TMI Blog2010 (12) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... s not governed by Explanation (b) to section 6(1)(c) and was governed only by section 6(1)(c) alone cannot be faulted. Therefore when the respondent has satisfied the criteria namely 365 days in the preceding four years of the previous year 2009-10 and remained in India for 96 days, in that previous year the consequent search and seizure effected on him by invoking section 132(1) of the Act was well within the jurisdiction of the appellant. - 1205 of 2010 - - - Dated:- 23-12-2010 - IBRAHIM KALIFULLA F. M., KIRUBAKARAN N. JJ JUDGMENT F. M. Ibrahim Kalifulla J.- The Income-tax Department is the appellant. The challenge is to the order of the learned single judge dated April 13, 2010, passed in W. P. No. 921 of 2010. 2. By the impugned order, the learned single judge set aside the order of the second appellant dated December 10, 2009, passed under section 132B of the Income-tax Act and consequently directed the fourth appellant to return the gold jewellery weighing 9957.43 grams seized from the respondent at the gate of Anna International Airport, Chennai on the night of August 13, 2009/early morning of August 14, 2009. 3. The brief facts which are required t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, Gandhi Nagar, Thirumalaivasal, Sirkali Taluk, Nagai District. 6. The appellants thereafter, seized the gold jewellery under section 132 of the Income-tax Act. After the seizure, the respondent filed a writ petition in W. P. No. 20083 of 2009 for mandamus to direct the first appellant to forthwith release the gold jewellery weighing 9957.43 grams, which he imported after paying the customs duty thereon, which was seized from him at Anna International Airport in F. No. ADIT/A.I.U./2009-10. 7. The said writ petition was filed by one S. Manikandan son of K. Subramanian claiming himself to be the power of attorney agent of the respondent. In the affidavit filed in support of the writ petition, the petitioner therein claimed that the respondent had been doing business in gold jewellery in Singapore and that he had brought the jewellery into India as his stock-in-trade of business, which cannot be seized at all under the amended provisions of section 131 of the Income-tax Act. 8. He further claimed that he was coerced by the appellant to admit as though the gold jewellery brought by him belonged to somebody else. The respondent also sent a communication dated September 2, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than the amount of seized asset, which according to the second appellant worked out to Rs. 58,49,217 and such amount would attract penalty leviable at 200 per cent. on the tax sought to be evaded under section 271(1)(c) of the Act in a sum of Rs.1,16,98,434 in all a sum of Rs. 1,75,47,651. 14. The second appellant thereafter, held that since the tax liability was more than the value of the seized asset, the assessed jewellery would be retained towards the tax liability and the jewellery cannot be released pending finalisation of the assessment and recovery of the entire tax or completion of the assessment. 15. It was further observed that the exemption provided under the Customs Act for acquiring gold jewellery cannot be taken for granted in all circumstances for claiming immunity when it comes to the question of the Income-tax Act. 16. As against the said order of the second appellant, the respondent preferred the present writ petition in W. P. No. 921 of 2010. The second appellant has filed a counter-affidavit resisting the claim of the respondent for return of jewellery. 17. By the order impugned in this appeal, the learned single judge held that the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. According to the learned standing counsel the respondent should therefore undergo the assessment proceedings and depending upon the outcome of the assessment to be made, the return of jewellery can be decided. 24. As against the above submissions, Mr. B. Kumar, learned senior counsel appearing for the respondent submitted that under Notification No. 31 of 2003, dated March 1, 2003, issued under the provisions of the Customs Act, exemption was granted in public interest for import of gold bars or gold in any form, at the rate prescribed under the said notification subject however to the condition that duty should be paid in convertible foreign currency and the quantity of gold imported in any form should not exceed ten kilograms per eligible passenger. The said notification also provided for such import either by carrying it by the eligible passenger at the time of his arrival in India or by import within 15 days of such arrival in India. The eligible passenger has been explained in the very same notification by stating that "a passenger of Indian origin or a passenger holding a valid passport, issued under the Passports Act, 1967, who is coming to India after a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te a friction. 30. The learned senior counsel contended that if the search and seizure could not have been made on the date of seizure for non-compliance with section 6(1)(c), it cannot be given an extension by taking into account the subsequent event of the respondent's stay after the seizure. 31. According to the learned senior counsel there was violation of the right to property which is constitutionally protected under article 300A in the absence of any statutory provisions. 32. The learned senior counsel also contended that the search and seizure effected by the appellants was in violation of section 132 of the Act, inasmuch as, there was no prior information available in order to effect seizure and consequently the very seizure was invalid. 33. The learned senior counsel placed heavy reliance upon the decision of the Delhi High Court reported in Ajit Jain v. Union of India [2000] 242 ITR 302 which was also affirmed by the hon'ble Supreme Court in the decision reported in Union of India v. Ajit Jain [2003] 260 ITR 80. The learned senior counsel further contended that the estimated tax liability and penalty in the order dated December 10, 2009, does not fit into s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the order passed under section 132B of the Act dated December 10, 2009 can be sustained, awaiting the conclusion of the assessment proceedings ? 40. Based on the answers to the above questions, the relief to be granted will have to be decided. 41. As far as the first question is concerned, it is necessary to refer to certain basic facts relating to the search and seizure made on August 14, 2009, based on the original file placed before the court. The file discloses that on August 13, 2009, a sworn statement was recorded under section 131 of the Income-tax Act after issuing a summons to the respondent at 11.00 pm. After recording the formal identification of the respondent relating to his address, avocation, family set up etc., he was asked as to whether he was carrying any valuable items from Singapore to Chennai. The respondent gave the following answer : "This 10 kgs. gold jewellery is not own to me. After obtaining boarding pass at Singapore airport, I was ready to enter check-in area to complete other check-in formalities. An unknown person came and approached me at the check-in area with a request to carry 10 kgs. of gold jewellery to Chennai. He further i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e where the petitioner therein went from Mumbai to Chennai on January 9, 1996, with a sum of Rs. 8.60 lakhs, which was duly reflected in the company's cash book, in which he was the managing director and on reaching Chennai, he stayed in Hotel Chola Sheraton. According to him the said money was to be deposited with a bank for making a bank draft for payment of customs duty on January 12, 1996. While he was staying in the said hotel, a raid was conducted by the officers of the CBI on January 11, 1996 and a sum of Rs.8.6 lakhs was recovered from him. On the information of the CBI respondents Nos. 4 and 5 therein viz., the Director of Income-tax (Investigation) and Assistant Director of Income-tax (Investigation) arrived in the room and took into possession of the said amount of Rs. 8.5 lakhs. A statement of the petitioner was recorded on oath by the said respondent No. 5, wherein in answering to a question with regard to the source and purpose for which the money was kept by him, he stated that the money was out of the sale proceeds fully recorded in the books of the company and he was carrying it because the same was to be deposited with the SIB (Customs). 47. The said petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive and, therefore, the jurisdiction of the court to interfere is very limited. A court will not act as an appellate authority and examine meticulously the information in order to decide for itself as to whether action under section 132 is called for. But the court would be acting within its jurisdiction in seeing whether the act of issuance of an authorisation under its jurisdiction in seeing whether the act of issuance of an authorisation under section 132 is arbitrary or mala fide or whether the satisfaction which is recorded is such which shows lack of application of mind of the appropriate authority. The reason to believe must be tangible in law and if the information or the reason has no nexus with the belief or there is no material or tangible information for the formation of the belief, then, in such a case, action taken under section 132 would be regarded as bad in law.' By now it is well-settled that while the sufficiency or otherwise of the information cannot be examined by the court in writ jurisdiction, the existence of information and its relevance to the formation of the belief is open to judicial scrutiny because it is the foundation of the condition precedent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another unknown person in Chennai. He also stated that, that unknown person gave USD 10950 for the purpose of payment of customs duty. The further information was that for carrying out the said job, he would be paid a sum of Rs. 8,000 at the destination. 50. When the above piece of information was gathered from the respondent, according to the appellants, they had reason to believe that the respondent who was in possession of such large quantities of gold, which had not been or would not have been disclosed for the purpose of the Act and consequently took the next step of getting the authorisation from the competent authority to effect the search. Thereafter, the search was effected on the next day viz., August 14, 2009. Once again, the respondent reiterated what he stated on the previous day viz., August 13, 2009, as to how he brought 10 kgs. of gold jewellery from Singapore to India. 51. In the decision of the Delhi High Court, wherein an earlier decision of the same High Court reported in L. R. Gupta v. Union of India [1992] 194 ITR 32 (Delhi), has been pointed out wherein it is stated that there must be some material which can be regarded as information which must exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not therefore be countenanced. On the first issue, we hold that the search and seizure was validly made. 58. With this, when we proceed to examine the second question viz., whether the respondent can be held to be a "resident" in India as per section 6(1)(c) of the Act. In order to bring an individual as a resident in India as per section 6(1)(c), the said individual having been in India for a period of 365 days or more within 4 years preceding the previous year should also remain for a period of 60 days or more in that previous year. Explanation (b) to section 6(1)(c) stipulates that being a Citizen of India who being outside India comes on a visit to India in any previous year in that case instead of 60 days of stay in India, such stay should be for 182 days. 59. Keeping the above statutory requirement of number of days stay in India, when we find out the actual number of days stayed by the respondent in India in the four years preceding the previous year viz., 2009-10 and the number of days stayed in that previous year, it is not in dispute that between October 16, 2004 and November 28, 2007, the respondent stayed in India for more than 365 days and in that previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was specifically entered therein that the respondent was not permitted to engage in any business, profession or occupation without a valid work permit till March 9, 2001. Similarly in the visit pass that enabled him to enter Singapore on January 29, 2007, it was specifically mentioned that it was for social visit only that too for 30 days. 64. Again in the visit pass issued on January 8, 2008, an endorsement was specifically made to the effect that he was not permitted to work or engage in any business, profession or occupation without a valid work pass. Similarly, such entry was noted in the visit pass issued on July 5, 2008. 65. Therefore, going by the entries found in the passport it is revealed that the respondent was visiting Singapore from India and it was therefore quite apparent that the statutory documents viz., the passport which can be relied upon as against any other claim made on behalf of the respondent, whatever be the period of stay in the foreign countries, the respondent's stay therein was only as a visitor. In other words, being an Indian resident, he was permitted by those foreign countries to visit those countries viz., Singapore and Malaysia and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. We, therefore, hold that Explanation (b) to section 6(1)(c) is not attracted in the case of the respondent. Therefore when the respondent has satisfied the criteria namely 365 days in the preceding four years of the previous year 2009-10 and remained in India for 96 days, in that previous year the consequent search and seizure effected on him by invoking section 132(1) of the Act was well within the jurisdiction of the appellant. 71. Once we are able to reach the above conclusion, the only other question is the validity of the order dated December 10, 2009, passed under section 132B of the Act. When the appellants had every jurisdiction to invoke section 6(1)(c) of the Act on the respondent, the respondent having filed his return of income, it is for the respondent to participate in the assessment proceedings and work out his remedies. While dealing with the said issue, the apprehension expressed by the learned standing counsel for the appellants cannot be brushed aside. 72. As rightly pointed out by the learned standing counsel there were contradictions in the statements of the respondent as regards the ownership of the 10 kgs. gold seized from him. The contention about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 6(1)(c), the said provision does not state that calculation of stay in the relevant previous year should be made only by keeping the date of arrival in India. What has not been specifically provided in the statute cannot be inferred as put forth by the learned senior counsel for the respondent. It was not the case of the respondent that the appellants forced the respondent to stay back in India after August 13, 2009. 78. In fact the respondent was freely travelling between Chennai and Singapore even after August 13, 2009 and therefore nothing prevented the respondent from staying back from India in order to ensure that 60 days period was not complied with. Therefore the said contention does not merit any consideration. 79. For all the above stated reasons, we hold that the order of the second appellant dated December 10, 2009, passed under section 132B of the Act cannot be interfered with and the order of the learned single judge in having set aside the same cannot therefore be sustained. 80. In order to enable the respondent to ascertain the tax liability, we only direct the appellants to conclude the assessment proceedings expeditiously preferably within three mont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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