TMI BlogAppropriation of sale proceeds of Gold seized during search operation under section 132, towards tax arrears-minutes of 55th meeting of regional Co-ordination CommitteeX X X X Extracts X X X X X X X X Extracts X X X X ..... tment about the case of Kakumull. A quantity of 68 gold coins was seized by the Income-tax Department from the premises of one Kakumull at Madras. There are income-tax arrears to the extent of Rs. 4,05,723 to be realised in this case. Sri Sampath pointed out that the Income-tax Dept. desired to appropriate the seized gold coins towards the tax arrears. In this connection he brew the attention of the members to sec. 3 of the Gold (Control) Act, which provides that the Act does not apply to gold in the custody/control of Govt. departments. Shri Sampath stated that in cases of this type it is necessary to evolve guidelines so as to enable the Income-tax Dept. to initiate appropriation proceedings towards recovery of tax arrears. Shri Chidambar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Central Excise for appropriate action. Invariably, the gold so recovered is confiscated by the Customs and Central Excise authorities. In cases where the officers of the Enforcement and Central Excise Department are associated at the time of search itself, gold found in whatever form during search operations is confiscated by the Customs authorities on the spot. 2. Instances are not lacking where primary gold is detected from the carriers engaged in smuggling. Carriers are never found to be men of means. The gold is invariably confiscated but in view of section 68 of the Income-tax Act, the value of the gold has to be assessed in the hands of the carriers because investment therein remains unexplained in their hands and the identity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gold articles or primary gold, in whatever, form, towards the income-tax arrears after the seizure during search operations would not be improper. 6. The matter was fully discussed in the 55th Meeting of the Co-ordination Committee at Madras. Relevant extract of the minutes is enclosed. As would be clear therefrom, the Collector of Central Excise concurred with the views expressed above but pointed out certain inherent difficulties which may have to be overcome before the sale of gold is resorted to by the Income-tax Department. The difficulties pointed out by him were as under:- (i) The gold seized during search operations cannot bought by private parties as the would involve violation of the provisions of the Gold Control Act. (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be proceeded against for violation of the Gold Control independently. Recovery of gold from their premises and the appropriation of its value towards tax arrears due from them should constitute flawless evidence for establishing the violation of the Gold Control Order. Under these circumstances, the appropriation of the value of the gold towards tax arrears would not in any way prejudice the action under the Gold Control Act or other Customs and Central Excise laws. 10. Incidentally, it may be pointed out that if a suitable procedure is devised for the appropriation of the value of such gold towards tax arrears, it will go a long way in reducing the amount of tax arrears which is quite substantial in the case of carriers employed by smugg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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