Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2013 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (2) TMI 120 - HC - Income TaxSearch and seizure - challenge the operations & seeking release of gold ornaments, being stock in trade - assessee also challenged the territorial jurisdiction of the Court - Held that:- On the basis of the record and the reasons noted by the authority, it was not possible to come to the conclusion that the petitioners had not or would not have disclosed the jewelery for the purpose of the Act. Recall that for authorization of search operations under section 132(1)(c) it is required that the competent authority in consequence of the information in his possession has reason to believe that the jewelery, bullion, etc. which represents either wholly or partly income or property has not been or would not be disclosed for the purpose of the Act. Perusing to documents it is found that the entries of gold distributed to various goldsmiths matched perfectly with the entries of gold ornaments received from such persons after adding alloys for conversion of gold from 24 carat to 22 carat. The so called discrepancies pointed out by the Revenue in such documents really do not exist. Respondents fail to notice that the gold ornaments would weight marginally more than the weight of gold from which they are made due to addition of alloys. They also failed to see that such increase in weight was uniform in all cases. Accounts were also maintained regarding labour charges to be paid to different agencies. It can therefore not be stated that there was sufficient information in possession of the Director of Income Tax to have reason to believe that such jewelery had not been or would not be disclosed for the purpose of the Act. There were some discrepancies highlighted by the Department particularly with respect to the agreement dated 14th June 2012. It was argued that such agreement was found in possession of the petitioners and not in possession of the lessee & that the co-relation between the gold actually used in preparation of the ornaments and the one which was available with MG-HUF could not be established but to our mind, these factors would not be sufficient to clothe the authorities with the power to issue search authorization under section 132(1)(c). The Department's doubt about the source of gold of MG-HUF, even if it is genuine, cannot cast any shadow on the question whether the petitioners would or would not have disclosed the same for the purpose of the Act. Further, the contention that the identity of the gold could not be established also is not a sufficient factor as once the gold was, as claimed by the petitioners, received from MG-HUF and the same was distributed among different goldsmiths for preparation of ornaments, failure to see how the exact identity of the gold or co-relation thereof could be maintained or established. When it was pointed out that the petitioners had maintained voluminous records right from the beginning and when such record was found from the premises of petitioner No.1 Company, immediately upon the survey operation being conducted, unable to find as how the competent authority could form a reasonable belief that such gold jewelery had not been or would not be disclosed for the purpose of the Act. On the basis of the various decisions L. R. Gupta And Others [1991 (11) TMI 51 - DELHI HIGH COURT] & VINDHYA METAL CORPORATION [1997 (3) TMI 3 - SUPREME COURT] it emerges that mere possession of money, bullion, jewelery or such valuable article or thing per-se would not be sufficient to enable the competent officer to form a belief that the same had not been or would not be disclosed for the purpose of the Act. What is required is some concrete material to enable a reasonable person to form such a belief - Thus the petition is allowed. Search and seizure operation is declared illegal and it is hereby quashed. Consequently, seizure of the gold ornaments under panchnama dated 26th July 2012 is also quashed.
|