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The Deputy Director of Income Tax (Investigation) , Ujjain, Rupan s/o Rajendra Gorecha, R/o Limidi, Dahod Gujrat, Rajendra P. Gorecha, R/o Limidi, Dahod Gujrat And Nayan Kothari (Jain) , Dhar. Versus Nayan Kothari s/o Rajendra Kothari, Commissioner of Income Tax, Ayankar Bhawan, Indore, Deputy Director of Income Tax (Investigation) , Income Tax Department, Indore And Income Tax Officer, Income Tax Office, Collectorate, Dhar

2015 (12) TMI 630 - MADHYA PRADESH HIGH COURT

Withholding of the silver bullion - Held that:- It has been an admitted fact that a routine checking has been conducted during the Lok Sabha election in the year 2014 and M.P. Assembly election in the year 2013. Moreover, according to the requisition filed by the assessee petitioner, it clearly indicated from the books of accounts that the goods belonging to Rupam s/o Rajendra Gorecha and all necessary documents were filed before the Income Tax Department and the application under Section 132-A( .....

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me the fact drawn to the notice of this Court that the proceedings under Section 132-A (1)(c) of the ITA regarding assessment of the assessee company is still pending consideration before the Assessment Officer. We find that the learned Judge of the lower Court was right in considering the payment of security on production of silver bullion etc.and hence, there is no infirmity in the impugned order in this regard. The condition was imposed by way of abundant caution.

Both the writ pet .....

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R.L. Jain, learned Senior Advocate with Ku, Veena Madlik, learned Counsel For the Respondent : Shri Manoj Munshi, learned Counsel ORDER Per Smt. S.R. Waghmare, J. These two petitions are taken up together since they arise out of the same cause of action and are therefore, decided by this common order, which shall govern both the petitions. 2. By Writ Petition No.4941/2014 under Article 227 of the Constitution of India, the Dy. Director of Income Tax (Investigation) Ujjain is aggrieved against th .....

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thority of law. 4. Briefly stated the facts of the case are that on 11.3.2014, information was received by the petitioner department from the police station Badnagar, Ujjain that they had seized cash of ₹ 27.80 lacs. and silver bullion items weighing 479.50 kg valued at ₹ 2.05 crores from respondent Nayan Kothari when he was travelling in an Innova car at Badnagar while coming from Gujarat towards Indore. The Dy. Director of Income Tax (Investigation), Ujjain found upon investigation .....

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x Act by Shri K.C. Ghumaria, Director of Income Tax (Investigation), Bhopal on 12/3/2014. Respondent Nayan Kothari after expiry of 120 days from the date of last requisition by the Income Tax Department filed a requisition under Section 132-B of the Income Tax Act that the respondents Income Tax Department are the duty bound to release/return the assets since the requistion is valid only for 120 days. Counsel submitted that only if there was a demand of tax, interest or penalty outstanding the p .....

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er the impugned cash and jewellery to the Income Tax Department. However, simaltatneously imposed several restrictions while delivering the possession of the impugned assets and cash to the Department. And these conditions have been challenged before this Court. Counsel for the Income Tax Department has vehemently urged the fact that requisitioning of the assets under Section 132-A of the Income Tax Act and thereafter when warrant of authorization is issued; it should not be accompanied by any c .....

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Section 132-A cannot suffer from any such limitation and conditions as have been imposed by the Trial Court and under Section 293 of Income Tax Act the petitioner was constrained to file the present petition to set aside or modify the impugned condition. Hence, Counsel prayed that the impugned order be set aside. 5. Whereas, in Writ Petition No. 6502/2014 , it was alleged that despite order dated 23.4.2014 passed by the JMFC Badnagar, Ujjain under Section 132(A) (1)(c) of the Income Tax Act, th .....

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ad failed to do so. Hence, the present petition. 6. Counsel for the Income Tax Department has vehemently urged the fact that the petitioner Income Tax Department had filed an application under Section 132-A(1)(c) of the Income Tax Act 1961 read with under Section 451, 457 of the Cr.P.C. and by order dated 23/4/2014 the assets have been handed over to the Income Tax Department, due to the warrant of authorization issued earlier. There cannot be a rider imposed by the Trial Court such as payment o .....

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Income Tax Department was entitled to silver bullion items and cash without any such condition being imposed and it is only under these circumstances, the Income Tax Department has prayed for handing over the same without any security to the respondents. Whereas, the petitioners/respondents Nayan Kothari and others are aggrieved by the rejection of their application under Sections 451 and 457 of the Cr.P.C. since no tax was outstanding and proper bills and receipts were filed. 7. Counsel for the .....

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by the police authority. The Assistant Commercial Tax Officer considering the silver bullion as business assets of the petitioner and considering Rupam s/o Rajendra Gorecha as owner of the silver bullion levied tax and penalty of ₹ 11,18,090/-. Whereas Counsel for the Assessee/petiitioner urged that this amount which was reduced on being compounded and paid the tax and penalty of ₹ 6,70,854/- and settled the issue with the Commercial Tax Department under the composition scheme. This .....

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pplication under Section 132-A of the Income Tax Act by the petitioner Nayan Kothari was rejected and as a consequence of rejection order the petitioners were suffering financial constraints and a registered demand notice was served by M/s Riddhi Siddhi Corporation for dishonour of cheque issued by Rapam Gorecha towards payment of dues for purchase of silver bullion and his business is almost brought to a standstill. Despite these circumstances, the JMFC has directed to hand over the possession .....

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. 9. Counsel for the petitioner Assessee has placed reliance in the matter of Commissioner of Income Tax,Allahabad and others vs. Vindhya Metal Corporation and others (Civil Appeal No.5526/1983 decided on 5/3/1997 (equivalent citation (1997) 139 CTR (SC)495. Counsel submitted that mere unexplained possession of the amount, without anything more, could hardly be said to constitute information which could be treated as sufficient information relatable to a conclusion, leading to an inference that .....

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ner had also stated that the entire money found in his possession was reflected in the books of account of the company and regularly assessed at Delhi. The Court has held that it was empowered to enquire into the existence of the information and its relevancy regarding search and seizure under Section 132-A of the ITA. 10. Finally, Counsel for the petitioner relied on the decision of our own Court in the matter of Director of Income Tax (Investigation) vs. Payal Selection and Company and others .....

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for supurdgi of the goods. The CJM rejected the application of the assessee company for supurdgi of goods and ordered that custody of the seized property be given to Income Tax Department under Section 132-A. In appeal against the order, a stay was granted by the Sessions Judge and matter was remanded to CJM with the direction that silver seized should be placed in treasury. However, police entrusted the wrongfully seized silver property to the department and the order was challenged as contrar .....

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n fallacious on the part of the CJM, to have entertained the application under Section 132-A and the Court had directed handing over of the seized silver/assets to the department and the order of Sessions Judge was upheld. 11. Counsel for the Income Tax has vehemently urged the fact that in the present case the assessee has failed to explain the source of assets made in the application and the assessment proceedings under Section 153-A of the ITA was still lying with the Assessment Officer. And .....

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a), whereby this Court has considered the question whether the requisition issued by the respondent under Section 132-A (1)(c) before the JMFC, Badnagar Ujjain was maintainable. It is pertinent to note that in this case also that the law was set in motion under Section 132-A (1)(c) and also under the Criminal Procedure Code and not under the Income Tax Act alone, then this fact cannot be blinked away or marginalized and the question that whether the department has right to retain the assets unde .....

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