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TMI Blog2024 (12) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... aridkot. It assails the action of the Income Tax Department for confiscating its jewellery which it had allegedly kept in Locker No. 161, maintained with South Indian Bank, Punjabi Bagh, Delhi. 3. One search and seizure operation was carried out at business and residential premises of one Deep Malhotra and his other concerns which included the premises of the petitioner company also. The search and seizure was carried out from 18.05.2023 which concluded on 23.05.2023. During the course of search, list of inventory of cash, jewellery, foreign currency and other assets was made. The statement of the director of the company, namely, Chitwn D. Malhotra was recorded on 18.05.2023 and it was stated by her that the company stores its jewellery and other ornaments in two lockers no. 160 and 161, as maintained in South Indian Bank, Punjabi Bagh, Delhi, while locker no. 160 is in the name of the directors of the company and locker no. 161 is in the name of the company. Thus, in both the lockers, the stock in trade of the company has been lying in safe custody. Her statement was recorded on 18.05.2023. The closing balance of the stock in trade as on 31.03.2023 was also provided, which reflec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Chitwn D. Malhotra was recorded on 19.05.2023. It is specifically pointed out that the locker contained jewellery, which was part of stock in trade, in spite thereto, the respondents did not release the stock in trade. The valuation was conducted by the respondents. She submits that during search, the gold weighing 6758.49 grams was found from the house, while 6555.69 grams of gold was found from the locker no. 161, which was in the name of the company. The same was 3765.31 grams of gold jewellery and 2790.38 grams of gold coins. That apart, diamond worth 371.55 grams was also found from the locker. 7. Learned senior counsel for the petitioner has invited attention to the panchnama prepared and the inventory of jewellery seized from the locker, and if both of them are added, the stock in trade is found to be tallied. Despite thereto, the respondents have refused to release the gold which has been seized from locker no. 161. 8. It is submitted by learned counsel for the petitioner that the action is in violation of the provision of Section 132 of the Act. She also submits that the respondents were obliged to pass orders under proviso to Section 132B (1) (i) of the Act. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een denied of their having received any application from the directors of M/s Dillano Luxurious Jewels Limited for operating the concerned lockers. 12. The petitioner company has filed the rejoinder. It has been stated that the details of the stock in trade as mentioned in the statement made before the authorities tallied with the actual stock seized by the respondents. It is submitted that the books of accounts were being regularly maintained and were being audited. GST returns were being regularly filed and the counsel also invites attention to the documents placed along with the rejoinder to submit that regular income tax returns had been assessed. The assessment for the year 2022-2023 was conducted, which was reflected in the said return tallied with the gold which was available with the petitioner. 13. Learned counsel for the petitioner submits that in all circumstances, there was no occasion available with the respondents, to have withheld the gold, which they have seized from the locker. 14. We have considered the submissions. 15. Section 132 of the Act laid down the search and seizure procedure to be followed and allows the authorities to enter, search and seize and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Dillano Luxurious Jewels Ltd. The same was maintained by Ms. Mudita at our office at No. 40, North Avenue, West Punjabi Bagh, New Delhi. However, the same may not be as per books of accounts. I am also submitting the closing balance of stock-in-trade (value in gms) as on 31.03.2023 as Exhibit-3. The closing stock as on 31.03.2023 is as under: Gold (14 ct.): 13575.017 gms Diamond: 1369.964 ct. C Stone (Coloured Stone): 18065.46 ct." xxx xxx xxx Q.33 Please submit the detailed inventory of stock available at your business premise and bank locker along with the description, weight and date of purchase, purchase bills etc. Ans. I have submitted the details of stock available as Exhibit-2 to my statement. The same is prepared by Shri Sudeep who is an employee of M/s Dillano Luxurious Jewels Ltd. The purchase bills of raw material are seized as Annexure-A7 from the business premise of M/s. Dillano Luxurious Jewels Ltd. However, the same details regarding the inventory at bank locker has been misplaced as the same was prepared by me. The stock in bank locker at South Indian Bank is usually used for very limited purposes like few exhibitions, few select clients and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is "[deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C, may be recovered out of such assets]: Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained] to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the [Principal Chief Commissioner or] Chief Commissioner or Principal Commissioner or] Commissioner, to the person from whose custody the assets were seized:" Thus, the said provision specifically lays down the procedure for releasing of the assets which have been recovered in normal search and seizure, even if they are not part of the stock in trade. The respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of 120 days, was held to be contrary to mandate of proviso to Section 132B (1) (i) of the Income Tax Act, 1961. Once the said period is over, respondents have no authority to retain the jewellery, held the High Court. 22. In our considered opinion and taking note of the aforesaid judgments, we hold that the respondents have acted in an arbitrary, illegal and unjustified manner in seizing the stock in trade of the petitioner company. Any jewellery recovered from the locker belonging to the company, would have to be presumed to be that of the company and it cannot be allowed to contend that the jewellery belongs to any individual director. If such an attempt is allowed to be accepted, dispute would arise regarding the stock of the company itself. At the same time, the company's assets cannot be claimed by any individual director. However, the action of the respondent-department would result in the company's assets being claimed by the individual director also, which cannot be allowed. 23. We find that the action was being initiated against the Oasis Group and the petitioner company. The respondents, therefore, were wholly unauthorized to withhold the stock in trade after the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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