TaxTMI 
TaxTMI 
2023 (10) TMI 377
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....m. 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 Adjudicating Authority and further Section 19 of the....
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....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 before this Court. He also submitted that in view of....
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....ion 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 the authorities to get the particulars required for completion of any i....
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....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 this Court that the provisions, contained in Section 19 of the FEMA, 1999, gives power to the Appellate Tribunal to consider th....
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....ea 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 his order dated 26-9-1972 held "that the rejoinder may be taken on record and the matter contained therein so far as it relates to the new points rai....
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....isions 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 the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Addit....
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....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 counsel for the petitioners has relied upon various judgments. He referred paragraphs No.2,5, 18, 19, 21 and 24 the judgment delivered by this Court in the case of Harshvardhan Chhajed Vs. Director General of Income Tax (Investigation) [in SBCWP.No.6097/2020] decided on 07.09.2021¸ which ....
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....n 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 disposed of." "21. From the perusal of the aforesaid judgments and law laid down, it is apparent that the seizure has to be conducted after due care and caution. Merely on account of reasons to suspect, seizure of goods ought not to be undertaken as held in Khem Chand Mukim (supra). In fact the investigation wing has to show re....
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.... 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 purpose behind insertion of the aforesaid proviso which reads as under: "60. Amendment in Section 132 to provide that stock-in-trade not to be seized during search: 60.1 XXXX 60.2 The Finance Act, 2003, has amended Section 132 to provide that any bullion, jewellery or other valuable article or thing being stock-in-trade of the business, foun....
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....sion 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 illegal. The Respondents shall forthwith return to the Petitioner, the jewellery seized. Since the action of the Respondent is found to be grossly arbitrary, and the entire action is vitiated, in order to discourage the Respondents from resorting to unwarranted action of search, we are inclined to saddle the Respondents with costs which are quantified at Rs.50,000/-. The costs shall be payable to Delhi Legal Service A....
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....rse 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 that the cash, which the petitioner was carrying, had no connection with the ensuing election, informed the Income Tax Department which, later on 25.03.2014 seized the cash from the petitioner. The case of the petitioner, as reflecting from the present petition is that, the cash belonged to said Shri Manoj P. Rajdev and not to the petitioner. However, since the same was seized from the petitioner, the petitioner filed a petition dated 14.04.2014 befor....
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.... 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 asset only upon being satisfied with the source of its acquisition. However, this further proviso puts a time limit, within which, such asset must be released. The question of not releasing the asset would arise only upon the decision on an application that may have been made by the person concerned is taken by the Assessing Officer. If no decision is taken, necessarily, the option of the Assessing Officer to adjust such seized asset would be confined to the exi....
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....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 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 sear....
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....lso 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 the ED admitted that 6 kgs of gold as well as the seized Indian currency were handed over to the IT Department only on 28th August 2009. On its part the IT Department admitted to thereafter having received both the gold as well as the Indian currency and admitted having issued the warrant of authorization under Section 132A of the IT Act. "16. A perusal of Section 37 of the FEMA reveals that it cannot be invoked to seize Indian currency. The ED had itself admitted before this Court that there wa....
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....o 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 gold bullion, which were taken in possession, have to be released and the respondents counsel therein informed that in case the petitioner approaches the competent authority for release of the Gold Bullion, the same shall be accordingly released. Finally the writ petition was disposed of as having become infructuous in view of the fact that the gold bullion was released to the petitioner therein. The judgments cited by the counsel for the petitioners as a whole speak that the respondent authorities are under a....