue of violation of principle of natural justice/delay/competence of any Authority to issue the orders. This Court finds that the alternative statutory remedy available to the litigant/petitioners is available to them and the order, which is put to challenge itself makes a reference of such a remedy/Authority for raising the grievance. This Court, in the wake of statutory alternative remedy available to the petitioners, would not like to entertain the present petition filed under Article 226 of the Constitution of India. Learned counsel for the petitioners, at this juncture, submitted that the writ petition is pending before this Court since 2019 and there is a timeline provided under Section 19 of the FEMA, 1999 to file an appeal and as such the petitioners would be deprived to file their appeal and they will not be able to defend themselves, suffice it to say by thi....
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.... ASG appearing for the respondents also raised a preliminary objection that a new plea cannot be taken in the rejoinder. He submitted that a plea regarding compliance of provisions of Section 37 of the FEMA read with Sections 132 and 132B of the Act of 1961 has been raised in the rejoinder which is a new plea and the same cannot be entertained. In support of the submissions, learned ASG has also referred para 41 of the judgment delivered by this Court in the case of Jwala Prasad Vs. State of Rajasthan (D.B. Civil Misc. Writ Petition No. 1083 of 1972), decided on 22nd November 1972, which is quoted as under:- "41. It may be noticed here that the learned counsel for the petitioner wanted to enlarge the scope of his contention by making reference to the points raised by him in the rejoinder and submitted that all these points should be taken into consideration. We may observe in this connection that when this case came up for hearing before our learned Brother Gattani, J., sitting singly (before the case was referred to us) an objection was raised by the opposite party that the rejoinder should not be looked into as it contains new pleas and our learned Brother Gattani J., by....
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....nted in the books of accounts. Therefore, the respondents may be directed to return the seized gold bullion and other articles. Counsel has referred the provisions of Section 37 of the FEMA and sections 132 and 132B of the Act of 1961, relevant part of which are reproduced as under:- "Power of search, seizure, etc.- 37. (1) The Director of Enforcement and other officers of Enforcement, not below the rank of an Assistant Director, shall take up for investigation the contravention referred to in section 13. (2) Without prejudice to the provisions of sub-section (1), the Central Government may also, by notification, authorise any officer or class of officers in the Central Government, State Government or the Reserve Bank, not below the rank of an Under Secretary to the Government of India to investigate any contravention referred to in section 13. (3) The officers referred to in subsection (1) shall exercise the like powers which are conferred on income-tax authorities under the Income-tax Act, 1961 (43 of 1961) and shall exercise such powers, subject to such limitations laid down under that Act." "Search and Seizure 132. (1) Where....
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....ount 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 Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval 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. To support the contentions, the learned couns....
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....lery (gold and silver ornaments) seized by the Authorized Officer in course of search on 9.9.2011 forthwith to the petitioner-assessee after complying with the requirement provided, i.e., making a note or inventory." 19. In case of Director General of Income Tax & Anr. Vs. Diamondstar Exports Ltd. & Ors. reported in 2006 (3) TMI 140, the Supreme Court has observed as under:- "5. Without going into the question as to value of goods found by the court to have been illegally seized, we hold that the appellants are liable to compensate the respondents at least by way of costs. The loss obviously suffered by the respondents during the pendency of the proceedings before the High Court was further aggravated by the delay in complying with the High Court's decision. In the circumstances, we direct the appellants to pay a sum of Rs. 75,000 to the respondents on account of costs which the respondents will accept in full and final settlement of the claim towards the quantum of interest under the impugned order. Such payment is to be made within a period of four weeks. In the event such payment is not made, this appeal will stand dismissed with costs. 6. The appeal is ....
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....o Section 132(1)(iii) has been added with effect from 01.06.2003 with the obvious intent that the stock-intrade ought not be seized but, instead, should be inventorized so that the same can be used at the time of assessment and for other follow up actions. Further, proviso appearing after sub clause (v) of sub Section (1) of Section 132 also provides that where it is not possible or practical to take physical possession of any valuable article or thing, and removal of it to a safe place is not possible or practical due to its volume, weight or other physical characteristics, the authorizing officer may serve an order on owner, or the person who is in the immediate possession or control thereof that he shall not remove it, part with or otherwise deal with it, except with the previous permission of such authorized officer, and such action of the authorized officer shall be deemed to be seizure of such valuable article or thing under clause (iii). The 3rd proviso to section 132 (1) provides that nothing in the second proviso shall apply in the case of any valuable article or thing being stock-in-trade of the business. Circular No.8 of 2003 dated 18.09.2003 issued by CBDT explains the ....
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....y to furnish his explanation and evidence in support thereof." "26. Obviously, when the Petitioner - who is in the business of making jewellery, would necessarily have certain items as purchases in bulk for the purpose of molding them into specific jewellery articles such as ear rings, ear tops, sets etc. Petitioner had placed material on record to substantiate the fact that jewellery found in his possession at the time of search was his stock-in-trade. Since the Respondents did not raise any serious dispute in their counter affidavit or in the additional affidavit, therefore, in view of the mandate contained in the proviso to Section 132B(1)(i), the Respondents have no authority to retain the seized jewellery beyond the said period. The outer limit of 120 days as provided under Section 132B has also expired in the month of January 2019." 29. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned search and seizure and ex post facto warrant of authorization dated 11.09.2018 issued by Respondent No.2 under Section 132 of the Act is hereby quashed. Consequently, all the actions taken pursuant to such search and seizure are declared....
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.... "27. In view of the above, we are of the view that the seizure of jewellery being stock-in-trade by the authorized officer is wholly without authority of law and contrary to the statutory provision contained in proviso to Section 132 (1) (iii) and third proviso to Section 132(1) (v). Therefore, the opposite parties-Income Tax Department are directed to return the jewellery (gold and silver ornaments) seized by the Authorized Officer in course of search on 9.9.2011 forthwith to the petitionerassessee after complying with the requirement provided, i.e., making a note or inventory." He further referred paragraphs No.2,8, 11 and 12 of the judgment delivered by Gujarat High Court in Nadim Dilipbhai Panjvani Vs. Income Tax Officer, reported in 2016(1) TMI 811, which are reproduced thus:- "2. The petitioner, on 24.03.2014, was travelling from Morbi to Rajkot carrying cash of Rs. 20,07,000/-. According to him, he had to handover such cash to his friend Manoj P. Rajdev. The vehicle, in which, the petitioner was travelling, was intercepted by the police authorities being the election period for general election to the parliament. The police authorities, after being satisfied....
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.... 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 proviso to the said clause. The further proviso, thus, requires that such assets or portion thereof referred to in the first proviso 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 previous year, in which, the asset was seized etc. are completed. To this extent, we fully accept the stand of the counsel for the revenue that the further proviso would have to be read in continuation of the first proviso and therefore would not override the provision of the first proviso which requires the Assessing Officer to release the asse....
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....reproduced thus:- "18. Having heard the learned advocates appearing for the parties and having considered their rival submissions in light of the statutory provisions and facts and circumstances of the case, the Court is of the view that the impugned order passed by the respondent rejecting the petitioner's application for release of jewellary and gold ornaments is not tenable at law and hence the same deserves to be quashed and set aside. The provisions contained in Section-132B(1) are very clear and unambiguous. Section-132B deals with the assets seized under Section-132 or recognized under Section-132A of the Act. A detailed procedure is prescribed under Section-132B(1)(i) of the Act. Out of such seized assets, the amount of the existing 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 req....
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....the letter dated 19th July 2006 written by the Petitioner Gauri Shankar to the Assistant Director, ED has been placed on record in which the Petitioner claims to have visited the office of the ED on 20th July 2005 with purchase documents relating to the seized gold. The Assistant Director, however, was stated to be out of station. The copy of the letter addressed to him was also not accepted in the office. It is claimed that the copy of the letter along with copies of purchase vouchers was also sent to the ED by speed post. In compliance with the summons issued by the ED, the Petitioner visited its office on 1st February 2006 and 15th February 2006. No communication was received thereafter. A reminder was sent on 21st August 2006. The Petitioner made a representation to the Secretary, Department of Revenue, Ministry of Finance on 26th September 2006 followed by a reminder dated 20th July 2007. " "13. It is not understood how, despite not issuing any legal justification for detention of the Indian currency amounting to Rs. 1,49,000/- and 6 kgs of gold, it was retained by the ED till 28th August 2009 i.e. for over four years. The affidavit dated 19th November 2009 filed by t....
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....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 this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released with the prior approval of the certain authorities, as mentioned in the provisions, to the person from whose custody the asset was seized. The proviso clause further provides that such asset or any portion thereof 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 date of the authorizations for search under Section 132 or for requisition under Section 132A, as the may be, was executed. 18. Recently on 07.08.2023 in D.B. Civil Writ Petition No.3040/2023 (Mangilal Agarwal vs. Deputy Director of Income Tax (Investigation-1), this Court considering the statement made by the counsel appearing for the respondents upon instructions from the respondent authorities submitted that no order has been passed by the competent authority under section 132B of the Income Tax Act. On the basis of such statement, the Court observed that the goods including go....