TMI Blog1991 (11) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ying and possessing contraband smuggled gold worth about Rs. 68 lakhs. The appellant thus falls under the category of relatives as defined under section 2(2)(c) of the Act and his illegally acquired property is liable to be forfeited to the Central Government under the provisions of the Act. The proceedings against the appellant were started by the Competent Authority, after recording reasons under section 6(1) of the Act, on October 19, 1985. After carrying out due investigations into the sources of investment as also examining the contentions of the affected person raised from time to time, the final order forfeiting the property was passed under section 7(1) of the Act on February 27, 1991. The appellant has taken several grounds in appeal challenging the legality of the impugned order and the same are contained in the memorandum of appeal filed by him. However, Shri R. J. Merchant, Advocate, appearing on behalf of the appellant, pressed his arguments only in respect of some of the grounds. We would, therefore, deal with the arguments pressed before us. The first ground pressed by the appellant's learned counsel is that no valid order of forfeiture under the said Act can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll does not require that the offence in relation to which the person has been convicted ought to have been committed after the coming into force of this Act. It is thus abundantly clear that this contention of the learned counsel cannot be upheld. The second argument of the learned counsel for the appellant is that, since the property in dispute had allegedly been illegally acquired by the appellant's father and had come to him through gifts in December, 1968, and April, 1969, he should not be held liable to surrender the same under the Act. This contention is also without force. The definition of illegally acquired property contained in section 3 ( 1 ) (c)(A) includes: "(A) any property held by such person which would have been, in relation to any previous holder thereof, illegally acquired property under this clause if such previous holder had not ceased to hold it, unless such person or any other person who held the property at any time after such previous holder or, where there are two or more such previous holders, the last of such previous holders is or was a transferee in good faith for adequate consideration." Thus, the only exception made by law is in respect of thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other provision of law The other benefit conferred under the scheme is that the particulars of the gold bonds shall be treated as confidential. The purpose of the National Defence Gold Bonds Scheme has been clarified in the Statement of Objects and Reasons given in the Taxation Laws (Amendment and Miscellaneous Provisions) Bill. The Bill provides certain tax concessions to persons investing in various schemes including the National Defence Gold Bonds Scheme, 1980, by amending the Income-tax Act, Estate Duty Act, Wealth-tax Act and the Gift-tax Act. Various concessions under the scheme have been enumerated in the following extract from the Statement of Objects and Reasons : "National Defence Gold Bonds, 1980.-(i) Persons who have acquired the gold subscribed by them towards the Bonds out of their income which they have not disclosed for the purposes of income-tax, excess profits tax, business profits tax, super-profits tax or surtax, will not be liable to any of these taxes on such income in assessments for any assessment year made after the 19th October, 1965, if the income had not been detected by the Income-tax Officer before the date on which the gold was subscribed towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 1969 when smuggled gold worth Rs. 68 lakhs was recovered from him. The conviction order under the Customs Act was passed against him on November 2, 1971. The proceedings under section 6 of the Act were initiated by the Competent Authority on October 17, 1985, and the impugned forfeiture order against the appellant was passed on February 27, 1991. Thus, there is a time lag of 22 years between the commission of the offence by the appellant's father and passing of the forfeiture order, of 20 years between the conviction order against the father and the forfeiture order and of 14 years between the conviction order and the initiation of the proceedings and a further gap of over 5 years between the initiation and completion of the proceedings under the Act. It is argued that, in the absence of plausible reasons for the inordinate delay, the proceedings should be quashed being bad in law. Learned counsel has relied upon decisions of this Tribunal in Chandan Kumar Saha and Gaur Chandra Saha v. Competent Authority [1989] 179 ITR 183 and Mohd. Golam Rasul Mia v. Competent Authority [1990] 181 ITR 206. The principles applicable in cases of inordinate delay in initiating action unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly explained. It was argued that the Act was passed on January 25, 1976, and the Competent Authority Organisation under the Act was set up in January, 1977. Therefore, although the initiation of the proceedings under the Act is based on the conviction order dated November 2, 1971, it was impossible to take any action till 1977 since the Competent Authority Organisation did not exist prior thereto. The learned Competent Authority has argued that some delay is by and large inherent in initiating and completing the proceedings under the Act. After the conviction or detention of a person justifying taking action against him under the Act is reported to the concerned Competent Authority, the cumbersome process of searching for his relatives and their properties is set in motion. It is understood that nobody will willingly co-operate in this process. Everybody will exhibit a tendency to hide. After locating the affected persons and the properties owned by them, it is necessary to evaluate the properties as also to find out their respective incomes. The Competent Authority can record his reasons in terms of section 6 of the Act for issuing a notice thereunder after he is equipped with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... several lakhs, it was considered prudent and proper that an adequate opportunity be given to the appellant before taking a final decision in the matter. Moreover, the case of the appellant was linked with a number of other cases of the Koli group in which proceedings had been initiated by the Competent Authority. A proper co-ordination of investigation in all cases of the group was necessary before deciding the matter. The proceedings, being complicated and involving substantial amounts, took a number of hearings in which several letters were issued to the appellant and the several replies filed by the appellant were duly considered. On a number of occasions, adjournments were sought by the appellant and his learned counsel who were duly accommodated by the Competent Authority. In support of his contention, the Competent Authority produced the note sheet of the proceedings and filed a photocopy thereof containing the day to day record of the proceedings starting from October 17, 1985, and culminating with the forfeiture order on February 27, 1991. It has been noted that several adjournments were sought from time to time by Shri B. M. Gupte, advocate, appearing on behalf of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to invest its savings in the form of gold has been taken for the first time at the appeal stage and that too during arguments and has not been substantiated by any evidence whatsoever. There is a glaring contradiction in the stand taken regarding the form in which the gold was tendered for the purchase of gold bonds. The initial stand was that gold ornaments weighing about 1,200 tolas were surrendered but it was found by the Competent Authority in the course of investigation that the father of the appellant did not tender jewellery or ornaments and in fact it was 1,200 tolas of gold in the form of 120 pieces that was tendered. It has been so stated by the appellant's father in his application submitted to the Reserve Bank for the purchase of gold bonds. On being questioned by the Competent Authority, the father of the appellant stated that he did not remember the details of the gold ornaments but he could say with certainty that he had handed over gold ornaments in return for the National Defence Gold Bonds. He changed his stand already taken stating that the gold ornaments were melted and converted into gold bars of 10 tolas each for being surrendered to the Gold Control Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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